May 15 2017 express

May 15, 2017

An interesting mix of prominent established energy companies – Centrica, Elia (Belgian TSO), Engie, Shell, Sempra Energy, SP Group, Statoil, Stedin (a Dutch distribution system operator), TWL (Technical Works Ludwigshafen), and Tokyo Electric Power  (Tepco) – have joined forces to support the Energy Web Foundation (EWF), a non-profit organization whose mission is to accelerate the commercial deployment of blockchain technology in the energy sector. The companies put up $2.5 million in a first round of funding.

EWF is a partnership between Rocky Mountain Institute (RMI) in the U.S. and Grid Singularity, a blockchain technology developer specializing in energy sector applications, based in Vienna, Austria.

In a press release, RMI notes that “blockchain technology reduces transaction costs by keeping a single logical copy of transaction records—avoiding the need for reconciliation and settlement. Because of its unique attributes, blockchain technology has the potential to play a significant and potentially game-changing role in the energy sector. On the incremental side, blockchain technology can be used to reduce the cost of utility bills or the need for working capital in wholesale market gas or electricity transactions. On the game-changing side, blockchain technology can allow millions of energy devices (HVAC systems, water heaters, electric vehicles, batteries, solar PV installations) to transact with each other at the distribution edge while providing support to utilities and grid operators to integrate more utility-scale variable renewable energy capacity at much lower cost.”

According to Hervé Touati, President of EWF, “The main challenge of the electricity sector in the 21^st Century is to integrate more renewable energy into the grid in a cost-effective fashion in a context of largely flat or diminishing demand. The only way we know how to do this is by automating the demand side—by allowing many more participants in the grid. That means automation at the distribution edge, and integration of this automation with wholesale markets.”

Grid Singularity, together with its partner Parity Technologies, “will bring the most advanced blockchain technology, addressing the limitations in terms of speed and transaction costs of the currently available blockchains, and enabling features that are focused on supporting energy-specific applications”, notes RMI.

“The current test-network ‘Kovan,’ which is a proof-of-concept for the new consensus algorithm, has the ability to perform up to 1,000 transactions per second (tps) and is already used by many blockchain start-ups. By embedding further state channel technology, we intend for our architecture to facilitate scaling to 1 million tps over the next several years,” Ewald Hesse, chief executive of Grid Singularity and vice-president of EWF, said. “With the ‘Polkadot’ design conceived by Parity Technologies, we are also introducing the concept of interoperability among multiple blockchain architectures, which should free users from technology lock-in.”

EWF says it is “actively soliciting collaboration with other technology providers eager to support the open-source approach of eliminating energy market entry barriers.”

A big boost for blockchain, no doubt. But what also intrigues me is the mix of companies behind it, especially the presence of Shell (and Statoil) among utility companies like Centrica, Engie and KEPCO. Could Shell be eyeing the utility space …?

 

May 15, 2017

Elon Musk can certainly be admired for shaking up the traditional energy business as no one else is doing. That doesn’t necessarily mean, however, that his own ventures will prove to be great successes. He may one day be remembered as the one who paved the way for electric cars and solar PV plus storage to conquer the world, but whose own business proved to be a failure.

However that may be, Musk’s latest product – solar roof tiles, under the SolarCity brand – turn out be much more cost-competitive than many analysts had thought, reports Bloomberg. Tesla has has begun “taking $1,000 deposits for its remarkable solar roof tiles—to be delivered this summer at a price point that could expand the U.S. solar market”, says the news agency.

Tesla will begin with production of two of the four styles it unveiled in October: a smooth glass and a textured glass tile.  “Roofing a 2,000 square-foot home in New York state—with 40 percent coverage of active solar tiles and battery backup for night-time use—would cost about $50,000 after federal tax credits and generate $64,000 in energy over 30 years, according to Tesla’s website calculator.  That’s more expensive upfront than a typical roof, but less expensive than a typical roof with traditional solar and back-up batteries. The warranty is for the lifetime of your home.”

“The pricing is better than I expected, better than everyone expected,” said Hugh Bromley, a solar analyst at Bloomberg New Energy Finance who had been skeptical about the potential market impact of the new product. Tesla’s cost for active solar tiles is about $42 per square foot, “significantly below” BNEF’s prior estimate of $68 per square foot, Bromley said. Inactive tiles will cost $11 per square foot.”

Bloomberg notes that “the vision Musk describes with the solar roof is the grand unification of Tesla’s clean-energy ambitions, combining solar power, batteries, and electric cars. ‘These are really the three legs of the stool for a sustainable energy future,’ Musk has said said. ‘Solar power going to a stationary battery pack so you have power at night, and then charging an electric vehicle … you can scale that to all the world’s demand’.”

Musk’s rooftop shingles “are virtually indistinguishable from traditional high-end roofing products, with discreet solar cells embedded beneath a glass surface. From most viewing angles, they look just like ordinary shingles, but they allow light to pass through from above onto a standard flat solar cell.”

Tesla, which acquired SolarCity last year for $2 billion, “has halted door-to-door sales of solar panels”, writes Bloomberg, “and begun testing solar sales in its auto stores”, which are modelled on Apple’s successful specialty stores. “Initial trials found the new strategy was 50 to 100 percent more effective than at the best non-Tesla locations selling SolarCity products. Over the next six months, more than 70 stores will be staffed for solar sales.”

Musk’s clean-energy dream seems another step closer to reality. By contrast, Germany’s SolarWorld last week filed for insolvency, “overwhelmed by Chinese rivals who had long been a thorn in the side of founder and CEO Frank Asbeck, once known as the Sun King”, reports Reuters.

SolarWorld was “one of the few German solar power companies to survive a major crisis at the turn of the decade, caused by a glut in production of panels that led prices to fall and peers to collapse, including Q-Cells, Solon and Conergy. SolarWorld was forced to restructure and avoided insolvency thanks to a debt-for-equity swap and the support of Qatar, which took a 29 percent stake in the group four years ago through Qatar Solar S.P.C. A renewed wave of cheap Chinese exports, caused by reduced ambitions in China to expand solar power generation, was too much to bear for the group, which made its last net profit in 2014.”

“SolarWorld has led the fight against illegal price dumping in the United States and Europe. This dumping has further intensified, however,” Asbeck said in a statement on May 10. “This is a bitter step for SolarWorld, the management board and staff and also for the solar industry in Germany.”

 

May 15, 2017

In a fascinating article for National Geographic (10 May), Jonathan W Rosen reports on what some will see as an alarming development: the African continent is on the point of turning to coal-fired power in a massive way.

Rosen mentions plans to build a 1050 MW coal power plant in Lamu, a small island off Kenya’s northern coast with just 24,000 residents, to be financed with Chinese and South African capital. It is symptomatic of wider plans in Kenya and other African countries to industrialise their economies.

According to data compiled by CoalSwarm, an industry watchdog, more than 100 coal-generating units with a combined capacity of 42.5 gigawatts are in various stages of planning or development in 11 African countries outside of South Africa, writes Rosen. This is “more than eight times the region’s existing coal capacity. Nearly all are fueled by foreign investment, and roughly half are being financed by the world’s largest coal emitter: China”.

Rosen notes that “Africa’s embrace of coal is in part the result of its acute shortage of power. Although the continent’s economy has doubled in size since 2000, more than two thirds of residents south of the Sahara still live without electricity and most states lack the grid capacity to drive the expansion of job-creating industries. The International Energy Agency projects the region’s electricity demand to triple by 2040, with roughly half of new capacity coming from renewables. Yet coal-fired plants, which generate 41 percent of the world’s electricity today, remain attractive because coal is relatively cheap and their operation isn’t subject to the whims of nature—unlike solar, wind, or hydro.”

Hydropower in Kenya, for example, has become increasingly unreliable as a result of droughts. And solar and wind aren’t expanding fast enough. “Coal will give us some breathing space,” says Richard Muiru, an advisor to Kenya’s Ministry of Energy and Petroleum. “We see it as a shot in the arm as we continue to develop our renewables.”

There is another side to the story, though: the opportunity Africa offers to coal power operators in China, India and elsewhere to expand at a time when they are faced with cuts and overcapacity in their domestic markets.

“Although Chinese President Xi Jinping announced in September 2015 that the country would limit public investment to overseas carbon-intensive projects,” writes Rosen, “analysts say Chinese lenders are increasingly pushing cut-rate coal on African governments in order to support Chinese contractors and equipment manufactures impacted by the domestic slowdown.”

 

May 15, 2017

On 8 May Japan’s trade ministry (METI) reported “success in producing gas by extracting methane from deposits offshore Japan’s central coast”, Reuters news agency reports.

According to Reuters, “The tests being run at two different wells are the first since 2013, when Japan achieved the world’s first-ever extraction of gas from offshore deposits of methane hydrate, a frozen gas known as flammable ice.”

For many years Japan’s magical and mysterious methane hydrates have been the subject of much speculation. Japan’s offshore waters contain huge resources of methane hydrates. For Japan, if it could produce them, it would enable the country to become self-reliant in gas (and possibly energy) consumption for the first time in modern history. It could also be the start of the worldwide development of methane hydrates, which would lead to a great shake-up of global gas markets.

Yet there is a long way to go. The Japanese government has set a target for commercial production between 2023 and 2027, but “METI officials have said the goal will still be a challenge as many obstacles remain to be solved”.

METI said the production tests will be carried out by two wells and will continue for a combined four to five weeks. The first production well in 2013 ended abruptly in less than a week due to problems with sand flowing into the well.

Methane hydrate is formed from a mixture of methane and water under certain pressures and conditions. India, Canada, the United States and China are among the countries also looking at exploiting hydrate deposits as an alternative source of energy.

If you are interested in the R&D behind methane hydrates, see here for more information on the Gas Hydrates Project of the U.S. Geological Survey (USGS).

Incidentally, alarm has been raised in the past over the potential release of huge amounts of methane from the seabed as a result of global warming, but those fears appear to have been unfounded, according to this article in Nature.