February 13, 2018
UK capacity auction: the biggest winner is gas (the biggest loser too)
February 13, 2018
National Grid, the UK transmission system operator, on 8 February announced the results of its capacity auction for delivery in 2021/2022.
The clearing price turned out to be much lower than analysts had expected at £8.40 per kW per year. In December 2016 a similar auction cleared at £22.50 per year.
In total 50.41 GW of capacity was awarded, out of 74.2 GW offered. You can find the results in this document. Save the link because it was very hard to find! Communication does not seem to be the strongest point of the people who are responsible for the capacity auction.
This is perhaps also why media reports were few and far between, and in some cases dead wrong. For example, Reuters reported that “British power capacity auction fails to attract gas projects”, whereas the results show that gas fired stations got by far the most contracts!
You can see the main results in the graph below:
In case you have noticed that the explanatory notes show 9 types of “CMU” (capacity market unit), whereas the figure on the left shows 11 colour bars, you are quite right. There are two explanatory notes missing – the bar that says 4,558 MW are interconnectors and the one that says 2,675 MW is storage.
Here is a table with the full results:
If there are any conclusions to be drawn from this is that: gas did very well (OCGT are open-cycle gas turbines, CCGTs are closed-cylce gas turbines), and nuclear and interconnectors also did well. Demand response (DSR) did get some contracts too.
But what completes the picture is if we also take into consideration which CMUs exited the auction, because they turned out to be too expensive.
This is shown in this table:
It turns out that CCGT’s were also the largest category that did not make it, which explains why Reuters thought that the capacity auction failed to attract gas plants.
Interestingly, a lot of coal did not quality either, whereas all nuclear units that participated in the auction qualified.
Climate, energy and transport in Germany’s coalition agreement: there’s lots of it
February 13, 2018
What exactly did Angela Merkel and Martin Schulz agree to in their draft coalition agreement (it still has to be approved by the members of the SPD)?
As we reported last week, the new government promises to set an “end date” for coal power next year, quite a significant announcement, although of course we don’t know what that date will be.
But the two parties agreed on a lot more than that. Clean Energy Wire has a useful overview in English, of which I reproduce the key points below. There are many interesting items among them. For example, the pledge that “We do not want EU support for new nuclear power plants”. Or the announcement “to establish a Fraunhofer research institute for storage technology”.
Have a look:
- Commit to “national, European, and Paris Climate Agreement climate protection goals for 2020, 2030, and 2050 for all sectors”
- Work towards becoming largely greenhouse gas neutral “no later than in the second half of the century”
- Fully implement the Climate Action Programme 2020, as well as the Climate Action Plan 2050
- National target of reducing emissions by 40 percent by 2020 compared to 1990 levels watered down to lowering emissions “as much as possible”/”as fast as possible”; internationally binding 2030 target of reducing emissions by 55 percent to be reached “by all means”
- Introduce law in 2019 to ensure that the 2030 sectoral climate targets are reached
- Establish a special commission on “growth, structural economic change and employment”, bringing together policymakers, industry representatives, environmental organisations, and labour unions, to draft an action programme by the end of 2018, which should include:
- measures to close the gap to the 2020 goal “as much as possible,” and to make the 2030 energy sector goal “reliably achievable”
- a plan “for the gradual reduction and phase-out of coal-fired power production, including an end date, and the necessary accompanying legal, economic, social, and structural policy measures”
- financial support for the necessary structural changes in affected regions, and a fund financed through the federal budget
- The commission’s findings will feed into the law on climate protection
- At the same time, a similar process is planned for the transport and buildings sector
- Strengthen the EU Emissions Trading System (ETS) as the “leading principle” for CO2 pricing. “Our goal is a CO2 pricing system that aims at being effective globally, but at least encompasses the G20 states.”
- “Acknowledge Germany’s responsibility for international climate protection,” and increase official development aid contributions to assist other states
- Continue ”close cooperation” with France in implementing the Paris Climate Agreement and the commitments made at the 2017 ‘One Planet Summit’
- Establish a ‘support programme for decarbonisation’ for the industry to secure Germany’s position as an industrial location, strengthen the international competitiveness of German companies, and create future-proof jobs in Germany. “To reach the ambitious environmental and climate protection policy targets, we need modern products and processes.”
Industry / Business
- “Guarantee the international competitiveness” of energy-intensive industries to maintain “integrated value chains” and prevent carbon leakage
- Take advantage of “Germany’s leading position in the energy transition” to bolster the international competitiveness of German companies
- Develop bilateral energy partnerships “with the aim of facilitating market access for German industry and advancing the global energy transition”
- Align energy research more with energy transition
- Provide R&D funding for low-carbon industry processes and the circular CO2 economy
- Continue with the “goal-oriented and efficient expansion of renewable energy sources that is synchronised with grid capacity and increasingly geared towards market mechanisms”
- “Strive to achieve a share of 65 percent renewables by 2030” [if this refers to the commonly used definition of “share of power consumption,” it would bring forward the current 2040 target by ten years]
- “Substantially increase” renewables expansion to cover additional power demand in the transport, construction, and industry sectors
- Implement “special auctions” to save up to ten million tonnes of CO2 by 2020: 4GW onshore wind power, 4GW solar power, as well as “one offshore wind power contribution” in 2018 and 2019, “provided that the grid’s carrying capacity is sufficient”
- Create an offshore wind power “test field” to conduct research on potential for energy transition
- Improve the “balance of interests” between the renewable energy industry, environmental protection, and the local residents in onshore wind power expansion
- Compile an “ambitious plan containing measures to optimise existing grid infrastructure and accelerate expansion”
- Use digitalisation and other technologies, and improve cooperation between grid operators in order to make better use of the existing grids
- Encourage the acceptance of grid expansion and accelerate construction by installing underground cables “at sensitive locations, if technically feasible”
- Introduce annual “stress tests” of the grid by 2019 to identify bottlenecks
- Examine the possibility of offering a financial stake to affected land owners in profits from grid expansion; “recurring payments may be an option”
- Develop an “ambitious and cross-sectoral energy efficiency strategy” with the aim of reducing energy consumption by 50 percent by 2050
- Stabilise financial support for efficiency measures at current level
- Continue to promote energy efficiency and the use of renewable energies in the buildings sector. “Here, we continue to apply the principles of profitability, technology-neutrality, simpleness, and voluntary participation.”
- Introduce tax privileges for the energy efficient retrofitting of buildings
- Reform grid fees to allocate costs based on a “causative principle”
- Monitor affordability and security of energy supply on a regular basis
- Encourage private investment in storage technology by gearing renewable energy sources more towards market principles
- Facilitate the electrification of the heating, mobility, and electricity sectors (sector coupling) in combination with storage technology
- Establish a Fraunhofer research institute for storage technology
- Assess if the premises of power plants that are no longer needed can be used as large thermal storage plants
- Make Germany a location for liquefied natural gas (LNG) infrastructure
- “We do not want EU support for new nuclear power plants. We want to end all state fund stakes in nuclear power plants abroad.”
- “We are committed to the 2031 deadline for finding a final repository.”
Mobility and environment
- Appoint a commission including actors from politics, business, environmental associations, unions, as well as the affected states and regions to work out a strategy by early 2019 on the “future of affordable and sustainable transport,” including a reliable timeframe
- In the field of transport policy, honour the commitments to the Paris Climate Agreement and to Germany’s Climate Action Plan 2050. “We want to reach the Paris climate targets, while also taking social considerations into account, safeguarding industry’s competitiveness, and securing affordable mobility.”
- The above task will require “support for electric mobility, public and rail transport, and more efficient and cleaner combustion engines, including retrofitting, and the continuation of funds from the diesel summit.”
- Increase efforts to improve air quality in inner cities. “We want to avoid driving bans and increase air quality.” Use the “Sustainable Mobility for the City” fund to support mobility plans aimed at reducing pollution
- Reduce pollutant emissions from road transport at their source. “This includes – if technically possible and economically justifiable – technical improvements of vehicles in the existing fleet.” A decision on steps to further reduce NOx emissions – “including technical retrofitting” – will be taken in 2018 “on the basis of the results of current research on hardware retrofitting options by the ‘Technical Retrofitting’ working group and the other ‘diesel summit’ decisions, as well as based on consideration of all legal questions regarding registration, guarantees, and the bearing of costs, cognisant of the relevant court decisions and the decisions on the European level.”
- Establish a monitoring and sanctions system for carmakers to ensure that the vehicles in circulation today comply with emission limit values. “We will promote the establishment of a German Institute for Consumption and Emission Measurement (DIVEM).”
- Change the regulatory framework to enable states, cities, and municipalities to introduce binding requirements and emission limits for commercial passenger transport (buses, taxis, rental cars, car-sharing vehicles, courier/parcel services)
- Introduce a reduced tax rate for company e-cars and hybrids (0.5 percent of domestic list price)
- Make the switch to low-emission vehicles easier for taxis and light commercial carrier services – not preferring any one technology and within the bounds of the current budget plans – by increasing the buyer’s premium for e-cars and introducing other support instruments
- “We want to significantly advance electric mobility (battery, hydrogen, and fuel cell) in Germany, extend the current support measures where necessary beyond 2020, and complement them. We will intensify the roll-out of a nationwide charging and refuelling infrastructure. The target is to make at least an additional 100,000 charging points available by 2020, of which at least a third should be fast charging stations (DC). In addition, we want to support the construction of private charging stations. […] We will legally facilitate the installation of charging points for electric vehicles of tenants and apartment owners.”
- Introduce a deduction regime for commercially used electric vehicles; extend support for the retrofitting or purchase of electric taxis, buses, trucks, and car-sharing
- Transform the existing National Platform for Electric Mobility into a platform called “future of mobility,” which will deal with the development of the car industry. “Battery cell production is an important economic and industrial policy area for Germany and Europe. We will support industry in establishing the entire electric mobility value chain in Germany and Europe.”
- Increase the profitability of electric buses by exempting them from the EEG surcharge.
Continue the “National Innovation Programme Hydrogen and Fuel Cell Technology”; change regulation to enable the use of ‘green hydrogen’ and hydrogen from industrial processes as fuel or for the generation of conventional fuels (e.g. natural gas).
European solar market grows, led by … Turkey (and held back by tariffs)
February 13, 2018
Surprise, surprise: the European country which (probably) installed the most solar power last year was not an EU member state. It was Turkey.
All in all, European countries installed some 8.61 GW of solar power systems in 2017 – a 28% increase in comparison to the 6.72 GW added in 2016, according to a first estimate from SolarPower Europe, the association of the solar power sector in Europe.
EU member states grew by around 6% to 6.03 GW in 2017 from 5.69 GW in 2016.
The largest European solar market in 2017 was Turkey, which grid-connected 1.79 GW last year, followed closely by Germany, which added 1.75 GW (though this figure could still be adjusted upwards). Turkey saw an end-of-year rush with around 800 MW of solar systems either under construction or installed, but which were not fully up and running in 2017. The total market share of Turkey and Germany was around 41% in Europe in 2017.
While Turkey grew by 213% year-on-year and Germany by 23%, the UK, once a solar star, lost its position as the leading European solar market. After axing solar incentive programmes, new installations dropped by 54% to around 912 MW in the UK, from 1.97 GW in 2016, less than half of the 4.1 GW that was installed in 2015.
France and the Netherlands, backed by strong government support, showed two-digit growth in solar capacity additions – France adding 887 MW and the Netherlands adding 853 MW. Spain is also showing signs of progress, with 135 MW of new solar systems installed in 2017, a 145% increase from 55 MW installed in 2016.
“We are expecting strong growth in the coming years as several EU member states are choosing solar to meet their national binding 2020 renewables targets. This makes perfect sense as solar is the most popular energy source among EU citizens, due to its low-cost, versatility and reliability,” said Michael Schmela, Executive Advisor and Head of Market Intelligence at SolarPower Europe.
The date are based on official data from government agencies whenever possible. If such information was not available from primary sources, SolarPower Europe has gathered data mostly through its members, comprising national solar associations. As data for Q4/2017 is often not yet completely available or will be updated by national entities responsible for solar statistics in the coming months, the actual installation numbers might be considerably higher than this first estimate, the organisation notes.
James Watson, CEO of SolarPower Europe, did make a critical note. He said, “If the trade measures on imported solar panels were removed, according to a DG Justice and Consumers study we could see an increase in solar self-consumption in the EU of around 20-30%. Likewise, if the EU adopted a 35% renewable energy target, instead of today’s 27%, no less than 120,000 new solar jobs could be created.”
“France can become powerhouse of global tidal energy industry”
February 13, 2018
An announcement from the French Secretary of State for the Ecological and Inclusive Transition, Sébastien Lecornu, that France “could become the powerhouse of a global tidal energy”, is not exactly a hard piece of news, I will admit that.
And yet it does show the ambition of France in this area of renewable energy, which has little to show for itself as yet, but holds some real promise, at least in theory.
Lecornu spoke at an event at which he “announced preliminary studies to the launch of a tidal energy tender”. According to lobby group Ocean Energy Europe, “the announcement is an important first step and strong message to the sector. A tender for tidal energy will see France become the global centre of tidal energy manufacturing.”
The tides in northern France are among the most powerful in the world, notes Ocean Energy Europe. “Following a decade of R&D development, tidal energy technology is now ready to use this resource. Tidal farms will generate predictable renewable energy, while creating significant jobs opportunities and local economic activity.”
Lecornu also announced the launch in 2018 of preliminary studies of tidal zones in Brittany and Normandy.
Rémi Gruet, CEO of Ocean Energy Europe, welcomed the announcement and called for the launch of a tender for tidal energy as soon as possible. “A tender for tidal energy will see the first manufacturing plants come to France, creating a strong domestic industry, with significant export opportunities globally”, said Gruet.
According to Gruet, “The French Government has clearly recognised this opportunity and it will be up to the sector to demonstrate the readiness of the technology and the progress achieved in the first pilot farms. We look forward to discussing the design of the tender, to ensure fast deployment and best use of public finances.”