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ENERGY
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NEWS ANALYSIS
20 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
O
n 25 July, a coalition
of Europe-based PV
manufacturers fled a
complaint with the European
Commissionover unfair competition.
Led by SolarWorld AGs vice-
president Milan Nitzschke, EU
ProSun seeks protection from
alleged dumping by Chinese frms.
The complaint follows the success
of SolarWorlds US subsidiary in a
campaign for protective tariffs in the
US, where Chinese frms now face
duties of between 31% and 250%.
In the wake of the US decision,
SolarWorlds chief executive
forecast legal action would be
underway by the end of June, with
the frst results set for spring 2013.
The [European] market is as
formed by Chinese dumping as the
US market, Nitzschke told REW.
The necessity for anti-dumping
methods is as great. Fundamentally,
the arguments do not differ here.
In a press release following the
complaint to Brussels, Nitzschke
said Chinese frms used unfair
competition to take their share of EU
solar products from virtually zero to
over 80% in only a few years.
EU manufacturers have the
worlds best solar technologies but
are beaten in their home market
due to illegal dumping of Chinese
solar products below their cost of
production, he said.
But Brussels-based trade
attorney Jennifer Patterson suggests
the EU is unlikely to set duties as
high as those imposed by the US.
Statistically, EU AD [anti-dumping]
duties are roughly one third of those
in the States, she told a conference
call hosted by the Jefferies Group.
China could also beneft from
being categorised as a market
economy by the EU. In addition, the
European Commissions judgment
is likely to take into account
community interest the impact of
tariffs beyond the PV sector.
Yet the stakes are high for Chinese
frms. Europe provides almost three
quarters of new PV capacity. US
duties while signifcant shield only
a tenth of the global market. Even
relatively low tariffs could render
Chinese products uncompetitive
and Patterson sees Karel De Gucht,
the European commissioner for
trade, as sympathetic to dumping
allegations.
THE INDUSTRY RESPONDS
Trina Solar, a leading Chinese
exporter, puts faithin thefair process
of the European Commission, said
Jodie Roussell, the frms director
of public affairs in Europe. We are
looking forward to proving that we
are not dumping and we have the
data to prove it, she told REW.
She stressed that as in the US
leading frms would be assessed
individually over the commissions
15-month investigation and
that any tariffs would vary
between frms according to the
evidence uncovered.
If we are to speculate on the
imposition of duties at high levels
such as we have seen in the
States it could set back the sector
in Europe by 10 or 15 years, she
said. Anti-dumping measures are
not in the interests of the thousands
of small European companies that
have been built around the industry.
While Nitzschke told REW that
the support of European companies
is huge because every company
producing in Europe is suffering
from Chinese dumping, many in
Europes PV sector clearly share
Roussells point of view.
EU ProSun already faces
concerted opposition from the
Alliance for Affordable Solar Energy
(AFASE), whose 70 members include
material suppliers, equipment
makers, project developers, installers
and maintenance companies. On
its website, AFASE thunders that
only about 20 solar companies
mostly anonymous are assembled
under the [EU ProSun] initiative. The
group claims the short-sighted anti-
dumping complaint would backfre
on the whole solar industry.
For Alina Bakhareva, renewable
energy research manager at Frost &
Sullivan, proponents of anti-dumping
tariffs may be set for disappointment,
whatever their complaints outcome.
I think its too late, she said.
Demand in Europe is sluggish at the
present and there is no sign that itll
pick up anytime soon. Its similar to
wind, in that demand is now shifting
to markets such as Asia.
Piers Evans
PV MARKETS
EU TRADE COMPLAINT AIMS
FOR ANTI-DUMPING TARIFFS
Frank Asbeck, SolarWorld CEO
SOLARWORLD
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____________________ ___________________
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Renewable energy continues
to grow in the face of both
economic crisis and subsidy
reductions in key markets.
The technology portfolio is
expanding, with generation
from wind, solar PV and
bioenergy growing in double
digits year-on-year. Hydropower
continues to grow steadily and
remains the largest renewable
source in absolute terms. Even
geothermal and ocean energy
are growing. That growth is
being driven by emerging and
developing markets outside the
OECD and we expect this
contribution to accelerate.
One striking trend is the
geographic spread of renewable
energy projects, often to totally
new markets. Just a few years
ago, only a handful of countries
hosted signifcant solar, wind,
or bioenergy projects but
renewable energy projects are
now taking root across Asia, in
Latin America, and in Africa and
the Middle East.
While we see growth across
renewable technologies, of
course the trends for each
vary. Solar PV is particularly
striking. Stagnating economies
and electricity demand,
combined with feed-in tariff
reductions and other support
limitations, are slowing down
European PV growth. But that
is compensated for by increases
in China, the US, Japan and
India, and also driven by a
rapid fall in component costs.
And with falling costs comes
intensifed global competition.
A consequent shake-up of the
industry should ultimately bode
well for its long-term health.
Companies surviving the current
consolidation are restructuring
and successfully transitioning
from subsidised markets to new
and potentially more competitive
market segments.
Finally, although wind and
solar often grab headlines,
hydropower remains the
largest renewable source by
a wide margin. And despite its
more sedate image, hydro's
growth continues at a healthy
pace, driven by the need for
baseload capacity in emerging
economies, and by increasing
pumped storage demands in
countries seeking to integrate
more variable renewables.
With an outlook marked by
growth and driven by emerging
economies, these trends are
likely to continue and accelerate
into the medium term.
MARIA VAN DER HOEVEN, EXECUTIVE DIRECTOR, INTERNATIONAL ENERGY AGENCY
THE BIG QUESTION
22 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
What can we expect over
the next 12 months?
In each issue, Renewable Energy World asks leading players in the
industry to give their verdict on a key question of the moment.
For this annual review edition, our readers share their hopes and
fears for the year ahead, and forecast what the industry might look
like 12 months from now.
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______________
THE BIG QUESTION
24 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
The global wind market
has undergone a dramatic
transformation over the past
two decades. In 2011, it defed
the fragile Western economic
climate with a record level of
global installations (around
42 GW). There is no doubt that
although much of the IP and
highest ranking turbine OEMs
reside in Europe, the balance of
power has shifted to Asia and
specifcally China, the number
one market in the world.
The wind industry was largely
unaffected by the credit crisis,
but now is feeling its hangover.
It is faced with an overcapacity
of turbines and some core
components, limited credit
availability, high material prices,
shortages in skilled labour,
continuing low US gas prices
and Chinese turbine and core
component suppliers producing
at lower costs than western
competitors. This has resulted
in Western companies reducing
prices and proft margins,
resulting in a strategic rethink
of their earlier ambitious targets
and aggressive investment
decisions made during the
boom of 2008. Despite this,
the investment level available to
the wind industry remains high,
but there has been a marked
evolution in the shape and
face of the investment vehicles
available, most notably in the
offshore sector.
Looking ahead over the next
12 months, the Chinese market
will still constitute the lions share
of global installations despite
a drop in annual installations,
with Europe seeing a fat level
of growth and the US seeing
a spike as companies seek to
capitalise on the PTC before it
expires at the end of 2012.
It is, however, the Latin
American, Indian, Eastern
European and European
offshore markets which are
expected to provide the
main impetus in installations
moving forward.
Its crucial that transmission
capacity is improved in time to
facilitate the expected offshore
progress in northern Europe.
Furthermore, it is expected
that there will be a continued
shift towards the use of direct
drive technology and an
increasing interest in two-bladed
wind turbines.
Rumours of our industrys death
have been greatly exaggerated.
Yes, its true that upstream
module oversupply is thinning
margins and eroding proftability.
But the global solar market will
still grow in 2012, just not at the
pace were used to. Although
its a tough time to be a solar
manufacturer, its a great time
to be a solar consumer. Thats
what matters.
For the frst and last time,
the price of solar modules has
breached the US$1/W mark, a
harbinger of cost-competitive
solar. We have fnally reached
the tipping point. New markets
are emerging, and the potential
for growth is astounding.
Of course, to achieve this
growth, solar companies will
need to endure a market that is
slowly digesting excess capacity
and ensuring that only the most
effcient producers survive. As
the industry moves through
this consolidation phase, we
expect bankability to separate
the wheat from the chaff. We are
witnessing a fight to quality,
where customers are looking for
a reliable and trustworthy brand
that can uphold its end of the
promised 25-year relationship.
In addition, innovation
will defne future leaders. In
previous years cost reductions
came from both technology
improvements and declines in
key material prices; in coming
years innovation will take centre
stage. Companies that have a
technology heritage and have
invested heavily in R&D will
be able to innovate ways to
redesign cells and modules,
to effectively use cheaper
ingredients and to scale higher
conversion effciencies.
Despite the scepticism
of critics, we can expect the
industry to continue on a
moderate growth trajectory in
2012 and to accelerate into
2013. The consumers good
fortune bodes well for the
industry as our ultimate goal is
to make solar power a viable
and affordable energy choice.
We knew that solar
manufacturers would have to go
through this ultra-competitive
Valley of Death'. Consolidation
is maturation. Amidst unfounded
political scepticism of our
industrys long-term health and
potential, we must stay focused
on what matters.
BIRGER T. MADSEN, DIRECTOR, NAVIGANTS BTM CONSULT APS
ANDREW BEEBE, CCO, SUNTECH
TILDY BAYAR
SUNTECH
Rumours of our
industry's death
have been greatly
exaggerated.
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________________
THE BIG QUESTION
26 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
There is still a lot of work to do
to move UK climate chief Lord
Stern's central thesis (that the true
cost of not acting on environmental
issues is far greater than the
cost of investing in alternative
technologies) into the political
mainstream. It is being questioned
whether green is compatible with
growth, when in fact it should
be synonymous. Community
led cleantech companies offer a
viable approach, commercialising
disruptive innovations without the
heavy investment the sector has
demanded in the past.
In solar, for example, new
business models will be enabled
by technology advances bringing
existing low-cost industries into
the supply chain. This will require
equity fnance to build some
exciting early stage SMEs [small
and medium-sized enterprises]
in a capital effcient manner.
The fnancial backdrop is not
healthy: for example, seed stage
venture investment in the UK has
dropped every year from 2006
(about 400 million [US$620
million]) to last year (about 10
million [$16 million]). This is
seriously affecting the ability of
UK cleantech entrepreneurs to
get their ventures funded.
There is a perception that
early stage ventures do not
offer an attractive risk-reward
profle. The reality is that seed
stage investment has often been
through publicly backed funds
with signifcant restrictions on
follow-on investment. These
funds have therefore shouldered
the operational risk inherent in
backing early stage, high growth
companies some of which do
fail without being able to invest
in the winners that do eventually
emerge. This negatively skews
the true value of early stage
investing on average.
The UK urgently needs to
re-seed its early stage venture
capital market, with substantial
funds going into cleantech
sectors. A fully functioning
seed fund will do 80% of its
deals in seed, but 80% of the
money goes into later rounds.
Community-led cleantech will
help returns, but government
help is needed to correct the
perception that early stage is
not an attractive place to invest.
Once corrected, the market will
take over the job.
In the end the sector
needs to stand on its own feet.
Ironically this requires more early
stage funding so the fnancing
of disruptive innovation can
be shown to be attractive and
therefore self-sustaining.
IAN BRITTON
ANDREW OLDFIELD, HEAD OF CLEANTECH,
MERCIA FUND MANAGEMENT
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________________
THE BIG QUESTION
RENEWABLE ENERGY WORLD JULY-AUGUST 2012 27
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The renewables industry's
circumstances have changed
fundamentally over the past
fve years. Renewables became
mainstream, economic, and
grew out of their sometimes wild
teenage years. And even faster
growth across all renewable
energy technologies is more
important than ever.
A certain amount of climate
change is now 'locked in',
based on the amount of CO
2
and other greenhouse gases
emitted into the atmosphere
since industrialisation began.
On the 25th anniversary of
the Chernobyl catastrophe
yet another nuclear incident
underlined the urgent need to
rethink global energy strategies.
The Fukushima disaster sparked
a surge in global renewable
energy and made at least some
governments reconsider their
energy approach. At the same
time, the poor state of the
global economy has resulted
in decreasing carbon prices,
some governments reducing
support for renewables, and a
stagnation of overall investment,
particularly in the OECD. Rising
oil demand is putting pressure
on supply, causing prices
to rise and making possible
increased exploration for
'marginal and unconventional'
oil resources, such as regions
of the Arctic newly accessible
due to retreating polar ice, and
environmentally destructive tar
sands in Canada.
For almost a decade it
looked as if nothing could halt
the growth of the renewables
industry. But the economic crisis
and its continuing aftermath
slowed growth and dampened
demand. While the industry is
slowly recovering, increased
competition, particularly in the
solar PV and wind markets, has
driven down prices and shaved
margins to the point where most
manufacturers are struggling
to survive. PV prices fell more
than 60% in the past two years,
with costs not always following.
More production capacity not
only for PV is a must to get to
the market size needed to save
the climate and supply enough
energy to growing economies
such as China and India.
A renewable energy market
of around 200 GW by 2020 is
required. The big question is
whether governments around
the world will provide the reliable
policy framework needed, and
if infrastructure will be adapted
to renewables not the other
way round.
SVEN TESKE, RENEWABLE ENERGY DIRECTOR, GREENPEACE INTERNATIONAL
BP
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POLICY & MARKETS: REN21 GLOBAL STATUS REPORT
28 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
GREEN GROWTH
STILL SETTING
THE PACE
RENEWABLE ENERGY MAINTAINING
KEY INVESTMENT MOMENTUM
Renewable energy markets and policy frameworks have evolved rapidly in recent years.
Despite a challenging economic backdrop, this years REN21 global renewables report
reveals growth across all sectors. Janet Sawin presents the highlights.
Renewables accounted for almost half of the estimated
208 GW of electric capacity added globally during 2011.
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POLICY & MARKETS: REN21 GLOBAL STATUS REPORT
RENEWABLE ENERGY WORLD JUNE-JULY 2012 29 RENEWABLE ENERGY WORLD JULY-AUGUST 2012 29
R
EN21s Renewables Global Status Report an overview of
renewable energy market, industry, investment and policy
developments worldwide, relying on an international network of more
than 400 contributors reveals that the sector continued to expand
across all its various segments.
Renewable sources supplied an estimated 16.7% of global fnal
energy consumption in 2010. Of this total, modern renewable energy
(as opposed to traditional biomass) accounted for an estimated 8.2%, a
share that has increased in recent years, while the share from traditional
biomass has declined slightly to an estimated 8.5%. During 2011,
modern renewables continued to grow strongly in all end-use sectors.
In the power sector, renewables accounted for almost half of the
estimated 208 GW of electric capacity added globally during 2011. Wind
and solar photovoltaics (PV) accounted for almost 40% and 30% of new
renewable capacity respectively, followed by hydropower (nearly 25%).
By end 2011, total renewable power capacity worldwide exceeded
1360 GW, up 8% over 2010; renewables comprised more than 25% of
total global power-generating capacity (estimated at 5360 GW in 2011)
and supplied an estimated 20.3% of global electricity. Non-hydropower
renewables exceeded 390 GW, a 24% capacity increase over 2010.
The heating and cooling sector offers an immense yet mostly
untapped potential for renewable energy deployment. Heat from
biomass, solar and geothermal sources already represents a signifcant
portion of the energy derived from renewables, and the sector is
slowly evolving.
Renewable energy is used in the transport sector in the form of
gaseous and liquid biofuels; liquid biofuels provided about 3% of global
road transport fuels in 2011, more than any other renewable energy
source in the sector.
MARKET AND INDUSTRY HIGHLIGHTS
Solar PV grew the fastest of all renewable technologies between 2006
and 2011, with operating capacity increasing by an average of 58%
annually, followed by concentrating solar thermal power (CSP), which
increased almost 37% annually over this period from a small base, and
wind power (26%). Demand is also growing rapidly for solar thermal
heat systems, geothermal ground-source heat pumps, and some solid
biomass fuels, such as wood pellets. Biodiesel production expanded in
2011 but ethanol production was stable or down slightly compared with
2010. Hydropower and geothermal power are growing globally at rates
averaging 2%3% per year.
Wind power capacity increased by 20% in 2011 to approximately
238 GW by year-end, seeing the greatest capacity additions of any
renewable technology. As in 2010, more new capacity was added in
developing countries and emerging markets than in OECD countries.
China accounted for almost 44% of the global market (adding slightly
less capacity than it did in 2010), followed by the US and India; Germany
remained the largest market in Europe.
A year of extraordinary market growth, solar PV added almost
30 GW of operating capacity, increasing total global capacity by
74% to almost 70 GW. For the frst time ever, PV accounted for more
capacity additions in the EU than any other technology. While the EU
again dominated the global market, led by Italy and Germany, markets
expanded in other regions, and China has rapidly emerged as the
dominant player in Asia. Module manufacturing continued its marked
shift to Asia, mainly at the expense of European frms.
The growing use of biomass for heat, electricity and transport
fuels has resulted in increasing international trade in biomass fuels in
recent years, particularly wood pellets, biodiesel and fuel ethanol (for
more on this, see page 7680). Biomass, in the form of both solid
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POLICY & MARKETS: REN21 GLOBAL STATUS REPORT
30 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
and gaseous fuels, continues to provide the majority of heating
produced with renewable energy sources. Markets are expanding
rapidly, particularly in Europe, where biomass is used increasingly in
district heat systems. Biomass power capacity increased from about
66 GW in 2010 to almost 72 GW at the end of 2011. The US leads
the world in biomass-based power generation, with other signifcant
producers in the EU in addition to Brazil, China, India, and Japan.
Solar heating capacity increased by an estimated 27% in 2011
to reach approximately 232 GWth, excluding unglazed swimming
pool heating. China again led the world for solar thermal installations,
with Europe a distant second. Most solar thermal is used for water
heating, but solar space heating and cooling are gaining ground,
particularly in Europe.
More than 450 MW of concentrating solar thermal power
(CSP) was installed in 2011, bringing global capacity to almost
1760 MW. Spain accounted for the vast majority of capacity
additions, while several developing countries launched their frst
CSP plants. Although CSP faced challenges associated with rapidly
falling PV prices and the Arab Spring, which slowed development
in the MENA region, signifcant capacity was under construction
around the world by the years end.
Geothermal energy provided an estimated 205 TWh (736 PJ) in
2011, with two thirds in the form of heat and the remaining one-third
as electricity. At least 78 countries used direct geothermal energy in
2011. Most of the growth in direct use was associated with ground
source heat pumps (GHP), which can provide heating and cooling
and have experienced growth rates averaging 20% annually. Growth
in electric capacity was modest, with an estimated 11.2 GW in place
at years end, but the rate of deployment is expected to accelerate.
An estimated 25 GW of new hydropower capacity came on
line in 2011, increasing global installed capacity by nearly 2.7% to
approximately 970 GW. Hydropower continues to generate more
electricity than any other renewable resource, with an estimated
3400 TWh produced during 2011. Asia was the most active region
for new projects. Hydropower is increasingly providing balancing
services, including expansion of pumped storage capacity not
counted in 970 GW total in part to accommodate the increased
use of variable solar and wind resources.
After years that saw development of only small pilot projects,
global ocean power capacity almost doubled in 2011. The launch
of a 254 MW tidal power plant in South Korea and a 0.3 MW wave
energy plant in Spain brought total global capacity to 527 MW. A
number of additional projects small pilot- and utility-scale were
under development in 2011.
Across most technologies, renewable energy industries saw
continued growth in equipment manufacturing, sales and installation
during 2011. PV and onshore wind power experienced dramatic
price reductions resulting from declining costs due to economies
of scale and technology advances, but also due to reductions or
uncertainties in policy support. At the same time, some sectors
particularly PV manufacturing have been challenged by falling
prices, declining policy support, the international fnancial crisis, and
tensions in international trade.
GROWTH BY COUNTRY AND REGION
Renewables represent a rapidly growing share of energy
supply in a number of countries and regions. In the EU,
renewables accounted for more than 71% of electric capacity
additions in 2011, bringing renewable energys share of total
electric capacity to 31.1%. PV alone represented almost
47% of capacity additions.
Germany continues to lead in Europe and to be at the forefront
globally, remaining among the top users of many renewable
technologies for power, heating and transport. In 2011, renewables
provided 12.2% of Germanys fnal energy consumption, 20% of
electricity consumption (up from 11.6% in 2006), 10.4% of heating
demand (up from 6.2%), and 5.6% of transport fuel (excluding
air traffc).
In the US, renewable energy made up an estimated 39% of
electric capacity additions in 2011. The share of US net electricity
generation from non-hydropower renewables has increased from
3.7% in 2009 to 4.7% in 2011. Nine states generated more than
10% of their electricity with non-hydro renewables in 2011, up from
two states a decade ago. All renewables accounted for about 11.8%
of US primary energy production in 2011, up from 10.9% in 2010.
China ended 2011 with more renewable power capacity than
any other nation, with an estimated 282 GW; one quarter of this total
(70 GW) was non-hydro. Of the 90 GW of electric capacity newly
installed during the year, renewables accounted for more than one
third, and non-hydro renewables for more than one ffth.
The top seven countries for non-hydro renewable electric
capacity China, the US, Germany, Spain, Italy, India and
Japan accounted for about 70% of total capacity worldwide.
By region, the EU was home to nearly 44% of global non-hydro
renewable capacity at the end of 2011. The BRIC nations accounted
for almost 26%, but virtually all of this capacity is in China, India
and Brazil.
A DYNAMIC POLICY LANDSCAPE
At least 118 countries, more than half of which are developing,
had renewable energy targets in place by early 2012, up from
109 in early 2010. Renewable energy targets and support policies
continued to be a driving force behind increasing markets, despite
some setbacks resulting from a lack of long-term policy certainty
and stability in many countries.
The number of offcial targets and policies supporting investments
in renewable energy continued to increase in 2011 and early 2012,
Renewable power capacities, EU 27, BRIC, and top seven
countries, 2011. REN21
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The Americas: (Intl +1) 713-354-6100 / EMEA: (Intl +33) 2-35-25-5225
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POLICY & MARKETS: REN21 GLOBAL STATUS REPORT
32 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
but at a slowed adoption rate. Several countries undertook signifcant
policy overhauls resulting in reduced support; some changes were
intended to improve existing instruments and achieve more targeted
results as renewable energy technologies mature, while others were
part of the trend towards austerity measures.
Renewable power generation policies remain the most common
type of support policy; at least 109 countries had some type of
renewable power policy by early 2012, up from the 96 countries
reported last year.
Feed-in-tariffs (FiTs) and renewable portfolio standards (RPSs)
are the most commonly used policies in this sector. FiT policies were
in place in at least 65 countries and 27 states by early 2012. While
a number of new FiTs were enacted, most related policy activities
involved revisions to existing laws, at times involving controversy
and legal disputes. Quotas or renewable portfolio standards
were in use in 18 countries and at least 53 other jurisdictions,
with two new countries having enacted such policies in 2011
and early 2012.
Policies to promote renewable heating and cooling continue
to be enacted less aggressively than those in other sectors, but
their use has expanded in recent years. By early 2012, at least
19 countries had specifc renewable heating/cooling targets in place
and at least 17 countries and states had obligations/mandates to
promote renewable heat. The focus of this sector is still primarily in
Europe, but interest is expanding to other regions.
Regulatory policies supporting biofuels existed in at least
46 countries at the national level and in 26 states and provinces
by early 2012, with three countries enacting new mandates during
2011 and at least six increasing existing mandates. Transport
fuel-tax exemptions and biofuel production subsidies also existed in
at least 19 countries. At the same time, Brazils mandated ethanol
blend level was reduced, partly in response to low sugarcane yields,
while long-term ethanol support policies in the US were allowed to
expire at years end.
INVESTMENT TRENDS
Global new investment in renewable power and biofuel production
capacity rose 17% to a record US$257 billion in 2011. This was
more than six times the fgure for 2004 and almost twice the total
investment in 2007, the last year before the acute phase of the
recent global fnancial crisis. This increase took place while the
cost of renewable power equipment was falling rapidly and while
there was uncertainty over economic growth and policy priorities
in developed countries. Including large hydropower, net investment
in renewable power capacity was some $40 billion higher than net
investment in fossil fuel capacity.
One highlight of 2011 was the strong performance of solar
power, which soared past wind power, the biggest single sector
for investment in recent years (although total wind power capacity
added in 2011 was higher than solar).
The top fve countries for total investment were China, which
led for the third year running, followed closely by the US, then by
Germany, Italy and India. The US was the clear leader if investment
in energy effciency, smart grids and other energy-smart technologies
is included. India displayed the fastest expansion of any large
renewables market in the world, with 62% growth. Developing
countries saw their relative share of total global investment slip
back after several years of increases, accounting for $89 billion
of new investment in 2011, compared with $168 billion in
developed countries. There is a long way to go, but the report shows
that more people are deriving power from renewables as capacity
grows, prices fall, and renewables share of global energy rises.
Janet L. Sawin is research director and lead author of the
REN21 Renewables Global Status Report.
For more information on REN21 and to download a copy of the
full report, visit: www.ren21.net
e-mail: rew@pennwell.com
This article is available on-line. To comment on it or forward it to
a colleague, visit: www.RenewableEnergyWorld.com
SPECIAL
FOCUS: RURAL
RENEWABLE
ENERGY
Signifcant technological innovations and cost reductions,
along with improved business and fnancing models,
are extending the opportunities for individuals and
communities in developing countries to implement renewable
energy solutions.
For a majority of very remote and dispersed users,
decentralised off-grid renewable electricity is less expensive
than extending the power grid. At the same time,
developing countries have begun deploying more and more
grid-connected renewable capacity, which is in turn expanding
markets and further reducing prices, potentially improving the
outlook for rural renewable energy developments.
Rural renewable energy markets in developing countries
differ signifcantly across regions: for example, Africa has by
far the lowest rates of access to modern energy services,
while Asia presents signifcant gaps between countries, and
Latin Americas rate of electrifcation is quite high. In addition,
active players in this sector are numerous, and participants
differ from one region to the next. The rural renewable energy
market is highly dynamic and constantly evolving; it is also
challenged by the lack of structured frameworks and of
consolidated data sets.
In addition to a focus on technologies and systems, most
developing countries have started to identify and implement
programmes and policies to improve the ongoing operational
structures governing rural energy markets. Most countries are
developing targets for electrifcation that include renewable
off-grid options and/or renewably powered mini-grids; there is
also some use of grid-connected renewable electricity. Such
developments are increasing the attractiveness of rural energy
markets and developing economies for potential investors.
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WIND: BTM GLOBAL MARKET UPDATE
34 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
WIND MARKET
MOVES TO
MATURITY
The 17th annual International Wind Energy Development World Market
Update from Navigants BTM Consult depicts a maturing industry that is
still growing, albeit more slowly. Edward Milford picks out some of the
key details.
A 2.3 MW offshore machine installed at
Redong, China SIEMENS
GROWTH RATE SLOWS
BUT FORECAST HEALTHY
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36 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
WIND: BTM GLOBAL MARKET UPDATE
W
hen can a new industry like wind power be considered mature?
One sign is surely when it rises and falls in line with the global
economy, indicating that it has left the shelter of state support and
is starting to make its way in a less-regulated global market. BTM
Consults recently released 17th annual World Wind Market Update
picks this transformation as a headline trend.
The wind industry managed to grow in 2011 despite worldwide
economic woes recording another record year with 41.7 GW of new
installations but the annual rise in new capacity was only 6%. While
this fgure was slightly up from a 3% increase in 2010, annual expansion
in new capacity fell far short of the 23% average for the previous fve
years, or the 42% registered in 2008 on the eve of the fnancial crisis.
Interestingly, though, the rise in capacity came from slightly fewer
turbines. In 2011, 23,460 new units were installed, a 3.7% decline from
24,558 in 2010. Meanwhile, the average wind turbine is now rated at
1.7 MW, up from 1.6 MW the year before.
In terms of overall capacity, the 41.7 GW installed last year raises
the global total by 21% to 241 GW, which should cover about 2.3% of
world electricity demand in 2012. As recently as 2003, total installed
wind capacity was just under 40 GW less than the amount installed
last year alone and provided less than 0.5% of the worlds electricity.
Within another decade, we should expect to see wind energy covering
more than 8% of global electricity, and 10% by the mid-2020s.
The key markets of Europe, North America and Asia despite
switching their relative importance continue to host almost all global
wind capacity. But markets such as Latin America and Africa are now
also stirring. The long-awaited offshore market is, as ever, evolving
more slowly than expected.
ASIA
In 2011, 52.1% of new global capacity was installed in Asia and mainly
China, where 17.6 GW was installed, fully 42% of global installations.
This fgure was actually down slightly from 18.9 GW in 2010, when
China made up 48% of all global installations. But China still extended
its lead in overall wind capacity with 62 GW well ahead of the US,
ranked second with 47 GW, and Germany, placed third with 29 GW.
After a surge in installations, Chinas wind expansion is now
poised to slow, though remaining stable and, one hopes, sustainable.
While the market hinges on central government support, China has a
signifcant wind turbine manufacturing base the government will want
to see fourish. On the downside, transmission issues continue to drag
on development, with almost a quarter of installed wind power yet to
be grid connected.
Asias other wind hotspot is India. Its market has also been affected
by government policies and has experienced several stop-start cycles.
But 2011 was a good year, with 3.3 GW of new capacity installed.
While this fgure is barely more than one sixth of Chinas new capacity, it
makes India the third-largest market by annual installation. Indias wind
capacity now totals 16 GW, about 6% of its overall installed power
capacity. The industry now benefts from several supportive regulatory
measures as well as a signifcant wind turbine manufacturing base.
By comparison with the two Asian giants, the rest of the region
saw very little activity, with just 74 MW installed, mostly in Taiwan. Asian
capacity excluding China and India is only slightly more than 600 MW,
or 1% of Chinas total.
EUROPE
Five years ago Europe was the largest regional market, with 51% of
new installations. That fgure has now slipped to 24.5%. While Europe
remains the largest region in cumulative terms with 97.5 GW of
installed capacity its relative importance for new installations has
faded. In 2011, 10.2 GW of wind capacity was installed in Europe, a
7% decline from the total of 10.9 GW installed in 2010.
On a European level, policy broadly supports wind power, but it is
at the national level where it really makes a difference. Germany remains
the largest national market, with 2 GW installed in 2011, bringing
its total wind capacity up to 29.2 GW. This fgure covers signifcant
re-powering of older turbines, which added 238 MW, along with
a greatly reduced offshore component of just 30 MW down from
108 MW in 2010 and decommissioning of 123 MW of turbines.
Overall, wind power generated an impressive 10.6% of all electricity
used in Germany during the year.
The UK added 1293 MW of wind power in 2011, the second
largest European increase, although a drop of 15% from the 2010
fgure. The country also leads in offshore installations, with 330 MW of
new capacity bringing its offshore total to 2.1 GW, just under 30% of
the national total of 7.1 GW. While many projects are now at the pre-
planning stage both onshore (5.2 GW) and offshore (7 GW) rising
political opposition may slow development. But wind already provides
4.5% of UK electricity, with one third of this from offshore wind farms.
Spain had the third largest fgure for new installations with
1050 MW, bringing its total to 21.3 GW, the second highest total in
Europe. But new capacity slipped by 31% from 2010, leaving the
country behind the target of 22.1 GW set by the previous government.
Financial turmoil and a radical overhaul of support for renewables in
January 2012 are likely to hit future installations, although wind already
provided nearly 16% of Spanish electricity demand in 2011.
Elsewhere in Europe, Italy, France and Sweden were ranked fourth,
ffth and sixth for new installations. Italys fgure of 950 MW edged up
on 2010, while Frances 875 MW was a 26% fall. Swedens 763 MW
brings its total to 2.9 GW and gives wind a 4.5% penetration fgure for
the country. Greece, Poland, Portugal, Romania and Turkey all installed
over 350 MW signifcant fgures in much smaller markets.
NORTH AMERICA
The US installed 6.8 GW of new capacity in 2011, up 31% from the
2010 fgure but well short of the highs of 2008 and 2009. Total capacity
has now reached 47 GW and the US is the second largest market after
China in both new capacity installed and cumulative installations.
As always, US installations hinge on the tax regime. A 30% cash
grant as an alternative to the Investment Tax Credit (available in lieu of
the Production Tax Credit) applied to projects in operation before the
end of 2012 that had started construction before the end of 2011. This
has not been renewed. The longer-standing Production Tax Credit is
due to expire at the end of 2012. While activity in 2012 is holding up
Table 1: Global installed capacity in 2010 and 2011
BTM CONSULT A PART OF NAVIGANT MARCH 2012
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Answers for infrastructure and cities.
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WIND: BTM GLOBAL MARKET UPDATE
38 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
reasonably well, longer-term planning continues to be diffcult due to
uncertainty about the tax credits that may be available.
The other key feature of the US wind industry is the variation
in installations between states, refecting great differences in wind
resources, economies and policy. The four states with the largest levels
of installation are Texas, Iowa (which sells a lot of wind energy to other
states for renewable credits), California and Illinois. While California has
missed its 2010 target of 20% renewables penetration, it has set a
goal of 33% by 2020, and Illinois has set a target of 25% by 2025.
Installations in Canada almost doubled from 2010 to 1267 MW,
bringing total capacity to 5.2 GW. This in turn is set to more than
double in the next fve years with another 6 GW contracted. A target
of 20% of electricity from wind by 2025 looks eminently achievable.
OTHER MARKETS
Latin America saw some signifcant growth, with Brazil, Mexico and
even Argentina seeing quite big jumps in installed capacity. Australia
and New Zealand both continued with steady growth, although
installations in Japan dropped in 2011 as the original FiT system
expired. Only small increases were recorded for Africa, the Middle East
and Russia and the transition economies.
OFFSHORE WIND
Only 470 MW was installed offshore in 2011, a drop of nearly two
thirds from 2010. Almost all of this was in Europe, with just two
non-European projects, both in China. Within Europe, almost all
development was in UK waters. The cumulative installed offshore
capacity is now just short of 4 GW, or 1.6% of global installations.
Almost as much capacity, about 3.89 GW, is under construction,
and 1.5 GW of this is due onstream in 2012. Offshore wind continues
to be hampered by longer delivery times, siting diffculties and limited
supply of equipment such as tending vessels and cabling. Turbine
availability has also been an issue with rising prices for larger turbines.
But eight suppliers now have turbines larger than 3 MW available for
offshore deployment, and further progress should now be possible.
THE SUPPLY SIDE
Supplying wind turbines is, clearly, a global business. The six largest
manufacturers are all in different countries and the top 10 now account
for 78.5% of global production, see Table 2. Vestas of Denmark
remains the leading manufacturer with a 12.9% market share. Chinas
domestic market has provided an excellent platform for Chinese
manufacturers, and there are now four in the top 10 in the world (and
seven in the top 15).
Chinese manufacturers hold 90.8% of their domestic market
and are now exporting more, albeit from a low base. In 2011, fve
Chinese manufacturers supplied 140 MW in turbines across fve
foreign markets. But none of them operate in more than fve export
markets, while the six non-Chinese manufacturers in the global top 10
all operate in more than 10 markets.
Market share fgures appear to be converging further. Last years
top three manufacturers (Vestas, Sinovel and GE) all lost market share,
while the other seven in the top 10 all gained market share. The overall
share of the market enjoyed by the top 10 has declined steadily in the
last fve years, from 90.7% in 2007 to 78.5% now.
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WIND: BTM GLOBAL MARKET UPDATE
RENEWABLE ENERGY WORLD JULY-AUGUST 2012 39
This partly refects the emergence of more manufacturers in China,
raising price competition to bring down prices by about 40% in the past
three years. This has been coupled with a move to develop machines
that can be effective in lower wind speed areas, with larger rotor
diameters and higher effciencies. There has also been an increase in
the average size of wind turbines being supplied.
FORECAST TO 2016 AND BEYOND
In many ways it is becoming increasingly diffcult to forecast the likely
developments with confdence. The political will that had propelled
growth has now cooled in many parts of the world. Almost everywhere
the economic situation is much weaker. However, the industry is now
larger, and with scale comes, to some extent, more predictability.
Looking at the market country-by-country and assessing a range of
factors and, in particular, support mechanisms the report forecasts
growth of 3.6% in 2012, of about 10% in subsequent years, and,
possibly, of nearer 20% in 2016. This would more than double existing
installed capacity and see it at 510 GW by the end of 2016, when wind
power should meet about 4.4% of global electricity demand.
If these forecasts are accurate, two other important signs of the
industrys maturity could be apparent. First, these growth rates are
steadier and more sustainable. While national policies will affect growth
in individual countries, sometimes quite dramatically, the number and
range of markets should afford signifcantly more stability worldwide.
Above all, however, the industry is now at a scale where the amount
of electricity it is providing is unarguably more than just a politically
convenient token, an almost invisible slice of a global pie chart for
which there are ready substitutes. Real maturity comes from supplying
in a signifcant quantity and at an economic price, something for which
there is real, lasting demand and that is even without mentioning
other key factors, such as wind powers very low emissions and lack
of fuel costs.
Edward Milford is the publisher emeritus of Renewable Energy
World magazine
e-mail: rew@pennwell.com
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WAsP Engineering 3
Prediction of wind conditions
for turbine safety
Main features:
Extreme wind speeds
Turbulence statistics
Wind profiles
Wind shear
Flow inclination angle
Fast linear flow model
Spatial and transect views
Turbulence simulation
Visual Basic scripting
IEC 61400-1
site assessment with
Windfarm Assessment
Tool (requires WAsP 10)
DTU Wind Energy (formerly Ris DTU) Roskilde Denmark Tel +45 46 77 59 43 wasp@risoe.dtu.dk
New in version 3: Revised extreme-wind model Spatial views in Google Earth Revised obstacle
model New WAT launcher Flow model set up directly from grid maps Work with larger model domain
Further information about WAsP Engineering 3, related products and training courses at www.wasp.dk
Table 2: The top 10 suppliers in 2011.
BTM CONSULT A PART OF NAVIGANT MARCH 2012
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40 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
PV: MARKET ANALYSIS
PV STILL FACING
A BUMPY RIDE
As the PV industry is at the beginning of a potentially long correction, longer if global economies slip back into
recession, a return to strong margins is unlikely in the near term. Solar manufacturers will have to learn to work
in a low incentive environment, argues leading analyst Paula Mints.
T
o encourage the continuation of necessary incentives as well
as utility participation, the photovoltaic industry has promised
a consistent (and signifcant) reduction in module prices along with
grid parity with conventional energy sources. The PV industry has
also promised to do this without subsidies and it may have to keep
its promises.
Conventional energy producers have not promised low energy
prices without subsidies and are expected to continue to enjoy
without much negative press indirect and direct subsidies for
many years to come. This is the unfortunate irony that all industry
participants face: they must participate enthusiastically in a process
that leads to low margins, losses, failures and therefore a lack of the
very R&D funds necessary to continue innovating.
No one ever said that getting out of bed in the morning was fair,
and few worthwhile causes are ever achieved without a fght. But,
sadly, a growing list of companies have not been able to compete in a
climate of artifcial pricing for PV technology along with expectations
that prices will fall. That in many cases these expectations come
from the very companies that could not compete in the current
climate is also ironic.
Manufacturers and demand-side players alike have all
participated in the rush-to-the-bottom pricing strategy. As if low
margins and company failures were not enough, in March the US
imposed preliminary duties on cells and modules imported from
China. In May more signifcant duties were imposed with the fnal
ruling expected in October. Aside from the infghting this action
engendered among already beleaguered PV industry participants, it
appears that the importers of the technology will be responsible, at
least temporarily, for paying the duties outright, or, in the best case,
putting up a bond with collateral. In sum, an unexpected outcome
of the trade dispute is the fnancial pressure brought to bear on US
system integrators and installers. These small business people are
the backbone of the US solar industry.
A TALE OF TWO QUARTERS
To highlight the highly competitive environment in which PV
manufacturers currently operate, Q4 2011 and Q1 2012 revenue
and shipment results were observed for seven manufacturers First
Solar, Suntech, SunPower, Trina, Yingli, JA Solar and REC Solar
providing a representative sample of the pressures currently faced
WORKING IN A LOW
INCENTIVE WORLD
PV manufacturers continue to face signifcant market pressure. SUNTECH
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42 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
PV: MARKET ANALYSIS
High debt levels in Spain (formerly a strong market) and Italy
(a strong through wavering market) continue to shake confdence.
Though the pro-bailout party won the recent Greek election by a
small margin, this does not ensure that austerity measures will
succeed in that country.
In the US, the effects of a slow and bumpy recovery may
result in a version of austerity and election year politics and
innovative government spending programmes are generally not
mutually compatible.
TECHNOLOGY TUSSLE
Continued low pricing for crystalline technologies is stressing the
competitiveness of thin flms, particularly amorphous silicon (a-Si)
and tandem junction amorphous. Closures of a-Si manufacturing
pioneers such as Uni-Solar have raised questions in the minds
of investors and other observers. Cadmium telluride (CdTe)
manufacturer First Solar has shuttered plans to increase capacity
and announced plans to focus on stable markets without incentives.
Other CdTe manufacturers such as Calyxo, Abound and PrimeStar
are apparently struggling to remain competitive in the current hostile
market environment.
Investors remain interested in CIGS/CIS technology, with
Manz acquiring Wurth Solar, and Nanosolar continuing to garner
investment. US-based Stion has licensed its CIGS technology to
TSMC, which expects to proftably manufacture the technology at the
same capacity level as Japans Solar Frontier. Good intentions aside,
execution will remain diffcult while crystalline prices remain low.
CIGS players are not immune to failure, with German manufacturer
Solecture fling for bankruptcy in May 2012, while an empty parking
by manufacturers. Figure 1 presents revenues for the two quarters
observed. During this period only Yingli Solar showed an increase in
quarterly revenues from Q4 2011 to Q1 2012.
Shipments for the seven manufacturers for the two quarters
were fat, at 2.7 GWp in Q4 2011, and 2.6 GWp in Q1 2012, with
revenues decreasing by 16% from US$3.2 billion in Q4 2011 to
$2.7 billion in Q1 2012. In good news for grid parity, but desperately
bad news for six of the seven manufacturers observed, continued
low average selling prices indicate that 2012 will be a diffcult year
for solar manufacturers. Cell manufacturer JA Solars average
price in Q4 2011 was $0.78/Wp, falling 10% to $0.70/Wp in
Q1 2012. Average prices for the other six manufacturers, considered
together, was $1.29/Wp in Q4 2011, falling by 16% to $1.09/Wp in
Q1 2012. Removing SunPowers premier product, the fve remaining
manufacturers had an average price of $1.17/Wp in Q4 2011, falling
by 15% to $1.00/Wp in Q1 2012.
Figure 2 presents shipments for the seven manufacturers for
Q4 2011 to Q1 2012. Only Yingli and SunPower showed an increase
in shipments for the observed period.
WHERE IS IT GOING AND WHAT IS IT COSTING?
At the end of 2012, when the gigawatts are counted, it is likely to
be a strong year for shipments and installations and a poor year
for proftability. There is a strong likelihood of further failures and
consolidations. At the end of the year there will likely be fewer
manufacturers and slightly higher prices leading to a fat overall
average price in 2012 over 2011.
Figure 3, on page 44, offers average prices from 2001 through
a 2012 estimate, refecting averages for all buyer categories to the
frst point of sale in the market. Currently, manufacturers are selling
inventory at extremely low prices, as noted earlier. Demand-side
inventory is also being resold. In the US, some demand participants
may need to sell inventory to meet the obligations of the Commerce
Department. Inventory is almost always sold at a lower rate than
the original price point. For 2012, as indicated by current quarterly
pricing, high inventory and expectations for lower prices along with
lower incentive rates are holding prices down, and prices will go down
further before they tick up. In market conditions where demand-side
participants sell inventory, while manufacturers continue selling new
product, manufacturers are essentially competing with themselves.
This is not a healthy market situation.
The always promising US market for solar installations may
suffer in 2012 as installers and system integrators struggle with the
previously mentioned cash fow problems. China has announced a
plan to install ~5 GWp and, given that the countrys manufacturers had
16 GWp of manufacturing capacity in 2011 (46% of the global total),
along with continuing losses for most of its manufacturers, installing
some of the excess capacity domestically makes sense. There have
already been failures among the lower tier manufacturers in China,
and it is highly likely that moving forward there will be consolidation
among the remaining manufacturers, even frst tier participants.
Germany installed 2.3 GWp from January through April and,
despite new complexity in its incentive programme and more
frequent decreases in its tariff, it is on track to install 67 GWp in
2012, likely signalling the end to its FiT programme. Regarding its FiT,
the pioneering efforts of Germany moved the PV industry signifcantly
forward in terms of understanding how to effciently deploy the
technology. That the original FiTs were too generous and have proved
unmanageable is not the point. Now the industry needs to catch up
with its learning curve and mature some of its hard won knowledge.
Figure 1: Q4 2011 and Q1 2012 revenues for select frms NAVIGANT
Figure 2: Q4 2011 and Q1 2012 shipments for select frms NAVIGANT
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RENEWABLE ENERGY WORLD JULY-AUGUST 2012 47
SOLAR THERMAL: CHINESE CONSOLIDATION
SHAKE OUT FOR
SOLAR THERMAL
Flat-plate solar collectors are installed on balonies outside
workers dormitories at the Sunrain Group factory in Louyang
in Henan province, China. LUCIO MESQUITA
Chinas Big Four solar thermal frms, with their
vast distribution networks, are racing ahead of a
fast-consolidating market, reports Brbel Epp
in this second feature of a two-part series.
COMPETITION HEATS UP AS
CONSOLIDATION GATHERS PACE
O
n Saturday afternoon, when residents are likely to be at home,
a truck carrying solar water heaters pulls up outside a new
apartment block in Jinan city. As Linuo Paradigmas sales team
starts assembling the heaters, a crowd of curious onlookers gathers.
Heating your showers with these is far cheaper than using gas or
electricity, the salespeople tell their audience. By the time the truck
leaves that evening, several contracts have already been signed.
For Zhanshen Cui, manager of the Jinan Branch of Linuo
Paradigma, direct marketing can give a vital edge in an increasingly
ferce tussle for sales. He runs six shops in Jinan, a city of six million
in the coastal province of Shandong. Over a year, each outlet can
sell about 1600 systems. But competition is getting tough and sales
targets cannot be met by staying in the shop.
Nationwide, Linuo Paradigma has 20,000 franchise shops, of
which 1600 are top partners, who are fnancially independent but
must use the manufacturers logos and marketing material. Solar
shops generally sell systems at prices set by the system supplier,
ranging from RMB2500 to RMB6000 (US$390$940). Discounts are
set by the suppliers central sales department and further rebates are
forbidden. Installation is included in the fxed gross system price and
must be covered by the shop owners margin.
RAPID CONSOLIDATION IN THE INDUSTRY
But franchisees have a compelling sales pitch. Solar water heaters are
the cheapest way to heat domestic water. According to calculations
from the Chinese Solar Thermal Industry Federation (CSTIF), over its
lifetime, a solar water heater costs a family 3.5 times less than an
electric water heater and 2.6 times less than a gas one (see Table 1
on page 49).
This straightforward sell has enabled the Chinese solar water
heater industry to grow to an enormous size. Solar research company
The Suns Vision estimates that 2800 companies 1600 assemblers
and 1200 suppliers had a combined turnover of RMB73.5 billion
($11.5 billion) in 2010. Yet a tiny slice of these frms contributed
almost all of this total. We question around 300 [manufacturing]
companies annually, which are responsible for 95% of the total
annual sales volume, said Hongzhi Cheng, who heads a 30-person
team at The Suns Vision. The other around 1300 solar water heater
makers are negligible for overall market statistics, since they rise and
disappear and they sell poor quality products.
Rapid consolidation is also underway, he adds. Over recent
years, the market share for the top 100 brands has rocketed from
40% up to 70%. Yunbin Li, deputy general manager at Linuo
Paradigma and sales director for the Chinese market, estimates that
1000 solar thermal companies have closed their doors in the last
two years. First, these companies do not have access to the fast
growing solar project market and, second, the sales networks of the
larger companies are getting tighter and tighter.
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CUSTOM
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48 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
SOLAR THERMAL: CHINESE CONSOLIDATION
Leading the market in both scale and growth are the Big
Four frms: the Sunrain Group, the Linuo Group, Himin Solar and
Sangle Solar. Each has a solar thermal business valued above
RMB2 billion ($313 million) and all four are heavily committed to
sales and marketing.
At Sunrain, for instance, salespeople outnumber production
workers. At the end of 2011, the groups 5298 staff included 2003
in sales and only 1914 in production. Regional sales teams help
local distributors, although franchisees are ultimately responsible
for achieving targets, said Chen Liang, marketing planner for
international business development.
From 2009 to 2011, the Sunrain Goups turnover from
solar water heating technology doubled from RMB1.54 billion
($241 million) to RMB3.1 billion ($485 million), according to a company
profle published in February 2012. In 2009, as it celebrated its 10
th
anniversary, Sunrain formulated its 533100 vision for the next fve
years. Each digit in the fgure corresponds to one aspect of the frms
target: that in fve years it will have 30,000 direct employees, create
300,000 job opportunities along the value chain, and have tripled its
annual turnover to RMB10 billion ($1.6 billion).
The group which has two separate brands, Sunrain and Micoe
has already become the frst solar water heater specialist listed
on the stock market. After a protracted application process, it was
listed at the end of May 2012. Cheng from The Suns Vision predicts
that the government will only permit one other solar thermal heating
frm Himin to join the Sunrain Group on the stock exchange.
SOLAR THERMAL FIRMS TARGET EXPORTS
The Chinese solar industry aims to raise its export business more
than 12-fold over the next six years up from $20 million to
$250 million. Yet even $250 million would be only 2% of the industrys
estimated overall turnover.
Linuo Paradigma, which emerged from a joint venture between
Germanys Ritter Group and the Chinese Linuo Group 11 years ago,
stands out with exports totalling 6%8% of its turnover. Linuo Ritter
International, set up in 2011, will offer the companys entire product
range worldwide, from non-pressurised thermosiphon systems for
water heating through to complex large-scale solar thermal systems
generating process heat. Twenty-fve sales specialists now work at
this new subsidiary, based in Jinan, and Linuo Paradigma already
Each of the Big Four has a solar thermal business valued above
RMB2 billion. BRBEL EPP
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SOLAR THERMAL: CHINESE CONSOLIDATION
RENEWABLE ENERGY WORLD JULY-AUGUST 2012 49
TABLE 1. ESTIMATED RELATIVE COSTS FOR DOMESTIC WATER HEATING 2008 TO 2010
Technology for providing 100 litres of hot water per day Electric Gas Solar
Investment costs (RMB) 1200 1000 1800
Annual running costs (RMB) 500 350 5
Life time (years) 8 8 10
Annual average total costs (RMB) 650 475 185
Investment ratio with solar water heater as 1 3.5 2.6 1
SOURCE: CHINESE SOLAR THERMAL INDUSTRY FEDERATION (CSTIF)
runs sales offces in both Germany and the US.
Himin claims an export share of less than
10% of its business turnover with about 20 staff
in its export department. The frms key markets
are Vietnam, Malaysia, South Korea, Australia
and Germany. But so far the company only has
sales offces in Malaysia and Vietnam. We are
planning a German and a Belgian sales offce,
said Deputy General Manager Juiwei Wang.
But the Big Four complain about cutthroat
competition for exports from the around 100
Chinese solar thermal system suppliers with
lower quality products. The other obstacle to
exports is the rising strength of the renminbi
on international currency markets. Since we
mainly use US dollars, most of our customers
have asked us for discounts and the cost of
the imported raw material is also increasing,
said Yongmei Xu, sales director of Linuo Ritter
International. Our proft ratio becomes less and
less. The only way to work it out is to develop
new products, which needs time and effort.
Himins answer to the tighter market
nationally as well as internationally is to become
a service provider for complete micro-emission
solutions, says Wang. The frms new Me
Pad product range incorporates various clean
energy technologies for customer groups such
as households, hotels, schools or dormitories.
Precisely what lies behind these
announcements will only emerge when the frst
projects are implemented. But if the Big Four
invest as strongly in sales and marketing abroad
as they have done in China, their export success
is assured.
Brbel Epp is the founder of Solrico, a market
research agency focusing on solar thermal
technology.
e-mail: epp@solrico.com
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POLICY & MARKETS: US WIND
50 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
SUBSIDY KEY TO
US WIND SUMMIT
PLANNING FOR PTC POLICY
A determined effort to extend the Production Tax Credit has gained much support
among both US political parties, but as the pending expiration date draws closer,
Steve Leone fnds the industry anxiously waiting to see how this game of political
hardball will play out.
C
olorado senator Mark Udall is persistent by nature. Hes a
mountain climber who has scaled some of the worlds most
daunting peaks, from Mount McKinley in Alaska to Mount Aconcagua
in the Andes. That dogged pursuit has served him well in his recent
career spent navigating the perilous cliffs of Washingtons Capitol
Hill. And now he has at least one more mountain to climb the
seemingly intractable extension of the Production Tax Credit (PTC),
the wind industrys defning subsidy and the fnancial tool that has
helped his rugged home state become a leader in wind energy
generation and wind turbine manufacturing.
Udalls approach is equal parts steady ascent and unfagging
determination. His base camp is the Senate foor and from there he
plans to critics, annoyingly so to make the extension of the PTC
a daily topic of discussion. In a town notorious for the flibuster, the
Democrats approach is slightly different in that hes scheduled time
each morning for when Congress is in session. And so it will be that
every morning through to the summer recess, Udall will remind his
colleagues why the PTC has gained widespread bipartisan support
across much of the country, and why Congress should extend the
soon-to-expire tax credit soon enough to keep the industry from
contracting and taking jobs with it.
This is the same refrain that has echoed through the halls of
Congress and numerous statehouses since the end of last year. The
industrys growth, which in the US is expected to surpass 10 GW
of new installations through the end of this year, is closely aligned
with the PTC, which pays out 2.2 US cents per kWh generated.
That credit has helped to make wind energy a lucrative and
worthwhile pursuit for developers and utilities alike, and its relative
stability over recent years has allowed projects to move ahead with
confdence. That strong pipeline has in turn ushered in a new era
of US manufacturing, which has sprouted up across much of the
country all to support the growing industry.
Without promises of an extension, development plans have
skidded to a halt, orders have dried up, and large manufacturers are
US President Barack Obama pushes for the extension
of the Production Tax Credit during a visit in May to TPI
Composites in the state of Iowa. TPI COMPOSITES
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POLICY & MARKETS: US WIND
52 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
plotting their escape or at least a scaled-back presence. At stake,
according to a recent Navigant study, are as many as 37,000 jobs,
a staggering number for an industry that currently employs about
75,000 workers. An extension, meanwhile, would add 17,000 jobs,
according to the same study.
Notoriously, the industry has been down this path before, but
the last time the PTC was allowed to expire the only real victim was
project development. That was in 2004 and at that time about three
quarters of the industrys supply chain came from imports. Now, the
US wind industry boasts about 500 manufacturing facilities, many of
which are centred in regions like the Southeast, where wind energy
is a rare fnd, but where wind manufacturing is seen as one of the
few bright spots for an economy thats struggling to fnd traction.
Ideologically, the PTC may fnd its broadest support among
Democrats. But wind generation remains strongest in staunch
conservative pockets like the Midwest, where turbines line farms
across Texas and Iowa. And in states like Oklahoma and Kansas,
the industry is ramping up to become a political force.
Thats why the PTC is a rarity. Its a political hot potato, yet its one
with wide support that has prominent Republicans and Democrats
calling for its extension. Most agree that the tax credit is worth the
$4 billion$5 billion bill that comes with a one-year extension.
According to PTC supporter Senator Charles Grassley, Republican
of Iowa, members of his party are reluctant to move ahead with
legislation until they can fnd budget savings to offset that expense.
So far, the support has produced lots of nods and handshakes, but
not enough legislators willing to jump into the hot seat and vote for its
extension. The hot seat, of course, is boiling at the moment because
of a perfect political storm. The general election is just months away
and a centrepiece of the campaign is President Obamas pursuit of
a clean energy policy. And nipping at its heels is the growing reality
that fundamental tax reform will follow the election. That has industry
insiders and analysts trying to read Washingtons tea leaves. How
will tax reform come together? Can any type of tax policy receive a
long-term extension in this political landscape? And how does wind
differentiate itself amid the coming battle?
THE TIMETABLE
At Windpower 2012, the American Wind Energy Association (AWEA)
annual conference in Atlanta in June, Republican strategist Karl
Rove told those in attendance that the worst thing that happened
for the wind industry was when Obama put the PTC extension on a
Congressional to-do list ahead of its August recess. Republicans
say it wont happen because Obama is failing to show leadership
on the issue, and that the ultimatum proves their point. Democrats
contend that theres no way House Republicans, especially, will give
Obama a political victory on the eve of the November election. Either
way, few are giving a pre-election agreement much hope, even if
Udall does succeed in giving the issue mainstream prominence
each and every day.
That pushes the real political horse-trading into the tight window
between the end of the election in early November and the new
Congress in mid-January. By then, the PTC will be one of many
cutthroat issues on the agenda, and it could get lost in the fray as the
Bush-era tax cuts, the payroll tax holiday and the potential raising of
the debt ceiling take precedence.
According to Tim Kemper of the Reznick Group, the PTCs best
bet is that it gets passed early in the lame-duck session (taking
place after the elections for the next Congress but before the
current Congress has reached the end of its constitutional term). If
that happens, the industry may have enough deals waiting on the
sidelines to retain some of that 2012 momentum. The later a deal is
struck, the more diffcult it will be to salvage 2013, which according
to Bloomberg New Energy Finance could see as little as 500 MW of
new US installations. IHS Emerging Energy Research, meanwhile,
has projected the market could drop from 11 GW in 2012 to just over
2 GW in 2013.
This small window of opportunity comes as America debates
the future size of its government, and ultimately what role taxpayers
will play in energy investment. The recent economic downturn has
paved the way for fundamental tax reform, and programmes like the
PTC could get caught in the line of fre.
The last big tax reform came in 1986, and it was the type of
divisive, laborious process that makes rewriting the tax code in
2013 a long shot. That realisation could, perhaps, bode well for a
one-year extension, but that would really put pressure on the industry
to secure something longer term.
Many in the industry dont think a one-year extension will do much
to secure the confdence of international companies and investors.
That thinking extends to state legislatures across the country those
places where jobs are the driving issue of the day. One such place
is Arkansas, home to major manufacturing operations for everything
from blades (LM Wind Power) to turbines (Nordex and Mitsubishi).
The notion that a one-year extension, especially with looming tax
reform, will give companies the confdence to stay or invest in his
state is a non-starter for Democratic Governor Mike Beebe.
We dont need it renewed for a year, he told the industry at
Windpower. How in the world do multi-million-dollar investments get
made... how in the world can business or industry chart a course...
how in the world can the transmission system be expanded as it
needs to be... how in the world can all these capital decisions be
made when youre making public policy for something as important
as this tax credit on a year-to-year basis and you dont know whether
its going to be renewed? Thats insane.
I cant imagine with the sort of [bipartisan] support that there
would be any hesitancy at all not only to renew, but to put in a cycle
that people can be assured that they can make decisions two years,
three years and fve years down the road, he added.
COMPANIES REACT
For legislators like Beebe as well as Governor Sam Brownback of
Kansas and Senator Charles Grassley of Iowa, both Republicans,
theres little secret why they are among those leading the crusade.
Wind has become big business in their states, and the success
and impact of the industry easily cuts along party lines. And thats
certainly why Udall is heading up the charge from the Senate foor.
Earlier this year, when Danish wind giant Vestas announced it
was cutting more than 2300 jobs in Europe, it took the opportunity
to warn that it could slash its presence in the US in half if the PTC
failed to be extended. Many of those 1600 potential job losses could
come in Colorado, where Vestas has spent about $1 billion building
three manufacturing plants and one engineering facility. Those
operations employ about 1700 people.
The recent economic downturn has
paved the way for fundamental tax reform,
and programmes like the PTC could get
caught in the line of fre.
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POLICY & MARKETS: US WIND
And its not just Vestas. Vermont-based
NRG Systems, which manufactures wind
measurement technology, had to cut jobs
in May for the frst time in its 30 years.
President and CEO Jan Blittersdorf said,
Anything we can do to get past this and
back to steady growth is fne by me.
Mitsubishi Heavy Industries scrapped
plans for a manufacturing plant in Beebes
home state of Arkansas, which certainly
didnt diminish his passion for strong policy.
And in rural Virginia, an area with few
inroads in wind generation, a 45 MW wind
farm targeted for completion by the end of
this year was pushed back to 2015.
From developers to turbine
manufacturers, the wind industry has
already seen a stark downshift in its
production plans. And while many are busy
moving ahead to close out a strong 2012,
theyre looking at the stark realities of 2013.
WHERE THE MARKET IS GOING
As industry giants react to the lack of orders
for 2013, theyre turning to other markets to
fll the void. During a visit by Senator Grassley
to the Acciona plant in Iowa, company
offcials said theyre turning to Canada to fll
their own pipeline. Thats a similar approach
to that reportedly considered by Siemens
and Gamesa, who aparently see the smaller
Canadian market as a way to weather the
short-term downturn.
Canada in 2011 installed more than
1200 MW of new wind energy capacity
and has plans to install 1500 MW in 2012.
The country, which boasts stable policies
in Ontario and Quebec, has surpassed
5000 MW of cumulative capacity, and it
has plans to top 10,000 MW by 2015.
Partnerships with companies rooted in the
US market may soften the jobs impact
there. But those companies are also sure to
explore their options in Latin America, where
wind has been gaining serious momentum.
Whether such a strategy would work for
long depends on transportation costs the
main reason that domestic wind projects
have drawn manufacturing to the US.
Blades from companies like TPI Composites
in Newton, Iowa, are not necessarily less
expensive to produce than those coming
in from places like China. But transporting
50-metre blades to construction sites can
push overland transportation costs to
$15 to $20 per mile, said TPI CEO Steve
Lockard. The US wind industry has evolved
out of a need for transportation effciency in
a way thats unnecessary for industries like
solar. So from the US wind industrys point
of view, feeding long distance markets may
keep the jobs intact, but it wont create the
long-term stable economics its working to
achieve.
Without consistent federal policy,
domestic developers and manufacturers
may look for other ways to regain their
post-PTC footing. According to Kemper,
as they view the prospects of a zero-build
year, theyll be forced to reconsider what
constitutes an acceptable deal. And theyll
also be driven by existing state policies.
Ultimately, we may see some states
increase their wind incentives as a way to
drive production and manufacturing within
their own borders. While this likely wont
make up for the potential loss of the PTC, it
could lessen the blow from its demise.
Senator Mark Udall pushes for the PTCs extension in his daily speech from the Senate
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POLICY & MARKETS: US WIND
RENEWABLE ENERGY WORLD JULY-AUGUST 2012 55
Dan Shreve of MAKE Consulting recently released a report that
looks at the US wind industry from 2013 to 2016 under a series of
scenarios, ranging from no extension to the adoption of a Clean
Energy Standard. While MAKE expects the PTC to get a one-year
extension, there are other factors at play that could weigh down
the industry over the next few years regardless of an extension.
According to the report, none of the policy scenarios it looked at
supported more than 7 GW of new installations per year, and the
more likely scenario sees peaks of about 5 GW through 2016, with
signifcantly lower fgures in the short term.
The reasons for the lower wind installations have much to
do with the expectation of continued low natural gas prices and
a lessening commitment from utilities in states with a Renewable
Portfolio Standard (RPS). Those states, says the report, have made
great strides in meeting the RPS and theyll need to invest less in
wind to maintain their pace.
Strong year-on-year build cycles, plus effective banking of
renewable energy credits (RECs), ensure that many utilities are already
in compliance and can use cheap REC purchases from existing
capacity, says the report. MAKEs baseline scenario estimates
RPS policies will drive little more than 15 GW of new capacity
through 2016.
While this changing policy landscape paints a murky portrait,
in many ways it will force the industry to stand on its own ahead
of schedule. This, says the report, will drive innovation and cost
savings in ways that may not lead to massive installation numbers,
but will position the sector better for future success.
Steve Leone is associate editor of RenewableEnergyWorld.
com
e-mail: rew@pennwell.com
This article is available on-line. To comment on it or forward it to
a colleague, visit: www.RenewableEnergyWorld.com
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_________
CSP: AUSTRALIA
56 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
STRONG ON SOLAR
A move into concentrating solar thermal power (CSP) could not only drive Australias de-carbonisation but
establish a global technology lead. Piers Evans reports on a new analysis from the Australia Solar Institute.
S
olar Dawn, as its name suggests, is a CSP project with
aspirations as a catalyst. Based near Chinchilla Australias
melon capital in rural Queensland, at 250 MW, if completed its
impact would be felt worldwide.
Hugely signifcant for the industry, is how Dr Lovegrove of IT
Power Australia describes the A$1.2 billion (US$1.2 billion) initiative.
The scheme is backed by Australias federal Solar Flagships
Programme and the consortium behind Solar Dawn has dubbed it
the largest solar project in the Southern Hemisphere.
But, while Solar Dawn could bring up the sun for Australian CSP
with a jolt, its chances of seeing daylight are fading. On 1 July 2012,
the scheme missed an extended deadline for funding. The state of
Queensland promptly withdrew its support, leaving a A$75 million
(US$79 million) hole. None of us knows whats happening, says Dr
Lovegrove. But he would deny that Australian CSPs prospects are
also dimming. Spectacular daybreak may look off the cards, but
several glimmers of light are showing.
For a start, less ambitious CSP projects remain on track. Just
down the road from the proposed site for Solar Dawn, the 44 MW
Kogan Creek Solar Boost is now under construction. On completion,
the hybrid plant will feed additional solar generated steam to the
existing 750 MW coal-fred Kogan Creek Power Station.
In strategic terms, CSPs ft for Australias meteorology, economy
and climate objectives is also arguably as snug as a lifeguards
Speedos. In the recent report: Realising the Potential of Solar Power
in Australia a team led by Dr Lovegrove foats the idea of CSP
providing up to 15 GW in the near-to-mid-term.
Without a radical overhaul of its grid, Australia could have
2 GW in CSP by 2020 and 10 GW by 2030, according to the reports
roadmap. In the longer term, the technology could meet half of the
countrys energy needs by 2050.
LETTING THE SUNSHINE IN
Blistering sunshine obviously fgures in Australias appeal for CSP. As
a technology, concentrating solar thermal requires excellent direct
normal insolation from the sun, mostly met in the 15 to 35 latitude
bands, in the words of the International Energy Agency.
But top solar locations are, almost by defnition, a poor match
with existing distribution and transmission infrastructure. Australian
networks have developed to transmit electricity from large central
generators near coal, gas or hydro resources. Electricity from CSP
would need to fow over long distances in different directions.
To see precisely how well CSP could map onto solar resources
and existing systems, Dr Lovegroves team examined the potential
of various types of CSP, both off-grid and grid connected. The study
concluded that 15 GW of CSP capacity could be achieved with
only modest grid extensions. Initial installations could cover hybrid
systems at existing fossil-fuel plants and smaller off-grid plants
for mines and towns. Further down the line, nation-building grid
extensions could unlock more substantial solar resources.
Of this 15 GW potential, 8 GW would be high-capacity standalone
plants with enough thermal storage to justify fairly modest grid
extensions. Another 2 GW would be hybrid plants delivering steam
to established coal-fred plants, while 34 GW would be standalone
A view of a dish-Stirling CSP unit. WIZARD POWER
AUSTRALIA EYES CSP LEADERSHIP
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__________________
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CSP: AUSTRALIA
58 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
plants with capacities of 50150 MW linked to existing grids.
Medium-scale grid-connected and off-grid plants are also seen as
likely to take off, although totalling less 1 GW of capacity.
CLEANING THE ENERGY MIX
In any case, the hurdles to adding CSP capacity to Australias grids
could be overshadowed by the risks of sticking with fossil fuel. By
coincidence, Solar Dawns recent thunderclap broke amid a political
storm over an attempted overhaul of the energy mix.
Also on 1 July, 2012, Prime Minister Julia Gillards fagship
Carbon Price came into force. From now on, the countrys 294
top polluters must pay A$23 (US$24) for each tonne of carbon
emitted, although the price is expected to ease from 2015. A glance
at Australias current energy mix reveals why the laws proposers
Figure 1: Map of Australian transmission networks overlaid with the distribution of Direct Normal Insolation (DSI).
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59 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
were willing to brave ferce public opposition. Australias 50 GW of
installed capacity is among the worlds dirtiest, with coal providing
three quarters of electricity. In per-capita carbon emissions, Australia
is the developed worlds number-one.
The new law labelled the Carbon Tax by its many opponents
is aimed at cutting carbon emissions from 2000 levels by 5% by
2020 and by 80% by 2050. While renewables take on a larger slice
of energy mix, a closure programme for heavily polluting coal fred
plants should help speed Australia down the league of top polluters.
In any cleaner generation future, solar power offers two
advantages over other renewables. An analysis of electricity prices
within a recent report for ASI by ROAM Consulting: Solar Generation
Australian Market Monitoring, found that solar should prosper
because its hours of peak generation coincide with peak demand.
But CSP holds another ace in its ability to meet peak and baseload
demand through storage.
STORING UP BASELOAD CAPACITY
For now, in fact, concentrating photovoltaic (CPV) technology
is making similar headway to CSP in Australia. Construction is
underway on Solar Systems 2 MW Mildura Solar pilot plant, where
a 100 MW facility will be built if the demonstration project prospers.
Yet basic economics could still favour solar thermal technology.
CSP without storage is twice as expensive as large-scale PV, says
Dr Lovegrove. Why bother? The real reason is storage.
CSP technologies can feature thermal storage units. As heat
can be stored far more effciently than electricity, these plants
open up a rare opportunity for renewables to provide baseload
and peaking power. The value of CSPs capacity to meet
demand could also rise over time. A future energy mix with more
intermittent renewables such as wind would put a high premium on
energy storage.
Whats more, the ability to effectively time shift solar generation
would also protect CSP revenues once more solar power comes
on line, with additional PV capacity creating a bulge in daytime
generation that would be expected to curb prices, cutting its
premium. Anything fxed in time of dispatch can cause a fall in
pricing, says Dr Lovegrove. Storage means you can adapt to the
new peak.
CSP: AUSTRALIA
Figure 2: Possible progression of indicative CSP LCOE and market
value in Australia (2011 real AUD) for two combinations of growth
and progress ratio. ASI
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RENEWABLE ENERGY WORLD JULY-AUGUST 2012 60
CSP: AUSTRALIA
THE STRATEGIC CASE FOR CSP
In addition, the ASI sees a strategic case for
investing in CSP. It suits Australia because
were sunny and have experience in power
stations, says Dr Lovegrove.
Solar Dawn would provide a showcase
for home-grown compact linear Fresnel
collector (CLFC) technology already in place
at the coal-fred Liddell Power station and
being installed at the Kogan Solar Boost.
Areva Solar, which is driving both the Solar
Dawn and Solar Boost projects, was formed
by the purchase of Ausra Solar, a frm that
originated in Sydney in 2002.
A lull in global CSP activity could also
let Australia make its mark. Nothing that
Australia can do will affect the photovoltaic
industry which is now taken up by China
but one of our conclusions is that CSP offers
an opportunity in a technology area that
suits Australia, says Dr Lovegrove.
In fact, rather than a crowded feld,
Australian CSP could emerge into a void.
After driving the industry for many years,
Spains commitment to CSP could waver
amid its on-going fnancial crisis. In the US,
federal backing for CSP now looks uncertain.
Increasingly, the industry is looking to India,
where the Jawaharlal Nehru National Solar
Mission aims for 20 GW of CSP and PV
by 2022, as well as Middle East and North
African states.
The prospects for Australian CSP
technology in new markets such as India
are buoyed by Arevas recent contract to set
up two 125 MW CSP plants in Rajasthan.
Areva will provide construction management
services for the project, scheduled for
commercial operation by May 2013.
CSP STILL TOO PRICEY
But one drawback outweighs the host of
benefts that CSP could bring. ASIs report
pegs the levelised cost of energy (LCOE) for
utility-scale solar thermal at about A$250
(US$261)/MWh. Meanwhile, the maximum
revenue in main grid-connected markets
currently totals about A$120 (US$125)/
MWh, including renewable certifcates.
In fairness, the gap between CSP
and fossil fuel is not as unbridgeable as
these fgures suggest. A complex study of
potential revenue suggests CSPs ability to
meet baseload and peak demand through
being dispatchable doubles the value of its
production. This time value means CST
would have earned A$87(US$91)/MWh over
20052010 while wholesale prices averaged
only A$42 (US$44)/MWh.
But ASI Executive Director Mark Twidell
identifes the gap between revenues on the
market and the cost of technology as it moves
from demonstration to commercialisation as
the critical issue facing CSP technologies.
There is a range of market and policy
drivers that will impact on the widespread,
large-scale deployment of CSP but
ultimately it is about bringing down cost and
closing the cost-revenue gap, which is the
responsibility of industry, government and
the research sector, he says. An added
challenge for CSP is the impact of Australias
commodity boom, which has pushed up the
price of construction in the areas where new
plants would go up.
GETTING TO THE RIGHT PRICE
The study projects that CSP will be
competitive with Australias grid at some
point between 2018 and 2030. There is a
90% probability it will fall within that range,
says Dr Lovegrove. Rising demand and
falling CSP capital costs would both drive
this transformation. While real energy values
are forecast to rise by between 1% and 3%
per year, capital costs are predicted to drop
by between 20% and 50% by 2020.
CSP is right at the top of the cost curve,
says Dr Lovegrove. His optimism rests on
the likely trajectory of global deployment as
well as a SunShot Vision Study in the US,
which found heaps of opportunity to reduce
the costs of various elements. In his view,
the industry can reasonably expect costs
to fall in line with those in the wind industry,
giving a progress ratio (PR) of 0.8 or 0.9 with
each doubling of installed capacity.
That said, the ASI hardly expects CSP to
take off in Australia entirely on its own merits.
The purpose of Realising the Potential of
Solar Power in Australia is rather to alert
authorities to the wider benefts of CSP so
these can be rewarded.
A CALL FOR NEW POLICIES
For now, wholesale electricity markets
largely determine CSP plants revenues,
with renewable energy certifcates adding
about A$30-40 (US$3141)/MWh. But Dr
Lovegrove argues plants income should
also refect their specifc advantages for
networks.
As CSP plants are likely to be in rural or
relatively remote locations, they could reduce For more information, enter 35 at REW.hotims.com
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____________
MEET THE WORLD OF
GLASS AND SOLAR
www.glasstec.de
www.solarpeq.de
23 26 OCTOBER 2012
DSSELDORF, GERMANY
Messe Dsseldorf GmbH
Postfach 1010 06
40001 Dsseldorf
Germany
Tel. +49 (0)2 11/45 60-01
Fax +49 (0)2 11/45 60-6 68
www.messe-duesseldorf.de
CSP: AUSTRALIA
high line losses. Installations could also earn additional revenues
through reducing network costs by providing reliable generation at
the end of near-capacity lines.Capacity value the extent to which
CSP can cut investment in other dispatchable systems provides
a further case for enhanced revenues. In addition, rising capacity of
fuctuating renewables such as wind and solar PV could raise the
value of ancillary services for balancing the grid, which CSP with
storage is equipped to provide.
The ASI report advocates such technology-neutral incentives as
one element in a four-pronged approach. Second, Dr Lovegrove and
his team suggest the sector aim to better communicate its value
proposition to key organisations, retailers and fnanciers. They also
call for CSP-solar precincts in areas of high solar resource, where
connections for CSP would be provided to cut development costs.
Finally, the report recommends a push in R&D to reduce costs and
build confdence. Key areas where Australia could focus include
deployments of less than 50 MW, fossil-fuelled hybridisation and
advanced cooling technologies suited to water supply constraints.
GETTING THE MESSAGE ACROSS
But will Australias authorities heed the ASIs call? That may hinge
on the next federal election, due by the end of 2013. As REW goes
to press, the opposition led by the Liberal Partys Tony Abbott looks
set to romp home. Which could be ominous for all renewables.
Abbott has made a pledge in blood to repeal the Carbon Price.
But Mark Twidell prefers to stress elements of consensus. The
independent Australian Renewable Energy Agency (ARENA), which
has bipartisan support and funding legislated through to 2020, will
make investments to develop renewable energy technologies and to
help lower their costs, including meritorious CSP projects.
In his view, there is even hope for Solar Dawn. The Australian
government remains committed to the deployment of large-scale
solar, he says.
Dr Lovegrove seems more willing to acknowledges headwinds.
Its such an uncertain environment. If you ask most the key
stakeholders, what theyd really like is some certainty, so that they
can start planning. Its incredibly tricky to see what will happen.
While very, very optimistic about the sectors global outlook, he is
less sanguine about its future in his homeland.
Whether Australia manages to shoot itself in the foot or not
remains to be seen, he says. On the upside, he sees potential for
Australia to relatively easily take a leadership role to become a
major, major player. But he admits that CSPs advocates have a
complex message to get across. Everybody loves renewables in
a motherhood sort of way, but very few people have cottoned onto
the importance of matching demand throughout the day, he says.
Piers Evans is Production Editor of Renewable Energy World
magazine.
e-mail: rew@pennwell.com
This article is available on-line. To comment on it or forward it to
a colleague, visit: www.RenewableEnergyWorld.com
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MARINE POWER: TECHNOLOGY DEVELOPMENT
62 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
RISING TIDE FOR
OCEAN ENERGY
Growing global interest in harvesting the seas vast generation potential is now focused on the UK, where a
series of initiatives such as the new Marine Energy Parks are aimed at maintaining the countrys technological
lead, reports David Appleyard.
R
evealing a second marine energy park, this time in the waters
of the Pentland Firth and Orkney in the North of Scotland, the
UK has effectively cemented ocean energy technologys place in the
worlds future energy mix.
The Pentland Firth and Orkney Waters Marine Energy Park (MEP)
will incorporate the European Marine Energy Centre (EMEC), which
is currently testing nine devices, and provides a dedicated space for
companies to test and develop their projects. The Pentland Firth and
Orkney Waters MEP includes the largest wave and tidal development
zone in the world, with the Crown Estate having already awarded
licences worth a combined 1.6 GW to developers there. Energy from
waves or tides has the potential to generate an estimated 27 GW in
the UK alone by 2050.
Meanwhile, the Offshore Renewable Energy Catapult, announced
in February 2012, will focus on developing offshore wind, wave and
tidal technologies from a headquarters in Glasgow in Scotland and
an operational centre in Northumberland in the northeast of England.
Richard Yemm, commercial director and founder of Pelamis
Wave Power, commented, This builds on the world-leading work
in the region, and further cements this area as the proving ground
of this industry. This marine energy park creates an even more solid
platform for commercialisation of the sector in these waters, while
maximising economic benefts for the local community.
Energy and Climate Change Minister Greg Barker said: Marine
power is a growing green clean source of power which has the
potential to sustain thousands of jobs in a sector worth a possible
15 billion [US$23 billion] to the economy by 2050.
The development followed a recent amendment to the UK
revenue support scheme, in which the government revealed plans for
banding of support for various technologies through the Renewables
Obligation (RO) for large-scale renewable electricity generators from
20132017. Marine hydro will receive 5 ROCs/MWh up to 30 MW.
Gaynor Hartnell CEO of the Renewable Energy Association
(REA) said: The higher subsidy levels which the REA called for have
been confrmed. There is a 30 MW size threshold, above which only
2 ROCs/MWh are available. The REA did not support this somewhat
arbitrary distinction, but government felt there was a need to limit
the potential amount of capacity which could be supported at
5 ROCs/MWh, and this was the most workable solution.
Conventional hydro has been increased from 0.5 to 0.7 ROCs/
MWh while offshore wind will be set at 2 ROCs/MWh in 20142015,
reducing to 1.9 ROCs in 20152016 and to 1.8 ROCs 20162017.
Upcoming installations of OPTs PowerBuoy could show
the potential for utility-scale ocean power generation.
OPT
UK AIMS TO RIDE THE WAVE
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You probably know SKF as a company providing energy
efcient solutions, in everything from wind turbines to
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MARINE POWER: TECHNOLOGY DEVELOPMENT
64 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
The Pentland Firth and Orkney Waters MEP is the second in the
UK, following the announcement of an Energy Park in the South
West of England earlier in 2012.
South West Marine Energy Park will stretch from Bristol through
to Cornwall and as far as the Isles of Scilly. The region already hosts
many marine and tidal developers and initiatives. In Cornwall, for
instance, the Wave Hub was deployed in 2010 to provide a grid-
connected offshore facility for testing wave energy technologies. Wave
Hub holds a 25-year lease on 8 km
2
of seabed about 16 km off the
north coast, and offers shared infrastructure for demonstrating arrays
of wave energy devices. Four berths can be leased at the 11-tonne
hub, which is linked to the UKs electricity transmission grid via a
25 km cable and permitted for up to 20 MW. The Wave Hub could
also be upgraded to about 50 MW, say its backers.
The creation of the MEPs follows an agreement in late 2011
between Falmouth Harbour Commissioners and The Crown Estate
which owns the UKs seabed to create a wave energy nursery
test site in the Falmouth Bay on Cornwalls south coast. The
FabTest site has a fve-year licence from the Marine Management
Organisation for mooring marine energy converter devices. Although
not electrically connected, FabTest will enable up to three device
developers to investigate structural integrity, response behaviour,
mooring and umbilical behaviour, subsea components, monitoring
systems and deployment procedures in moderate sea conditions
before deploying devices in more energetic offshore conditions.
Dr Lars Johanning, senior lecturer in renewable energy at the
University of Exeter, which will manage the centre, describes FabTest
as a stepping stone to Wave Hub that will help device developers
on the critical path to commercialisation.
AN INTERNATIONAL RESOURCE
Companies based outside the UK are set to participate in the British
drive to dominate in marine energy.
Ocean Energy Limited, an Ireland-based company, is working
with Wave Hub to deploy its technology. In collaboration with its
partner Dresser-Rand, Ocean Energy expects to have set up a
full-scale device by the end of this year. Wave Hub will match
fund some of Ocean Energys deployment costs up to 1 million
($1.6 million). Ocean Energy, whose OE Buoy uses the oscillating
water column principle to generate power by forcing air though a
turbine, says it will consider fabricating its 1.5 MW device locally.
US-based Ocean Power Technologies has also signed a commitment
to deploy its PowerBuoy device at Wave Hub.
More recently, in late December 2011, a 1 MW tidal turbine was
installed off the Orkneys by Hammerfest Strom AS, a company
partly owned by Iberdrola, Andritz Hydro and Statoil New Energy.
The device, an HS1000 with a 30-metre rotor diameter, will join one
of the worlds frst tidal power arrays in the Sound of Islay. Machines
are due to be installed over 20132015 for the 10 MW array, which
won planning consent from the Scottish government in March 2011.
ScottishPower Renewables aims to use the turbine not only
in its Islay project Scotlands only consented tidal array but in
even larger-scale projects in the Pentland Firth, which it is currently
investigating, said chief executive Keith Anderson.
Meanwhile, Alstom and SSE Renewables signed a joint venture
agreement in January 2012 for developing the Costa Head Wave
Project of up to 200 MW. The companies aim to populate the site
north of mainland Orkney with AWS-III wave energy converters,
under development by AWS Ocean Energy Ltd, in which Alstom
acquired a 40% equity share in June 2011.
The plans envisage an initial phase of about 10 MW at the site,
which is in water with a depth of 6075 metres about 5 km north
of Orkney. The AWS-III converter is a 2.5 MW foating device with
an array of fexible membrane absorbers that use wave action to
compress air, which is then forced through a turbine. A 1:9 scale
model was tested in Loch Ness in 2010. Full-scale component
testing will commence in 2012.
SSE Renewables received exclusive development rights to the
Costa Head site from the Crown Estate in 2010 and with partners is
currently developing half of the 1.6 GW of wave and tidal sites leased
by the Crown Estate as part of a commercial leasing programme for
marine energy projects.
Alstom is not the only power giant now venturing into marine
energy. In February, Siemens acquired a majority stake in Marine
Current Turbines Ltd (MCT), a UK-based company that develops
tidal stream turbines (see box panel on page 65). The German
engineering frm had increased its stake in the company to 45%
in November 2011, having acquired a frst stake in February
2010. In November 2008, MCT implemented a commercial-scale
demonstration project with its 1.2 MW twin rotor SeaGen device in
Strangford Lough in Northern Ireland.
Other projects at the planning stage include Kyle Rhea (8 MW)
off Scotlands Isle of Skye and Anglesey Skerries (10 MW) in Wales,
under development with project partner RWE npower renewables.
As many as nine turbines will be installed between the Skerries
group of rocks and islands and Carmel Head about 2 km off the
Anglesey coast. Subject to planning and fnancing, MCT and RWE
npower renewables aim to start commissioning in 20142015.
MCT is also working with Minas Basin Pulp & Power to deploy
a SeaGen tidal system into the FORCE facility in Canadas Bay of
Fundy. In addition, MCT has an approval for a lease from the Crown
Estate to deploy a 100 MW tidal farm off Brough Ness, on the
southernmost tip of the Orkney Islands.
Many other engineering players are seeking access to EMECs
testing facilities. Dutch offshore energy company Bluewater Energy
Services is to take up a berth at the Fall of Warness test site for
demonstrating a full-scale BlueTEC foating tidal energy converter
based on vertical axis turbine technology. Japans Kawasaki Heavy
The 1.2 MW SeaGen twin-rotor device in Northern Irelands
Strangford Lough. MARINE CURRENT TURBINES
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MARINE ENERGY: TECHNOLOGY DEVELOPMENT
Industries Ltd has an eye on full-scale testing at EMEC for an ocean
tidal generation system it is developing with Okinawa Electric Power
Co. and Okinawa New Energy Development Co. for a demonstration
project off Japans coast at Okinawa.
In February 2012, a report by the UKs Energy and Climate
Change Select Committee concluded that the UK could become a
leading exporter of wave and tidal power equipment and expertise,
but only if the government adopts a more visionary approach. The
report found that wave and tidal stream energy could supply 20%
of the UKs current electricity demand, although the committee
acknowledged that these technologies have high costs and are
unlikely to make much, if any, contribution before 2020.
While marine renewables could offer the UK signifcant
longer-term benefts, interest in the feld is growing around the
world and rival markets are beginning to emerge in nations such as
Canada, the US, Korea and New Zealand.
UTILITY ENGAGEMENT
The opportunities for large-scale generation are indicated by a
September 2011 deal between New Jersey, US-based OPT, a
leaseholder of one of the Wave Hub bays, and Lockheed Martin.
The two say they intend to collaborate on utility-scale PowerBuoy
deployments for a wave power project at Reedsport in Oregon.
A PB150 PowerBuoy is intended to be the frst of a 10-buoy wave
power station with a peak generating capacity of 1.5 MW. OPT says
it is involved in other planned projects in North America, Australia,
Japan and Europe that would use the PB150, and the company has
two PowerBuoys operating in separate oceans a grid-connected
40 kW PowerBuoy in Hawaii and the one in Scotland.
Another utility power project currently under development
comes from Irish technology frm OpenHydro, which in August
2011 deployed its frst 500 kW tidal turbine in Brittany, France, in
conjunction with French utility Electricite de France (EDF), following
assembly of the machine at DCNSs shipyard in Brest. With a
three-month testing period completed late last year, the frst two
16-metre-diameter tidal turbines are due for installation off the coast
of Paimpol-Brehat this summer and the last two by the end of 2013.
Also in January 2011, Irish energy group Bord Gais Energy
committed up to 2 million to OpenHydro as part of its plans for
Irelands frst tidal energy farm. The company now has a project
portfolio spanning the USA, Canada, France, Scotland and the
UKs Channel Islands with utility partners including EDF, NovaScotia
Power and SSE Renewables. In 2010, OpenHydro, in conjunction
with SSE Renewables, was awarded licence rights by The Crown
Estate to develop a major 200 MW tidal farm in the Pentland Firth,
off the northern coast of Scotland.
E.ON provides a further example of utility engagement with the
Pelamis project, which has been grid connected at EMEC for a
year and more. A 750 kW E.ON machine was installed in October
2010 and Pelamis has since implemented a progressive testing
programme in increasingly energetic sea conditions. In November
2011, this machine was joined by a second 750 kW P2 delivered
to EMEC under a supply contract with ScottishPower Renewables.
In May 2011 Aegir Wave Power, a joint venture between Swedish
utility Vattenfall AB and Pelamis, secured a similar Crown Estate lease
for a 10 MW project off the southwest of Shetland. According to a
spokesperson, Pelamis is working with utility Energias de Portugal
with a view to executing long-term ambitions to re-enter a site of the
coast of Portugal, site of early testing of three P1 devices that were
decommissioned in 2008.
OUTLOOK FOR MARINE TIDAL
Siemens estimates worldwide potential power from tidal plants
at about 800 TWh annually, or some 3%4% of current global
consumption. Meanwhile, the ocean power market is showing
growth rates that Siemens says it expects to run in two digits
through to 2020.
Amanda Pound, marine renewable services manager for A&P
Falmouth, considers that the UKs nexus of natural resources,
government engagement and industry makes it a unique proposition.
But it risks its global lead unless it continues to develop.
David Appleyard is chief editor of Renewable Energy World
magazine.
e-mail: rew@pennwell.com
This article is available on-line. To comment on it or forward it to
a colleague, visit: www.RenewableEnergyWorld.com
OCEAN/TIDALS
PATH TO POWER
Like any nascent renewable technology, ocean energy sets
its developers some tough challenges. Andrew Tyler, CEO of
Marine Current Turbines (MCT), recently told the EnergyOcean
International conference that getting past the very expensive
hobby stage of development can take at least $15 million.
But froma relatively secure standpoint Siemens has now
taken a majority stake in MCT he offered a few pointers for
getting start-up projects afoat.
Costs are substantial, he told the conference in Danvers,
Massachusetts. The proof-of-concept stage runs at about $1
million. Small-scale demonstration totals about $2 million to
$5 million. Launching a full-scale prototype takes about $15
million to $30 million.
Whats more, as banks wont touch them because of the
risk, developers can only seek fnance fromventure capitalists,
governments or large energy companies.
To obtain this fnance, it is vital to cut costs and technology
risks, he added. Even venture capitalists wont touch a
science experiment. He also told frms to focus on sites
that are easy to develop not the complicated, deepwater
locations that offer the juiciest energy potential.
Above all, startups must focus on the levelised cost of
energy (LCOE), which should be in line with other renewable
energy sources.
But ocean energys ability to meet Tylers criteria is
demonstrated by Siemens recent decision to raise its
investment in MCT to gain a majority stake. By 2020, MCT
aims to be installing a 100 MW facility that can compete in
electricity costs with offshore wind.
RENEWABLE ENERGY WORLD JULY-AUGUST 2012 65
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BIOMASS: SECURING SUSTAINABLE FUEL
66 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
MEETING THE KEY CRITERIA OF
QUANTITY AND SUSTAINABILITY
Driven by EU renewables targets, demand for biomass wood pellets is set to soar over the next decade as
utilities displace coal-fred generation. Tim Probert explores how the industry could reconcile the primary
criteria of a viable biomass supply chain: quantity and sustainability.
The power industry faces an uphill struggle to
source enough sustainable biomass to meet
demand. DEUTSCHES PELLETINSTITUTCOMPOSITES
BUILDING LIQUID
MARKETS FOR
SOLID BIOFUEL
O
nce you realise that even sludge given away free by sewage
farms can be a more expensive feedstock for power generation
than coal, it is clear the power industry faces an uphill struggle to
source enough sustainable biomass to supply a surge in co-fring
and dedicated burning.
While utilities can and do burn hundreds of different types
of biomass, literally almost any old rubbish such as chicken litter,
peanut husks and olive stones, the most cost-effective biomass to
displace coal in co-fring and conversion plants at serious volume
is wood pellets. Although more than twice the cost of wood chips,
pellets have 3.5 times the energy density by volume. Furthermore,
pellets are usually made from compressing sawdust in pelletisation
plants, offering a standardised, industrialised product in large, easily
transportable quantities.
So far, so good. At present, the global trade of wood pellets
is a manageable 1012 million tonnes per year. However, the use
of pellets is rising extremely quickly, driven by EU targets. Around
half of the EUs target for providing 20% of energy from renewable
sources by 2020 will be made up by biomass, according to Member
States National Action Plans. The European Pellet Council estimates
that pellet imports to the EU increased 50% in a single year, 2009
2010, to 2,523,000 tonnes, while trade within the EU rose 60% to
3,445,000 tonnes. Overall, global trade could hit 60 million tonnes
by 2020, it says. To meet this demand the industry will require large
investment both in processing and in wood pellet feedstocks, while
at the same time it needs to ensure supplies are sustainable.
SOURCING WOOD PELLETS
Power utilities are used to purchasing commodities towards the
end of the supply chain at the port of loading or discharge on a
long-term basis. At present for biomass this is simply not possible
on a viable scale. Securing biomass is very diffcult because there is
no tradition of commitment to long-term contracts with suppliers, at
least not of the kind to which the energy business is accustomed.
Some utilities have recognised the upstream risks by building and
operating their own pelletisation plants. RWE Innogy, for example,
runs a 750,000 tonnes per year plant in Waycross, Georgia, USA.
Yet exposure to fbre market risks means power frms cannot secure
the long-term price and volume of biomass, says Diekumo Anthony,
biomass fuel developer at E.ON Climate & Renewables.
The primary feedstocks of pelletisation plants are sawmill residue
and forestry residues like bark, he says. They are by-products of
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BIOMASS: SECURING SUSTAINABLE FUEL
68 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
another market altogether. The entire biomass fuel supply chain on
the power side is reliant on subsidies, while upstream the feedstock
is led by the demand for timber from the US construction industry. So
the entire supply chain is foating in the middle of two uncertainties.
The key players, the people who have control of the factors
which create these risks, are not utilities or the biggest users of the
product. Therefore, the price and volume of the feedstock for wood
pellets is completely dependent on other markets. That presents
huge risks in developing a secure biomass supply chain.
The bulk of feedstock for wood pellets in North America,
which accounts for two thirds of EU imports, comes from small
landowners, with the rest coming from a handful of large forestry
product companies traditionally supplying pulp, paper or other
wood-based products. Anthony suggests the only way to manage
these market risks is to take control of the supply chain as far
upstream as possible, and to partner with forestry product suppliers
owning vast tracts of forest.
BIG ROLE FOR FORESTRY PRODUCT COMPANIES
One such company is Weyerhaeuser. The Washington state-based
company is the worlds largest private sector owner of softwood
timberland, managing more than 8 million ha of forest in the US
and Canada, as well as one of the worlds largest pulp and paper
companies. James Leitheiser, director of global business services for
Weyerhaeuser Solutions, believes the power industry is needlessly
reinventing the wheel by manufacturing a product it does not
truly understand.
Forty or ffty years ago North America saw the same thing in the
paper industry, he says. Paper companies owned forestry assets
for security, but once the industry matured the supply and demand
fow of raw materials changed. The paper supply chain does not
exist in a vacuum; it is integrated with traditional forestry products.
The economics of the supply chain mean that biomass has to be
integrated into these products as well. The paper industry has
already learned these lessons.
In other words, utilities should leave wood pellet manufacture
to forestry product companies that can harness their expertise and
natural economies of scale to offer long-term security of supply,
says Leitheiser. Weyerhaeuser is pushing a Resource Forward
model, which it claims can reduce project risk and commercial
risk for investors. Under this model, a large timberland owner with
strategically located resources would bring the supply chain forward
via an institutional investor to provide stable, relatively low-cost
capital to build a pelletisation plant in conjunction with an offtake
partner. The offtake partner could be a utility or a biomass supply
intermediary, such as a commodity trader, an energy company or an
agribusiness, delivering wood pellets to European ports.
This Biomass, Inc. model is proving very attractive to investors.
Biomass is on the cusp of a huge change, says Dr Chris Rowland,
senior research analyst at Ecofn, an investment management
company specialising in energy.
Many companies are eyeing investment in the biomass
feedstock supply chain. We see potential in investing in assets along
the entire chain, owning forestry, pelletisation plants, as well as
storage facilities at European ports.
In the US, at least eight pelletisation plants with capacities of
500,000 tonnes per year or more are now in the design stage,
potentially giving a huge boost to current annual capacity of 2 million
tonnes, says Leitheiser. All this must be done to scale in order to be
successful, he says. If you build half a dozen of these plants you
start to get signifcant volumes to market and economies of scale.
UTILITIES WANT TO TAKE MORE PRICE RISK
Not all market players wish to tie up their supply of wood pellets in
long-term contracts. Jorrit Hachmer, vice president of Biofuel Trading
& Development at RWE, sees a need for foating price contracts that
allow end users to reduce credit risk by trading price risk, separating
it from the physical commodity, as happens with coal and other
energy commodities.
Were pretty comfortable with buying short. This hasnt been the
problem so far. A foating wood pellet price element within supply
contracts would allow us to trade derivatives with banks and other
investors, he says. The only alternative is to continue with the
status quo, where the buyer has to calculate risk premiums, which in
the end makes the product more expensive. Credit is a big challenge
and well need a lot of it to build these pelletisation plants. If we want
to maintain cost leadership of renewable energy, its important that
we use credit in the right way so that biomass is not overpriced.
Weyerhaeusers Leitheiser says its Resource Forward model
incorporates an element of foating prices so that trading companies
can partake in price risk. Its almost always cost-effective to source
some supplies on a short-term, spot basis from third parties, but
having a long-term anchor supplier offers a great deal of security to
end-use customers and investors, he says.
TRADING BIOMASS
As utilities tend to produce pellets themselves, pricing biomass
can be a challenge. In November 2011, Amsterdam-based energy
exchange APX-ENDEX launched the worlds frst biomass exchange.
In phase one, the exchange started with non-cleared wood pellets,
meaning the physical settlement is arranged bilaterally between the
counterparties after trade has been concluded.
Phase two, scheduled for later this year, will include implementing
clearing services for wood pellet contracts with a contribution from
the Port of Rotterdams BioPort in shipping, storage and distribution.
These contracts enable end users and institutional investors to
The power industry faces an uphill struggle to source enough
sustainable biomass to meet demand. RWE
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BIOMASS: SECURING SUSTAINABLE FUEL
70 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
hedge themselves against price movements, while producers will
be able to sell biomass on a longer-term basis in order to access
working capital, says APX-ENDEXs futures manager Paul Groes.
As yet there have been no trades on the exchange, says
Groes, but several banks, hedge funds and other institutions have
expressed an interest in trading cleared contracts. We are now
developing the concept of clearing in conjunction with European
Commodity Clearing, says Groes. We have three or four concepts
on paper and we will make a decision in due course.
A key challenge for APX-ENDEX and other commodity
exchanges seeking to offer biomass trading is the lack of international
standardisation of wood pellets. APX-ENDEXs current product
specifcation criteria are based on input from its pricing panel, which
includes E.ON, RWE, Eneco, Dong and Electrabel and suppliers like
Enviva, but the exchange will adjust to any moves by the industry to
introduce standardisation, says Groes.
Peter Rechberger, general manager of the European Pellet
Council, says wood pellets must become a clearly defned
commodity to compete against fossil fuels. There is no EN
(European Standard) for industrial pellets yet, although the power
sector has virtually defned its own industrial pellet qualities: I1, I2,
I3, he says. We are working with IWPB 1 (Initiative for Wood Pellet
Buyers) to include industrial grade certifcation as part of PellCert,
which aims to develop an ENplus2-compatible certifcation scheme
for industrial wood pellets that also incorporates sustainability.
SUSTAINABILITY, SUSTAINABILITY, SUSTAINABILITY
Sustainability is critical to the biomass industry, as utilities are
acutely aware. So far, many European utilities have effectively
self-certifed their biomass as sustainable. For instance, British
generator Draxs Sustainability Policy rules out burning any biomass
that does not reduce carbon dioxide versus the coal alternative.
But rising demand will increase the amount of fresh wood
needed from forests, an area coming under stricter control from the
EU. German utility RWE npower, which operates the ill-fated Tilbury
coal-to-biomass conversion plant that caught fre on 27 February,
2012, says UK demand alone could hit 1112 million tonnes of
pellets by 2015, equivalent to 2223 million tonnes of fresh wood.
Sawmill residues can only be expected to provide half of the
fbre for this volume of wood pellets, says Karine Culerier, senior
market analyst, RWE Supply & Trading. More and more volume
from sustainability-certifed forests will be needed, she says.
At the end of 2011 the UK adapted the Renewable Energy
Directive for biofuels and bioliquids to block extraction for solid
biomass from primary forests, peatlands, wetlands, grasslands and
land for nature preservation, she adds. Crucially, forests with a land
use change after January 2008 will not qualify for ROC (Renewable
Obligation Certifcate) support.
As a result, commercial forest thinning is developing, she says.
The increasing volume of fresh wood required has also boosted
sustainability schemes such as the Green Gold Label, although the
proliferation of such schemes to 67, according to a University of
Utrecht study is slowing the development of the supply chain.
RWEs Hachmer calls for a single, Europe-wide sustainability
scheme. The lack of one is harming the industry, he says. We
need to convince the public that biomass is sustainable. Without
public support, there will be no industry.
Caroline Season, senior policy adviser for bioenergy at the
UKs Department of Energy and Climate Change, says a European
Commission report on requirements for EU-wide sustainability
criteria for solid biomass is imminent. Two years ago they said there
was no need to bring in an EU-wide approach but individual Member
States could introduce their own criteria. Of course, the Commission
could decide to take a different view in the report. They have
signalled quite strongly in an earlier report that solid biomass should
be consistent with transport biofuels, with a minimum greenhouse
gas emissions reduction and some restrictions on sources, such as
primary forests or wetlands.
Hachmer rejects fears that large chunks of Brazilian rainforest will
be burned in European power plants. All the hurdles of sustainability,
credit, fnance and logistics will show that easier tonnage will be out
of North America. He also considers that stricter sustainability rules
will in the long run be more cost-effcient, although he warns that
they will bring a great deal of administration and companies may
struggle on the paperwork side to keep up the growth in demand.
Not all European utilities support using biomass in large
combustion plants. Dr Bernhard Graeber, director of Renewable
Energies & International Climate Projects at another German utility,
EnBW, would prefer biomass to be burned at its country of origin.
Its wrong for Europe to subsidise power generation which
makes it feasible to transport wood from the US and Canada, he
says. It would actually make more environmental sense for these
countries to use this biomass to displace their own coal generation
and export more coal to Europe. To have a sustainable development
of biomass it has to be home-grown. The German model is based
mostly on small, decentralised biomass units fred by energy crops
sourced by local farmers. Its not the intention of Germany to
import massively.
It has yet to be proven whether utilities will be able to source
enough biomass on a sustainable basis. Europe is essentially
conducting a very large experiment to see if it can.
Tim Probert is a freelance journalist focusing on the energy
sector.
e-mail: rew@pennwell.com
This article is available on-line. To comment on it or forward it to
a colleague, visit: www.RenewableEnergyWorld.com
The power industry faces an uphill struggle to source enough
sustainable biomass to meet demand. ELECTRABEL
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GEOTHERMAL: SOUTH AMERICA
72 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
GEOTHERMAL IN
SOUTH AMERICA
MAJOR PROSPECTS
FOR DEVELOPMENT
Spurred by rising power demand, South American
countries are aiming to develop their vast geothermal
potential. But Meg Cichon asks whether developers
will secure investment and favourable policy.
I
f any part of the world should be concerned about climate change,
it is South America. Despite contributing some of the lowest per
capita emissions globally, many countries in the region are at high risk
from global warming, while South Americas population is expected
to rise fast. As governments respond with support for renewable
energy, several major prospects are opening for geothermal power.
BURGEONING POTENTIAL
So far, South America has largely relied on hydropower, but its
capacity to expand is fading. Though many areas offer untapped
potential, most is in remote locations with limited access to the grid,
according to Meeting the Electricity Supply/Demand Balance in Latin
America & the Caribbean, a report released by the Energy Sector
Management Assistance Programme (ESMAP).
Geothermal, on the other hand, could present a major opportunity
throughout South America. Exploratory drilling has been limited and
the ESMAP report gives a broad range of capacity estimates. But
many regions hope exploration will uncover more potential resources.
Extrapolating from the experience in the US, where there
has been a large amount of exploratory drilling, the potential of
conventional geothermal resources in Latin America might be as
much as 300 TWh per year, the report states.
The most viable resources are thought to be located along
the Pacifc Rim, which ranges from Mexico to Chile. Key spots
in the Caribbean islands also carry some potential, according
to researchers.
POLICY PUSH
Several South American countries have implemented incentives to
move geothermal energy plans forward. Countries at the forefront
include Argentina, Chile and Peru, according to the 2012 Geothermal
International Market Overview Report, released by the Geothermal
Energy Association (GEA).
Argentina implemented a feed-in tariff (FiT) for geothermal
projects, with a 15-year entitlement period after the plant is brought
online. The plan also includes a goal of renewables providing
8% of electricity by 2016. Though a 1998 law supported wind
and solar generation, geothermal did not become eligible as a
renewable energy source until 2007... In May 2009, the Genren
Program was launched, aiming to purchase and incorporate
1000 MW from renewable energy plants, 30 MW of which is to come
from geothermal energy, according to the GEA.
Chiles government is also eager to tap its geothermal potential
of up to 16,000 MW. To drive renewable development, the Chilean
National Energy Commission partnered with the US Department
of Energy (DOE) to create the Renewable Energy Center in Chile.
According to its website, the DOE uses the facility to compile global
renewable energy best practices and techniques to then use in
the region.
Chiles non-conventional renewable energy law requires all
utilities with a capacity of at least 200 MW to demonstrate that
at least 5% of their energy comes from renewables. After 2014,
this requirement will increase by 0.5 percentage points annually
until 2024, when it fnally reaches 10%, according to the GEA
report. Chiles law of geothermal concessions, established in
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RENEWABLE ENERGY WORLD JULY-AUGUST 2012 73
GEOTHERMAL: SOUTH AMERICA
Geothermal exploration underway at the Mariposa site in Chiles
Maule Region is part of a regional push to develop a renewable
resource some believe could total 300 TWh per year. ALTERRA
2000, also regulates exploration and permitting of geothermal
projects. In response to this favourable policy, a total of
83 geothermal exploration concession requests were under review
as of June 2012 at Chiles energy ministry, according to Business
News Americas.
Peru is thought to have nearly 3000 MW of geothermal
potential, none of which has been exploited. The country currently
draws most of its energy from natural gas, hydropower and fossil
fuels. Recognising its need for energy development, the Peruvian
government has set up FiTs and tax incentives for renewables. It
has also held auctions for contracts, including a recent 500 MW
tender. Its goal is to generate 5% of its electricity from renewables
by 2014.
RACE TO BE THE FIRST
Though no geothermal plants are currently online in South America,
several projects are nearing completion. Argentina could technically
claim to have won the race with a demonstration project built in
1988 in the volcanic Copahue region, a site that has been explored
for geothermal development since the 1970s. Decommissioned in
1996 due largely to high electricity prices, the 670 kW project used
171C sources at depths of 800 to 1200 metres.
Near the abandoned demonstration plant, the 30 MW Copahue
project in development by Earth Heat Resources provides a new
contender. The project has potential for massive expansion if the initial
30 MW plan is successful, according to its developer. Now in its
second phase of development, the project is expected to be
completed this year.
This second stage study will encompass many elements of the
upcoming programme for this year including drilling, civil works, other
facilities, engineering and transmission line issues, said Earth Heat
Resources Managing Director Torey Marshall. This milestone will
confrm the location of wells, location of roads, location of potential
plant sites and transmission line locations; an enormous step in our
development of the Copahue Project.
Earth Heat Resources recently signed a power purchase
agreement (PPA) with Electrometalurgica Andina SAIC for an initial
30 MW. It has also signed a letter of intent with Xstrata Pachon SA
to purchase 50 MW, with the potential for further expansion. Xstrata
sees the potential in geothermal and is eager to get involved with
sustainable, renewable projects in Argentina.
We are committed to fnding the best environmental, social and
economic solutions in support of our potential future investments
in Argentina, and look forward to working with Earth Heat in the
frst geothermal plant in the country, said Xavier Ochoa, Xstratas
general manager.
Close on the Copahue projects heels is Enel Green Powers
Cerro Pabelln geothermal project in Pampa Apacheta, Chile. With
eight geothermal concessions in Chile the most recent acquisitions
include Colorado, San Jose I, and Yeguas Muertas Enel is eager
to tap the nations vast potential. The 50 MW Cerro Pabelln
project recently received environmental approval and is ready to
move forward.
The countrys geothermal potential is one third of the installed
geothermal capacity worldwide, explained Enel Green Power CEO
Christian Herrera. Electricity generation through geothermal energy
not only helps meet the growing energy demand in the country,
helping to reduce dependence on imported fuels, but [its] also a
concrete contribution to reducing greenhouse gas emissions,
contributing to the mitigation of global warming.
In development but further from completion, is a $330 million
geothermal project planned for GGE Chiles San Gregorio concession
in southern Chile, for which the renewable energy frm has already
submitted an environmental impact assessment (EIA). Expected to
break ground in 2013, the 70 MW Curacautin project will consist of
10 drilling platforms, 14 production wells and 11 reinjection wells,
and is scheduled to come online in 2016, according to Business
News Americas.
The nearby Mariposa Geothermal System owned by Alterra
Power Corp is near an active volcanic region in the Chilean Andes.
Exploration for the project since the early 2000s has found great
potential in the area. The exploration results give an inferred
resource estimate of 320 MW available over 30 years, according to
the developer. To date, 200+C resources have been found at the
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top of the wells. Additional holes will be drilled to determine further
resources. A 50 MW plant is in development and expected to be
completed by 2016. Alterra is now searching for partnerships to
continue exploration and development at the site.
A key factor for this project is the proximity of hydropower
projects. Developers are hopeful that a collaborative effort could be
established for building transmission systems to feed the renewable
resources to the Central Power Grid.
NORTHERN INFLUENCE
Facing many of the same climate change and population issues,
Central America and the Caribbean have moved much faster to
embrace their geothermal resources than their southern neighbours.
According to the GEA report, most countries in Central America
have developed a portion of their geothermal resources.
El Salvador and Costa Rica derive 24% (204 MW) and
12% (163 MW) of their electricity production from geothermal energy
respectively. Nicaragua (87 MW) and Guatemala (49.5 MW) also
generate a portion of their electricity from geothermal energy, said
the report.
But Central Americas geothermal resources offer signifcant
potential for further development. The geothermal potential
of the region has been estimated at between 3000 MW and
13,000 MW across 50 identifed geothermal sites. In the Caribbean
Islands, the sector can expect a boost from electricity costs,
which now total $0.24/kWh for fossil fuel based electricity but only
$0.05/kWh for power derived from geothermal plants. In Central
America, the planned SIEPAC (Sistema de Interconexion Electrica
para America Central) transmission interconnection could greatly
facilitate geothermal development by enabling countries to develop
their geothermal sources and spread their renewable wealth at
competitive prices.
In sharp contrast, South America has failed to develop its
transmission interconnections. According to the GEA report, recent
issues regarding the fow of energy across national borders have led
to underdeveloped, rarely used and cut transmission lines.
But though this structural hurdle may have held back
development, the current climate crisis and the increased need
for clean energy are driving governments to explore the massive
geothermal resources that are believed to await development
throughout their region.
According to Geothermal Resources in Latin America and the
Caribbean, a report released by Sandia National Labs and the US
DOE, With [gigawatts] of estimated power potential, geothermal
energy can and should supply a portion of the additional capacity
required [in Latin America].
Meg Cichon is associate editor of RenewableEnergyWorld.com
e-mail: rew@pennwell.com
This article is available on-line. To comment on it or forward it to
a colleague, visit: www.RenewableEnergyWorld.com
GEOTHERMAL: SOUTH AMERICA
RENEWABLE ENERGY WORLD JULY-AUGUST 2012 75
In developing their geothermal resources, South American
countries such as Chile can follow examples from Central America
and the Caribbean. ALTERRA
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76 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
BIOENERGY: BIOFUELS MARKET
W
hen all carbon emissions are taken into account, feedstocks
for renewable liquid automobile fuels are far from equal. Palm
oil and some other crops used in biodiesel are more carbon-intensive
to produce and consume than oil, according to some researchers.
Meanwhile, the corn or sugar normally used for petrol-substitute
ethanol appears to offer genuine carbon savings (see table overleaf).
For Europe, these are crucial calculations. Unlike the US, which
also backs biofuels for energy security reasons, Europes rationale
for encouraging biofuel use is purely environmental, said European
Commission (EC) energy spokeswoman Marlene Holzner. There is
no consideration of energy self-suffciency in this policy, she said.
So, by fully accounting for carbon emissions, Europe could end up
undermining its current biofuels policy.
Diesel use is still rising relative to petrol in Europe. The International
Energy Agency (IEA) expects diesels share in oil product demand
to grow from 42% in 2011 to 44% in 2016. In Europe, biodiesel
is expected to meet two thirds of biofuel consumption by 2020.
Companies such as Neste, Cargill, Sofprotol and Abengoa have
invested about 13 billion in European biodiesel production capacity,
which could almost already meet EU 2020 targets. But if biodiesel
from feedstocks with a high carbon footprint is excluded from EU
targets, much of this investment would be wasted, and increased
bioethanol production and imports would be unlikely to fully make up
the difference.
Europe is now working to introduce new rules that fully quantify
biofuel emissions, replacing estimates based solely on carbon
emissions directly linked to the biofuel crop itself, such as fuel for
harvesting and nitrogen-based fertiliser. To develop these regulations,
the EC is attempting to quantify indirect land use change (ILUC)
emissions, which take account of the carbon impact of crops
displaced by the biofuel feedstock.
While ILUCs are proving to be a very complicated issue with
no plan and no date set for introducing rules Holzner contradicts
widespread reports of disagreement between the EUs energy
and climate departments over fundamental principles. The energy
department had been reported to oppose ILUC limits because
biofuels were making an important contribution to European energy
supply and security, while the environment department was more
concerned over their environmental impact.
Climate spokesman Isaac Valero-Ladron also claimed that there
is a strong consensus on the need to act and address ILUC. But
the new rules must accommodate not only considerations about
energy but the agriculture departments concerns over European
biodiesel and the trade departments concerns over imported
biodiesel. The EC is now preparing a legislative proposal on ILUC
that will be accompanied by an impact assessment identifying those
biofuels considered heaviest in emissions, said Valero-Ladron.
The current European programme excludes biofuels that reduce
carbon emissions by less than 35% from their petroleum equivalent.
Factoring in ILUC estimates is expected to push several key
biodiesel feedstocks well beyond this threshold. European biodiesel
production is currently dominated by palm, soya and rapeseed oil.
But these feedstocks while the cheapest to produce are also
the least energy-effcient. Rapeseed is the biggest feedstock within
Europe, with production largely centred in France and Germany.
Three alternative approaches are being considered, said Holzner.
The frst would exclude ILUCs but require all biofuels to achieve up
to a 60% emission saving on conventional fuels by 2016, which
would probably allow Europe to continue producing rapeseed and
other biofuels but could halt palm and soya imports. The second
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RENEWABLE ENERGY WORLD JULY-AUGUST 2012 77
BIOENERGY: BIOFUELS MARKET
BIOETHANOL VS
BIODIESEL
EUROPE HESITATES OVER INDIRECT
IMPACT OF GREEN FUEL
For years Europe has encouraged motorists to use diesel over petrol in its efforts to cut carbon dioxide
emissions. Now, as the focus switches to introducing renewable fuels, Jeremy Bowden discovers that
it is proving far easier to produce clean bioethanol to replace petrol than clean biodiesel, leaving Europes
renewable fuel targets looking vulnerable.
European biodiesel production is currently dominated by
palm, soya and rapeseed oil, which are the cheapest but least
energy-effcient feedstocks.
EUROPEAN COMMUNITY
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BIOENERGY: BIOFUELS MARKET
78 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
option would be to include ILUC estimates, which biofuel producers
and industry bodies fear would be very damaging for their sector.
The third option is a combination of the two, which would favour
bioethanol production but could run up against Europes reliance
on diesel.
Much palm oil is already ineligible for conversion to European
biodiesel because it fails to meet sustainability criteria outlined in
legislation introduced in 20092011, said Holzner. To qualify, crops
must prove they are harvested from agricultural rather than recently
deforested land. But ILUC, as a much more complex and subtle
assessment of secondary impacts such as displaced agricultural
production, is very diffcult to quantify and agree on, she said.
New rules would also have to be WTO compatible, she added.
Canadas former ambassador to the World Trade Organization
(WTO), John Weekes, has already said the EU is likely to face WTO
challenges over foreign energy source discrimination. He describes
the moves as a trade barrier designed to keep competing biofuel
feedstocks out of Europe. Brazil, Indonesia, Malaysia and the US
have all raised concerns at the WTO over EU trade rules on biofuel
imports. But Holzner describes reported criticisms from WTO
partners as premature because nothing has been tabled yet.
A CHALLENGE TO EU RENEWABLE TARGETS
Holzner insists that any changes would not endanger Europes
renewable fuel targets: If we look at the biofuel mix in 2020, the
greenhouse gas emission savings are estimated to be 21%. This
is the case even if no action is taken to mitigate estimated ILUC
impacts, she said in an email. The overall impact of biofuels is to
reduce carbon emissions. Any change in the mix will not alter the
underlying objectives, she said.
But Daniel Kluge of the German Renewables Federation (BEE) said
ILUC assessments could threaten the EUs renewable fuels carbon
reduction targets. The European Biodiesel Board claims ILUC is
scientifcally unproven and ILUC emissions are greatly overestimated.
Producers claim uncertainty over assumptions for modelling ILUC
emissions means immediate action cannot be justifed. Specifc rules
should be delayed in favour of an indirect approach, in their view.
The ILUC methodology is not solid, said Kluge.
Academics have also challenged the EUs calculations of
emissions for palm oil and other oilseeds. Gernot Pehnelt of the
Friedrich Schiller University of Jena, Germany, has recently produced
research showing systemic differences between EU estimates and
those of other scientifc studies.
For the BEE, ILUC issues should be treated as a local problem
more associated with land development regulations, said Kluge.
Biofuel producers have been left in limbo by EU policymakers
inability to make any progress at a meeting in early May, he said.
After more than a year of infghting within the European Commission,
the blocs 27 commissioners had been expected to choose between
the three main policy options at the meeting, but failed to do so.
Meanwhile, in defence of what they see as their cleaner green
fuels, European bioethanol producers have asked the EU to introduce
ILUC targets so the market can distinguish between good and bad
biofuel pathways. This would completely overhaul the industry
towards producing bioethanol or advanced biodiesel, say producers.
Advanced or second-generation biofuels made from woody
cellulosic materials such as tree bark and leaves which do not
compete with food production, and so have less ILUC impact are
in their infancy and very costly, but could be about to turn a corner.
Biofuels have been heavily promoted in the EU as the most
straightforward way to reduce greenhouse gas emissions from
transport. Europes Renewable Directive requires countries to achieve
a 10% share of sustainable energy in road transport by 2020, mostly
from biofuels along with a 6% reduction in the carbon content of
transport fuels by the same date. While environmental campaigners
estimate that each year biofuels cost Europes taxpayers 18 billion,
which could be better spent on promoting electric vehicles and
public transport, other innovative technologies are some way from
making a major impact. Biofuels are also perfectly compatible with
combustion engines and much of the existing fuels infrastructure.
Key investors such as BP believe existing infrastructure will give
biofuels the edge over electric vehicles and gaseous fuels. BP has
invested billions of dollars in developing biofuels mainly sugar-
based ethanol in South America, although it is poised to build its
frst cellulosic biofuels plant. BP is alone among major oil companies
in supporting the USs new renewable fuel standard (RFS2). Philip
New, BPs head of biofuels, recently contrasted US renewable fuels
policy with the EUs confused state of regulatory support.
ESTIMATED CARBON EMISSIONS FOR
DIFFERENT FUEL TYPES, INCLUDING
ILUC (G OF CO2/MEGAJOULE)
Tar sands 107 (EU default)
Crude oil 87.5
Palm oil 105
Soya bean 103
Rapeseed 95
Sunfower 86
Palm oil with methane capture 83
Wheat 3564
Corn 43
Sugar 3436
Second generation (cellulosic) ethanol 932
Second generation (cellulosic) biodiesel 921
Source: EC, EurActive
Big companies ability to use existing infrastructure in biofuel
production provides a critical cost advantage. BP
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Conference & Exhibition
6 - 8 November 2012
Sandton Convention Centre
Johannesburg, Republic of South Africa
www.renewableenergyworldafrica.com
THE NEW FRONTIER FOR
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excellence in the green energy sector.
Renewable Energy World Africa is a unique forumfor the industry,
combining both a world class conference with an exhibition
showcasing the latest technological developments. This premier
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REGISTER NOW AND SAVE WITH OUR EARLY BIRD RATES
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_______________________________________________
BIOENERGY: BIOFUELS MARKET
80 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
Some energy and trade interests also argue for biofuels to be
promoted in Europe on strategic and security grounds, as they are
in the US. The EU relies heavily on oil and natural gas imports and
its dependence is set to grow. The variety and distribution of biofuel
feedstocks makes them far less vulnerable to disruption than oil
supplies. Whats more, biofuel prices are not closely linked to the
volatile and highly unpredictable price of oil.
A missing element in the debate among lawmakers on both sides
of the Atlantic is the impact of biofuels on food prices and consumers.
Many campaigners claim renewable fuel production has helped
push up prices for many agricultural commodities, with expansion in
feedstocks such as rapeseed or corn tightening other crop markets
through competition for land. But, especially in the US, rising prices
are widely expected to quickly expand food supply, while concern is
high over energy prices and security, which also affect food prices.
US MARKET PRESSES FORWARD
President Obama is targeting an all of the above energy policy,
which means diversifying supply including into biofuels to
reduce energy shocks and price volatility as well as to cut carbon
dioxide emissions. Petrol dominates the US auto market, and most
US biofuel comes from corn-based ethanol, a petrol replacement
with a relatively low carbon footprint. US regulators have already
excluded palm oil-derived biodiesel from the countrys renewable
fuels programme.
In the 2011 season, ethanol production consumed 40% of the
US corn crop, overtaking consumption by US livestock and poultry
for the frst time. Before the RFS was introduced in 2005, 53.4% of
the crop went to livestock and poultry and just 12.5% to ethanol.
The renewable fuel standard (RFS) guarantees biofuels a share
of the motor fuel market of 57 billion litres in 2012, rising to 68 billion
litres by 2015. The US taxes imported ethanol mainly Brazilian
sugar-based production and subsidises its own production.
Cellulosic ethanol is intended to supply 3% of production, but
so far provides only 0.1%. Companies must buy credits if they
cannot source enough cellulosic ethanol, even if the fuel may not
be available. Unless production of advanced biofuels increases, the
shortfall will widen. Under the 2007 law, the US must use 167 billion
litres of renewable fuels per year by 2022, with cellulosic biofuel
making up 73 billion litres. But a National Academy of Sciences
report published in 2011 concluded that this target cannot be met
without new innovative technologies that unexpectedly improve the
cellulosic biofuels production process.
Huge government incentives may yet make this happen, and
there are signs the tide is turning. Several cellulosic biofuel plants
are about to come onstream in the US. Honeywell claims a Rapid
Thermal Process (RTP) technology it is poised to introduce can
produce fuel at signifcant scale at a cost equivalent to a crude oil
price of US$45 per barrel of oil equivalent.
As BP noted, using existing infrastructure provides a critical cost
advantage. If refners can produce advanced biofuels themselves
with existing equipment, it could bring billion-litre-scale projects, as
well as operational synergy with existing oil infrastructure. Experts
suggest such technologies might be operational by 20152016, as
US cellulosic biofuels mandates start to expand dramatically.
In the meantime, Europes decision-makers seem locked in
a frustrating and complex struggle to set up ILUC measures that
satisfy environmentalists, avoid international trade disputes, keep
farmers happy and protect existing investments in biodiesel capacity.
Jeremy Bowden is a freelance journalist focusing on the energy
sector.
e-mail: rew@pennwell.com
This article is available on-line. To comment on it or forward it to
a colleague, visit: www.RenewableEnergyWorld.com
To register low indirect land use change (ILUC) emissions, crops
must be harvested from agricultural land rather than areas that
have recently been deforested. BP
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Conference and Exhibition
4 6 February 2013
Qatar National Convention Centre
Doha | Qatar
SERVING THEMARKETS
ESSENTIALWATER NEEDS
INVITATION TOATTEND
WaterWorld Middle East returns to Qatar National Convention Centre, Doha, Qatar 4-6 February 2013 with a
comprehensive conference and exhibition that provides a unique opportunity for attendees to recieve the most
up-to-date information, ideas and products about the latest technologies and developments in response to the surging
growth and vitality in the MENA region.
The Middle East andNorthAfrica (MENA) region is one of the most water-scarce regions inthe world. Diminishingnatural
water supplies coupled with surging demands ensures that investment for developing water supply is at the forefront of
regional objectives and requirements with GCCcountries likely to invest more than $100 billion in the water sector up to
2016, even as the region faces water over consumption with per capital higher than the global average.
Attractingdelegates, exhibitors and visitors from over 50 countries across theMiddleEast andNorthAfrica(MENA) region
and around the world, this high-quality event is set to become the industrys leading platformto meet and network with
senior executive and industry leaders with a dedicated and diverse exhibition foor and multi-track conference.
Attendee opportunities provide the chance to:
Be part of this top quality event that draws interest from high-level decision makers and infuencers
Network with peers and professionals and develop new business contacts
See the latest equipment and technological solutions that promote water sustainability and reuse to help
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Join us inDoha, Qatar inFebruary 2013 and celebrate the 2ndannual WaterWorldMiddle East conference andexhibition
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WaterWorld Middle East attracts the top players in the industry and its the single most important
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82 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
SOLAR: CSP IN THE SOUTHEAST US
CAN FLORIDAS MARTIN SOLAR
ENERGY CENTER BLAZE A TRAIL?
Floridas 75 MW hybrid concentrating solar power (CSP) Martin Solar Energy Center, now moving into its
second year of service, remains the US East Coasts only CSP project, but Elisa Wood examines its potential
to spearhead the technology in the US Southeast.
The Martin Center stands as a model for CSP in the Southeast.
FPL
US CSP AIMS TO
RISE IN THE EAST
B
ut will there be more CSP in the US Southeast? When people think
of ideal locations for concentrating solar power, they generally
envision remote and dry deserts, like the US Southwest. But with its
Martin Solar Energy Center, Florida Power & Light (FPL) has shown
that CSP can work in a humid and cloudy climate, as well. Will that
success bring more of the technology to the Southeast?
The question remains open. While it initially appeared more CSP
was on it way, optimism has waned because of a combination of
technological, political and market forces. First, the Southeasts
climate continues to deter many developers. CSPs high temperature
technology works best when solar energy is consistent. From a
geography standpoint, the Southeast is not a region where you
would [expect to]see CSP move forward, says Steve Kalland,
executive director of the North Carolina Solar Center.
Second, FPL Martin has a unique advantage. It is not a
stand-alone project, but a hybrid that operates in conjunction with an
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SOLAR: CSP IN THE SOUTHEAST US
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84 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
existing combined-cycle natural gas plant. This integration underlies
its success. Because some of the infrastructure was already built,
it was cheaper than a stand-alone CSP plant. Any new CSP in the
Southeast is likely to also be hybrid. After all, it offers a potential
20% cost advantage. And as natural gas prices continue to drop,
hybrid systems will become even more cost-effective, according
to Kalland.
But the hybrid cost advantage does not appear to be enough to
get projects going. The Southeast is heavily vested in fossil fuel and
nuclear, deeply cost conscious, and slow to adopt favourable green
energy policies. And a handful of utilities control large parts of the
energy market, making it diffcult for independent power developers
to compete. Couple that with the rapidly falling cost of crystalline PV
panels, and CSP faces an uphill climb in the region.
A WEAK LEGISLATIVE ENVIRONMENT
CSPs slow going is due in part to lack of state and local government
commitment to solar, according to Bruce Kershner, executive director
of the Florida Solar Energy Industries Association. Favourable policy
has been stymied over the years by administrative changes and
political manoeuvring. Strong legislation has been proposed, only
to be rewritten and weakened as it made its way through the two
branches of the state legislature, according to Kershner.
We have a Republican House, Senate and Cabinet, he says.
They are fscally conservative people. State leaders show little
appetite for increasing rates to fund solar programmes.
FPL won cost-recovery for the Martin Center. But new projects
remain subject to state least-cost requirements. Avoided costs are
low in the state as they are in much of the Southeast and natural
gas fred plants are often a preferred new supply choice. Without
guaranteed cost recovery, utilities have little incentive to invest
in solar.
Further, the Southeast has a dearth of innovative renewable
energy polices. State renewable portfolio standards (RPS) drive
green energy development in large swathes of the nation by requiring
that renewables be used to meet a certain percentage of electric
demand. (Some states even have carve-outs requiring that part
of the RPS be met specifcally with solar energy.) About three ffths
of the states now have RPS requirements; the Southeastern states
of Florida, South Carolina and Georgia are not among them. North
Carolina is the exception among the Southeastern states in having
an RPS. But the programme is relatively slow to ramp up. The North
Carolina RPS requires that 12.5% of demand be met with renewable
energy by 2021 (0.2% specifcally from solar). This is relatively weak
compared with booming solar states like New Jersey, which requires
22.5% renewables by 2021.
A handful of states also have or are working on developing
solar renewable energy credit markets (SRECs), which allow utilities
and sometimes competitive suppliers to meet RPS standards with
credits. Rules vary from state to state, but typically utilities either
produce their own credits or buy the SRECs from solar power
generators. And if there are not enough credits available, they pay
a non-compliance penalty to the state. The penalty is typically set
high enough to encourage utilities to source energy to meet their
RPS quota.
For example, in New Jersey, the 201011 RPS requirement for
energy producers was 306,000 SRECs. Each SREC is valued at
US$665 per MWh, and the penalty for non-compliance was set at
$675 per MWh. By 2015, New Jerseys RPS solar requirement will
rise to 965,000 SRECs for energy producers.
North Carolina has had an SREC programme in place since 2010,
but the programme has been ineffective because the state did not
set a compliance payment. Without a fne for failure to meet the RPS
programme, energy suppliers have no reason to follow the states
rules. Without rules, complicated and expensive new technologies,
such as CSP, will not get built, says Kalland. CSP is very policy-
dependent, perhaps more than any solar technology because of its
capital costs. We have to get a very specifc framework in place to
encourage utilities to invest in projects.
TOO MUCH UTILITY CONTROL?
Another major roadblock for the SREC market in North Carolina, and
for renewable energy development in the Southeast in general, is
that a few large, investor-owned utilities tend to dictate the market.
For example, Duke Energy and Progress Energy together provide
71% of North Carolinas electricity. Both utilities have already met
their North Carolina compliance needs for solar and have removed
Any new CSP in the Southeast is likely to
also be hybrid. After all, it offers a potential
20% cost advantage. And as natural gas
prices continue to drop, hybrid systems
will become even more cost effective.
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SOLAR: CSP IN THE SOUTHEAST US
86 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
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John Granger, PGD technical services
general manager-solar at Florida Power &
Light (FPL), discusses the performance of
the 75 MW Martin Solar Energy Center.
REW: What is FPLs view of the plants
overall operating performance during its
frst year?
JG: Overall, throughout the Martin
facilitys frst year, there have been unique
challenges as there are with any new
power plant, especially one that uses frst-
of-a-kind hybrid technology. There have
also been some pleasant surprises.
Its common for any type of solar
thermal facility to take time to get up to its
full capacity, and this is especially true for a
frst-of-a-kind hybrid facility. Anytime a
new plant comes online there are built-in
projections of outage time, so while the
performance was below our expectations
in 2011, the plant is on track to reach its
full potential by the end of this year.
From January to December 2011,
FPLs Martin solar facility produced
28,982 MWh of electricity with zero fuel
costs. This performance was short of our
projected goal, but our current projections
indicate that the facility will generate
approximately 110,000 MWh this year
when operating at its optimal level. An
incident that resulted in the loss of heat
transfer fuid and planned and unplanned
outages at the interconnected Martin
natural gas combined-cycle plant were the
primary causes of MWh shortfalls. Were
optimistic that were on track to reach our
revised level of production going forward.
REW: Were there any surprises and how
were they handled?
JG: The release of the heat-transfer
fuid was unexpected and certainly a
learning experience. The energy storage
capacity of the facility has been a pleasant
surprise. The heat-transfer fuid stores heat
surprisingly well, and there have been days
when the plants been generating power
as late as 10 pm during summer months
long after the suns gone down. In addition,
but not related to heat storage, the facility
peak generation output can exceed the
nominal 75 MWpeak output with optimum
solar conditions. Just recently, the plant hit
a peak of 85 MW with a single-day total
generation of 730 MWh.
REW: Were any plant modifcations
made?
JG: Yes. FPL made design modifcations
to ensure that there would not be another
recurrence of the heat-transfer fuid
release. In addition, several changes
were made to accommodate Floridas
variable sunlight and its impact on the
type of equipment needed to balance the
demands of the solar thermal production
and the transfer of energy to the natural
gas, combined-cycle components.
REW: What was the amount of energy
output from solar versus natural gas at
the plant?
JG: In 2011, the Martin solar facility
produced 28,982 MWh. The natural
gas combined cycle area of the plant
produced 6,058,221 MWh.
REW: How did Floridas cloud
cover and humidity infuence
solar output?
JG: Solars biggest challenge is
determining how to operate best with
variable sunlight, and weve made great
strides in optimising the performance
of our solar plants. For a solar plant
to perform at peak capacity, unfltered
sunlight is vital; this can be demanding
when the weather is constantly changing.
As the sun goes in and out, temperatures
fuctuate, and temperature fuctuation
affects performance.
REW: How do you see the
future of CSP in Florida and
CSP/hybrids in general?
JG: Were as optimistic as ever about the
future of solar in Florida. FPL continues
to support efforts to encourage further
investment in cost-effective renewable
energy generation in the state. With the
appropriate regulatory legislation, we are
ready to begin construction at multiple
sites around Florida and continue to meet
the energy needs of Floridians with reliable
and responsible generation.
FPL PIONEERING CSP
WITH FLORIDA HYBRID
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SOLAR: CSP IN THE SOUTHEAST US
RENEWABLE ENERGY WORLD JULY-AUGUST 2012 87
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themselves from the SREC market for the next several years. This
is a devastating blow for the states SREC market 71% of its
customer base has removed itself from the market.
In addition, industry liberalisation never swept the Southeast,
as it did other parts of the nation such as the Northeast, where
solar is thriving. In these deregulated states, customers can
leave the utility to buy supply elsewhere. However, green-
leaning customers in regulated states have little leverage
to pressure utilities into adding more renewable energy to
their portfolios.
SOLAR VERSUS SOLAR
It isnt just public policy, low utility rates or lack
of liberalisation that is slowing the CSP market
in the Southeast. Even in New Jersey, a poster
child for US solar development, it is crystalline
fat-plate PV that is capturing the market,
not CSP.
PV is simply cheaper right now. From an
economic standpoint, its hard to see CSP
making a lot of sense in the Southeast when
trying to compete with the cost of crystalline
PV, says Kalland. If any solar gets built, it
will be fat-panel PV. North Carolina alone will
install 100120 MW of fat-plate PV this year
and 90% of renewable activity will come from
fat-plate crystalline PV, according to Kalland.
If PV prices continue to drop, it makes the
game that much harder for CSP companies to
compete in order to get projects built, he says.
It will take a legislative commitment to get the
CSP market going.
With crystalline PV providing many of the
same benefts as CSP, including reduced
emissions, it makes little sense for utilities to
purchase a more expensive form of solar energy.
Utilities like the consistent energy output of CSP
plants, but most think it is a more expensive way
of meeting RPS requirement, says Kalland.
MORE CSP THAN EVER?
But dont rule out the Southeast completely for
further CSP. Many expect the CSP price point
to drop as projects are built in other parts of the
US and around the world over the next several
years. As more projects get built, costs will get
driven down, says Kalland. But realistically that
is not coming anytime soon in the Southeast.
CSP technology is also expected to undergo
breakthroughs in performance and to improve
storage capabilities for stabilising the grid. But
until there is a major technology advance and
the price-point comes down, crystalline PV will
continue to make the most economic sense,
says Kalland.
So for now, the Martin Centre stands as a
model for CSP in the Southeast, but one unlikely
to be quickly emulated until we see price, technology or policy
change in CSPs favour.
Elisa Wood is a US correspondent for Renewable Energy World.
Energy writer Reid Smith contributed to this article.
e-mail: rew@pennwell.com
This article is available on-line. To comment on it or forward it to
a colleague, visit: www.RenewableEnergyWorld.com
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88 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
BIOGAS: AUTOMATION
USING DIAGNOSTICS AND
MONITORING TO INCREASE YIELDS
Plants that produce biogas to feed power stations in Germany are turning to integrated automatic solutions to
overcome the inherent challenges of the production process and meet legislative requirements for transparency.
Frank Schlachter and Ute Forstner discuss automated processes at the Leckeng biogas plant.
The biogas sector must adopt new production methods to meet
its baseload potential, claims Biogas Pirates.
SIEMENS
AUTOMATING
BIOGAS PLANTS
G
ermany has 7100 biogas plants, according to Fachverband
Biogas e.V., the countrys biogas association. In 2011 they
had a combined capacity of about 2780 MW and contributed about
3.1% of the nations energy mix. But the sector must adopt new
production methods to meet its baseload potential, claims Biogas
Pirates, a frm active in Schleswig-Holstein in northern Germany
which specialises in the construction and servicing of biogas plants.
Automation systems can both raise plant availability and help
meet the transparency requirements of Germanys EEF energy laws,
says Biogas Pirates manager Ralf Breckling. We used to only take
care of service and replacement needs, he said. During that time
we quickly learned that integrated, robust complete systems based
on durable, fexible industrial solutions are the best investment for
plant operators.
THE NEED FOR INFORMATION
Operational effciency and biogas yields are potentially raised through
gathering various types of data, which must also be available for
further processing. Information can include fow rates, pressures or
fll levels as well as motor performance data or methane content.
Some parameters must be monitored cyclically. It is important,
for instance, to ensure that the fermentation process runs smoothly.
If the bacteria in the fermenter are not fed for six hours, methane
production drops signifcantly. After only a few more hours, fermenter
contents can no longer be regenerated and must be removed in an
elaborate, time-consuming and costly process.
Detailed diagnostics and high-availability systems are vital.
Before purifed biogas or biomethane can be fed into the natural
gas network, its composition and quality parameters such as calorifc
value and density must be known and checked against public
guidelines. Gas and energy production must also be documented
along with the quantities of all feed materials. By constantly checking
ingredients, operators can monitor and control the fermentation
process to maintain the quality of the generated biogas.
To achieve this, all subsystems must communicate simply and
securely with each other. Ethernet-based data cables such as those
used in offces to connect printers with PCs are an effective way
to exchange data. But industrial ethernet has become the standard
for meeting the industrial sectors need for robust communication
systems that can reliably transfer data over long distances.
AUTOMATION IN PRACTICE
Automation featuring such communication systems can be seen in
practice at a biogas plant built in 2010 at Leckeng, near Germanys
border with Denmark.
The plant consists of a wet fermenter, a secondary fermentation
tank and fermented substrate storage. New material is brought
in every hour via a feed screw to keep methane production at a
maximum. A continuous automation solution from the feld level
to the control room features synchronised components. The plant
supplies gas to two combined heat and power (CHP) stations, each
with a capacity of 400 kW.
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BIOGAS: AUTOMATION
The plants operators opted for an open industrial ethernet
standard for automation that offers real-time capability and
supports remote diagnostics as well as implementation of internet
protocols. Industrial ethernet was also considered appropriate for
enabling the secure and reliable transmission of data over the 2 km
between the digester plant and the outlying CHP station. In addition,
components and systems linked to the system can be expanded and
modifed later. A fexible mini-controller monitors the entire biogas
plant. Three ethernet connections on the device ensure networking
and fexibility. A modem can also be easily connected for secure
remote maintenance.
Rather than being fed into the gas network, methane from
Leckeng fres the two CHP units to generate electricity and heat. The
second satellite CHP station, in the engineering room of a high-rise
building, supplies about 160 homes with heat. Internet and Profnet
communication enable distributed generation of heat and electricity
with methane piped over from the biogas plant to be run as if it were
a centralised plant.
SUSTAINABLE PRODUCTION
Sustainability determines how biogas plants operate in several ways.
The switch to industrial automation solutions, for instance, enables
preventative or condition-oriented maintenance.
These functions beneft from standardised switching technology.
The modular safety system, for example, includes all the components
needed for switching, protecting or connecting consumers as well
as for monitoring, controlling, detecting, commanding, signalling and
supplying power. If any of these components need to be replaced,
they can be quickly removed from the control cabinet and new
components installed.
Easy connectivity was also the main reason why the Leckeng
plant installed a communication interface. This interface was
originally developed to provide information from the fnal meters
the sensors and actuators to an automation system. While
microprocessor technology has made sensors increasingly
powerful, many users had been unable to apply their diagnostic
and parameter information as it was unavailable in the automation
system. Sensors also usually had to be wired elaborately with
multi-pin cables. Using the communication interface, sensors from
the meters can simply be plugged in.
Biogas plants have also benefted from standard connection
blocks. They can connect individual components to form complete
feeders, saving time and ensuring units are always wired correctly.
At Leckeng, the motor or load feeders consisting of contactors
and circuit breakers for motor protection were equipped with
communication interfaces. As a result, only the initial starter of a
series is wired to the master. Other starters are linked via plug-in
connectors using pre-fabricated fat cables.
Plug & play and standardised connection blocks greatly cut the
costs of wiring modules and of assembling individual devices into
complete feeders. The user also receives diagnostic information that
is unavailable with conventional wiring. Up to four feeders direct,
reversing or star-delta starter can be connected to each other.
The system enables information to be received from even the
lowest feld level. The display can easily visualise information such
as whether a motor contactor has triggered, or whether voltage is
supplied to all phases.
As each individual components availability determines the
biogas plants effciency, it is important to be able to diagnose
each individual motor feeder using remote access. Operators get
instant information on how to solve simple problems. Service and
maintenance staff also know immediately what caused a fault or
triggered an alarm. Important diagnostic information is usually
programmed by the user for a companys specifc requirements, but
ready-made solutions are also available.
INTEGRATED SYSTEM SOLUTIONS
While the Leckeng biogas plant selected a fexible mini-controller,
larger plants could implement control systems. From an automation
viewpoint, a control system makes sense especially when several
plants operate within an integrated system. Wastewater treatment
plants or waste recovery systems can, for instance, operate in
combination with biogas plants. Local authorities can also operate
several biogas plants.
The need for an integrated system solution is very clear in these
cases. The system solution should include graphic confguration
tools, a uniform engineering platform, integrated safety technology
and additional functions such as alarm and asset management.
The automation system must also be scalable for easily integrating
additions to the system.
Fast and straightforward engineering is another requirement, as
biogas plants are often built under extreme cost and time pressure.
Finally, the solution must deliver all the necessary functions including
instrumentation and drive technology, safety technology and power
management in a uniform environment. The scope and functionality
of the automation can be adapted to the plant size and the
process engineering.
OPTIMISING OPERATING COSTS
As well as the effciency of processes, plant operating costs also need
to be monitored. The Leckeng plant is equipped with a multifunction
meter that can collect more than 50 measurement values such as
voltage, currents, power and frequency.
The meter monitors network quality and can measure the
difference between reference current and supply current. But the
systems effectiveness hinges on power monitoring. Supply contracts
set how much power is available at any moment. Exceeding this
limit is expensive, so the controller is programmed to prevent energy
intensive work processes from starting or running simultaneously.
For a biogas plant such as Leckeng, the overriding objective is to
achieve an energy supply that is as environment-friendly as possible.
Biogas Pirates considers that this is achieved through applying
industrially proven state-of-the-art technology to accomplish this
goal. In the end, a biogas plant is not much different from an
industrial plant, says Ralf Breckling.
Ute Forstner is marketing manager for the chemical industry at
Siemens. Frank Schlachter is area sales manager for Siemens
Northern German region.
e-mail: rew@pennwell.com
This article is available on-line. To comment on it or forward it to
a colleague, visit: www.RenewableEnergyWorld.com
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90 RENEWABLE ENERGY WORLD JULY-AUGUST 2012
CPV: TRACKING PROGRESS
A CRUCIAL ASPECT
OF PROJECT SUCCESS
Tracking is crucial to CPV, but can it enable the technology to earn a larger portion of the solar power sector?
Tildy Bayar spoke with key players in the trackers feld to see where the sector is focused, and how it is
coping with the challenge of low-cost PV.
Tracking accuracy can be affected by many factors.
MECHATRON
FOCUS ON CPV
TRACKERS
A
s anyone involved in the solar industry knows, cost reduction
is crucial to survival in a challenging global market. Although
concentrating photovoltaic (CPV) technology currently supplies
just 0.1% of this market with just 100 MW installed worldwide,
compared with PVs 70 GW its manufacturers believe they can
ultimately offer a lower-cost alternative to conventional panels.
CPV uses mirrors or curved lenses to focus (concentrate)
sunlight up to hundreds of times onto a smaller number of solar
cells than traditional PV. (The amount of concentration is measured
in suns.) Because the materials used are for lensing and focusing
are relatively low-cost when compared with silicon wafers, CPV
advocates claim their technology is more effcient than PV and ideal
for high direct normal irradiation (DNI) areas. However, in order to
achieve higher energy yields, CPV panels must remain trained on the
sun at a precise angle throughout the day as a result of the narrow
effective incidence angle. This is where trackers come in.
Players in the CPV tracking space include Mecasolar, newcomer
Nexteer, Opel Solar, Soitec, SolFocus, SunPower, Titan Tracker and,
until recently, Amonix and DEGERenergie.
ACCURACY
Trackers are vital to CPV and they need to be extremely precise
in how they follow the sun. Hansjrg Lerchenmller, senior vice
president of Soitecs solar energy business unit customer group,
explains: With a CPV system the alignment of the module towards
the sun has to be very accurate, in the range of 0.5. This accuracy
is achieved with precise dual axis tracking. Stavros Mastorakis,
technical director at Mecasolar, comments: For a low-concentrating
CPV module such precision was requested to be less than 1.5,
while in a typical PV [module] a precision of 3 would not affect the
results in energy yield. SolFocus CPV considers that for its mirror-
based systems the acceptance angle can go up to 1.0.
How hard is it to achieve such accuracy? When automotive
manufacturer Nexteer moved into trackers, it discovered the scale
of the challenge through site visits, says David Westphal, executive
director of the companys SunSteer CPV tracker programme. We
visited felds and every tracker had the panels pointed in different
directions. They had tried multiple times to fx the problem but it
didnt work.
Tracking accuracy can be affected by temperature changes, wind,
low DNI, condensation, soiled sensors and even more subtle events
such as ground movement and gradual degradation of mechanical or
electrical systems. Environmental conditions defnitely affect system
performance, says Lerchenmller: We found that for example
low temperatures infuence the system. Consequently different
environmental conditions require different system layouts.
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CPV: TRACKING PROGRESS
Nancy Hartsoch, senior vice president of marketing and sales at
SolFocus and the chairperson of the CPV Consortium, says, When
we designed and tested our trackers we felt it was critical to have
them operating in different temperatures and climates around the
globe to understand performance in the unique conditions of various
geographies. For example, hydraulic trackers can run into diffculties
when temperatures drop well below freezing, so we decided to go
with electric motors.
Westphal argues that, ultimately, Output remains a function of
the device that youre moving. Even different coatings on PV will give
them more or less tolerance to exact perpendicularity to the sun.
CPV wants to be tracked even more accurately. What type of mirror,
how good is the polish, are they using Fresnel lenses? determine the
angle they need to hold.
SINGLE OR DUAL AXIS?
Dual axis trackers can follow the sun both vertically and horizontally,
while single axis trackers are generally north-south aligned. The
consensus seems to be that dual axis tracking is required for
high concentration PV (HCPV) of 100 suns or more while for low
concentration (2100 suns) single axis can be used.
With the current feed-in tariff (FiT) applied, two axis tracking for
low-concentrating CPV modules is not paying off its investment, says
Mecasolars Mastorakis. On the other hand, if we are talking about
high-concentrating CPV modules then a two-axis system is a must
in order to obtain the higher yields.
For Westphal, the choice also depends on where you are in
relation to the equatorial plane. We fnd we get the best gains using
dual-axis and being below 1, perpendicular to the sun, at 1/10 of
a degree. Everybodys particular CPV panel has different aspect
characteristics as to tolerance to being out of alignment to the sun.
How accurately you need to track to get effciency out of a particular
device is based on that technology.
Hartsoch sees dual axis trackers as vital for HCPV, while silicon
PV or fat-plate panels can be fxed or can employ single or dual
axis tracking: it becomes an economic and terrain-based decision,
trading off cap-ex costs against generation. The higher the value of
the energy, the more likely that a tracked approach will be better due
to the higher energy generation, she says.
For HCPV, tracking on two axes is mandatory, and that is why
suppliers of dual axis trackers have to be diligent in the quality of their
equipment and push the bar on reliability testing, failure analysis, and
all aspects of assuring the trackers will be operating in the feld for
25 years. The critical importance of trackers to CPV systems is why
SolFocus has designed its own tracking technology, to ensure it is
perfectly married to the CPV panels it deploys. There is no shared
accountability for energy production with this approach.
Lerchenmller considers that dual-axis tracking will no longer be
cost competitive for silicon modules. Module costs went down so
much, going to tracking almost immediately means that you have to
use the highest module effciencies available with CPV technology.
So, effectively, for fxed installations and for CPV installations, in terms
of energy yield per m
2
of module, tracking for a CPV system can be
much cheaper per kW because even if its slightly more expensive
per m
2
, the cost per kW or kWh is much smaller because module
effciency is almost exactly twice as much as a good silicon module.
If you go for silicon and thin flm, your choice will be either fxed
or maybe single-axis tracking depending on location and specifc
technology. Its not worth having dual-axis tracking for silicon. Of
course, due to the fact that [it is] twice as effcient as a good silicon
module, dual axis tracking makes a lot of sense [for CPV] and
provides maximum distribution of energy.
COST: THE HOLY GRAIL
CPV allows manufacturers to produce fewer solar cells, which
can offer a cost advantage over PV. However, this saving plus the
effciency boost given by trackers can be offset by the extra cost of
components, a tracking system and maintenance. (Trackers make
up about 20% of CPV system costs.)
The challenge for CPV is that developers might choose instead
to simply install more PV panels given their current low price and lack
of extra maintenance costs.
As Westphal puts it, As PV panels drop towards the US$1/W
range, you have to be able to look at [a customer] and say I can
give you a large enough performance increase over a fxed array so
theyll understand why they shouldnt just install more fxed panels.
Lerchenmller says, Some people quote or believe that going
to a more precise tracker leads to an increase in cost, which is
not true. Look at the forces and constraints of a tracker. A tracker
consists of a drive, a precision mechanical device which is also
used in other industrial products where things are turning and the
structure. Its about positioning accuracy: the drive is responsible
for play or backlash whatever accuracy you need, you cannot
afford any signifcant backlash or play in design. Wind which blows
onto the tracker would immediately start to move and swing it, and
would create a lot of stress, putting stress on the drive. So you have
to go to minimum backlash anyway, then the difference between
high tracking accuracy is down to software and algorithm. What is
important for cost is effciency of the module.
Hartsoch says, When you look at a CPV system, the tracker is
only part of the picture. With inexpensive PV panels you can get 20%
more energy with a single-axis tracker. The question is: will CPV give
you a lower cost of energy in high-sun areas? Today, the answer is
yes, it can.
COST REDUCTION STRATEGIES
Price and quality of materials, ease and speed of installation, energy
use and even the size of a tracker can reduce costs.
One of Soitecs cost-lowering strategies is, says Lerchenmller,
Larger modules for fast assembly. You cannot place large modules
by hand, which is why we use small cranes for our new system. The
previous system incorporated 168 smaller modules, and it used to
be that two people were mounting module by module on the tracker,
and for each of the modules they adjusted three screws.
Now we have one person using a small crane to mount 12 big
modules per system. He or she places the module on the tracker,
You have to be able to look at a customer
and say,
so they don