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Wind build-out: convergence of process and permitting rules needed to promote certainty for investors

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Wind build-out: convergence of process and permitting rules needed to promote certainty for investors

by Mike Scott, February 22, 2019

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France, single wind turbine

Two weeks ago, Energy Post reported on permitting and legal barriers to the development of onshore wind capacity in Germany. In this follow-up analysis, Mike Scott identifies similar obstacles in key regions as well as some clear success stories. To complete the picture, he spoke with WindEurope and Vattenvall to get their views on the way forward for the industry and investors across the EU.

Wind is now a major player in European energy markets, 14% of all EU power comes from wind according to latest figures. But it is being held back by difficulties in getting projects approved and legal wrangles. The industry wants a convergence of permitting practices, the ability to make use of the latest (i.e. biggest) technology and more consistent application of the rules.

Europe installed 11.7GW of gross wind power capacity in 2018, almost a third less (32%) than the previous year, according to figures released this week by industry body WindEurope.

In 12 European Union countries, not a single turbine was installed, while growth in the onshore sector in Germany more than halved, while demand “collapsed in the UK”. In fact, the body’s CEO Giles Dickson said, 2018 was “the worst year for new wind energy installations since 2011”.

While much of the decrease is due to the vagaries of the project cycle and changes to state aid rules, the market is still hampered by policy and permitting barriers in a number of markets, said WindEurope sustainability analyst Mihaela Dragan. These include:

  • In Poland and Bavaria, developments must be a minimum of 10 times the height of the tip of the blade from the nearest houses. With the newest turbines having a tip height of around 240m, it “effectively rules out developments in these areas”. Since the rule was introduced in Poland in 2016, there has been no more than 50MW of capacity installed, she adds.
  • In Italy, the distance is six times the tip height, while in Denmark and Wallonia in Belgium, it is four times tip height.
  • In a number of markets, including the UK and France, there are restrictions related to aviation, including military training flights. In the UK, tip height is limited to 120m, which places a real limit on technological development and makes projects less cost-effective, because they cannot generate as much energy as taller turbines.
  • The French market has virtually ground to a halt because the Conseil d’Etat, the highest administrative jurisdiction in France, in December 2017 annulled a decree giving the regional prefect authority for issuing environmental permits needed to build new wind farms. The market is waiting for a decree, which the government has promised, to establish an authority to deliver permits, but it has not happened yet. The lead time for wind projects in France is 6-8 years, double the European average.
  • In Germany, the permitting process has been getting longer and it can now take more than two years to win approval, up from 10 months just two years ago. And when projects are approved, a growing number are being dragged into court cases around issues such as community opposition, as well as noise and landscape legislation, which creates delays in the permitting process. At least 750MW of wind projects are currently involved in court cases.

These issues are having a knock-on effect on the market – Germany’s last three onshore auctions have been undersubscribed.

“It’s clear the permitting process is not fit for purpose. It’s taking longer and longer to get a permit. And even if wind farms do get a permit, many then get caught up in legal disputes, which is pushing up costs. The German government needs to take urgent action to make permitting easier. And the Bundesländer need to identify appropriate new zones for onshore wind. If they don’t, auctions will continue to be under-subscribed, and prices will remain higher than they should be. And this will jeopardise Germany’s target of 65% renewables in electricity by 2030,” said Dickson.

Permitting can be a challenging and expensive process, agreed Tobias Nylander, head of the onshore wind development team at Vattenfall. “In several European countries permitting is becoming increasingly difficult and we see many examples where the permit process puts national renewable targets at risk.”

Tip height rules reduce opportunities for innovation, he added. “To enable growth in renewables as cost efficiently as possible, permits need to be given for projects with attractive fundamentals, such as high wind speeds and the ability to build modern technology with high total heights.”

Each market has its own permitting system, “which we think is needed to reflect local need, culture and priorities,” said Nylander. “However, there is good practice in different markets (e.g. in regard to process and flexibility in permits) and if adopted would lead to a degree of convergence across the EU which would promote certainty and confidence among investors and enable a successful build-out of renewables.”

It is not all bad news – in Poland, for example, the tip height rule will be waived if the local community is in favour of the development, according to the Polish Wind Energy Association, while in France, the defence ministry has released a number of flight training zones so wind farms can be sited there.

“The vision of the wind industry for the next few years is optimistic,…installation forecasts for wind power are approximately 2000MW a year.” AEE president Rocio Sicre

The French government has also reformed its appeals process, removing entirely one of the three stages of the process in a move that could reduce the time taken for an appeal by a year and a half.

And, after years in the doldrums, the Spanish market has roared back into life with the recent announcement by trade body Asociacion Empresarial Eolica (AEE) that 4.6GW of capacity will be installed by 2020.

“The vision of the wind industry for the next few years is optimistic,” AEE president Rocio Sicre said. “Installation forecasts for wind power are approximately 2000MW a year.”

It’s important not to lose sight of the fact that wind energy provided 14% of the EU’s electricity last year, up from 12% in 2017, according to WindEurope. And with a total installed capacity of 178.8 GW in the EU, it remains the second largest form of power generation capacity in the EU-28, and it is likely to overtake natural gas in 2019. A record number of projects were financed with 16.7GW of projects reaching Final Investment Decision, 4.2GW in offshore and 12.5GW onshore, with a total value of €26.7bn, a 20% increase on the year before, according to WindEurope.

Another plus is new EU legislation that will make it easier to repower projects where turbines are coming to the end of their lives.

This could have a significant impact on the market as the first wind farms reach the end of their 15-20-year lifespan. WindEurope says that the repowering market, which was worth 1GW-2GW in 2017, could rise to between 5.5GW and 8.5GW by 2027.

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Nike enters the race for renewables investment as governments step back

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Nike enters the race for renewables investment as governments step back

by Mike Scott, February 14, 2019

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Costs of developing clean energy capacity are falling and the industry is moving from being supported mainly by state subsidies to a more commercial footing where projects are supported by corporate backing, with EU, national or regional targets providing a foundation for the market.

The US sportswear giant Nike has signed its first power purchase agreement (PPA) for renewable power in Europe, committing to buy 40MW of wind power from a 111MW Iberdrola project in Navarra in Spain.

The deal shows how corporate demand for clean energy and state and regional decarbonisation targets are coming together to drive the market for renewables. Nike’s move is driven by its membership of RE100, the campaign to get companies to go completely renewable and follows its switch to 100% renewable electricity in the US a year ago.

Navarra, meanwhile, is a member of the Under2 Coalition, a group of state and regional governments that have introduced climate targets both to cut emissions and to boost their economies. Some 81.1% of the region’s electricity demand is currently covered by renewables, and it has established itself as a European leader in wind power innovation. Encouraging private investment in renewables is part of Navarra’s roadmap for growing the industry further.

It has recently seen the construction of the world’s tallest onshore steel turbine tower, a “self-erecting” prototype that uses hydraulic jacks rather than cranes. Developer Nabrawind says the system could cut the costs of installing turbines on land by 20%.

The Navarra PPA means that three quarters of the company’s global power supplies are renewable and shows how commitments made in one market are percolating through to the rest of the world.

Mike Peirce, Corporate Partnerships Director at The Climate Group, said: “We’re thrilled about Nike’s news – this is a powerful illustration of how RE100 members are investing at scale and accelerating the global shift to clean energy.

“By committing to source electricity from a new wind project in Spain, Nike is growing its own renewables portfolio as well as supporting construction of new projects to power local homes and communities – generating benefits on all sides.”

Corporate PPAs are now a major part of the market, as Bloomberg New Energy Finance (BNEF) highlighted recently. Companies signed contracts for 13.4GW of renewable capacity in 2018, more than double 2017’s 6.1GW, putting them alongside utilities as the biggest buyers of clean energy globally. The market is growing at a tremendous rate, said Jonas Rooze, head of corporate sustainability for BNEF. “Corporations have signed contracts to purchase over 32GW of clean power since 2008, an amount comparable to the generation capacity of the Netherlands, with 86% of this activity coming since 2015 and more than 40% in 2018 alone.”

While most of the contracts were in the US, PPAs in Europe doubled too, from 1.1GW to 2.3GW. The US has dominated sales because the corporate PPA sector was pioneered by large tech groups such as Facebook, Amazon, Apple, Netflix and Google. These companies are very keen to present themselves as sustainable, but they use far more energy than is commonly realised, to power energy-hungry data centres. Facebook alone accounted for more than a quarter of the US market, buying more than 2.6GW of capacity globally.

But the market is starting to broaden as other sectors get involved, and smaller companies that were previously locked out of the market join forces to buy clean power. ExxonMobil became the first oil major to sign a renewables deal, while sectors from retail to

Bloomberg itself teamed up with Cox Enterprises, Gap, Salesforce and Workday to form the Corporate Renewable Energy Aggregation Group, the first example of companies combining their relatively small energy demand to enable them to act as the anchor tenant for a large offsite renewable energy project. The move “lays the groundwork for other corporates to procure renewable energy co-operatively, maximizing value and reducing risk,” the group says.

“Historically, a lack of transparency, high costs and little flexibility meant only a select group of Fortune 500 buyers with immense resources could participate in this type of transaction. Kudos to these buyers for their vision and commitment toward not only impacting their own carbon goals, but also toward paving the way for many others,” said Bryce Smith, Chief Executive Officer of LevelTen Energy, which helped with the transaction.

There is a feeling that the European market is just taking off – companies signed PPAs for the first time in Poland, and just the second time in Denmark and Finland, BNEF pointed out, with new deals signed in the UK, following a lull after the expiration of a national subsidy programme. “Several requests for proposals and changes in policy suggest burgeoning new markets in Germany and France as well,” BNEF added. Denmark and Finland saw their second-ever deals.

Most of the PPAs in Europe in 2018 were for wind energy. The Nordic region led the way, thanks to strong wind resources and credit support from government bodies. Aluminium producers Norsk Hydro and Alcoa were the biggest clean energy buyers in Europe in 2018, while the tech giants Facebook, Amazon and Google were also significant buyers.

Industry body WindEurope said that 1.5GW of new wind PPA deals were signed, and that interest is spreading to other sectors, with Mercedes-Benz striking the first wind PPAs in the auto sector last year to power its electric vehicle and battery manufacturing operations in Poland and Germany, while pharma, chemicals and steel companies also signed deals.

Further south, the solar PPA market is thriving, too. Irish investment firm WElink Investment Holdings has just signed the world’s largest private solar PPA, for 708MW of capacity being developed by Audax Renovables in Portugal and Spain.

Corporate demand for renewables is predicted to continue to be strong, thanks to the continuing fall in the price of renewable energy, the rise of decentralised energy and smart grids and, most importantly, the growth of initiatives such as RE100 and the Science Based Targets Initiative.

BNEF calculates that RE100 signatories bought an estimated 189TWh of electricity in 2017, equivalent to Egypt’s electricity consumption. The research group estimates that they will need to buy an additional 190TWh of clean electricity in 2030 to meet their RE100 targets. Should this shortfall be met with offsite solar and wind PPAs, it would catalyse an estimated 102GW of new solar and wind build globally, greater than the size of the UK’s power generation fleet in 2017.

“These initiatives have created an entire new universe of opportunity for utilities, clean energy developers and investors,” said Rooze.

***

Sources: BloombergNEF, Bloomberg Terminal, The Climate Group, company sustainability reports. Note: Charts are for RE100 members that have disclosed electricity demand. Certificate purchases includes non-U.S. green tariff programs, and are assumed to step down 10% each year. Onsite generation and contracted wind and solar purchases are assumed to remain flat through 2030. Regional breakdown of shortfall estimated based on each company’s share of revenue by region.

Further reading on PPA https://globalrenewablehub.com/ Brookfield Renewable

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EU can help bring far-ranging benefits of a meaningful energy transition

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South East and Eastern Europe: Part II

EU can help bring far-ranging benefits of a meaningful energy transition

by Komila Nabiyeva – February 11, 2019

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In Part 1 of this special report, Komila Nabiyeva demonstrated how investment conditions in South East and Eastern Europe, South Caucasus and Central Asia make it almost impossible to justify development of renewables infrastructure on any great scale. That being the case, she calls on the EU to play a greater role. Their initiatives are already making a difference. This is encouraging because it shows that with more EU engagement, a more meaningful energy transition is possible. As well as getting the region on the road to Paris targets, that would help solve their pressing energy security and health issues, boost economic growth and contribute to democratisation and peace building.

Background

Energy infrastructure in the countries of South East and Eastern Europe, South Caucasus and Central Asia is largely inherited from the Soviet era. This has led to fossil-fuel based monopolies where policy-makers and energy industry see little advantage in creating the conditions for a transition to renewables.

High fossil fuel and nuclear subsidies (including the complete over-looking of the cost to health and the environment) going hand-in-hand with artificially low electricity prices hinder investments in renewables capacity and infrastructure. As a result, the region as a whole is missing out on a whole raft of fundamental long-term economic, environmental and health benefits.

Benefits of an energy transition

An energy transition would be extremely beneficial from social, economic and political standpoints, and a number of drivers and opportunities could foster the process.

The region remains extremely dependent on fossil fuels and nuclear in its total primary energy supply (see figure 1). Most countries are net energy importers, heavily dependent on oil and/or gas imports. (For instance, in Armenia, Belarus and Georgia net energy imports account for over 60% of total energy use and in Moldova as high as 90%.) The deployment of renewable energy and energy efficiency measures could help solve pressing energy security and energy poverty issues.

Meanwhile, the economies, heavily dependent on revenues from local fossil fuel energy production (e.g. Russia, Azerbaijan and Kazakhstan) can increase their resilience to external shocks, such as volatile oil prices, by diversifying their energy supply.

Power generation, transmission and distribution infrastructure across the region is poorly maintained and often operating beyond its design life. In the coming years, many countries will have to replace their aging and inefficient fossil fuel and nuclear energy infrastructure (operating beyond its design-life), opening up a great opportunity for advancing the switch to clean energy.

In 2013, about 37 million emigrants came from countries in this region[1] – 16% of all international migrants in the world and nearly 10% of the total population in the countries of origin. Investment in renewable energy will create new domestic jobs, helping slow the rising rural depopulation, labour emigration and brain drain.

Deployment of decentralised renewable energy could also help to significantly advance the democratisation process. Investments and support for renewable energy projects by energy cooperatives, communities and citizens can help significantly to reduce oligopolistic control of large conventional power plants and levels of corruption.

An effective transition would help to dramatically reduce air pollution and to solve numerous health and environmental problems in the region, resulting from fossil fuel and nuclear energy generation. For instance, coal power plants in five Western Balkan countries are among the most polluting in Europe, causing about 7,200 premature deaths per year. Depending on weather and wind conditions, air pollutants can travel more than 1,000 km and cause damage to health in neighbouring EU countries and beyond.

Last but not least, renewable energy deployment can foster regional cooperation through the expansion of interconnection capacities to neighbouring countries and cross-country trade and help to end conflicts over limited and unevenly distributed fossil fuel energy and water resources.

EU engagement

Until the conditions for renewables investment are addressed in the region, its neighbours in Western Europe and the rest of the world cannot expect much in the way of a contribution to global efforts to reduce greenhouse gas emissions.

EU engagement is especially important in light of China’s controversial “Belt and Road” initiative which includes plans on construction of new coal power plants across the region. These would lock the countries into coal assets for decades, further damaging people’s health and the environment, and aggravating climate change.

It should focus on know-how transfer and dialogue on favorable sustainable energy legislation and investment climate, as well as technical capacity-building on integration, planning and operation of renewable energy.

With the targeted and concerted technical and financial cooperation of the EU and other international organizations, the countries in the region could significantly accelerate their currently slow pace of energy transition, improving their own social-economic situation and contributing to global efforts to stop global warming.

Part one: Subsidised fossil-fuel power blocking the way for renewables

***

This article is based on the report “Energy transition in South East and Eastern Europe, South Caucasus and Central Asia: Challenges, opportunities and best practices on renewable energy and energy efficiency”, published by the Friedrich-Ebert-Stiftung in December 2018. http://library.fes.de/pdf-files/id-moe/14922.pdf

About the author: Komila Nabiyeva is a freelance journalist, reporting on climate change and energy issues. She has worked as a communications consultant, moderator and trainer and has organized workshops on climate and energy issues for the United Nations and other organizations. Currently, she is coordinating the work of the Energy Watch Group, an international network of scientists and parliamentarians.

  1. The figures refer to the entire region covered in the article plus Turkey and Israel. ↑
Graphic produced for and first printed at the publication of the Friedrich-Ebert-Stiftung: Nabiyeva, Komila (2018): Energy Transition in South East and Eastern Europe, South Caucasus and Central Asia Challenges, Opportunities and Best Practices on Renewable Energy and Energy Efficiency

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Subsidised fossil-fuel power blocking the way for renewables

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South East and Eastern Europe: Part I

Subsidised fossil-fuel power blocking the way for renewables

by Komila Nabiyeva – February 8, 2019

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Multimillionaire Vasyl Khmelnytsky (L) passing solar panels of the UDP Renewables power plant in Kyiv Oblast - Photo: Kostyantyn Chernichkin

Right on the border with Western Europe, countries in South East and Eastern Europe, South Caucasus and Central Asia have enormous potential for renewable energy, but it remains largely untapped. A stark contrast to the situation a few kilometres further North and West. The region’s fossil-fuel and nuclear subsidies are among the highest in the world. The subsidies and accompanying low electricity prices translate to an unrealistic cost of capital (along with other major barriers) discouraging investment in clean energy. In Part 1, Komila Nabiyeva explains the barriers to, and possible drivers for, a meaningful transition in the region.

Background: the region’s renewables facts

During 2015 and 2016, the region[1] – spanning over 18 countries and home to over 300 million people – added just over 2GW of additional renewable power capacity, with hydropower accounting for 70% of these additions. By comparison, Germany installed 5GW of onshore wind energy in 2016 alone. By the end of 2016, total installed renewable power capacity in the entire region reached 85GW, less than in Germany with 104GW.

Several countries in the region have historically high shares of hydropower. With large hydropower (over 10 MW) included, shares of renewables in total final energy consumption vary from less than 5% to up to 45% (see Figure 2). Yet, including large hydropower does not show the real dynamics and new developments in the sector. The share of renewables excluding large hydropower barely reaches 3%, with only Armenia and Macedonia reaching slightly over 4% (see Figure 3).

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Graphic produced for the Friedrich-Ebert-Stiftung


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Graphic produced for the Friedrich-Ebert-Stiftung

Barriers

Most countries of the region have inherited energy supply infrastructure from the Soviet era, characterised by strong centralisation and monopolies as well as large-scale and inefficient generation facilities. The centralisation of a fossil-fuel based energy industry makes it much more prone to corruption than decentralised renewable energy. In many cases, government officials have a vested interest in existing business structures and see no advantage in changing the status quo.

Accordingly, high fossil-fuel and nuclear energy subsidies lead to artificially low energy tariffs which significantly reduce the competitiveness of renewable energy and discourage investment.

Subsidies

Energy subsidies to both fossil fuel production (through direct spending, tax reduction and exemption, credit subsidies to energy producers and utilities) and to consumption (through tariffs for electricity, heat and fuel for industry and households below their cost-recovers) as a percentage in the region’s GDP is one of the highest in the world, with 61% in Ukraine, 37% in Bosnia and Herzegovina and 35% in Serbia. These percentages are particularly high due to the fact that no charges are levied against the polluting effects of burning fossil fuels.

Chart: IMF, OECD

Electricity prices

Although some countries have started addressing the problem, electricity prices for households in the region are much lower than the EU average of 0.2 EUR per kWh. The highest, Montenegro, is half what is paid in Western Europe, the average is around a quarter (see Belarus) right down to 0.009 EUR per kWh in Kyrgyzstan:

Source: Author’s compilation based on Eurostat, 2018 and Climatescope, 2017

Tariff increases are a very sensitive topic for the population. But elimination of fossil-fuel subsidies, combined with targeted social assistance and compensation mechanisms, would release financial resources for targeted support for vulnerable social groups as well as for health care and energy efficiency.

Cost of capital for renewables

The investment climate in the region remains insecure due to unstable regulatory frameworks as well as complex administrative procedures and regulations on permits and licensing leading to long project development periods and additional transaction costs. This translates into high costs of capital for renewable energy technology.

At current cost of capital levels, investments in renewables in the Western Balkans (for example) can cost up to twice as much as in Germany or France. As a result, almost all recent utility scale renewable energy projects – such as solar and wind farms in Kazakhstan and wind farms in Georgia and Serbia – were only possible with the financial backing and guarantees of the European Bank for Reconstruction and Development (EBRD).

Following years of criticism for financing fossil fuel projects in the region, the EBRD started greening its portfolio in the last years. In 2018, it finally announced plans to stop financing coal and most of oil projects, as part of global efforts to combat climate change.

Meanwhile, high risk perception also leads to very limited access to affordable capital for individual investors, farmers and communities. As a rule, municipalities, often more interested in local energy efficiency measures, have extremely limited budget for retrofitting buildings. Several countries, e.g. Ukraine and Bosnia and Herzegovina, have started to address this issue through specialised funds with the support of international donors.

Opportunity

With targeted support, countries of the region could overcome numerous barriers to the energy transition. A mechanism for the countries of South East Europe – the European Renewable Energy Cost Reduction Facility, which aims to lower the financing costs for renewable energy – is currently under discussion. Increased financial support and the introduction of de-risking and financing mechanisms would help to decrease the cost of capital and enable access to affordable finance.

Programs supporting research and education on renewable energy and energy efficiency, capacity-building and exchange of best practices, would help to increase public awareness and support.

Last but not least, regional cooperation and interconnectivity could significantly facilitate the integration and balancing of renewables in energy systems. Across the region, numerous interconnections between power grids were established across national borders during the Soviet era. The existing infrastructure could be re-established and improved, which would help to overcome many of the technical challenges of renewable energy deployment.

Currently, the EU, with its associated programs, is the most significant driver across the region. A number of highly promising initiatives by the EU and IRENA[2]already exist. It is my opinion that the EU should step up its support further, in keeping with global efforts to tackle climate change, and aided as the costs of renewables continue to fall too.

Until this deeply entrenched systemic problem is addressed, it remains a fundamental barrier for renewables in the region.

Part 2: EU can help bring far-ranging benefits of a meaningful transition

***

This article is based on the report “Energy transition in South East and Eastern Europe, South Caucasus and Central Asia: Challenges, opportunities and best practices on renewable energy and energy efficiency”, published by the Friedrich-Ebert-Stiftung in December 2018. http://library.fes.de/pdf-files/id-moe/14922.pdf

About the author: Komila Nabiyeva is a freelance journalist, reporting on climate change and energy issues. She has worked as a communications consultant, moderator and trainer and has organized workshops on climate and energy issues for the United Nations and other organizations. Currently, she is coordinating the work of the Energy Watch Group, an international network of scientists and parliamentarians.

Many thanks to the Friedrich-Ebert-Stiftung for the use of the graphics which were produced for and first printed at the publication of the Friedrich-Ebert-Stiftung: Nabiyeva, Komila (2018): Energy Transition in South East and Eastern Europe, South Caucasus and Central Asia Challenges, Opportunities and Best Practices on Renewable Energy and Energy Efficiency

  1. The following regions and countries were covered by the research: South East Europe (Albania, Bosnia and Herzegovina, Kosovo, FYR of Macedonia, Montenegro and Serbia), Eastern Europe (Belarus, Moldova, Russia and Ukraine), South Caucasus (Armenia, Azerbaijan and Georgia) and Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan). ↑
  2. In 2016–2017, IRENA launched two very promising regional initiatives on South East Europe and Central Asia, which should help to accelerate the uptake of renewable energy in the regions by providing support to policymakers and investors. See https://www.irena.org/europe/South-East-Europe-Regional-Initiative and https://www.irena.org/asiapacific/Central-Asia-regional-initiative ↑

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Lithuania shows way to integrated EU energy future

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Renewables without borders

Lithuania shows way to integrated EU energy future

by Eric Marx

February 5, 2019

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The iconic gandras (stork), common in Lithuania, with electricity flowing in the distance

Elektrenai (“Electricity City”), Lithuania

As Lithuania and the Baltic Nations turn away from nuclear power and towards increased solar and wind energy production, one city is shifting towards a new energy future.

Elektrenai, or Electricity City, once powered an entire nation. Its three, soaring red-and-white smokestacks were its pride and joy, and heralded in popular songs and propaganda films. The city around the power plant was built to house the workers who ensured enough oil and gas was burned to keep Lithuania’s lights on night and day.

These days, Lithuania and its neighbours have a different vision of the future: One built on clean, green renewable power.

Elektrenai’s mayor, Kestutis Vaitukaitis, has long wanted to develop the city’s lakeside area into a tourist destination. The smokestacks clearly visible from his office window – and from vehicles arriving on the state’s main two-lane highway – aren’t your typical resort view. But Vaitukaitis says the power plant’s largest and oldest smokestacks are too costly to maintain and will be torn down next year.

A shift to cheaper, greener energy sources – chiefly renewable power imported from the Nordic countries and domestic biomass – means the last two oil-fired thermal blocks will soon retire.

Likewise, the plant’s modern 450-megawatt gas turbine – installed in 2012 at a cost of €329 million – will be relegated to backup generation for grid-system operators in the Lithuanian capital of Vilnius.

Elektrenai will rely on the plant’s new biomass boiler for domestic heating, but its electricity will no longer be home-grown, something many locals struggle to accept.

The mayor admits most of Elektrenai’s 14,000 residents are against demolishing the plant. For the older generation who spent their working lives there, he attributes this to “nostalgia for the Soviet times of their youth when, with your own hands you built something.”

Younger people argue that gas is a relatively clean source of power. If the smokestacks aren’t pumping out pollution any more, they don’t see the need to tear down the city’s iconic landmark. Yet as a symbol of fossil fuel, they no longer fit with the country’s image.

Cities like Elektrenai are at a crossroads moment, argues the mayor. A future built on a diverse array of green energy flows is coming. The blueprint is now self-evident. The only question is how fast they can get there.

Fast energy flows

Lithuania is remaking itself into a corridor for power flows, stretching from Finland and Sweden to the Central European countries via Poland. The small country is at the heart of one of the best-interconnected regions in Europe, with cross-border gas pipelines and electrical transmission cables setting a model for the European Union’s goal of a barrier-free continental energy system.

Lithuania is remaking itself into a corridor for power flows, stretching from Finland and Sweden to the Central European countries via Poland

After six years’ debate, Lithuania passed in June a national energy strategy considered by analysts to be among the most progressive in Europe. The country is aiming to have 45% of its final energy consumption by 2030 come from renewables, joining several other countries — Spain, Sweden, Italy and Portugal – that are pledging to surpass the EU-wide 32% renewables target.

Significantly, the strategy excludes any mention of nuclear energy, ending a fractious debate which had split the political class ever since the closure in 2009 of its Soviet-era Ignalina nuclear plant.

Analysts say Lithuania is responding to the falling cost of wind and solar technology, as well as hefty EU investment in the region’s cross-border interconnectors. Renewables are expected to grow to 7 TWh by 2030, and to 18 TWh by 2050, with wind energy covering between 50 and 55 percent of this.

It has also been helped by a booming domestic bioenergy industry which relies on wood burning for upwards of 70% of the country’s heat production.

That Lithuania burnishes its green credentials by relying on large biomass numbers for fuel heating is not without controversy.

Wood for biomass

Environmentalists charge the government with allowing clearcutting of old growth forests which are then replanted with fast-growing plantation trees. Yet only 10% of woods sold on the market are for biomass, according to Lithuanian NGO Miskas. Rather, most of the country’s deforestation is tied to wood product manufacturing, said Marija Dabrisiute, a forest campaigner at Miskas

Going forward, wind is to be Lithuania’s main source of electricity, while any increase in renewable heat is to come from a number of new technologies, including solar heating, heat pumps, municipal waste heat and possibly surplus wind power.

The government also believes it can create a favorable climate for investment in rooftop solar, according to Martynas Nagevicius, president of the Lithuanian Renewable Energy Confederation (LREC). The goal is to incentivise half a million electricity consumers to get involved in green power generation, either feeding power back on to the grid from home photovoltaic installations through a “prosumer” scheme, or by joining energy cooperatives.

“it’s a really crazy good environment to increase variable power production like wind and solar.” Martinas Nagevicius, President, LREC

Nagevicius says this will be possible because of Lithuania’s modernising infrastructure. New cross-border transmission lines are a big part of the story, but so are investments in new transformers and district heating systems, as well as the launch of a floating liquified natural gas (LNG) terminal in the port of Klaipeda.

“We can both balance power and supply power to Norway [via Sweden], and take it back from Norway when we need it, and to Poland and back,” said Nagevicius. “That is a really crazy good environment to increase variable power production like wind and solar.”

Fast forward to 2025

Still there are several major hurdles that lie ahead.

While Lithuania and the other Baltic states are fully integrated into the Nordic power market in terms of electricity trading, their physical grids remain a part of the Russian power system. Moscow central dispatch still influences Baltic power flows.

Consequently, full integration to the European electricity grid requires the cutting of all transmission lines to Russia, Belarus and Kaliningrad, a process known as desynchronisation. Also looming ahead is the completion of an additional gas line to Poland and a substantial increase in wind generation.

Such a boost in renewables will require increased backup, either in the form of batteries or balancing services offered by gas turbines that can be turned on or off in a matter of hours. Smaller, more flexible gas engines are the future, but larger units like the one in Elektrenai can also play a role.

Modernising and expanding the Kruonis Pumped Storage Plant into a giant battery is another option, said Dominykas Tuckus, chairman of the advisory board at Lieutovos Energjija, the operator of both the Kruonis and Elektrenai Power Plants.

“Our main asset is that a big part of the system for balancing renewables has already been constructed,” added Tuckus, a reference to the Russian-built Kruonis and Elektrenai plants.

Staring the Baltic region in the face is the 2025 deadline set by the European Commission for synchronisation with the European electricity grid. The true test lies ahead, with a diminished, secondary role already set for Elektrenai.

***

Article commissioned by the Robert Bosch foundation

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Germany: wind installation growth beset by legal challenges

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Germany: wind installation growth beset by legal challenges

Quick reads

February 5, 2019

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2017 anti-wind turbine campaign sticker

According to the German wind industry, new installations have ground to a halt due to a combination of red-tape holding up licences and because “almost every authorisation is sued”.

A joint statement by the German Wind Energy Association (BWE) and VDMA Power Systems (the trade association for power systems) has called on the government to streamline licensing procedures and eliminate administrative barriers to new turbines, otherwise the number of new installations will continue to drop. Already, Germany’s target of 65% of electricity generated by renewables is now in danger, they say.

According to figures provided by Deutsche WindGuard, the gross addition of wind turbines over the full 2018 year have virtually collapsed. At only 2,402 MW and 743 units, the number of new builds is still behind the level of 2013. It is also a decline of 55% compared to the full 2017 year. It is therefore well below the industry’s target of 3,300 MW for the year. This is despite demand for renewable electricity increasing in the future.

“The stop-and-go must be ended” – Matthias Zelinger, MD, VDMA Power Systems

Wind is essential for the new 2030 targets

The industry points out the contradictions between Germany’s exit from lignite and hard coal. “The stable expansion [of wind] over the years 2013 to 2017 has supported the German government’s climate protection goals and the expansion targets for renewable energies in the federal states,” said Matthias Zelinger, MD of VDMA Power Systems. Referring to the country’s new 65% target for renewable electricity by 2030, he added: “It is self-explanatory that the Federal Government’s 65% target cannot be achieved by continuing the currently foreseeable annual expansion by 2030.”

Legal challenges to turbines are growing

BWE says one main reason for the low expansion is the high surcharges for projects that get stuck after receiving a permit. Why the delays? Because “almost every authorisation is sued,” says the press release. These persistent legal challenges, along with the administrative hurdles, mean projects are taking more and more time to implement. This lack of certainty is scaring off suppliers.

Not enough permits

The Wind Energy Association also calls out some federal states for not issuing enough permits anyway. They named Bavaria, Saxony-Anhalt, the Saarland and Schleswig-Holstein. “In order to ensure sufficient competition, the licensing backlog in the countries must be reduced. All participants must create the conditions for more permits,” said Wolfram Axthelm, MD of the Wind Energy Association.

What’s the answer?

The industry wants the permit process simplified, and some form of legal guarantee that all obstacles to installation are cleared before suppliers commit to new wind installations. Otherwise Germany will not hit its renewables targets, and also lose its place as a leader in the wind turbine export markets.

Background: Germany wants to lead Europe in wind power

Germany has led Europe for many years in this sector. The CLEW factsheet says its gross expansion was about 5,300 MW up to 2017. That year, onshore wind power fed about 85 TWh of electricity into the grid. By mid-2018, about 29,070 onshore turbines were in operation across the country. Onshore wind turbines generated about 15% of Germany’s power mix in the first half of 2018, making them the single most important renewable energy source by far.

Technological progress

Due to the high concentration of wind power in northern states, Germany’s Federal Network Agency (BNetzA) rated the country’s coastal regions and hinterland as the ideal place for turbines. However, growing turbine efficiency has allowed regions with weaker average wind conditions further inland to catch-up, especially in central western and eastern German states.

The turbines’ average size has also grown considerably over time. With a diameter of almost 110 metres, the typical modern onshore wind turbine rotor in Germany is nearly twice as big as it was at the beginning of the century, rests on a 130 metre high tower and pours out 2.8 kW. At the same time, new installations can produce more energy at lower rotation speeds, making them less noisy. That’s why replacing old with new is part of the installation strategy: about 15% of wind power capacity added in 2016 was “re-powering”, where more efficient installations replaced older models at the same location.

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Africa and renewables: the international partnerships bringing 300GW potential to life

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Africa and renewables

The international partnerships bringing 300GW potential to life

by Mike Scott – 19/01/19

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Gaining access to energy is vital for Africa’s people and national economies so tapping their vast potential for renewables is the obvious solution both for them and the climate. The challenge, as ever, is funding. To solve this, African nations are striking up international partnerships in a bid to unleash the full power of their phenomenal natural assets.

Energy is crucial to lift people out of poverty. The International Energy Agency says the number of people globally without energy fell below 1bn for the first time in 2017 which is great but most of those that still lack it – some 600m – are in sub-Saharan Africa.

The continent needs $60bn-$90bn of investment a year to address its energy shortfall, according to the Economist Intelligence Unit. It also needs to wean itself off fossil fuels and install more renewable capacity (see my article from Jan 18)

Size of the challenge

According to World Bank figures, just 42% of households are electrified, with some countries having less than a tenth of homes connected. It’s even worse outside the cities – while 71% of those living in urban areas are connected only 22% of rural households are.

Even when there is power, it is often unreliable and expensive. One reason for the region’s slow progress in increasing access to electricity is the cost of building the necessary infrastructure – not just power stations but transmission networks and sometimes even roads to places that are often inaccessible.

Size of the opportunity

The African Renewable Energy Initiative, led by institutions including the African Union and the UN Environment Programme, aims to have 300GW of renewable energy capacity installed by 2030. The Initiative says that it “envisions smart, distributed energy systems that can handle a mix of renewable energy generation. This will enable Africa to leapfrog to the energy systems of the future.”

For this target to be met, deployment rates will have to increase almost seven-fold. And for that to happen, there must be effective regulation, sufficient financing and the right business models. That’s the challenge.

The continent has an opportunity to catch up with the rest of the world while avoiding the greenhouse gas emissions that accompanied development in the past.

Solutions – off-grid options make most sense

Hydropower, which represents the largest share of current installed capacity can be vulnerable to the effects of climate change, such as droughts, so it’s important to diversify.

Advances in renewables and storage technology, accompanied by dramatic cost reductions, mean that off-grid projects are more viable and effective than the cost of building out full grid infrastructure. Research group BNEF reports that a ”combination of high electricity tariffs, falling PV prices and a lack of reliability in the grid is spurring sales of on-site solar to business customers in Sub-Saharan Africa”.

On-site solar power is cheaper than the electricity tariffs paid by commercial or industrial clients in seven out of 15 markets in Sub-Saharan Africa that BNEF studied. “While the market is still small, it has great potential,” explained co-author Takehiro Kawahara, lead frontier power analyst at BNEF. “An immense energy deficit and crumbling infrastructure makes Sub-Saharan Africa fertile ground for solar. The most promising markets are Nigeria, Ghana, Kenya, Cameroon, Uganda, Senegal and Rwanda.

Getting the job done: an international affair

In many markets, it remains difficult to finance projects locally, particularly larger-scale schemes. In part, this problem is being addressed by funding from western governments as well as multi-lateral agencies and banks working in partnership with national bodies and energy companies.

Major projects contributing to realisation of 300GW potential

  • At the COP24 summit in December, the UK government announced £100m investment to support up to 40 new renewable energy projects in the region over the next 5 years. The new funding could unlock an extra £156m of private finance into renewable energy markets in Africa by 2023, the UK says.
  • The US Power Africa Initiative has committed $7bn to provide 30GW of energy capacity in the region, with 9.5GW funded so far, much of it in transmission assets.
  • The World Bank’s Multilateral Investment Guarantee Agency (MIGA) has just provided guarantees to EDF International and STOA, a French infrastructure investment vehicle that focuses primarily on Africa, to invest in the Nachtigal Hydropower Company. The International Bank for Reconstruction and Development and the International Finance Corporation also provided support.
  • The African Development Bank (AfDB) has just invested $25m in the ARCH Africa Renewable Power Fund, a $250m private equity fund for renewable energy projects across Sub-Saharan Africa, with a view to catalysing a further $60m-$75m in funding.
  • A $1bn Renewable Energy Facility for sub-Saharan Africa by the African Trade Insurance and European Investment Bank
  • BNEF reports that one of 2018’s biggest solar projects was a $2.4bn 800MW PV and solar thermal portfolio in Morocco
  • The 706MW Enel Green Power South Africa portfolio, at an estimated $1.4bn, was one of the biggest onshore wind financings, part of the country’s 40-fold increase in renewable energy investment to $4.2bn

The key to the continent realising its enormous clean energy potential is attracting private capital. And the main factor that will facilitate that is reducing risk for investors. But there are so many risks in Africa – around governance, rule of law, politics, poverty, currency fluctuations, the weakness of many economies and a lack of infrastructure – that many investors are reluctant to get involved. Transaction costs are therefore higher, and projects are consequently smaller. That’s why, according to the International Renewable Energy Agency, the average share of public investment during 2009-2016 in Africa was 56%, much higher than the global average (12-16%).

“Energy investments in Africa are constrained by limited [supply of] well-structured, bankable projects, as well as by unavailability of risk capital. Renewable technologies require additional support to be fully competitive over fossil fuel-based energy generation,” said Amadou Hott, the Bank’s Vice-President for Power, Energy, Climate Change & Green Growth, when he announced the Bank’s $25m ARCH investment.

But, he told CNBC Africa last year, “closing the gap on Africa’s energy challenges presents major opportunities for investors keen on engaging with the continent.”

Bringing projects to fruition means working with companies and banks from around the world. As long as those partnerships are as sustainable as the energy produced, the future looks pretty good.

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Desert solar: the race to build the world’s biggest farm

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Desert solar: the race to build the world’s biggest farm

by Arasan Aruliah

January 29, 2019

When solar power was first conceived decades ago, the obvious locations for the farms were the world’s great deserts. Sure enough, the biggest farms are being built there.

In Egypt, the Benban Solar Park will produce enough electricity to power one million homes. It’s located in Egypt’s Western Desert, a sea of rock and sand that has been uninhabited for millennia, roughly the size of France. It will house 32 power stations across a 37km2 site, using 6 million solar panels, and will be capable of generating 1,650 megawatts of electricity. The first plant went live this month with a capacity of 64MW.

Benban is part of a whole new strategy for infrastructure projects for a fast-growing country of more than 100 million people

First steps for Egypt’s private sector

It represents a fundamental change in the way the country provides power to its people. For decades, the government has built and operated almost every power plant in the country. Until recently, the government was spending more on electricity subsidies than it was on education, health care, and social welfare combined. But in 2014, officials rolled out a World Bank Group-supported program designed to reform the power sector and encourage private companies to contribute to national growth and development.

The World Bank provided a $3 billion loan, as well as the framework and financing for the Benban project. Its International Finance Corporation (IFC) division, along with a consortium of other lenders, pledged $653m and the Multilateral Investment and Guarantee Agency (MIGA), another part of the World Bank Group, is providing $210m worth of “political risk insurance” to private lenders and investors.

Egypt still has plans for wind and nuclear

Solar isn’t the only renewable energy Egypt is investing in. It is rolling out huge wind farms on the Red Sea and Gulf of Suez, with a combined capacity of 1,420 MW. And by 2026 it also hopes to have a new nuclear power plant operational. The 4,800 MW capacity plant at Dabaa is being built by Russia’s Rosatom. There is room for all.

Global solar generation capacity has grown rapidly for seven years in a row.

Record holders: India v China

Meanwhile, the competition between India and China to host the world’s largest single-site solar farm is hotting up. In the cold desert of India, a 5GW solar farm is due to go live in 2023. The Ladakh project will make it the largest in the world in power generation terms, surpassing the ambitions of China’s Datong Solar Power Project. Situated in the western Himalayas, the abundant sunlight and clear air should make it an extremely effective location for solar technologies. Power minister RK Singh said last year that Ladakh has the potential to host 25GW of solar generation.

Storage

The government tenders are not just for generation. The energy needs to be stored. So developers have been instructed to explore different forms of storage technology, including battery, molten salts, and pumped storage.

Dubai is throwing its hat into the ring too. The Mohammed bin Rashid Al Maktoum Solar Park will have a planned capacity of 1GW by 2020, and 5GW by 2030. The UAE Energy Strategy 2050 aims to develop an energy mix that combines renewable, nuclear and clean energy sources to balance economic requirements and meet environmental goals. By 2050, the UAE aims to invest AED 600bn ($163bn) to meet the growing energy demand and ensure the sustainable growth of the country’s economy. The strategy also seeks to increase the efficiency of energy use by individuals and organisations by 40%, and achieve savings of AED 700bn by 2050.

As PV costs drop, farms get bigger

You don’t need to break a world record to fight climate change, but it helps if you can break your own nation’s. In December, the Australian state of New South Wales (NSW) approved an AUS$1bn ($717m) solar project for Yarrabee Park. It should be generating 900MW of clean electricity in early 2020, and have a lifespan of about 30 years.

The new farm’s output will dwarf the 500MW produced by the nine large-scale solar farms currently operating in NSW, and will have the equivalent impact on carbon emissions as removing 540,000 cars from Australia’s roads.

There’s no doubt that large-scale solar projects have become more viable as the costs of making solar panels continues to drop. Combine this with the satisfying ambition to break a record, and solar farms will keep getting bigger and bigger.

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Renewable jet fuel lands at Schiphol

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Renewable jet fuel lands in Europe

by Mike Scott

January 25, 2019

Salicornia, a type of halophyte straw

If you were trying to find a link between fish farms, saltwater plants known as halophytes and mangrove forests, it’s unlikely that renewable jet fuel would be near the top of your list.

Yet these three elements are being combined in a project in Abu Dhabi to develop “a clean, alternative aviation fuel” that has been used for the first time in a commercial flight, from the emirate to Amsterdam. The biofuel made up only a tiny percentage of the flight’s fuel load but is the first step in the initiative’s ambitious aim to create a bioenergy industry that can be sited in arid coastal regions, producing both food and fuel without using land that is needed to grow crops or polluting the oceans.

The project has been developed by the Masdar Institute’s Sustainable Bioenergy Research Consortium (SBRC), a collaboration between Abu Dhabi’s Khalifa University, the emirate’s airline Etihad and its oil company ADNOC. Also on board are Boeing, French aircraft engine maker Safran, GE and German engineering group Bauer Resources.

The fuel is derived from a saltwater-tolerant species called Salicornia, whose seeds produce oil when crushed. But the first, rather unlikely, stage of the process is a fish farm, which will produce local species such as Nile perch, as well as shrimp. The fish farm is based on land rather than in the sea, with seawater pumped into pools where the fish will be farmed.

“The SEAS is a pioneering project – the world’s first desert bionetwork to produce food and fuel from seawater supplies in arid land” Dr Alejandro Ríos, SBRC

Young mangrove plants filter the run-off from the fish farm

One of the main issues for fish farms is what to do with the waste that is produced – in this project, known as the Seawater Energy and Agriculture System (SEAS), the waste from the fish farm is used as a fertiliser and irrigation for the Salicornia. The water will then flow from the halophyte ‘fields’ into mangrove wetlands, which help to clean the water, protect coastlines from storms, store carbon and provide a habitat for marine life and can be used for bioenergy.

“The SEAS is a pioneering project – the world’s first desert bionetwork to produce food and fuel from seawater supplies in arid land,” said Dr Alejandro Ríos, director of the Sustainable Bioenergy Research Consortium.

“This was the first time that ADNOC had ever refined biofuel, so it’s a significant step, even though the process is not that different from refining crude oil,” Rios added. “That is important because it means that they can use the existing infrastructure.”

Clean and better range capability than batteries

The project uses solar energy to power the pumps and the rest of the facility and there is a pleasing circularity to the scheme, which tackles multiple issues, including growing food in desert environments without depleting scarce water resources and making aviation fuel renewable.

This is an imperative because, unlike road-based transport, there is no other feasible alternative to using hydrocarbons, Rios said. “There will be short-haul flights in small planes that will be battery-powered within a few years, but for long-haul the physics just doesn’t work.”

The UAE is keen to establish a leading position among the world’s major oil producers when it comes to reducing its environmental impacts. It aims to derive 50% of its energy from clean sources by 2050, to cut the carbon footprint of power generation by 70% and increase energy efficiency by 40%.

“aviation is responsible for almost 5% of greenhouse gas emissions, and it is growing fast. By 2050, if no action is taken, aviation will have consumed a quarter of the world’s carbon budget” IPCC

Emissions reduction to 2050

At the same time, the need to decarbonise the sector is urgent, particularly in the Middle East. The Intergovernmental Panel on Climate Change says that aviation is responsible for almost 5% of greenhouse gas emissions, and it is growing fast. By 2050, if no action is taken, aviation will have consumed a quarter of the world’s carbon budget. According to Airbus, air traffic in the Middle East region is set to double within a decade. Indeed, aviation is one of the key pillars of the Emirates’ economy, with the country ranking third globally in terms of revenue ton kilometres.

The industry has long been accused of dragging its feet on tackling its environmental impacts, but in 2016, it agreed that any growth in emissions after 2020 will need to be offset through a scheme called CORSIA (Carbon Offsetting and Reduction in Aviation). IATA, the International Air Transport Association, has a target to cut net emissions by half from 2005 levels by 2050.

Zero-cost fuel from upstream fish

But progress has been painfully slow. Although there have been around 160,000 flights using biofuels, with feedstocks ranging from crop residues to algae to municipal waste, no commercial alternative to jet fuel has yet emerged, in part because of the cost.

That is where this project could have a real advantage, because much of the revenue is projected to come from the fish farm, with the aim of producing the fuel itself at zero cost.

But we’re still a long way from seeing commercial quantities of green jet fuel on the market – the pilot project sits on 2 hectares of land near Abu Dhabi’s airport, but Rios says it will need hundreds of thousands of hectares of land to produce commercial quantities of fuel. The next step will be to create a 200-hectare demonstration plant. That is going to take a couple of years at least, and a full-size plant is at least a decade away.

If it can be scaled up, though, the potential is huge – there is no shortage of land available for such projects not just in the Middle East but also Africa and India.

“It’s not about replacing existing aviation fuel, it’s about adding value to the oil and gas infrastructure and producing sustainable aviation fuel for the future,” Rios said.

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Spain shows political will to hit 2020 target and acknowledge coal miners too

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Spain shows political will to hit 2020 target and acknowledge coal miners too

by Arasan Aruliah

January 24, 2019

Spain’s largest independent supplier of electricity is committing to delivering an extra 3,000 GWh of renewables in a deal with Norwegian renewables giant Stakraft. When Prime Minister Pedro Sanchez took over last June, he promised to reverse the policies of his predecessor and commit to EU targets on renewables. Substantial social measures and a €250m fund have been agreed to try and make it a just transition. By getting everyone to the table, Spain can now embark on an ambitious plan that may just mean they hit their 2020 target after all.

FORTIA ENERGIA, the Spanish energy sourcing platform for large industrial consumers, and Statkraft, the Norwegian producer of renewable energy, have signed the first long-term power purchase agreement (PPA) for large industrial customers in Spain.

For a period of ten years Statkraft will supply 3,000 GWh of electricity to FORTIA. That’s enough to manage the power supply of large industrial companies in the steel, cement, metallurgy, chemical, paper and industrial gases sectors in the Iberian market (Andorra, Portugal and Spain). The energy will be sourced from Statkraft’s Spanish portfolio and primarily consists of new wind and solar projects already under construction.

At the end of 2018, mainland Spain had 98.65 GW of power generation capacity with demand estimated at 254,074 GWh this year. The additional 3,000 GWh brings hope that the country will now meet the EU’s 20% target for renewable energy generation by 2020. It currently stands at 17%.

It’s not just about the gigawatts, it’s about transition

FORTIA has annual sales of 11 TWh and is the largest independent supplier in the Iberian Electricity Market. Their press release says this is part of FORTIA’s strategy to provide industry with “competitive, diversified and balanced access to energy markets through new contractual models such as PPAs which are an opportunity for producers and consumers in the context of the energy transition.” They expect to announce more such PPAs “in the coming months.”

“We very much look forward to taking that next step in the energy transition together with our customers.” – Juan Temboury, Managing Director at FORTIA

Hallvard Granheim, Executive Vice President Markets & IT at Statkraft said the contract underlines “our commitment to powering major industrial companies across Europe with renewable energy.” Statkraft, owned by the Norwegian Government, is one of the largest managers of renewable assets on behalf of third parties in Europe, with a portfolio of circa 16,000 MW.

Prime Minister Sanchez has said that legislation on climate change was often unpopular with the general public. In particular, the recession of the last ten years made the energy transition a luxury that was hard to afford. But, going forward, he said it must not only happen, it must be “socially just”. Transition must not leave anyone behind, including coal miners that lose their jobs in the shift from fossil fuels.

The 2008 recession hit Spain’s renewables installations

The government now plans to invest €235bn from 2021-2030 as part of its energy and climate initiative. A new climate change law will be submitted to parliament by the end of this month. Last November they published a draft bill which included targets to cut its greenhouse gas emissions by at least 90% below 1990 levels by 2050, and to produce all of its electricity from renewable sources by the same date.

Stark contrast with the last government

This amounts to a reversal of the attitude of the administration in Madrid. Former Prime Minster Mariano Rajoy created a “sun tax” that imposed hefty taxes on small-scale renewable producers while ending payments for pumping their excess electricity back into the national grid. Sanchez scrapped it.

Rajoy’s administration also experienced clashes between the environment and energy ministries. For example, the Energy Ministry was working to prevent coal mine closures. Now, environmental and energy issues come under one single ministry, and 26 coal mines are being shut down.

Big blow to mining communities

Under an EU directive, all coal deposits that no longer make money and receive public funds were ordered to stop production by January 1 2019. Those mines that do not meet the deadline to cease production are supposed to hand the money back. It makes good economic and climate sense but comes at a high price for thousands of miners and their families.

To soften the blow to workers and the communities dependent on coal, Sanchez’s socialist government agreed to a deal with unions last October to smooth coal workers’ access to benefits such as early retirement and earmarked a €250m fund for aiding business ventures and re-purposing disused mines. The industry employed around 100,000 people in the 1950s but this has  dwindled to around 2,000 today.

The continued decline of coal is also showing up in the annual statistics. In December, grid operator Red Electrica de Espana presented provisional data for 2018, saying that nuclear remained the number one source of electric power for Spain in 2018, with a share of 21.4%. Wind was again second at 19.8%. Hydro increased the most, going from 7.4% in 2017 to 13.7% in 2018. Coal’s share reduced by 2.6% to 14.5% of the total.

Spain is now clearly pointing in the right direction, with a particularly impressive performance from hydro. Given the country has only 12 months to get from 17% renewables to 20% by 2020, the new deal between Fortia and Statkraft is a welcome step forward.

As I reported earlier this week, the economics and technology already stack up in most cases. But when the established method of power generation, in this case coal, gets displaced by renewables it is always an extremely difficult decision for responsible governments. Having the political will to manage the transition in a way that considers everyone is what’s required to keep voters onside. Spain’s new government seems to have found it.

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Saudi Arabia raises its solar and wind targets to 60GW by 2030

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Saudi Arabia raises its solar and wind targets to 60GW by 2030

by Arasan Aruliah

January 21, 2019

The Kingdom of Saudi Arabia has made even bigger promises of a renewable revolution before, but little has materialised. Well known as a world leading oil producer, exporter and consumer, it needs to stick to its commitments, and improve on them, if it is to play its part in emissions reductions.

In an interview with the UAE’s state news agency, WAM, Dr. Khalid bin Saleh Al Sultan, President of the King Abdullah Atomic and Renewable Energy City, announced that Saudi Arabia aims to produce 60 GW of renewable energy by 2030, including 40 GW from solar energy and 20 GW from wind and other sources. He explained that Saudi Arabia is working, under the framework of the KSA Vision 2030 and the National Transformation 2020 Programme, on building a sustainable renewable energy sector, along with the “Saudisation of technologies”. In order to find a balanced mix of fossil and alternative energy, achieve growth and prosperity, and reinforce energy security, they will integrate alternative energy into the national energy network.

Promises have been made before. In fact, over the past six years, the Saudis have announced a number of initiatives and investments totalling more than $350bn in renewable energy. But there’s little sign of any construction that matches those ambitions. Fatih Birol, executive director of the International Energy Agency, observes of the Saudi’s intentions, “There has been a lot of stop and go.”

“There has been a lot of stop and go” – Fatih Birol, IEA

The Saudis have certainly been sending mixed signals over its commitment to reversing climate change. In 2013, the government announced its plan to build 54 GW of renewable power and 17 GW of nuclear power by 2032 to cover 40–45% of future electricity production. It then drastically revised down these targets in 2016 to an ‘initial phase’ of only 9.5 GW by 2023. And at COP24, held in Poland back in December, it was one of four countries (the others being the United States, Russia, and Kuwait) that opposed the inclusion of the Intergovernmental Panel on Climate Change’s (IPCC) Special Report on Global Warming of 1.5°C in the negotiating text.

Saudi Arabia had also planned to phase-out of fossil fuel subsidies. However in December 2017 the government announced it would slow down this fossil fuel subsidy phase-out because it needed to lift the economy during difficult periods.

So an announcement to increase renewables generation is a welcome move in the right direction, provided the promise holds. While we wait for more evidence of it actually happening, or another policy reversal, it’s worth looking at Saudi Arabia’s emissions performance so far.

Saudi Arabia’s targets are “critically insufficient”

Climate Action Tracker (CAT) gives a good summary of the performance and projections for different regions and nations across the globe. Their most recent analysis for Saudi Arabia is dated 30th November 2018. It states: “under current policy projections, Saudi Arabia’s emissions [will] be at 1,061–1,117 MtCO2e by 2030—an almost six to seven-fold increase from 1990 levels.” It’s a performance worth their lowest rating possible, “critically insufficient: if all government targets were in this range, warming would exceed 4°C.”

To put the latest 60 GW promise in perspective, CAT comments on an even more ambitious announcement that was made in March 2018. Saudi Arabia and Japan’s SoftBank Groupsigned a memorandum of understanding to build a 200 GW solar plant, the largest single solar project in the world. If the MoU ever became policy and went live it could dramatically lower the emission outlook for the Kingdom. But CAT’s analysis says that if all 200 GW were fully installed, Saudi Arabia may rise above its “critically insufficient” rating, but only into the category “highly insufficient: if all government targets were in this range, warming would reach between 3°C and 4°C.” In other words, it’s not nearly enough.

Rising domestic consumption may yet force Saudi Arabia into renewables

All this is perhaps not a surprise, given the country is one of the world’s leading oil producers, and the national economy is highly dependent on it. Since 1970 oil exports have covered 90% of total government revenues, and contributed more than 35% of GDP.

It also has one of the world’s highest rates of per capita energy consumption, forecast to triple by 2030 when compared to 2010 levels. But domestic consumption itself is putting pressure on them to diversify away from oil and into renewables. As domestic consumption rises, not only do export revenues decline, government spending rises too because domestic oil use is heavily subsidised. Perhaps it is this that will see the Saudis keep their latest promise – and hopefully improve on it.

Falling cost of renewables means the gift of independence to poorest nations

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Falling cost of renewables is the gift of independence to poorest nations

by Mike Scott – in Abu Dhabi for Energy Post

January 18, 2019

Iceland's former President; Olafur Ragnar Grimsson

When oil became the dominant form of energy in the 20th century, it not only had a huge impact technologically – it defined the shape of geopolitics for decades as well, giving outsize power and influence to a few countries that were lucky enough to be sitting on top of oil (and later gas) reserves.

Now that influence is set to wane as the world switches from fossil fuel to renewable energy and it presents a huge opportunity, particularly for some of the world’s poorest countries.

Because every country in the world has some renewable resources, and the cost of renewable energy is falling so drastically, there will be a democratisation of the energy landscape, according to a new report from the International Renewable Energy Agency’s Global Commission on the Geopolitics of Energy Transformation.

Ólafur Ragnar Grímsson, the former president of Iceland, who chaired the commission, said that his own country is an example of how renewables can transform a country’s fortunes. “We have seen leadership in renewables come even from small and medium-sized countries. One is my own, thanks to its geothermal resources, while Denmark has become a leader in wind.”

During the 20th century, Iceland went from being one of Europe’s poorest countries, highly dependent on imported coal and oil, to a country with a high standard of living, which derives 100% of its electricity from hydro and geothermal energy, the report points out.

“The effective development of its renewables has enabled Iceland to bolster its energy security, widen its economic base, and attract new industries to the country, including aluminium smelting, data storage and greenhouse agriculture,” it adds.

The shifting sands of the energy landscape now present a real opportunity for those emerging markets that are not blessed with fossil fuel resources. “The geopolitical transformation will enable countries in parts of Asia, Africa and Latin America to reduce their energy imports,” Grimsson told Energy Post. “Countries all over the world will, for the first time, be energy independent.”

“Countries all over the world will, for the first time, be energy independent.” Ólafur Ragnar Grímsson, former president of Iceland

In Africa particularly, the opportunities are huge, said Carlos Lopes, former executive secretary of the UN Economic Commission of Africa and a native of Guinea-Bissau. The first one is for several countries that have reserves of strategic minerals that are vital for the production of renewable energy technology such as wind turbines and batteries. The Democratic Republic of Congo will play a key role.

“There are a number of minerals, such as cobalt, copper, graphite and coltan, that will be essential for renewable energy and that are highly concentrated in a few countries, a lot of which are in Africa,” Lopes said. “Those countries will be incredibly geo-strategically important in future. This is a huge opportunity for the continent.”

The other opportunity is for countries to wean themselves off reliance on the fossil fuel producers. “Every country can tap into one renewable energy or another to produce energy domestically and become more energy independent,” he added. “In Africa, almost half (48%) of the population don’t have access to electricity. Giving them that opportunity will be a major push factor for growth across the continent.”

Most countries in Sub-Saharan Africa will benefit from reducing fossil fuel imports and generating renewable energy domestically, because this will boost job creation and economic growth. “In the long-term, African countries have a unique opportunity to leapfrog the fossil fuel-centred development model despite recent discoveries of oil and gas,” the report says.

However, Lopes warns that African countries still face a number of challenges in benefiting from the rise of renewables. “What will really change the landscape will be industry, and Africans are latecomers to the clean energy sector. As a result, they face skewed intellectual property regimes and don’t have the knowledge base that others do. The globalisation of value chains has already distributed roles to different regions. There is a skills deficiency in sub-Saharan Africa, too.”

But Africa is growing fast – faster than renewable energy can keep up with, as Energy Post reported recently. It will be cheaper, initially, for Africa to use fossil fuels to drive its development, which is why their use is growing in the region at the moment.

For renewables to thrive, “Africa must create its own regional value chains to serve its growing markets. It’s not going to happen immediately, but it should be on the agenda.”

Mari Pangestu, Indonesia’s Minister for Trade

The change will cause serious problems for fossil fuel producing countries that fail to prepare for the transition, said Grimsson, with those most dependent on oil the most vulnerable. The report cites countries such as Iraq and Libya, along with Nigeria and Angola as particularly vulnerable.

Even countries that have a lot of renewable resources will not necessarily make the most of them if the political will is not there, former Indonesian trade minister Mari Pangestu told Energy Post.

While China and India have started tackling air pollution because of growing pressure from citizens, the same is not yet true in Indonesia, one of the world’s biggest coal producers, she said. But with 70% of the population set to be living in cities by 2030, that will surely change. “People won’t take living in polluted cities any more. If we don’t invest in sustainable infrastructure now, it is going to cost us in the future.”