Thursday, 12 January 2017

Record 126.5GW of solar and wind installed in 2016: BNEF, by Karl-Eric Stromsta, Recharge News, January 11, 2017

The world installed a record 70GW of solar and a near-record 56.5GW of wind in 2016, with acquisition activity also hitting a new high amid surging corporate M&A, says Bloomberg New Energy Finance.

Offshore wind represented “the brightest spot” for new investment, BNEF says, with capital spending commitments for offshore wind farms soaring 40% to $29.9bn thanks to a vibrant European market.

The record figure includes Dong Energy’s $5.7bn final investment decision on the 1.2GW Hornsea 1 array in UK waters, in addition to 14 other offshore projects larger than 100MW that received the go ahead last year off the coast of the UK, Germany, Belgium, Denmark and China.

 The offshore investment boom comes as developers are taking advantage of rapidly improving economics in the sector, as turbines get larger and construction operators get smarter, BNEF notes. The seven largest clean-energy financing deals globally last year all went to offshore wind projects in Europe.

“The offshore wind record last year shows that this technology has made huge strides in terms of cost-effectiveness, and in proving its reliability and performance,” says BNEF chief executive Jon Moore.

“Europe saw $25.8bn of offshore wind investment, but there was also $4.1bn in China, and new markets are set to open up in North America and Taiwan.”

Another bright spot in 2016 was acquisition activity, with BNEF clocking clean-energy deals worth $117.5bn, up from $97bn in 2015, representing the first time this has surpassed $100bn. While the majority of that is tied to project acquisitions, corporate M&A leapt to $33bn, with stand-out deals including Tesla’s purchase of SolarCity for $4.9bn and Enel’s buy-back of the minority holders in Enel Green Power.

Total new investment into clean energy fell 18% last year, to $287.5bn. BNEF says the drop reflects some gloomy factors, including a “marked cooling” in the Chinese and Japanese renewables markets, but also positive ones like “further sharp” drops in equipment prices.

Justin Wu, head of Asia for BNEF, says: “After years of record-breaking investment driven by some of the world's most generous feed-in tariffs, China and Japan are cutting back on building new large-scale projects and shifting towards digesting the capacity they have already put in place.

"China is facing slowing power demand and growing wind and solar curtailment,” Wu says. “The government is now focused on investing in grids and reforming the power market so that the renewables in place can generate to their full potential.”

Meanwhile, future growth in Japan “will come not from utility-scale projects but from rooftop solar systems installed by consumers attracted by the increasingly favorable economics of self consumption”, he says.

Solar was once again the leading sector for clean-energy investment in 2016, at $116bn, but this was down 32%, due in “large part” to lower installed costs, BNEF says. Wind investment fell 11% to $110.3bn.

Some $41.6bn was invested in smart-energy technologies, followed by biomass ($6.7bn); low-carbon services ($4.3bn); small hydro ($3.4bn); geothermal ($2.7bn); biofuels ($2.2bn); and marine energy ($194m).

While public-market investment into quoted clean-energy companies fell 21% last year, to $12.1bn, several companies raised substantial amounts of money, including Innogy, the renewables offshoot of German utility RWE, and Chinese electric-vehicle maker BYD.

Monday, 9 January 2017

Trump's pick as energy chief offers some hope for wind and solar, by Richard Kessler, Recharge News, Updated January 6, 2016

US President-elect Donald Trump has turned to former Texas governor and political rival Rick Perry to head the Department of Energy (DOE), raising cautious hopes that wind and solar energy may have a voice in his incoming administration.

During Perry's 14 years in office, Texas became a wind energy powerhouse and it now has more installed generation capacity than all but six countries. His “all-of-the-above” approach for energy technologies also encouraged development of large-scale solar there, which is now evolving into an important sector for investment and job creation.

Perry’s familiarity with solar and wind energy could prove helpful for both industries with Trump in the White House, although how much he would advocate for both remains to be seen. As governor, he was also is a firm supporter of natural gas and petroleum, not surprisingly as Texas is the leading producer of both.

Thus far, fossil fuels are emerging as big winners as Trump fills key cabinet and senior executive level positions. Trump himself has made no secret that he believes fossil fuels are the key to the US become energy independent.

Earlier today, he nominated ExxonMobil chief executive Rex Tillerson to be his secretary of state and earlier picked Oklahoma Attorney General Scott Pruitt and climate skeptic as administrator of the US Environmental Protection Agency (EPA).

He reportedly will choose US Representative Cathy McMorris Rodgers, the highest ranking Republican woman in the House of Representatives, to head the Department of the Interior. She is an advocate for increased oil and gas drilling on public lands and opposes EPA efforts to regulate carbon.

The nomination of Perry, which is also subject to confirmation by the US Senate, is ironic in that he wanted to eliminate the agency when he ran for president in 2011.

During a primary debate, he declared he would abolish three federal agencies including the commerce and education departments, but couldn’t remember DOE. “The third one, I can’t. Sorry. Oops.” The gaffe effectively ended his first presidential bid.

He tried again earlier this year but couldn’t compete for the Republican Party’s nomination with outsider Trump. Perry likened Trump to cancer, calling the real estate mogul’s campaign a “toxic mix of demagoguery, mean-spiritedness and nonsense that will lead the Republican Party to perdition if pursued.”

Trump returned the favor by deriding Perry’s campaign as a “barking carnival act.” Nonetheless, last May, Trump won Perry’s endorsement. “He wasn’t my first choice, wasn’t my second choice, but he is the people’s choice.”

DOE’s main responsibilities include the nation’s nuclear weapons program, nuclear reaction production for the US Navy and radioactive waste disposal, including clean up of multiple sites contaminated by military weapons programs in the 1940s through the 1960s. About two-thirds of its $29.6bn went for those activities.

It also sponsors more research in the physical sciences than any other federal agency, the majority of which is conducted through its network of national laboratories.

Under President Barack Obama, DOE has played a major role in his climate agenda and the controversial nuclear deal with Iran that he orchestrated. Trump opposes both. Over the last eight years, DOE issued billions of dollars in loans and loan guarantees for clean energy projects and later took credit for launch of the utility-scale solar industry in the US.

The agency also has been heavily involved in funding research and development of alternative fuels, materials and technologies, and initiatives that aim to improve energy efficiency and storage, and reduce carbon pollution.

It has gone as far as partnering with privately-owned Clean Line Energy Partners to develop a high voltage direct-current transmission line that will carry 3.5GW of wind energy from western Oklahoma to south-central and southeastern states.

Trump has not spelled out his plans for DOE, but conservatives are calling on him to end its role in “picking winners” among energy technologies and to return the agency to focusing on its core, traditional mission. Perry would bring strong executive experience to the job. Texas became the second largest economy during his tenure among the 50 states after California.

Environmentalists slammed the nomination of Perry as inappropriate given his prior low regard for the agency and cited his skepticism over climate change. They also criticized Perry’s record on environmental issues during his tenure and resistance to federal efforts to curb power plant CO2 emissions

Friday, 21 October 2016

Oil companies should branch into renewables: Fitch Ratings .By Karl-Erik Stromstam, Recharge News, October 19 2016

The world's largest solar plant, the 576MW Solar Stars, built by Total-owned SunPower

The world's largest solar plant, the 576MW Solar Stars, built by Total-owned SunPower

The ability of EVs to compete head-to-head with the internal combustion engine would be “resoundingly credit-negative for the oil sector”, says Fitch, one of the world's "big three" credit ratings agencies.
It would take several decades of strong growth for EVs to come close to rivaling regular automobiles on the world’s roads, Fitch acknowledges in a research note. But, it adds,reduced demand for oil due to EVs “could tip oil markets from growth to contraction earlier than anticipated”.
“The narrative of oil’s decline is well rehearsed, and if it starts to play out there is a risk that capital will act long before any transition occurs. This could reduce oil companies’ access to equity and debt capital, increasing funding costs during a crucial period."
Transportation accounts for 55% of oil consumption globally.
The financial implications of improving battery technology will resonate far beyond the oil industry, Fitch warns. Batteries could cause “disruption” across a range of industries that account for nearly one-quarter of all outstanding corporate bonds.
"We believe it will be important for oil companies to react early," Fitch says, noting that many oil companies are taking “initial steps” today to hedge against the profound changes coming to energy markets, with some diversifying into storage or renewables or focusing more on natural gas.
France’s Total, for one, is the majority owner of US-based solar group SunPower and French battery maker Saft. Royal Dutch Shell has signaled its intention to become a major player in offshore wind.
“If nothing else, this diversification will help guard against the risk that the markets turn against them,” Fitch says.

Wednesday, 5 October 2016

It's not just renewables that will transform the world's economy, By Jeremy Leggett, Recharge News, October 05 2016

Alongside the rise of renewables will be a second transformation of the global economy — one that may be just as important to reducing carbon emissions and combating climate change.
And like renewables, it will be good for business and the wider economy. In the 20th century, products were made, used and at the end of their useful lives either incinerated or sent to landfill.
In the 21st century, those products will increasingly follow circular, rather than linear pathways: products and their component parts will be recycled, remanufactured and refurbished.
This transition to circular economies is well summarised by Accenture analysts Peter Lacy and Jakob Rutqvist, in an excellent book, Waste to Wealth. “The old linear model of business is not only environmental suicide,” they write, “it’s also business suicide.” These are strong words for consultants making a living by advising some of the largest corporations in the world, entities not often noted for the ease with which they embrace fundamental change.
The authors go on to argue that the savings are too big to ignore — a $4.5trn reward for performing circular economy business models by 2030. They take no prisoners articulating the extent of the change inherent in a switch to a circular economy.
“It’s about eliminating the very concept of ‘waste’ and recognising everything has a value.”
Business models become very different in this world, just as they do in energy. Companies intent on embracing the circular economy have to go well beyond the point of sale, creating connections through product returns and customer engagement.
As energy companies move from centralised to decentralised power, they have to do the same: they are operating in new waters, where people are beginning to provide themselves with the energy they need for homes and commercial premises, and will increasingly do so if energy companies don’t find attractive new offerings consistent with the global energy transition.
The emissions prizes of both a renewable economy and a circular economy are huge. Adopting a circular economy could involve 70% cuts in carbon emissions by 2030 — through fewer emissions from landfill and incineration, and less use of raw materials — according to a recent study of five European economies by the Club of Rome think-tank.
Modelling a combination of strategies for renewable energy, energy efficiency and material efficiency (ie, the proportion of raw materals used in products, construction, etc), the study finds that gross national product would grow by about 1.5% across these five nations, with more than 100,000 additional jobs created, cutting unemployment by one third.
Champions are essential in this new paradigm, and they already exist.
Take the city of San Francisco. It has a 100% renewables target, and is taking policy steps consistent with that, not least requiring solar to be installed on or incorporated in all new buildings.
As long ago as 2002, it became a pioneer of the circular economy, taking on a target of zero waste to landfill or incineration by 2020. Within a decade of that it had reduced waste to landfill by 50%, winning the Greenest American City award in 2011 in the process.
It currently holds the North American record for recycling and composting, with an 80% diversion rate.
As for greenhouse-gas emissions reductions, its targets are a 40% reduction below 1990 levels by 2025, and a 80% reduction below 1990 levels by 2050, consistent with the Paris Agreement.
Continuing to target a renewables-powered economy and a circular economy in parallel will surely help it achieve those, inspiring other cities to do the same. Of course, it is possible in principle to go much faster than this.
The Centre for Alternative Technology’s Zero Carbon Britain plan gets the UK to decarbonisation as soon as 2030 without any outlandish assumptions about new disruptive technologies.
Bioenergy comprises more than a quarter of the fuel mix by then: a mix of biomass, synthetic liquid fuel/biofuel, and synthetic gas/biogas. The scope for using the recycling of existing biological material in this scenario is huge. Incredibly, global food waste alone would be the third-biggest emitter of greenhouse gases after the US and China, if it were a country.
And of course, there will be innovation en route by the new confederacy. This too is already happening. Take Dong Energy’s recent funding of the first full-scale power plant using bugs to clean up household waste.
Novozyme enzyme technology “washes” organic matter from unsorted waste from the equivalent of 110,000 homes, creating a slurry that can be turned into gas for use in power generation, or motor fuels.
The future can be both renewable, and circular. Sooner than you might think.

Wednesday, 31 August 2016

Brazilian supply chain: leave wind rules unchanged, By Alexandre Spatuzza, Recharge News, August 31 2016

Roberto Veiga, head of the wind energy work-group at the Brazilian Association of Heavy Machinery Makers (Abimaq), at right
Roberto Veiga, head of the wind energy work-group at the Brazilian Association of Heavy Machinery Makers (Abimaq), at right
“We know of other countries that have similar local content policies, but nothing like Brazil's. We started six, seven years ago, but it was too fast to become competitive [on a global scale],” he said during the Brazil Wind Power Thought Leaders Roundtable in Rio on August 30.
As one of the two sponsors of the Thought Leaders Roundtable, alongside Danish turbine maker Vestas, Abimaq has been developing programmes to increase competitiveness in the industry since the BNDES began its local content programme in 2012.
The local content programme has been successful, Abimaq says, but must be completed before Brazil can start thinking about exporting turbines.
“BNDES started this to get technology, not to build power plants,” he said.
Brazil’s complex and stringent local content rules require projects to use up to 70% locally made content, and goes down into the details of which nuts and bolts need to be made here.
The programme has resulted in more than R$1bn ($310m) being invested in upgrading Brazilian foundries, electric components, concrete tower and blade industries, building up a chain of more than 1,000 firms and 50,000 workers as local companies began supplying the six turbine makers now set up in the country.
The turbine suppliers – which include Nordex/Acciona, GE, Gamesa, Enercon and Brazil's WEG - are now said to have capacity to assemble over 3GW a year after complying with the three-year local content programme that ended in January 2016.
“A few years ago we had only one bearings manufacturer supplying the industry, now we have four,” says Veiga.
The programme’s formula for success was simple. The government established competitive tenders for 2GW of new wind capacity a year on average. The BNDES would then offer below-market financing for project developers that chose to use equipment complying with the local-content rules.
But Brazil’s new interim government declares itself to be more ‘market-friendly’, and is preparing major changes for the role the BNDES plays. The government assumed power in April when President Dilma Rousseff was suspended to undergo final impeachment proceedings in the Senate.
Amid Brazil’s ongoing economic crisis, BNDES' interest rates were hiked several basis points in its regular quarterly readjustments and it has reduced the amount of financing for infrastructure projects from around 70% of the project's capex to 50% or less.
Now the interim government – which is widely expected by political analysts to be confirmed at a final impeachment vote in the Senate in coming days – is signalling it will revise the yearly power tenders and that the BNDES will have to speed up programmes already place to make room for more expensive private or even international financing for power projects.
That raises doubts about future demand and the continuation of acquiring locally assembled machines at prices compatible with the prices seen in the tenders.
While BNDES’ final lending rates for the power industry adds up to around 11%-12% a year, private bank financing for the sector comes at costs 500 basis points higher or more, even as competition in the tenders has brought down the price of new wind power to around R$80/MWh.
With 9GW already contracted and still to be built by 2019 in Brazil, the country’s wind industry faces a cliff of contracts after reaching 10GW this year. Of the projects still to be constructed, the industry estimates that 3GW of turbines still need to be ordered from OEMs.
“You are lucky, guys,” Veiga told the Thought Leaders audience made up of top executives from government and local industry. “We have two and half year of contracts, while other industries only have three months of contracts. That’s why everybody wants in to the wind industry”.
Veiga delivered a clear message: the wind industry needs to face up to its challenges, but changes in financing and yearly contracting need to take into account the on-going program to increase competitiveness and reduce costs – which make Brazilian-made machines 30% to 40% more expensive than similar turbines made in other countries.
High labour costs, costly logistics and expensive raw materials contribute to the higher costs.
But Veiga points out that now is the time to continue reducing costs since the supply chain is also starting to face problems, and for that, contracts for new turbines need to keep coming.
“Some of our associated companies are looking at firing people so you have the opportunity to push down prices now … if the supply chain has demand, it has the capacity to invest, it is interested in investing and it has the technology [to increase competitiveness]. We need to show that the local content programme is a success and we need to go to the BNDES and the energy ministry to ask them to keep the rules”.

Tuesday, 16 August 2016

UK Offshore wind bar raised again as UK approves 1.8GW Hornsea 2, By Andrew Lee, Recharge News, August 16 2016

The UK government has given the go-ahead for Dong Energy to develop the 1.8GW Hornsea 2 project off eastern England, currently the largest offshore wind farm planned globally.
UK energy secretary Greg Clark gave development consent in a notice posted by the UK Planning Inspectorate this morning.
The wind farm would cost £6bn ($7.8bn) to build if fully developed in the North Sea some 90km off the coast of Lincolnshire.
Clark said: “The UK’s offshore wind industry has grown at an extraordinary rate over the last few years, and is a fundamental part of our plans to build a clean, affordable, secure energy system."
Dong has already taken a final investment decision on the 1.2GW Hornsea 1 project, which is due to be finished by 2020 when it will claim the title of the world's largest operating offshore wind farm.
The Danish group is also seeking to advance the 2.4GW Hornsea 3 development, with consultation currently underway.
Dong Energy UK chairman Brent Cheshire said: "Hornsea Project Two is a huge potential infrastructure project which could provide enough green energy to power 1.6 million UK homes. A project of this size will help in our efforts to continue reducing the cost of electricity from offshore wind and shows our commitment to investing in the UK."
The consent for Hornsea 2 comes against a widening debate over the UK's future energy mix, with a final sign-off of the controversial Hinkley Point nuclear plant on hold and even sceptical commentators noting the cost reductions achieved by the offshore wind sector.
Jonathan Marshall, an analyst at the UK-based Energy and Climate Intelligence Unit (ECIU) said: "This decision shows that, despite the muddle over the new nuclear plant at Hinkley point, there are energy technologies in which the UK has carved out a position as a global leader.
"The Government’s backing of offshore wind gives the energy sector some of the certainty that has been sorely lacking recently. Consistent support has driven costs of offshore wind down so that it’s almost competitive with fossil fuel generation."
Industry body RenewableUK said: "Today’s announcement is the latest vote of confidence in the UK’s world-beating offshore wind market. This huge infrastructure project will provide much-needed investment and energy security for our country.
"Offshore wind represents a massive economic opportunity to the UK and our coastal regions. It is creating new jobs and regenerating local communities."
Hornsea 2 joins a roll-call of huge offshore wind projects off eastern England.
Iberdrola is advancing the 714MW EA1 project down the coast from Hornsea. In the same East Anglia zone, Sweden's Vattenfall has started scoping out the 1.8GW Norfolk Vanguard project with a view to a potential planning application.
However, hopes for the development of a purpose-built regional offshore wind hub suffered a setback earlier this month when Dong decided against using the planned Able Marine Energy Park to support its offshore projects.

Monday, 15 August 2016

EIB favours RE in lending shake-up, By Karl-Erik Stromsta, Recharge News, July 24 2013

A coal-fired plant in western Germany

In a hotly anticipated and uncertain decision, the EIB’s board yesterday approved new lending criteria which include a Emissions Performance Standard that will be applied to all fossil-fuel generation projects.
The new standards – in line with current EU climate policy – would already effectively rule out coal and lignite plants, and the EIB says more restrictive standards may be imposed after further consideration.
Coming on the heels of the World Bank’s decision last week to limit funding to coal plants to “rare circumstances”, the move is hugely significant, both in practical and symbolic terms, in the push to decarbonise the electricity sector in the EU and beyond.
By far the world’s largest public bank, regularly lending more than €10bn ($13.2bn) a year to the energy sector, the EIB has acted as the financial lynchpin of many large EU renewables projects in recent years, particularly in the capital-intensive offshore wind sector.
Offshore wind projects which have benefited from cheap EIB loans in recent years include WPD’s Butendiek, EnBW’s Baltic 2 and the Northwind project in Belgium, which last week attracted Sumitomo of Japan as a major investor.
The Luxembourg-based EIB has loaned €1bn to Belgian offshore wind projects alone. It also lends outside of the EU occasionally, as evidenced by a recent €55m loan it handed to a hydroelectric project in Nepal.
Yet while the EIB has slanted ever more heavily towards renewables in recent years, it has also continued to finance fossil-fuel plants – including a highly controversial €650m loan made this spring to an unabated lignite plant in Slovenia, which led one observer to refer to the bank’s stance on emissions as “schizophrenic”.
Under its new rules, however, such loans would effectively be ruled out. The new lending criteria came as part of the EIB’s first energy-sector review since 2007, with consultations stretching over ten months.
The EIB notes that its lending to power projects requiring fossil fuels has “declined significantly” over the past five years, with coal and lignite stations accounting for less than 1.5% of its total energy lending during that period.