April 10, 2017
ENERGY WATCH #1 by Karel Beckman
Renewable energy evolution
April 10, 2017
Lots of new data has come out recently on renewable energy investment both globally and in Europe. Overall conclusion: renewable energy is marching forward – but is it fast enough?
The International Renewable Energy Agency (IRENA) reported that global renewable energy generation capacity increased by 161 GW in 2016, making “the strongest year ever for new capacity additions”. Cumulatively, IRENA’s Renewable Energy Capacity Statistics 2017 show that renewable generation capacity reached 2,006 GW.
The data show “that last year’s additions grew the world’s renewable energy capacity by 8.7 per cent, with a record 71 GW of new solar energy leading the growth. 2016 marked the first time since 2013 that solar growth outpaced wind energy, which increased by 51 GW, while hydropower and bioenergy capacities increased 30 GW and 9 GW respectively —the best ever year for growth in bioenergy capacity. Geothermal energy capacity increased by just under 1 GW.”
“We are witnessing an energy transformation taking hold around the world, and this is reflected in another year of record breaking additions in new renewable energy capacity,” said IRENA Director-General Adnan Z. Amin. But he also noted that “accelerating this momentum will require additional investment in order to move decisively towards decarbonising the energy sector and meet climate objectives.”
In fact, last year’s growth rate was virtually the same as in 2015. Europe in particular saw its growth slow to just 4.3%. Asia achieved growth of 11.5%, with North America in the middle at 7.3%.
Asia accounted for 58 per cent of new renewable additions in 2016. Asia was also the fastest growing region, with a 13.1 per cent increase in renewable capacity. Africa installed 4.1 GW of new capacity in 2016, twice as much as 2015.
This year’s edition of IRENA Renewable Energy Capacity Statistics also contains for the first time data specifically for off-grid renewables. Off-grid renewable electricity capacity reached a modest 2,800 megawatts (MW) at the end of 2016. Roughly 40 per cent of off-grid electricity was provided by solar energy and 10 per cent from hydropower. The majority of the remainder came from bioenergy. It is estimated that globally around 60 million households, or 300 million people, are served with and benefit from off-grid renewable electricity.
With regard to wind energy, almost three-quarters of new capacity was installed in just four countries: China (+19 GW); USA (+9 GW); Germany (+5 GW); and India (+4 GW). Brazil also continued to show strong growth, with an increase of 2 GW in 2016.
The majority of bioenergy capacity expansion occurred in Asia last year (+5.9 GW) and Asia is fast approaching Europe in terms of its share of global bioenergy capacity (32 per cent compared to 34 per cent in Europe).
Asia also saw the most growth in solar capacity last year, +50 GW (total 139 GW). Almost half of all new solar capacity was installed in China in 2016 (+34 GW). Other countries with significant expansion included: USA (+11 GW); Japan (+8 GW) and India (+4 GW). Capacity in Europe expanded by 5 GW to reach 104 GW, with most expansion occurring in Germany and the UK.
The Renewable Energy Capacity Statistics, which contain only raw data, go back to 2007, so they show the long-term trends over the last ten years. Capacity over this period doubled. IRENA thinks it should be able to double again by 2030, to reach 36% of final energy consumption.
In Europe, renewable energy is also growing, albeit at a slower pace recently than in the US and Asia. According to a new report from the European Environment Agency, Renewable energy in Europe 2017, which shows actual generation rather than just capacity, as the IRENA report does, the EU-wide share of renewables increased from 15% in 2013 to 16% in 2014 to 16.7% in 2015. This means the EU is on course to reach its target of 20% in 2020.
At Member State level, the shares of renewable energy continues to vary widely, however, as shown in this figure:
This table shows the figures in specific numbers:
RES-E = renewable electricity, RES-T = renewable transport, RES-H&C = renewable heating and cooling
What is striking is that in particular some of the North West European countries that tend to favour ambitious climate policies, still have a long way to go to reach their 2020 targets: in particular the UK, the Netherlands, France, Belgium and Ireland!
Clearly the electricity sector is furthest ahead in renewables: 28% of all electricity consumed in the EU in 2014 came from renewables. In renewable heating and cooling this was 18%, although in absolute terms this was larger than the renewables contribution in electricity. Transport has the longest way to go, with just 6% of energy use in the transport sector coming from renewables.
When we look at the contribution of different sources of renewables, we see that in electricity, hydropower and onshore wind make by far the largest contribution:
In heating and cooling, virtually all renewable sources come in the form of biomass:
In transport, biofuels are again very dominant:
According to the EEA, the progress in renewable energy since 2005 allowed the EU to cut its fossil fuel use by 11% and its greenhouse gas emissions by 10 % in 2015. “Coal was the most substituted fuel across Europe (representing roughly one half of all avoided fossil fuels), followed by natural gas (roughly 28 % of all avoided fossil fuels). The reduction in petroleum products and related fuels was less pronounced because of the lesser share of renewable energy sources in the transport sector.”
How far renewables can eventually grow as part of total energy supply is an issue that is still hotly debated. According to a new survey carried out by the UTS Institute for Sustainable Futures in Sydney for REN21 (the Renewable Energy Policy Network) found that “A majority of experts … consider a global transition to 100 percent renewable energy to be both feasible and realistic.”
Of 114 experts interviewed 35% agreed and 36% strongly agreed that “100% renewables on a global level is feasible and realistic. 17% disagreed and 12% were neutral.”
Opinion on this subject tended to cluster in regional groupings, notes the survey. “While experts from Australia and Oceania, Europe and international organisations agreed to a large extent that a 100% renewable energy future is technically and economically feasible, those from the USA and Japan generally disagreed.”
Before you jump to the conclusion that experts at least in Europe have come around to the feasibility of a 100% renewable energy system, note that only 14 European experts were interviewed, including representatives from Climate Action Network (CAN), Agora Energiewende (2), the Energy Watch Group, World Future Council (2), European Cultural Foundation, the German Federal Ministry of Economic Affairs and Energy, and Rescoop.eu, all of whom are strongly in favour of renewable energy. Plus, among others, Claude Turmes, another strong believer in the blessings of renewable energy. There were no scientists among them.
ENERGY WATCH #2 by Karel Beckman
Coal power forever
April 10, 2017
While the EU is gradually phasing out coal and shies away from shale gas, many other countries have no such intentions.
In Asia, an “unexpected renaissance” is taking place in coal power production, notes an article in The Diplomat by Grace Guo.
Guo notes that the Abe government in Japan aims to replace its nuclear reactors with 45 new coal-fired power plants – equipped, to be sure, “with the latest clean coal technology”. Coal will become Japan’s primary power source by 2019.
In India and China, coal is already the leading power source, and “it doesn’t seem that coal’s position is threatened”, writes Guo. As to the threat of air pollution, these countries tackle this by upgrading their coal power plants rather than closing them, i.e. using “supercritical” technology, just like in Japan.
“This supercritical technology has already had tangible effects on [India’s] plan to cut pollution levels as the 51 units currently installed have saved 6 million tons of CO2 — the equivalent of taking 1,267,000 cars off the road for one year.” The “coal plants being deployed in 2017 (and beyond) have little in common with the proverbial smokestacks of the 1950s and 1960s”, writes Guo. A point also made by Pieter Cleppe of Open Europe in his article for Energy Post that we published last week.
In the meantime, as Bloomberg reports, Pakistan (population 200 million) is planning to go all-out in an effort “to dig up one of the world’s largest deposits of low-grade, brown, dirty coal to fuel new power stations that could revolutionize the country’s economy.”
Bloomberg notes that the “project is one of the most expensive among an array of ambitious energy developments that China is helping the country to build as part of a $55 billion economic partnership.
A $3.5 billion joint venture between the neighbors will extract coal to generate 1.3 gigawatts of electricity that will be sent across the country on a new $3 billion transmission network.”
But the 1.3 GW is only a start. Currently, Pakistan produces virtually no coal-fired power. It has to import petroleum and LNG at a cost of $8 billion a year. But thanks “to the injection of Chinese capital and resources”, it is finally starting to develop its coal resources. “All the big industrial groups in Pakistan have already asked to give them coal”, Bloomberg reports.
In all, the Thar region where the activitity is taking place, could see 15 GW of coal power capacity get built over the next ten years.
ENERGY WATCH #3 by Karel Beckman
Carbon budget: Just four years left
April 10, 2017
With renewables growing only gradually and many countries sticking to – or expanding – coal power, it is no wonder that the world’s “carbon budget” is shrinking rapidly.
According to a new analysis by Carbon Brief, just “four years of current emissions would be enough to blow what’s left of the carbon budget for a good chance of keeping global temperature rise to 1.5C”. The analysis “brings the Intergovernmental Panel on Climate Change’s (IPCC) carbon budgets up to date to include global CO2 emissions in 2016”.
Carbon Brief explains that “the IPCC has previously laid out estimates of how much CO2 we can emit and still keep global average temperature rise to no more than 1.5C, 2C or 3C above pre-industrial levels. These are known as carbon budgets. For each temperature limit there are three budgets, each corresponding to a different probability of staying below that limit: 66%, 50% and 33%. (Strictly speaking, these aren’t probabilities, but are the proportion of all the model simulations that keep warming below that temperature limit.)”
Now that provisional data is available for 2016, writes Carbon Brief, “we can see what shape the budgets are in after another year of emissions.”
It has put its conclusions in an infographic:
So despite the fact that for the last three years, CO2 emissions from fossil fuels and cement production have grown only slowly, much more needs to be done: we need to get on a downward path.
Scientists have developed a set of four “pathways”, notes Carbon Brief, that show how emissions could develop under different scenarios. They look like this:
Carbon Brief notes that at this moment “we are tracking closest to RCP8.5”, i.e. the highest of the four. The “likely range of global temperatures by 2100 for RCP8.5 is 4.0-6.1 degrees Celsius above pre-industrial levels”.
If these scientists are right, it looks like we’re in some sort of trouble.
ENERGY WATCH #4 by Karel Beckman
McKinsey’s three energy gamechangers
April 10, 2017
You may have seen the word “gamechangers” once too many – I certainly have. But here comes McKinsey with three of them – in a research paper produced in collaboration with the world-famous World Economic Forum (WEF) in Davos. Whether these are new insights or not, I leave for you to decide.
The first: we are entering an era characterized by a “a proliferation of new energy sources”. The Industrial Revolution relied on wood, water and coal – then came oil and gas. Now, “as many as 20 new energy sources could be powering the global economy, including fuel cells; small, modular nuclear-fission reactors; and even nuclear fusion.”
This development is related to the strong growth of electricity demand, which is expected to double by the middle of the century.
The “abundant choice” raises “new dilemmas”, writes McKinsey. “For example, where should governments focus investment and research efforts? Most are minded to keep their options open for the time being in order to satisfy demand, as well as for cost and environmental considerations. Over time, though, they might have to choose. Uncertainty about how funding will be shared between new technologies could slow their development. And if technologies are in contention, governments might struggle to secure reliable energy supplies.”
One advantage, though: “Securing those supplies … will no longer necessarily depend on access to oil, gas, and coal reserves—access that has long colored geopolitics. In tomorrow’s world, access to the technologies that harness resources such as wind, sun, water, or heat from the earth’s core is likely to matter most.” (Daniel Scholten and Rick Bosman described this trend in an article for Energy Post in November 2013.)
The second: mobility will change.
“Center stage is the electric vehicle. EVs still have high upfront costs compared to conventional vehicles, but thanks in part to the falling price of batteries, they may be competitive by the mid-2020s. By the mid-2030s, our research shows they could account for between 27 and 37 percent of new-vehicle sales, depending on the extent to which regulation, technology, ride sharing, and self-driving vehicles further reduce costs and boost EV popularity.”
Here is what may happen according to McKinsey:
“Global demand for liquid fuel used in light vehicles could fall by between two million and six million barrels a day (a drop of between 8 and 25 percent), helping to make the chemical industry, not transportation, the source of demand growth for these fuels”, notes McKinsey.
For oil companies this is obviously a challenge: they “might need to rethink their strategies as a result, perhaps acquiring more acreage to support production of naphtha or natural-gas liquids—key feedstocks for chemical plants.”
There are other serious consequences: “If mobility patterns change rapidly, city planners could find themselves in a matter of years with expensive parking lots that stand empty”, notes McKinsey.
The third gamechanger I found perhaps the most interesting. This McKinsey calls this “fragmentation”.
According to the paper, “For the past half century, large players have dominated energy markets. Today, technology is spawning many smaller operators at the same time as new sources of capital emerge. Public markets and governments were once the only investors in the energy sector. But with many governments now cash-strapped, pension funds and private-equity firms are taking up the slack. In the past five years, private-equity firms invested more than $200 billion in the sector, matching new ideas and business models with capital hungry for returns. This fragmentation is diminishing the power of scale to shape markets.”
McKinsey gives several examples of this kind of “fragmentation”. In the US, a large number of small shale gas and oil producers “make uncoordinated decisions about supply, challenging the ability of the Organization of Petroleum Exporting Countries to influence prices.”
Another example: “Large utilities have to factor into their strategies the growing number of cities, businesses, and households that generate their own energy from renewables, often selling surplus back to the grid.”
“As scale in some areas diminishes in importance, agility takes precedence”, notes McKinsey. “With so many players interacting in so many different ways in so many different locations, it is harder than ever to predict the future. Billion-dollar investments in assets that must be productive for three decades or more become far too risky. Instead, companies will need to make smaller initial investments and be able to adjust their strategies rapidly as circumstances change or local conditions dictate.”
The consequence: “Local differentiation carries increasing competitive weight. In oil and gas, service providers increasingly tailor their offerings not at the country or even regional level, but basin by basin; power companies may need to consider different strategies for different cities depending on the choice of feedstock and the numbers of residents and businesses producing their own energy.”
If you think all of this is not particularly shocking, consider that it’s all free advice from McKinsey.