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NUMBER 478
Contents February 2019

Email
e: eworld@energyinst.org
Front cover IN THIS ISSUE…
Editor
Steve Hodgson
t/f: +44 (0)1298 77601 Rooftop solar Renewable energy has a solidly mainstream
stevehodgson@btinternet.com
e: shodgson@energyinst.org in Nottingham place in the global energy system these days,
Deputy Editor
Assistant Editor (see page 26) – and we include six articles in this issue. First,
Jennifer Johnson are renewables on targets, a story of California’s plans to
t: +44 (0)20 7467 7152 heading for a move to 100% renewables by 2045; second,
e: jjohnson@energyinst.org subsidy-free on subsidies, a discussion of whether – and
Production
General Officer
enquiries future? See page how and when – renewables in Europe
Yvonne
t: Laas7467 7100
+44 (0)20 16.
t: +44
e: (0)20 7467 7117
info@energyinst.org might achieve post-support status.
e: ylaas@energyinst.org Third, we look at increasingly
Advertising Photo: Nottingham
General
For enquires
advertising opportunities sophisticated control strategies for wind
t: +44 (0)20
please 7467
contact 7100 Bassey or
Alexander City Council turbines and whole wind farms; fourth,
e: info@energyinst.org
Simon Kirby we move to heat pumps and their role
e: sponsorship@energyinst.org
Advertising in decarbonising heating in the UK. Two
For advertising opportunities more articles cover efforts to improve the
News & regulars
Magazine subscriptions
pleaseBaker
Chris contact:
MEIPatrick Lynn, efficiency of waste-to-energy schemes, and
Redactive
t: +44 (0)20 Media
7467 7114
t: +44
e: (0)20 7880 7614
cbaker@energyinst.org
a couple of shorter pieces on peer-to-peer
e: patrick.lynn@redactive.co.uk investment and roof-mounted solar power.
Membership 2 From the editor The second theme is finance. Two articles
Magazine
For subscriptions
all membership enquiries please
Chris Baker
contact MEI
e: membership@energyinst.org – first on the movement to end investment
t: +44
or visit(0)20 7467 7114
www.energyinst.org 3 International update in coal projects; second on whether enough
f: +44 (0)20 7255 1472 investment is being made to give access to
e: cbaker@energyinst.org 7 Viewpoint energy to the world’s poorest people.
Membership Also, in the first of two articles, EI
For all membership enquiries please 8 UK update President Malcolm Brinded gives a personal
contact e: membership@energyinst.org
or visit www.energyinst.org view of energy challenges met during his
12 EI news career. The usual UK and international news
pages, plus opinion articles, complete the
issue.

Features
Renewables
14 California – 100% renewable power 26 Investment in tidal energy project,
by 2045? roof-mounted solar across the UK
Michael Ferguson
28 Towards decarbonisation
16 Subsidies still needed despite falling Martin Lambert
falling renewables costs?
Printed by Geerings Print Ltd
Liz Newmark
Energy Institute
Magazine of the
Printed by Geerings Print Ltd 20 Taking control of the wind 30 Energy is improving life for billions
David Appleyard Malcolm Brinded CBE, FREng, EI President
Magazine of the
61 New Cavendish Chief Executive
22 Smart hybrid technology for heat Finance
Street, London Louise Kingham OBE FEI
W1G 7AR, UK decarbonisation 32 Beyond coal? The outlook for
61 New Cavendish Chief Executive Colin Calder divestment
Street,ofLondon
control: EnergyLouise
World isKingham
circulatedOBE freeFEI
Terms
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Jennifer Johnson
of charge all paid-up members of the Energy
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Opinion

FROM THE EDITOR

New nuclear – priced out of

the UK electricity market?
W
hat is the significance
of Hitachi suspending
its efforts to build a
new twin-reactor, 2.8 GW nuclear
power station at Wylfa Newydd
on the island of Anglesey? And to
end more preliminary efforts to do
something similar at Oldbury on
Severn in Gloucestershire? Could
this be the end – Hinkley Point C
aside – of the new generation of
Steve Hodgson, nuclear plants to be built at five UK
Editor coastal sites?
Hitachi’s vehicle for the Wylfa
project, Horizon Nuclear Power,
said that despite making progress
on UK acceptance of the reactor
design, building a supply chain and
establishing an organisation of
talented people, it had failed to
close a deal with the UK
government for financing and
commercial arrangements for the
project. The company has therefore
suspended work on both projects,
at least for now, writing-off a
reported £2.1bn of development
costs.
This was the second serious
blow for the prospects of a new
generation of nuclear plants to be
built in the UK. The Wylfa news,
which broke in mid-January,
follows Toshiba’s decision last
November to wind up its UK
nuclear arm, NuGeneration, and to
quit the project to build a 3.3 GW
nuclear power plant at Moorside,
The views and opinions Cumbria. NuGeneration also
expressed in this
article are those of the blamed the demise of the scheme
editor only and are not on commercial issues, including
necessarily given or uncertainties about the level of
endorsed by or on behalf
of the Energy Institute. support for the project from the
government.
That leaves just the 3.3 GW
Hinkley Point C project currently
being built by EDF Energy in
Somerset, plus the possibility of a
similar plant at Sizewell, Suffolk,
also from EDF. Proposals to develop
another nuclear plant at Bradwell
in Essex with China General
Nuclear are considered to be at an
earlier development stage.
Yet the government made it clear
that it had made a generous,
three-part offer of support to Wylfa:
to take a one-third equity stake in
the project; to provide all the
required debt financing to complete
its construction; and to provide a
‘Contract for Difference’ (long-term
guaranteed sales price) for its
electricity output at a strike price of
up to £75/MWh.
Evidently, this package was not
enough for Hitachi. For comparison,
the strike price accepted by EDF
Energy for the Hinkley Point C
project in 2013 was £92.50 – and
here is the rub.
As Business and Energy
Secretary Greg Clark said on the day
of the Hitachi announcement, the
economics of the energy market
have changed significantly in recent
years. The costs of renewables have
fallen, dramatically in some cases
and are approaching the point
where public subsidies are no
longer required. Also, the pipeline of
new renewables projects coming
forward has strengthened.
This means, he added, that the
UK now has a well-supplied
electricity market with a growing
winter margin. Yet the costs of new
nuclear projects are heading in the
opposite direction – upwards –
making it more difficult than ever
to attract private finance into
new-build projects.
Clark was unequivocal – the
government had offered as much
support as it reasonably could have
done. He could not justify a higher
electricity strike price, given the
declining costs of alternative
technologies. Yet the government
remains committed to new nuclear
power, he added, and is currently
reviewing the viability of a new
support mechanism, the Regulated
Asset Base Model, for future
projects. It has also entered into a
‘nuclear sector deal’ to support the
industry as part of the
government’s Industrial Strategy.
But the message seems clear –
that the falling costs of alternative,
renewable sources of power
generation have done what fears
over nuclear safety or the
escalating costs of nuclear waste
disposal have failed to do – to price
nuclear power out of the UK
electricity market.
Indeed, Hinkley Point C might
well follow Sizewell B in becoming,
as Sizewell B did in 1995, the only
one of a planned whole new
generation of new nuclear plants
actually to be built.
Whether the alternatives can
rise to the challenge of replacing
the nuclear contribution to Britain’s
electricity needs – which are
falling, remember – is another
question. A separate question is
whether it will be renewables or
gas that take up the generation
slack in the short term.

In this month’s Petroleum Review:

• Predictive analytics to unlock capital and operating efficiencies
• Global road to decarbonisation is gathering pace
• Internet of Threats – tackling cyber security challenges
• Oil majors invest in sustainable innovation
Petroleum Review is the monthly sister publication to Energy World, covering
all aspects of the international oil and gas industry. As an EI member,
you can subscribe to Petroleum Review for £57, or access it online, for free,
at https://knowledge.energyinst.org/magazines/petroleum-review
For more information visit www.energyinst.org

2 Energy World | February 2019


Pumped hydro storage to ‘turbocharge’
energy transition – IHA
Industry report forecasts a 50% increase in global pumped hydropower storage capacity by 2030
T
he International Hydropower
Association (IHA) has
predicted that global pumped
hydropower storage (PHS) capacity
will increase by almost 50% by
2030 in a report: The World’s Water
Battery.
The organisation reports that
there are more than 100 PHS
projects currently under
construction worldwide. According
to the study, these plants will take
PHS capacity from 161 GW today to
239 GW in 2030. IHA also estimates
that PHS projects now store up to
9,000 GWh of electricity globally.
‘Pumped hydropower storage
accounts for over 94% of global
energy storage capacity, ahead of
lithium-ion and other forms of
storage,’ says IHA Senior Analyst
Nicholas Troja, one of the paper’s
authors. ‘It will play a critical role in
the clean energy transition by
supporting variable renewable
energy.’
The paper describes the benefits
of pumped storage for balancing
peaks and troughs in solar and wind
energy production. It states that PHS
provides reliable energy in bulk and
on demand for sustained periods,
which avoids the need to curtail
renewables during periods of excess
supply and further supports their
continued deployment.
Energy storage
Battery solution for Norwegian North Sea drilling rig
Siemens has supplied a lithium-ion energy
storage solution (ESS) to an offshore drilling
rig in a move aimed at reducing the costs and
environmental impact of oil production.
The installation will make the West Mira
drilling rig the first modern oil platform
to operate a low-emission hybrid power
plant using lithium-ion energy storage,
says the company. The solution comprises
four converter-battery systems for a total
maximum power capacity of 6 MW.
The integration of Siemens’ BlueVault
solution on West Mira will result in an
estimated 42% reduction in the runtime of
on-platform diesel engines, reducing carbon
dioxide emissions by 15% and NOx emissions
by 12%, adds the company.
The batteries will be charged using the
rig’s diesel-electric generators and will supply
power during peak load times. In addition,
InternationalUpdate
Pumped storage
technology and
operations
support the
energy transition,
however policies
and market
frameworks have
struggled to catch
up and are failing
to adequately
reward the
Pumped hydropower storage accounts for over 94% of global energy storage capacity flexibility
 Photo: Shutterstock
provided by
However, despite the projected PHS plants currently in operation hydropower
growth in PHS capacity, the report’s were commissioned and financed
authors note that existing under public ownership by utilities
regulatory frameworks don’t that enjoyed a monopoly status.
properly incentivise the services it Many projects in the pipeline
provides. Troja adds: ‘Pumped today are being executed under
storage technology and operations similar market conditions, which
support the energy transition, the report says points to:
however policies and market ‘deficiencies in how liberalised
frameworks have struggled to catch markets are incentivising
up and are failing to adequately development and rewarding their
reward the flexibility provided by services.’
hydropower.’ Ultimately, IHA believes that the
While PHS is a proven failure to provide certainty and
technology, the report notes that clarity in policy and market
projects face long payback periods regulation will increase borrowing
and high upfront capital costs. IHA costs and deter investment in new
has found that the vast majority of PHS.
the ESS will act as a backup in the event of a Norway as it anticipates greater interest in
power loss and can provide power to the rig’s efficient drilling operations.
thrusters if all running machinery is lost.
‘Offshore rigs have highly variable power
consumption for drilling and dynamic
positioning,’ explains Bjørn Einar Brath,
Head of Offshore Solutions at Siemens. ‘By
incorporating energy storage, it is possible
to reduce the runtime of diesel engines and
also keep them operating at an optimised
combustion level. This ultimately leads to
lower emissions.’
West Mira will operate in the North Sea’s
Nova Field, approximately 120 km northwest
of Bergen, Norway. In the coming months,
Siemens will work with the rig’s operator,
Seadrill, to ensure that the ESS meets
The installation makes the West Mira drilling rig the
performance and reliability requirements. first modern oil platform to operate a low-emission
Siemens has recently operated a battery hybrid power plant using lithium-ion energy storage.
module production facility in Trondheim, Photo: Siemens
Energy World | February 2019 3
 InternationalUpdate

Demand for coal ‘stable’ until 2023 – IEA

Coal demand will plateau, but many developing nations still rely on the fuel to power economic growth

G
lobal coal demand will
likely remain stable over the
next five years as growth
in India and Southeast Asia offsets
declines in Europe and North
America, according to a new report
from the International Energy
Agency (IEA), Coal 2018.
The study predicts that coal’s
contribution to the global energy
mix will drop slightly from 27% in
2017 to 25% by 2023. The decline is
attributed to the success of coal
divestment campaigns, the
introduction of new air quality
policies, lower-priced renewables
and abundant natural gas supplies.
Meanwhile, coal demand is
rising across much of Asia – with
India seeing the largest projected
growth rate of any country
worldwide at 3.9% each year. The
IEA also anticipates significant
increases in coal use in Vietnam,
the Philippines, Malaysia, Pakistan
and Indonesia.
‘The story of coal is a tale of two
worlds with climate action policies
and economic forces leading to
closing coal power plants in some
countries, while coal continues to
play a part in securing access to
affordable energy in others,’ said
Keisuke Sadamori, Director of
Energy Markets and Security at the
IEA. ‘For many countries,
particularly in South and Southeast
Asia, it is looked upon to provide
energy security and underpin
economic development.’
Demand in China – which
accounts for almost half of global
coal consumption – is likely to fall
by around 3% to 2023 as the
country introduces new clear-air
measures. While some major coal
users are working to phase out
polluting coal-fired plants, the IEA
notes that market trends are
‘The story of coal largely ‘proving resistant to
is a tale of two change’. This is why the
worlds, with organisation favours the
climate action development of carbon capture,
usage and storage (CCUS)
policies and technology alongside ambitious
economic forces policy making.
leading to ‘Tackling our long-term climate
closing coal goals, addressing the urgent health
impacts of air pollution and
power plants in ensuring that more people around
some countries, the world have access to energy
while coal will require an approach that
continues to play marries strong policies with
innovative technologies,’ said
a part in Sadamori. ‘It must rely on all
securing access available options – including more
to affordable renewables, of course – but also
energy in others’ greater energy efficiency, nuclear,
CCUS, hydrogen, and more.’
Keisuke Sadamori,
IEA

Transport

EU vehicle emissions target divides

Newly expanded solar farm opens
in New Jersey
Dutch life sciences firm DSM’s
North America division has unveiled
its newly expanded solar field in
Belvidere, New Jersey. The
20 MW project, located on 27 ha, is
now the largest net-metered solar
installation in the state of New
Jersey and the second largest on the
East Coast of the US, says DSM.
The solar generation facility
comprises over 62,000 solar panels
and is estimated to produce 25 GWh
of renewable electricity annually.
At peak production, the maximum
output of the solar facility will
exceed the site’s peak consumption,
with the excess solar power being
sent to the power grid.
As a member of the RE100
initiative, DSM is currently pursuing
a target of sourcing 100% renewable
electricity for its global operations.
Photo: DSM North America
automakers and environmentalists
The European Union has agreed a target
that will require carmakers to reduce the
carbon emissions of new vehicles they
sell in Europe by 15% in 2025, and by
37.5% in 2030 compared to 2021 levels.
The EU had originally proposed a 30%
reduction rate for cars and vans, with the
Parliament seeking 40%.
The deal was largely welcomed by
environmental campaigners, including
the NGO Transport & Environment
(T&E), though concerns remain about
its alignment with the Paris Agreement.
Cars and vans represent nearly two
thirds of transport emissions in Europe
and T&E has found that the new
regulation, along with the anticipated
truck standard, will deliver just 38% of
necessary emissions cuts. This means
that national governments will have to
take measures to reduce vehicle use.
‘This regulation is a good deal for
citizens: reducing fuel costs for drivers,
creating over 200,000 jobs and reducing
our dependence on imported oil,’ says
Greg Archer, Clean Vehicles Director at
T&E. ‘However, carmakers’ successful
scuppering of more ambitious targets
means governments will now need to
do a lot more at national level to bring
down transport emissions.’
Meanwhile, the European Automobile
Manufacturer’s Association (ACEA) – the
industry’s largest EU lobbying group –
has claimed that the target is aggressive
and fails to take technological and socio-
economic challenges into account.
‘All our member companies will
continue to invest in their portfolios
of alternatively-powered cars and
vans,’ says ACEA Secretary General,
Erik Jonnaert. ‘But there are still
several obstacles putting the brakes
on widespread consumer acceptance,
such as affordability and the lack of a
sufficiently dense network of recharging
and refuelling infrastructure.’
The organisation also warned that
the deal would have a ‘seismic impact’
on jobs across the European automotive
sector and called for policymakers
to present concrete plans for a skills
transition. However, the European
Commission has argued that the target
will help to support the long-term
competitiveness of European industry
and spur the necessary investment in
low-carbon transport technologies.
‘We are sending a clear political
signal to the industry, investors,
customers and public authorities,’
says Commission Vice-President for
the Energy Union, Maroš Šefčovič. ‘Our
ultimate goal is that the best, cleanest
and most competitive cars are produced
in Europe, that they use the best, most
modern infrastructure, and that we
reduce air pollution.’

4 Energy World | February 2019

 InternationalUpdate

New York continues to move on energy

efficiency, storage and solar power
New York State is introducing aggressive development plans despite federal government indifference to
climate change.

L
ate last year, New York
Governor Andrew Cuomo
announced that the state’s
Public Service Commission had
approved two initiatives that
will increase New York’s energy
efficiency and energy storage
targets as it strives to tackle
climate change.
The new energy efficiency
target for investor-owned utilities
will more than double utility
energy efficiency progress by 2025,
reducing the state’s energy
consumption by the equivalent of
supplying 1.8mn households.
Meanwhile, the energy storage
initiative sets the state on a
trajectory for achieving 1.5 GW of
storage by 2025 – and up to 3 GW
by 2030.
To meet the energy efficiency
target, the state says will help its
building developers, commercial
and institutional building owners,
industrial facilities and residential
households to pursue
improvements that reduce
state-wide energy consumption.
If it meets this target, New York
will have delivered nearly one-
third of its greenhouse gas
reduction goal of 40% by 2030, says
the New York State Energy and
Research Development Authority
(NYSERDA).
Meanwhile, the state is also
working to avoid more than one
million tons of carbon pollution by
introducing and integrating a
comprehensive network of energy
storage solutions. To this end, the
Public Service Commission has
adopted a strategy to address
barriers that have been preventing
energy storage technologies from
competing in the energy
marketplace.
The intervention by the
Commission is intended to
accelerate the market learning
curve, drive down costs and speed
up project deployment. New York
also hopes to create some 30,000
jobs in the clean-tech industry
while it pursues its energy storage
New York also
and efficiency objectives. hopes to create
Just days after the new targets some 30,000 jobs
were approved, NYSERDA in the clean-tech
announced that the largest
community solar project in New
industry while it
York City has been completed and pursues its
was operational. energy storage
Located in Brooklyn, the 1.2 MW and efficiency
solar array is providing energy to
residents and small businesses and
objectives
is part of Governor Cuomo’s
mandate for half of all electricity
consumed to come from
renewables by 2030.
‘We’re investing in projects and
programmes to advance our
aggressive energy goals across the
state,’ says Lieutenant Governor
Kathy Hochul. ‘While the federal
government has turned its back on
energy initiatives to reduce
consumption and greenhouse
gases, New York is leading the
nation to ensure a cleaner and
greener environment.’

Subsidies

Fossil fuel subsidies ‘have not decreased’ –

European Commission
The UK spends the most of any EU nation on subsidising fossil fuels
– followed by Germany, France, Italy and Spain – according to a new
report from the European Commission (EC), Energy prices and costs in
Europe.
While these countries spent more money on supporting
renewables, such as wind and solar, the Commission stated that
national policies may need to be reinforced to limit fossil fuel support
and facilitate decarbonisation in line with the Paris Agreement.
Oil, coal and natural gas subsidies are estimated to total €55bn
across the bloc, with the UK alone offering more than €12bn. Using
Eurostat data, the EC concluded that fossil fuel subsidy payments
remained stable across all sectors – from energy generation to
transport and manufacturing – in 2016, the last year for which data
is fully available.
The report notes that there are multiple legitimate reasons
for intervening in the energy sector with financial and regulatory
support, including correcting imperfect markets and providing
long-term strategic direction. However, it also admits that there are
subsidies which ‘changing circumstances have rendered redundant,
or excessive.’
In late December, EU legislators adopted a ‘clean energy package’
of laws that included a mandate to end all subsidies for existing
coal plants by the middle of 2025. Previous talks on the legislation
had been abandoned after Poland insisted upon using capacity
mechanisms to keep its coal plants online.
Capacity mechanism measures pay coal power stations to remain
on stand-by in the event of a sudden spike in electricity demand.
These so-called peak generators are designed to prevent blackouts
during winter weather events, but they would not be able to turn a
profit without government support.
The G20 group of countries had also pledged to phase out
inefficient fossil fuel subsidies back in 2009. However, the EC has
found that subsidies for oil, gas and coal are even higher outside of
the EU. Subsidies to petroleum products, primarily tax reductions,
account for the largest share of such payments.
A 2017 study by Canda’s International Institute for Sustainable
Development (IISD) found that a complete removal of subsidies to
fossil fuel production globally would reduce the world’s emissions
by 37 Gt of carbon dioxide between 2017 and 2050. The IISD says
this is roughly the amount of carbon dioxide that would result from
burning all proven oil reserves in the US and Norway.
Meanwhile, energy subsidies in general have risen across all 28 EU
member states from €148bn in 2008 to €169bn in 2016. The report
says the increase was largely due to the growth in renewable energy
subsidies, which reached €76bn in 2016.
The EC believes that improvements to market design are now
helping to finance the transition to clean energy with company
revenues rather than government support. Perhaps most importantly,
it sees Europe as providing a model for successful green investment
initiatives worldwide.
‘EU financial instruments and the EU sustainable finance initiative
is working to reorient global capital markets to have a better
understanding of and thus facilitate the provision of investment
capital for low carbon technologies,’ the report concludes.

Energy World | February 2019 5

 InternationalUpdate

Transport

VW to become an energy supplier

Volkswagen has established a new
subsidiary, known Elli Group, that will
supply a suite of energy and electric vehicle
charging solutions as part of its parent
company’s drive to embrace sustainable
transport.
In a statement, Thomas Ulbrich,
Volkswagen brand Board Member
responsible for E-Mobility, promised that
the auto giant ‘is going to force the pace of
the urgently needed transport and energy
transition to emission-neutral e-mobility.’
The Berlin-headquartered Elli will
gradually build up a portfolio of intelligent
power tariffs and electric vehicle (EV)
charging stations, as well as an IT-based
energy management system. The company
has also promised to source and supply 100%
renewable power to private households with
or without an EV.
Customers with electric cars will also be
offered a variety of ‘Wallbox’ charging units,
as well as systems that allow their vehicles The company has also promised to supply 100% renewable power to private households with or without an EV.
to be used as energy storage devices.  Photo: Volkswagen
Households with rooftop solar panels will be
able to store generated power in their cars or stations. It also plans to create a digital embroiled in the ‘dieselgate’ emissions
feed it back to the grid to earn money. payment system that utilises a charging card cheating scandal.
Finally, Elli’s energy management system and tailored tariffs. In 2015, it emerged that the company
will be designed to help customers decide ‘Our mission is to take e-mobility had been tricking environmental regulators
how to use their stored and generated out of its niche and to place it firmly in worldwide by using software that
power. As not all EVs will be charged at the the mainstream,’ said Thorsten Nicklaß, suppressed emissions of nitrogen oxides
same time, the company believes the burden designated CEO of Elli. ‘The name Elli stands (NOx) during trials. In real-world driving
on the power grid will be reduced while for ‘electric life’, because we intend to enable conditions, the group’s cars were emitting
optimising energy costs for household use a lifestyle that fully integrates the electric up to 40 times more NOx than in the testing
and mobility. car in people’s everyday lives.’ environment. Last June, Volkswagen agreed
Meanwhile, Elli is looking to expand Volkswagen’s EV initiatives come almost to pay a €1bn fine in Germany, saying it
its out-of-home network of EV charging four years after the company became accepted responsibility for its wrongdoing.

Separation technology turns steelmaking emissions into

biofuels
Swiss industrial engineering firm Sulzer has been selected
to provide distillation equipment to an ArcelorMittal steel
production plant in Ghent, Belgium. The technology will
help to convert waste gases from the steel manufacturing
process into some 80mn litres of bioethanol each year.
The steel industry is a significant contributor to
global carbon emissions, which is why the Luxembourg-
headquartered ArcelorMittal is striving to turn its
production sites into so-called ‘smart carbon plants’. To
do this, the company has partnered with LanzaTech, a
developer of a biotechnology that utilises acetogenic
bacteria, which is able to ferment carbon monoxide-rich
gases to produce ethanol.
For a successful breakthrough process, Sulzer said that
it is necessary to reduce energy consumption, rather than
increase it. To do that, the company proposed and designed
a solution that simplifies the process and the equipment,
while creating closed loops that can re-use key resources.
Sulzer has now developed a separation system
to extract the biofuel once the bacterial metabolic
process has been completed. The result is an integrated
manufacturing plant that produces both steel and ethanol
on a large scale, while reducing energy consumption and
waste.

Photo: Sulzer ChemTech

6 Energy World | February 2019


VIEWPOINT
Partnerships will help unlock
the EV charging infrastructure
L
ast year, 2018, saw further
growth for the UK’s electric
vehicle (EV) charging
infrastructure market, most notably
driven by increased adoption of EVs
by drivers and the corresponding
need to supply more charging
points. As consumers, industry
and the government become
increasingly aware of the issues
associated with traditional diesel
and petrol cars, they are looking to
EVs to cut pollution and long-term
costs. The government’s decision
to ban the sale of new petrol and
diesel vehicles by 2040 serves
to underscore how the future of
vehicle transportation will be
electric.
A tipping point has now been
reached and there is significant
need to scale-up the UK’s EV
charging infrastructure. Data from
Emu Analytics predicts that there
will be more than one million EVs
on UK roads by 2020, which will
require around 100,000 charging
points. With approximately 18,000
EV charging points currently
available, we will need a more than
five-fold increase in the number of
charging points over the next two
years to meet the forecasted
demand.
While this presents a logistical
challenge, it also provides high
growth prospects for developers,
investors and organisations looking
to deliver such infrastructure,
particularly on a partnership basis.
Of course, various partnerships have
already been established around the
concept of destination charging,
including between Tesco and
Volkswagen and pub chain
Marston’s and Engenie.
Destination charging
The idea behind this model is to
fit charging stations at destination
locations such as high street, city
centre and retail outlet car parks,
making it convenient for consumers
to charge their vehicles where they
plan to spend a bit of time. While
largely driven by consumer demand,
destination charging also benefits
local retailers and hospitality
businesses as it encourages the
consumer to spend time at their
premises while their cars charge.
We are likely to see more retail
and leisure operators make use of
parking spaces to install charging
points in the future, which will
involve partnering up with
developers, energy providers and
even vehicle manufacturers to
provide charging services.
In a similar vein, partnerships
between developers and public
sector bodies – in particular local
authorities – are also likely. Given
Maria Connolly is a the expectation on local authorities
Partner and Head of to support the delivery of charging
clean energy at law points, both to meet increasing
firm TLT, consumer demand but also to
tltsolicitors.com alleviate financial pressures,
public-private partnerships to
deliver charging stations are likely
to become more prominent. Indeed,
councils are increasingly looking to
exploit their land assets by
partnering up with developers to
provide charging points on town
and city centre streets and car parks.
Forecourt and standalone models
However, while many partnerships
will be based around the destination
charging model, forecourt charging
models are also being developed.
Much like traditional service
stations, such partnerships tend to
involve landowners, developers and
convenience retailers, while also
providing further opportunities for
mixed energy projects.
We are increasingly witnessing
mixed schemes with solar PV and
energy storage, which are being
used to provide energy for charging
points and to create auxiliary
revenue streams for the developers
operating the infrastructure and
landowners leasing the sites.
An uptake in standalone
charging points in residential
locations is also forecast, especially
in densely populated urban areas
where residents do not have
driveways or on-street parking and
are therefore unable to charge at
home. As with destination charging,
local authorities are likely to play a
major role in the development of
this model by partnering up with
developers and operators.
Partnerships
These partnerships within the
private sector and between public
Opinion
and private organisations will play
an especially crucial role in boosting
the UK’s EV charging infrastructure.
They enable charging infrastructure
to be deployed at scale, without
significant resource or capital
from site owners themselves. This
typically works through landowners
or local authorities supplying land
for charging sites, which developers
then use to build, operate and
maintain the infrastructure.
To give a concrete example, a
local authority could lease (or, if
‘on-street’, licence) the land to a
third-party developer that will fund
and own the charging
infrastructure. Such partnerships
can be put together either through
negotiation with a single developer
or through competitive tender.
While partnerships can present
some disadvantages (for example,
site owners not owning the
infrastructure or the developer
interest complicating the sale of the
land), there are many ways around
such issues (such as buyouts or
compensation). Overall, the benefits
of partnerships for EV charging
infrastructure largely outweigh any
disadvantages that may exist and
the models emerging in this space
resemble those that exist for other
capital projects, especially in the
energy sector.
The government and public are
continuing to move towards EVs and
this is being reflected in the clean
energy market. We’re likely to see
many more developments emerge
in 2019, particularly in locations
that are ideal for destination
charging, which maximise the use
of charging points and the
opportunities for return on
investment. Until now, many
investors were waiting in reserve,
but as the EV market continues to
grow we should expect to see the
number of partnerships (big and
small) multiply to deliver the
charging infrastructure the UK
needs. l
The views and opinions expressed in this
article are strictly those of the author
only and are not necessarily given or
endorsed by or on behalf of the Energy
Institute.
Energy World | February 2019 7
 UKUpdate

UK electricity falls to lowest level since

1994; low carbon sources dominate
Wind power reached new heights and renewables are now forecast to overtake fossil fuels in power generation during 2020

E
lectricity generation from
renewable sources rose
to a record high last year,
accounting for an estimated one-
third of the UK total, according to
analysis by Carbon Brief. Adding
the contribution of nuclear plants,
low carbon sources supplied just
over half (53%) of UK generation
in 2018, with the share from fossil
fuels at its lowest ever. Perhaps
more interestingly, the amount of
electricity generated in the UK in
2018 fell to its lowest level since
1994, added the UK-based climate
and energy policy website.
Indeed, lower per-capita
electricity generation and cleaner
supplies have contributed roughly
equal shares to the reduction in
power sector carbon dioxide
emissions since demand peaked in
2005, said Carbon Brief. This has
helped to cut UK greenhouse gas
emissions even as the economy
grows and population rises.
The history of UK electricity
since 1920 shows rising generation,
barring the 1974 three-day week
and the recession and miners’
strikes of the early 1980s. It then
levelled off in the early 2000s and
has been declining since 2005.
Generation in 2018 was some
63 TWh (16%) lower than in 2005, a
reduction equivalent to 2.5 times
the output of the new nuclear plant
being built at Hinkley Point in
Somerset, adds Carbon Brief, despite
the UK population increasing by
10% over the same period.
Carbon Brief’s analysis of UK
electricity generation in 2018 is
based on figures from BM Reports,
Sheffield Solar and the Department
for Business, Energy and Industrial
Strategy (BEIS). Official annual
statistics from the government are
published each August.
Government energy statistics for
the third quarter of 2018 also show
a record high for low carbon
electricity – 56% of electricity
generated during July to September
was from low carbon sources. This
was due to an increase in
generation from renewables,
making up a record 33% in that
quarter; an increase in the amount
of projects installed (capacity up by
10%) on the same period last year;
and more favourable weather.
Coal power made up just 2.5% of
electricity generation in the same
period, a dramatic fall from the 17%
three years previously.
Concentrating on renewables,
trade association RenewableUK
highlighted several major steps
forward for wind energy in 2018:
• A fresh wind energy generation
record was set on Tuesday 18
December, with onshore and
offshore wind generating 15 GW
between 11.15 am and 12.15
pm, equivalent to 34.7% of
Britain’s electricity needs.
• A record amount of UK
offshore wind capacity was
installed in 2018, with more
than 2 GW going operational
Lower per-capita in UK waters – nearly double
electricity the previous annual record of
generation and 1.1 GW set in 2012.
cleaner supplies • The opening of Walney
have contributed Extension meant that the UK hit
a milestone of 20 GW of onshore
roughly equal and offshore wind generation
shares to the capacity; enough to power over
reduction in 14mn homes.
power sector • ScottishPower became the first
carbon dioxide major energy supplier in the UK
emissions since to generate 100% of its power
from wind in October, having
demand peaked closed all its coal power plants
in 2005 and sold off its gas stations.
Last, a new report by energy
market analyst EnAppSys predicts
that renewables are on course to
overtake fossil fuels as the primary
source of power in Britain during
2020. Renewables will generate
121 TWh of electricity over the
calendar year of 2020, compared
with 106 TWh from coal and
gas-fired plants, based upon current
trends, says the company.
Paul Verrill, Director of
EnAppSys, said: ‘Last year, levels of
wind generation displaced
conventional power stations and,
whilst this leaves room for baseload
generation, it does squeeze levels of
output from other generators in the
market. New electrical transmission
infrastructure that came on line in
2018 will increase further the
contribution of renewable energy to
the UK fuel mix.’

Brexit

‘Elecxit’ could cost British consumers £270mn a year – UK ERC

Leaving the EU’s internal electricity market could cost British
consumers £270mn a year, according to research undertaken by the
UK Energy Research Centre (UK ERC). If the UK crashes out of the
EU without a deal or with ‘third country status’ as a consequence of
Brexit, inefficient trading could increase electricity generation costs
by that figure.
The EU’s electricity market allows electricity to be traded across
borders to neighbouring countries, maximising the benefits of an
interconnected electricity system. By coupling the markets of the 19
countries in North-Western Europe, it automatically trades electricity
from lower to higher-priced markets, maximising both profits and
energy security, says ERC.
Prior to the single electricity market, markets closed at different
times, forcing traders to decide their cross-border trades based on
anticipated, rather than actual prices, says ERC. And, with traders
guessing the price of electricity, errors were made, capacity went
underused, and energy flowed the wrong way up to a third of the
time.
However, coupled markets close at the same time, with trade
undertaken on the basis of market prices, avoiding these errors.
With ‘Elecxit’, Britain could return to the old system, with large
trading errors, says ERC.
Predicting electricity trading patterns in 2030 and comparing a
‘soft Elecxit’ with market coupling, and a ‘hard Elecxit, where the
British and French markets are decoupled, the cost of generation in
the two countries increases by 1.5% of the market value, says ERC,
with Great Britain carrying 60% of these losses.

8 Energy World | February 2019

 UKUpdate

Centrica, Ørsted and E.ON unveil new

battery storage facilities
Battery projects now help to run hospitals and offshore wind farms as well as providing balancing services to the
power grid

T
hree new battery storage
facilities – sited at an ex-
power station, a city street
and a hotel – illustrate the growing
importance of such installations for
managing both customer energy
use and power grid stability.
First, Centrica Business Solutions
has completed construction of what
it calls one of the largest battery
storage facilities in Europe, the
49 MW Roosecote battery in
Cumbria. This is the site of a former
coal-fired power station, and
subsequently the UK’s first
combined cycle gas-fired power
station.
The battery, which is able to
come on-line in less than a second
to meet fluctuations in demand, is
able to hold enough power for
around 50,000 homes, says Centrica.
It helps to keep the power network Inside the 20 MW battery at Carnegie Road, Liverpool Photo: Ørsted
stable by either absorbing power
from, or supplying power to, the Liverpool Bay. This project supports trialling a new 100 kW lithium ion
grid. the 90 MW wind farm’s production battery at the 200-room site to help One of the key
Construction took around 18 scheduling, as well as providing the hotel better manage its energy actions in
months to complete. The battery some grid services. consumption. keeping the UK’s
will now be operated remotely from One of the key actions in keeping The battery functions by
Centrica’s Energy Centre in the UK’s electricity grid balanced drawing power from the National
electricity grid
Peterborough.  and stable is ensuring that the Grid during off-peak periods and it balanced and
Meanwhile, offshore wind farm amount of electricity generated has capacity to run the hotel for up stable is
developer Ørsted has announced matches the amount of electricity to three hours. It will be used for at ensuring that
that its first standalone battery used at any given moment, says least 2–3 hours per day on-site,
energy storage system, at Carnegie Ørsted. Battery storage systems are depending on the needs of National
the amount of
Road in Liverpool, is now able to provide a flexible response to Grid, says project partner E.ON. The electricity
operational. The 20 MW battery grid needs and are therefore a installation is expected to save the generated
consists of three battery containers, valuable component of a modern, hotel £20,000 per year in energy matches the
as well as the associated power decarbonised energy system. savings alone.
conversion system, all supplied by Last, and at a rather smaller E.ON has supplied and installed
amount of
NEC. scale, the Gyle at Edinburgh Park the battery and will be managing its electricity used
Ørsted also has a 2 MW battery Premier Inn has become the hotel workload and efficiency from its at any given
located behind the meter at its chain’s first ‘battery-powered’ hotel. energy management centre in moment
Burbo Bank offshore wind farm in Whitbread-owned Premier Inn is Glasgow.

Tunnel boring machine for gas pipeline

National Grid’s 510 tonne tunnel boring machine,
named Mary, is halfway through her 5 km journey
under the River Humber, a major milestone in the
project to install a tunnel to house a new, 42-inch
diameter gas pipeline capable of transporting 20% of
Britain’s gas supplies.
The 160-m long machine reached the halfway point
on her journey from Goxhill to Paull on 8 January, said
National Grid and its joint venture contractors.
Once the tunnel is finished and Mary is removed
from the tunnel via a shaft on the opposite bank of
the river at Paull, the work on the next phase of the
project – to install the new gas pipeline – will begin.
This will replace the existing gas pipeline which,
currently crossing the river in a trench just below the
river bed, is at risk of being exposed by shifting tides.

Energy World | February 2019 9

 UKUpdate

A transformed electricity system

‘requires a revolution in regulation’
Report suggests that changes in regulation need to follow major changes taking place within the electricity industry

T
he regulation of electricity
needs to be redesigned
to meet the challenges of
decarbonisation, and to realise
a ‘decarbonisation dividend’,
according to a new report:
ReDesigning Regulation.
The report suggests that the
impact of decarbonisation,
decentralisation and digitalisation
requires a managed ‘revolution’ in
regulation – focusing on how the
market works, what needs to be
regulated and what tools the
regulator should use to deliver best
value for consumers.
The electricity sector should be
re-engineered from the plug and
socket end, placing demand as the
key driver of value within the
system. This would require a
fundamental rethink of how
markets work, where supply chains
can deliver better outcomes and a
move away from ‘siloed’ regulation
and cost pass-throughs, adds the
report.  the risks around bundled and
The report was authored by
Laura Sandys FEI, former member
of the Energy and Climate Change
Select Committee; Dr Jeff Hardy,
Senior Research Fellow at the
Grantham Institute, Imperial
College London; and Professor
Richard Green, Professor of
The electricity Sustainable Energy Business at
sector should be Imperial College Business School.
re-engineered Recommendations include:
from the plug • Change what we regulate
and socket end, – re-engineer the market from
placing demand the plug into the system rather
the top down approach of
as the key driver today to reflect the new values
of value within of time, location and service to
the system the system.
• Change how we regulate
– regulate risk not process, as
the future will be too multi-
dimensional for the current
approach to succeed.
• Provide greater protection for
consumers – as we move into a
more complex system of
bundled products and services,
amalgamate the consumer-
facing parts of Ofgem, Ofwat
and Ofcom into one ‘Essential
Service Regulator’ to manage
blurred products and services.
The report also suggests
changing the electricity supplier
license to a ‘retailer’ model, as
today’s one-size-fits-all licence is
no longer fit for purpose. An
insurance-backed assurance
scheme could replace today’s
electricity supply licences, allowing
the actual risks businesses pose to
consumers to be assessed and
insured against, without stifling
business model innovation.
Laura Sandys, CEO of
Challenging Ideas said: ‘Tomorrow
is already today and we need to
ensure that we don’t bake in the
costs and inefficiencies of the past
into the transformed system. We
need to embark on a managed
revolution to embrace the new
structure of the future of
electricity. Regulation will need to
look and feel very different if we
are to move away from the Price
Cap and more interventionist
policies. We hope that our thinking
might contribute to this endeavor.’ 
In the light of the recent failure
of several small electricity
suppliers, Professor Green added:
‘Too many electricity suppliers are
leaving customers in the lurch
when they go out of business. An
assurance scheme like the travel
industry’s ABTA and ATOL bonds
would provide protection against
this disruption.’

Energiesprong

Nottingham to roll out ultra-low energy homes

Nottingham City Council has secured over £5mn to roll out its rollout tender, will continue in its role as principal contractor.
‘Energiesprong’, ultra-low energy homes pilot scheme, which will Nottingham City Homes Chief Executive, Nick Murphy, said: ‘It’s
include improvements to over 150 Nottingham City Homes’ (NCH) a great start to 2019 to be rolling out the Energiesprong approach to
properties. The scheme will tackle some of NCH’s older housing stock so many homes. The first pilot homes look fantastic and have really
that is hard to heat, lifting residents out of fuel poverty, says the lifted the local area; this rollout will really add to the regeneration of
Council, while the environmental performance of the homes will also neighbourhoods across the city.’
be improved.
Energiesprong is a whole-house renovation approach pioneered
in the Netherlands. It upgrades a home with both energy saving
and energy generating measures, including insulated outside walls
and windows, a solar roof, and a state-of-the-art heating system.
The household’s energy demand is greatly reduced and what energy
is needed can mostly be generated on-site via the smart use of
renewable energy technologies. Environmental performance is
improved to almost net zero carbon, says the Council.
The rollout will be in two phases; Interreg NWE programme
is supporting the first 17 retrofits, and a European Regional
Development Funded project, Deep Retrofit Energy Model (DREeM),
is supporting the bulk of the rollout. The rollout follows a UK pilot
which was funded by the EU funding stream Horizon 2020.
The rollout will also include energy efficiency improvements to
a city school and a number of homes in Derby managed by Derby Improved homes from Nottingham’s Energiesprong energy homes scheme
Homes. Melius Homes, the successful contractor for the pilot and the Photo: Nottingham City Council

10 Energy World | February 2019

 UKUpdate

Storage

New heat storage technology on the way

Part of the pumped heat energy storage facility being developed at Newcastle University
What is said to be the world’s first grid-scale
pumped heat energy storage (PHES) system
has been commissioned by the technical
team at the Sir Joseph Swan Centre for
Energy Research at Newcastle University.
Based in Fareham, Hampshire, the facility
includes grid-coupled PHES technology rated
at 150 kW and able to store up to 600 kWh of
electricity.
Photo: ETI
The demonstration facility uses a
reversible heat engine, which converts
electrical energy to thermal energy and
then back again to electrical energy when
required.
Taking excess electricity from the grid, the
system drives the heat engine to compress
argon gas until it reaches 500°C, and stores
the heat produced. On the cold side, argon
gas is expanded down to a temperature of
-160°C. In both cases, the gas is then passed
through ‘thermal batteries’ – chambers
containing rocks – and gives up its energy to
the storage material, the gas then leaves the
store at ambient temperature.  What is left
behind is a ‘hot rock battery’ and a ‘cryogenic
cold battery’, both of which are able to store
their energy for up to eight hours.
To release the stored energy, the cycle is
reversed. The argon gas flows in the opposite
direction and uses the hot and cold energy to
turn the heat engine to generate electricity
that can be returned to the grid.
During recent testing, the 150 kW
reversible heat pump/engine was operated
in compression and expansion modes, ie as a
heat pump and a heat engine, with evidence
to support sub-second charge/discharge
mode switching.
The system was originally developed as
part of the Energy Technologies Institute (ETI)
Distribution Scale Energy Storage Project.
With its supporting R&D infrastructure, it
puts the UK in a world-leading position in the
research and development of low cost and
grid-scalable electrical and thermal energy
storage, says the ETI.
Dr Andrew Smallbone, Co-Director of the
National Facility for Pumped Heat Energy
Storage said: ‘Our initial tests have been very
promising, we can very quickly change our
system control from charge to discharge in
a few milliseconds. The analysis of system
performance indicated that the current
system operates with an efficiency which
yields a round trip efficiency of 60–65%.
This figure is very exciting… and already
sufficiently high to put the technology in
the mix for being the lowest cost and most
flexible grid-scale energy storage technology.’

Tariffs

New Smart Export Guarantee scheme to replace FiTs

Households and businesses installing new solar panels will eventually
be guaranteed payment for power provided back to the grid again,
following the issuing of government consultation documents on a
proposed new ‘Smart Export Guarantee’ (SEG) scheme to replace the
current Feed-in Tariffs (FiTs) scheme.
Under the proposed SEG, electricity suppliers would pay new small-
scale energy producers for excess electricity from homes and businesses
being put back into the energy grid. The new scheme could create a
whole new market, says the government, encouraging suppliers to
competitively bid for this electricity and giving exporters the best
market price while providing the local grid with more green energy. It
could also unlock greater choice for solar households over buying and
selling their electricity, says the Department for Business, Energy and
Industrial Strategy (BEIS).
BEIS adds that, with the cost of solar power falling by 80% since
2008, it’s the right time to review the way these payments are made.
The SEG would mean households and businesses installing new
renewable energy generators would be paid transparently for the
energy they produce.
Currently under the FiT scheme, accredited households and
businesses which install small-scale electricity generation are assumed
to export 50% of the electricity they produce and are paid for it – even
when the electricity is not needed by the grid or they export less than
50%.
The consultation proposals, combined with existing technologies
such as smart meters and battery storage could also help build a
bridge to smarter more efficient energy systems of the future, with
the potential to work together with electric vehicle and standalone
batteries to store and sell electricity to the grid when demand is high.
The FiT scheme, which closes to new applicants at the end of March,
has overachieved on its original objectives, says BEIS, outstripping
installation predictions by nearly 100,000 and with over 830,000 solar
installations producing enough power for two million homes.
The Solar Trade Association CEO Chris Hewett said: ‘We give these
proposals a cautious welcome. We are very pleased the government is
unequivocal; small generators will be compensated for the power they
contribute to the system, but the issue remains providing remuneration
at a fair market rate.’

Energy World | February 2019 11

 EI News

Shell Chairman confirmed as

IP Week Dinner speaker
C
harles O Holliday, Chairman of the
Board of Directors at Royal Dutch
Shell, is the latest speaker to join the
line-up for IP Week 2019.
Addressing over 1,000 guests as the
keynote speaker at the IP Week Dinner,
Mr Holliday will draw on more than 40
years of experience in senior industry
positions and touch on the importance
of industry taking a lead in the
energy transition.
Previously Chairman and Chief
Executive Officer of the global chemical
corporation DuPont, he has also served as
Chairman of the Bank of America
Corporation, the Business Council, the
National Academy of Engineering, the
Society of Chemical Industry – American
Section, the World Business Council for
Sustainable Development and the
Executive Committee of United Nations
Sustainable Energy for All.
Energy Institute (EI) Chief Executive
Louise Kingham OBE FEI, commented: ‘I’m
very much looking forward to hearing
Chad’s insights, drawing on his years of
experience at the top of some of the
biggest global commercial organisations,
on some of the critical issues facing the
energy sector.’
Speakers confirmed for IP Week 2019 so
far include Bob Dudley FEI, Chief Executive
of BP; Dr. Aldo Flores Quiroga, former
Undersecretary of Hydrocarbons, Mexico
Government; and Dr Pratima Rangarajan,
Chief Executive Officer, the Oil and Gas
Climate Initiative.
The full programme and event tickets
can be viewed at ipweek.co.uk Chad Holliday, Chairman of the Board of Directors at
Royal Dutch Shell

EI Fellows recognised in Queen’s New CPD

New Year’s Honours requirements
Congratulations to three Fellows of the EI who have been recognised in
the Queen’s New Year’s Honours list 2019 for their dedicated work in the
for Chartered
energy sector.
Professor of Energy Engineering at Imperial College London Geoffrey Maitland Engineers
FEI was recognised with a CBE for services to chemical engineering. Cordi O’Hara The benefits of becoming professionally
FEI, President and Chief Operating Officer at the National Grid in Massachusetts, registered were recently demonstrated in a
was awarded an OBE for services to the energy industry. Ray Riddoch FEI, UK salary survey undertaken by The Engineer,
Managing Director at Nexen, was awarded an OBE for services to the oil and which found engineers working in the energy
gas industry. sector in the UK receive on average around
On the accolade, Ray Riddoch FEI said: ‘I am delighted to receive this honour,
£8,000 a year more if they are professionally
which also recognises the outstanding efforts of my colleagues at Nexen.’
registered.
‘I joined the industry more than 35 years ago and I’m proud to lead an
Employers pay more because they
organisation that is helping ensure there will be North Sea oil and gas operations
value the proven commitment, skills and
for many years to come.’
experience. However, being chartered
Read more about the New Year’s Honours list at gov.uk/government/
comes with a responsibility to maintain your
publications/new-years-honours-list-2019
Continuing Professional Development (CPD) –
and the requirements are changing.
New regulations from the Engineering
Council come into force this month, meaning
that those holding the titles CEng, IEng or
EngTech must keep records of their CPD –
and submit them if requested. From 2020,
if you are not able to supply a record, your
registration could be at risk.
EI Head of Professional Affairs Sue Beard
said: ‘CPD is at the heart of what being a
professional is all about. The EI already asks
a sample of its members to submit their
records each year and CPD has always been a
requirement under the EI Code of Conduct and
for entry to professional membership.’
‘The main message is that, whatever titles
you hold, it’s important to keep good records.’
Not sure what you should be recording?
There is a simple CPD template and a range of
guidance on the CPD section on the website at
From L to R – Ray Riddoch, Cordi O’Hara and Professor Geoff Maitland energyinst.org/membership-and-careers/cpd

12 Energy World | February 2019

 EINews

EI Chief Executive gives Bath lecture

on ‘People and Energy’
‘T
he balance of power is shifting,’ EI
Chief Executive Louise Kingham
told the University of Bath’s
Institute for Sustainable Energy and the
Environment as she delivered a public
lecture in November 2018.
Presenting on the topic of ‘People and
energy – a relationship in transition’, Louise
discussed how energy is evolving from ‘big
energy, small consumer’ to one that is
balanced more in favour of consumers,
thanks to four parallel trends -
decarbonisation, decentralisation,
digitalisation and democratisation.
We’re seeing increasing amounts of
small power sources – wind and solar in
particular – connected to the energy
Louise Kingham presenting at the University of Bath
system on the local distribution networks,
or even behind the meter on individual ingenuity, allied with changes in how we ‘reality check’, stating that it would be a
buildings,’ she said. The result is a growing live our lives could yet avert the worst ‘lengthy transition’ with ‘the need to
army of ‘prosumers’ – that’s people who are impacts of climate change at the same time protect the most vulnerable in society
both producing and consuming energy. as opening up access for more than a billion along the way’.
Louise set out an optimistic view that people in the world still living without Watch Louise’s full lecture at
advances in technology and human electricity. However, she also advised a bit.ly/2MbmE66

EI collaborates with Robert Storey FEI

OUP on new oil and gas 1944–2019
dictionary With sadness we report the death
of EI Fellow Robert Storey, known
A new Dictionary of Oil and Gas as Bob, who passed away in early
Industry Terms – an invaluable January. Bob was active in the EI
guide to those new to the over many years, and for nearly
industry or requiring a greater two decades contributed to the
insight - was published by Oxford work of the UK Committee of the
University Press in January. World Petroleum Council (WPC), for
Written by leading expert which the EI provides a secretariat,
in the field Peter Roberts, including as its Chair between 2008
with assistance from the EI in and 2014. He was a speaker at and
reviewing the technical terms, supporter of many WPC Congresses
the dictionary outlines the legal, and EI conferences including
regulatory, technical, commercial International Petroleum Week.
and financial terms, phrases and acronyms used in A Chemical Engineer by
today’s international oil and gas industry. As well as A to background, Bob had a fruitful career in the industry having worked
Z definitions of terms and phrases, a series of technical for numerous organisations on projects across continents. He was Past
appendices summarise essential aspects of the industry Chairman of the European Construction Institute (ECI).
and common acronyms. Bob had a personality and charm which inspired all those he
The dictionary is now available for purchase at worked with. A huge rugby fan, he was generous and kind with a great
bit.ly/2zI9kkN sense of fun. Our thoughts and condolences are with his family.

Deceased members
The EI is sad to report the deaths of the following EI members:
Born Born Born
Mr A J Burt IEng FEI 1940 Mr J E Jesson CEng MEI 1937 Mr R Storey FEI 1944
Mr J Austin FEI 1927 Mr C McDermott MEI 1949 Mr R H Shipman MEI 1927
Eur Ing P N Blair CEng FEI 1930 Mr N Gibbard CEng FEI 1922 Mr R F O’Brien 1967
Mr P Sloan FEI 1933 Mr D Pigeon MEI 1955 Mr K L Coyle CEng MEI 1928
Mr J Snook FEI 1930 Mr G J Carlton MEI 1943 Eur Ing Dr G Horn CEng FEI 1928
Mr A J W West 1930 Mr T S Chua CEng MEI 1943 Mr R Cotterill CEng MEI 1928
Mr R Boissier CBE Hon FEI 1930 Mr J A Brown CEng MEI 1930
Eur Ing D E Jenkinson CEng FEI 1929 Mr S Smith CEng MEI 1942

Energy World | February 2019 13

Renewables
TARGETS
California – 100% renewable
power by 2045?
I
n September 2018, outgoing
Governor Jerry Brown mandated
a greener future for America’s
Golden state. Under this mandate,
California will be required to
derive all its power from renewable
sources by 2045. The move is
significant and comes as the Trump
administration, by ending the
Clean Power Plan and proposing an
exit from the Paris Agreement on
climate change, has begun to wind
down the environmental policies of
the previous government.
Yet even the bill’s most fervent
supporters acknowledge that such a
push will bring with it several
challenges. First and foremost are
the questions of grid reliability and
cost. And, amid policy backsliding at
the federal level, there are still
political hurdles to cross, even with
a favourable climate in-state.
Substantial challenges, though
surmountable, lie ahead.
Gas – the old generation
Nonetheless, California’s transition
is already well underway. Coal
generation has ceased altogether,
and the final nuclear power plant,
Diablo Canyon, is set to close in
2024. Negative gross power demand
growth and an uptick in renewable
generation have left gas-fired
generation floundering, too. And
as California approaches its goal,
these trends are likely to continue –
further intensifying the struggle for
merchant power producers, which
will have to make difficult decisions
around fossil fuel assets.
14 Energy World | February 2019
California was an early
adopter of large-scale
onshore wind power
Photo: Shutterstock
Most negatively affected by the
mandate will be gas-fired
generators, which currently
contribute around one-third of
California’s power generation. In the
months leading up to, and then
following Governor Brown’s
announcement, the closure of some
older assets was likely moved up,
while plans for further additions
were scrapped.
Given that by 2045 gas-
generation in California may, in
effect, become valueless, there is
broad consensus that new
generation is no longer
economically viable. After all, even
though the goal is several decades
away, these are intended to be
long-lived assets.
That said, natural gas is likely to
remain a key player as it assists
California in its renewable
transition, if only as a guarantor of
reliability as intermittent renewable
generation expands. Any near-term
benefit, however, will be fleeting.
Solar and wind – the new generation
Renewables currently contribute
35% to California’s grid – far shy
of the state’s ultimate ambitious
target. So while it’s clear that solar
and wind assets will be among the
major beneficiaries, whether they
can reliably supply the Californian
grid remains to be seen during the
coming years.
Solar and wind resources are
necessarily intermittent due to their
reliance on ever-changing weather
conditions. As such, for these assets
California tends to lead the way
among US states, so its adoption
of a plan to transform its power
industry to all renewables by 2045
is important. Here, S&P Global
Ratings’ Michael Ferguson analyses
the state’s chances of success.
to reliably meet the grid’s capacity, a
predicted 200-fold uptick in battery
storage could be needed. For the
moment, battery storage has its
limitations.
It may not simply be a question
of battery quantity but one of
battery quality, too. Current energy
storage solutions suffer from
significant energy losses and a
limited depth of charge – meaning
the grid’s renewable capacity would
need to be substantially overbuilt to
accommodate the intermittency
issue.
The pace of renewable
proliferation may, therefore, prove
dependent on the pace of supportive
technological advancements. In
California, there is a mandate for
battery storage but not to the degree
required to aid the mass shift to
renewables.
Other questions are yet to be
answered. We wait to see how
developers will manage aging
renewable assets. Will these be
replaced with advancing
technologies, or simply repowered?
In this vein, it isn’t yet known
whether the state will provide any
preferential pricing in favour of
newer assets to developers.
Hydro and geothermal – meeting the
generational gap
California’s Replacing gas-fired generation with
transition is renewable resources looks likely –
already well barring technological advancements
– to prove somewhat unreliable.
underway – coal Therefore, to ensure that the grid’s
generation has baseload can be consistently met,
ceased solar and wind may require some
altogether, and near-term support. Currently poised
for the task at hand are hydro
the final nuclear and geothermal assets, which are
power plant, likely to benefit substantially from
Diablo Canyon, California’s goal.
is set to close in Hydro and geothermal resources
are closer to baseload – making
2024 their resource risk far less
problematic when compared to
solar and wind. They also boast
 Renewables

much longer asset lives – up to 80

years in comparison to solar and
wind’s 20 years. This means that,
while wind and solar will need to be
repowered at some point, adding
uncertainty to refinancing, hydro
and geothermal are likely to just
continue their current pattern of
capital spending.
That said, the time and cost
involved in building new hydro and
geothermal assets remains
prohibitive. Therefore, we believe
that, absent any unforeseen
incentives, the benefits are more
likely to come in the form of
favourable contracts with utilities
that will help extend asset lives,
Past clients include:
rather than new generation.
• RBS Mentor
• Financing the
Carillion next generation
Facilities Management
• LastCo-operative
comes the challenge
Group of
financing further renewable
Emirates National Oil Company (ENOC)
capacity and the supporting
Yorkshire Water
technologies. Once we begin to
gham City consider
Council the long-term repowerings Figure 1. Gas-fired
generation in the
ergy and asset maintenance, the may well change, however, as the unlikely that success in California California and the US
enormity of the mandate’s price risks become clear and the could be mimicked elsewhere. But
While gas-fired power
tag becomes ever clearer, though estimates more precise. Further, as with careful navigation and support generation has been
we also note that reduced power green bond issuance flourishes, from a growing market for green rising fairly steadily
consumption will offset this to a California looks likely to benefit. investment, California’s vision for a across the US for many
decades, it has declined
degree. While the significance of more sustainable grid may yet come in recent years in
So how might California finance California’s mandate cannot be true. l California
its goal? In our view, though solar understated, neither can the Source: S&P Global
and wind may have less trouble political, regulatory and Michael Ferguson is the Director, Ratings
Sustainable Finance, at S&P Global Ratings,
securing finance, we anticipate that technological hurdles that await. spglobal.com
battery storage – on account of its After all, as a bellwether state for
nascency – lacks similar appeal. This environmental policies, it’s not

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Renewables
SUBSIDIES
Many millions of Euros of
subsidies have poured into
Europe’s green energy sector
– is the financial tap going
to be turned off?
Photo: Avij
16 Energy World | February 2019
T
he European and global
energy landscapes are
changing fast, and the biggest
winners are renewable technologies,
Dr Fatih Birol, Executive Director
of the International Energy
Agency (IEA), told attendees at the
November launch of the 2018 World
Energy Outlook – even as green
subsidies decline.
Birol believes that renewables
are maturing, meaning that
additional subsidies and tax breaks
may lose some of their importance:
‘By 2040, 45% of the growth in
global energy demand will be met
by renewable energies – solar and
wind – which we think will be the
number one source of power
generation in Europe, but also
bioenergy, hydropower and
geothermal,’ he said, adding that
30% of electricity demand globally
will come from renewable sources
by 2030.
In the 1990s, government
subsidies and incentives such as
feed-in tariffs helped to assure the
rise of renewables, especially in
Europe, where there has been strong
political support for green energy.
Feed-in tariffs, offering guaranteed
higher prices for renewable energy
producers helped create a critical
mass in scale for the industry.
For example, citizen cooperative
UrStrom invested in wind turbines
and solar installations around
Mainz, Germany. Under the tariff
policy, its renewable energy
producers could sell their electricity
at above-market prices guaranteed
for 20 years. This scheme jump-
started renewable power in
Subsidies
still needed
despite falling
renewables
costs?
Will subsidies disappear as Europe’s renewable
energy sector matures? The answer isn’t clear
cut, writes Liz Newmark in Brussels.
Germany and was copied Europe- 80% since 2009, while the cost of
wide. electricity from onshore wind fell
As green energy grows, by 22% between 2010 and 2017. By
policymakers have sought to bring the end of the decade, the
market discipline to the sector to organisation has estimated that the
promote efficiencies, and these average cost of power generation
concerns have worked their way from all commercially available
into European Union (EU) policy. In renewable energy technologies will
April 2014, the European be competitive with fossil fuels.
Commission adopted EU guidelines
on state aid for environmental Subsidy-free future?
protection and energy 2014–2020, Whether this will ultimately
to ‘provide more efficient public lead to a subsidy-free renewable
support measures that reflect sector remains to be seen.
market conditions‘ and reduce costs Industry supporters say it still
for customers.
These rules have tempered the
green energy subsidy freedoms that
existed before, and were designed to
encourage commercial renewable
development, with auctions or
bidding processes open to all green
energy generators competing
equally for government funds.
Following a 2015–2016 pilot phase,
all member states have had to hold
tenders to support new green power
facilities from 2017.
According to the International
Renewable Energy Agency (IRENA),
this trend has not been limited to
Europe, with 67 countries
implementing renewable tender
policies by early 2017, up from just
nine in 2009. In 2017, the Agency
estimated that almost half of the
renewable energy capacity to be
added until 2022 would be auction-
driven.
This change has been spurred by
dramatic price drops in wind and
solar generation. According to
IRENA, solar photovoltaic (PV)
module costs have been slashed by

needs subsidies – particularly to
compensate when the sun stops
shining or the wind stops blowing
– and as a proactive policy tool to
ensure Europe meets its climate
goals.
Andrew Canning, Press and
Communications Manager at
Brussels-based WindEurope,
formerly the European Wind Energy
Association, told Energy World that
renewable energy subsidies have
decreased, but have not been
abandoned. He noted their
reduction has been caused mainly
by falling costs. ‘Renewables need
less public support than they once
did,’ he explained. ‘Money is no
longer given on a lump sum basis,
but via auctions, increasing
competitiveness.’
Canning pointed out that
transitioning from government
allocated feed-in tariffs to an
auction-based system – such as a
feed-in-premium where producers
sell electricity on the market and
get a ‘top up’ on market price – still
means subsidies are being paid. And
the way they are paid means costs
fall: ‘Governments will now allocate
capacity for renewables and wind
farm developers then compete to
win this capacity, creating
downward pressure on prices,’
Canning says.
‘This has helped to spur
technological innovation. For
example, wind turbines are now
more powerful and can capture the
wind at lower speeds. Combined
with economies of scale as the
market grows, the result is that
onshore wind is now the cheapest
form of new power generation in
Solar power, such as these
installations in Spain, is
being built on a grand
scale – why do they need
subsidies?
Photo: Abengoa Solar
Wind turbines, such as
this installation in the
Netherlands, are becoming
increasingly cost effective –
do they need subsidies any
more?
Photo: Melaniepoort
many parts of Europe,’ he said, ‘with
offshore wind not far behind.’
What Canning and other
environmental experts like to
underline is that while the
increasingly competitive wind
industry is being integrated into
free markets, subsidies are still paid
to the fossil fuel sector. In
September 2017, The Guardian
reported that the governments of 11
European nations were providing
subsidies totalling more than £80bn
a year to the fossil fuel industries.
Electricity sector leads the way
At present, the share commanded
by renewables in different EU
energy segments is largest in
the electricity sector, followed by
heating and cooling and finally
transport, Danske Energi Senior
Consultant Kristine van het
Erve Grunnet told Energy World.
According to IRENA, renewables will
continue to grow in the electricity
sector, providing almost 30% of
power demand globally in 2023, up
from 24% in 2017.
‘The expected cost of electricity
production based on renewable
energy has fallen considerably,’
Grunnet said. ‘It is cheaper today to
produce electricity by deploying
onshore wind rather than building a
new coal plant.’
While biomass (including organic
waste) remains the primary source
of renewable energy in northwest
Europe – followed by wind and
supplemented by hydro and solar –
it will only play a secondary role in
electricity production in future, as
the fall in the cost of wind and solar
far outstrips the development of
biomass.
Grunnet believes it might be
possible to invest in offshore wind
under pure market conditions
during the next ten years.
Meanwhile, solar PV and onshore
wind will be close to being
profitable on market terms by 2025.
A higher emissions trading scheme
(EU ETS) quota price would facilitate
this process, she argued.
Renewables
With the cost models shifting,
attitudes to renewable energy and
energy subsidies currently vary
across Europe. ‘Germany has really
changed in the last year, it is not the
green energy front runner it once
was. Denmark too is waiting to see
what other countries are doing,’
Dirk Hendricks, senior policy advisor
at the European Renewable Energy
Federation (EREF), told Energy World.
‘Austria will definitely continue [as
a front-runner] though.’
Germany heads towards 80%
renewables
Electricity generation from
renewables in Germany almost
doubled between 2009 and 2016
to more than 188 TWh. The share
of renewables in the country’s
electricity consumption rose from
less than 5% in 1990, to almost
37% in 2017. But the country needs
more to meet EU and national goals.
Germany’s Climate Action Plan
2050 says that, by 2050, at least
80% of Germany’s electricity supply
should be from renewables.
The country’s renewable energy
association, Bundesverband
Erneuerbare Energien (BEE), says:
‘We must remove or at least
significantly raise established limits
on promoting renewable energy
and also find appropriate prices for
carbon emissions.’ This will protect
the climate, is cost efficient and will
help the ongoing linking of
renewable sectors (electricity,
heating/cooling, transport), the
association said in a report, Energy
Political Demands.
BEE also demands ‘guaranteed
prioritisation of fed-in electricity
from renewable sources’ as stated in
Germany’s Renewable Sources Act.
But despite past feed-in priority,
several renewable energy systems,
notably in the wind sector, have
been taken off the grid in favour of
fossil power plants that supply
electricity reliably and steadily. For
example, in summer 2016,
windfarms in northern Germany
were producing so much energy
Energy World | February 2019 17
 Renewables

that their state governments Wirsol – Outwood Solar Park, Essex, came on top of current proposals to
sometimes had to pay renewable and Trowse-Newton Solar Park, end support for new small-scale EU guidelines
energy companies to switch off Norfolk – are under construction. renewables from 2019, with the have tempered
their turbines to stop congesting the closing of the UK’s current feed-in the green energy
power grid. Political sensitivities tariff scheme. The UK government
In Germany’s first competitive However, the question – to has since begun consulting on a
subsidy
power auction in spring 2017, its subsidise, or not to subsidise replacement ‘Smart Export freedoms that
federal network agency accepted – is a politically sensitive one Guarantee’ scheme. existed before,
four bids for 1,490 MW offshore in the UK. Indicating a lack of Grunnet told Energy World that with auctions or
wind capacity in the North Sea with current consensus on the issue, for Denmark and Europe: ‘with a
only a €0.44/kWh subsidy. This was a spokesperson from the UK’s continued strengthening of the ETS
bidding
because Denmark’s DONG Energy Renewable Energy Association told and better transmission of power processes open
(now Ørsted) submitted a bid with a Energy World: ‘It would be difficult across countries, and further to all green
zero-subsidy rate. to give our view on renewable electrification, we do not see a need energy
The neighbouring Netherlands energy subsidies without alienating for subsidies for mature
aims to make 16% of all energy a number of our members.’ technologies such as wind and solar
generators
consumed in the country The association did, however, in the near future. However, it will competing
sustainable by 2023 and to achieve publicly slam a proposal by Ofgem be necessary to support less mature equally for
100% sustainable energy by 2050. to remove grid charge benefits for technologies such as batteries and government
The government wants to use low small renewables plants in its electrolysis.’
carbon energy sources such as solar, Targeted Charging Review And even for wind and solar,
funds
on and offshore wind, biomass, consultation, published last auction-less funding continues. On
geothermal and hydropower. It November. 20 December last year, the European
offers renewablePastenergy grants
clients for
include: ‘For the price of saving some Investment Bank granted a €70mn
large energy
• projects
RBS Mentorusing consumers the equivalent of a cup loan to Spain’s Talasol Solar to build
geothermal heat and solar parks, of coffee a year, these proposals will and operate a plant in Talaván,
• Carillion Facilities Management
and grants for smart technologies make it tougher to build small-scale Spain. This is one of the first
• Co-operative
combining Group and storage
production renewables and punish homes and photovoltaic energy projects to be
• or Emirates
contributing to smart
National businesses that have taken the
grids. Tax(ENOC)
Oil Company financed in the country outside
credits
• Yorkshire Water are available for other socially and environmentally renewable energy auctions.
energy efficient technologies. responsible decision to install Renewables costs continue to
Nottingham City Council
The UK also benefits from renewables such as solar,’ the fall, though unevenly according to
EDF Energy
unsubsidised renewable energy association’s Chief Executive, Dr technology and electricity system
schemes, especially solar. Clayhill Nina Skorupska, said in a statement details, making it unclear exactly
Farm in Bedfordshire, which started issued in November. when we will pass from a subsidy to
operating in September 2017, was Skorupska added that the plans, non-subsidy system. Most likely this
billed as the UK’s first subsidy-free although not finalised or due for will involve a set of processes over a
plant. Two more sponsored by implementation until 2021 or 2022, number of years. l

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Renewables
TURBINE CONTROLS
Taking control of the wind
The relentless drive to hammer down the levelised cost of
energy from wind has yielded startling forward leaps in
efficiency and energy production. In the search for still further
gains, the next big breakthrough is expected to emerge from
advanced wind turbine controls, reports David Appleyard.
T
oday’s wind turbines are
typically designed to align
themselves to the optimum
angle of attack for any given wind
speed and direction. Naturally the
goal is to derive the maximum
power generation from the available
resource. However, wind turbines
rarely stand in isolation. Arrays of
machines dot hillsides and fields
and each has an impact on the
downstream wind conditions.
For instance, the transfer of
momentum that imparts motion to
the rotor effectively reduces the
velocity of the wind downstream
for some appreciable distance. In
addition, vortices leave each blade
tip as it rotates, forming a vortex
spiral which also moves downwind.
These vortices interact and disturb
one another, increasing turbulence
of the flow.
For a machine operating
downwind, these effects can result
in an effective reduction in wind
speed and thus lower energy
production, as well as the increase
in turbulence. This imparts larger
mechanical loads on structures such
as the bearings and frame and,
where a wind turbine is only
partially immersed in such a wake,
asymmetrical loads due to apparent
velocity gradients.
In considering these challenges,
the wind industry has been
exploring wind farm asset
optimisation control strategies.
Rather than machines operating
selfishly, the goal is wind farms that
will operate collectively as a single,
Wake effects made visible efficient power station.
here in particular weather This approach is not only
conditions
expected to increase wind farm
Photo: Horns Rev Offshore
Wind Farm, Denmark. outputs, it could also result in wind
Christian Steiness/Vattenfall turbines experiencing reduced
20 Energy World | February 2019
loads. Potentially, this is a massive
dividend for wind turbine designers
and manufacturers which may be
able to specify smaller and lighter
components in light of lower loads
and reduced fatigue, whilst also
contributing to an extended life.
Developing the controls tool kit
Advances in ITC and sensor
technology such as LiDAR (Light
detection and ranging) being used
to measure variations in wind
speed some distance in front
of a wind turbine, are enabling
machines to react ahead of time by
feathering the blades or yawing.
This represents a major advance in
controls development. However, key
to advanced wind farm controls is
the development of new algorithms
that treat the entire wind plant as a
holistic problem.
Developing a better
understanding of the wind flow and
the interactions between wind
turbines is allowing the creation of
more accurate numerical models.
These in turn have generated
appropriate optimisation strategies.
A number of research programmes
are currently validating these
models by trialling them at full
scale wind farms.
For example, DNV GL is planning
to begin some validation on a real
wind farm in the first part of 2019
to understand how closely their
analytical models mimic reality.
Giuseppe Ferraro, Business Manager
for Turbine Engineering at DNV GL
– Energy, explains: ‘We are involved
in a few pilot commercial projects
with both wind turbine OEMs and
owners/operators. At the same time,
we are finalising a series of
validation campaigns of the
analytical models to ensure that
simulations align with reality.’
He continues: ‘One of the main
goals of the validation campaign is
to understand the effects of
different conditions on modelling
accuracy. We are exploring the
adjustments we need to implement
on models to replicate the different
conditions encountered on real
wind farms.’
Closed loop controls
In Europe, for instance, the CL-
Windcon (Closed Loop Wind Farm
Control) project was launched in
November 2016. With advanced
modelling of open- and closed-loop
control algorithms the CL-Windcon
project says it will treat the entire
wind farm as a comprehensive real-
time optimisation problem.
Scheduled to conclude in October
this year, the outcomes of this
project are ambitious, but
suggestive of the significant
opportunity that advanced controls
represent. CL-Windcon indicates it
expects a 10% reduction in the
levelised cost of energy (LCoE).
Backed by a consortium of 14
partners from six countries,
including General Electric,
University of Stuttgart, Germany’s
DEWI, Enel Green Power and Delft
TU, among others, the project
received funding from the European
Union’s Horizon 2020 programme.
During the second and third year
of the project, full-scale wake
experiments are being performed at
Enel Green Power’s Sedini wind
farm located on the island of
Sardinia. A cluster of several GE
1.5 MW wind turbines in different
configurations is being used as part
of the validation programme for the
models and control algorithms.
This project is exploring
wake-deficit and wake-deflection
models with the control software
commanding changes in turbine
set-points in response to measured
flow conditions. The turbine’s
set-points will be predefined and
changed as a function of wind speed

and direction to modify how the
wake of a turbine is propagated
through the cluster.
Subsequently, the tools for wind
farm dynamic modelling at a
reasonable computational effort
will be fully open source at the end
of the project, according to CL-
Windcon.
Taking the project offshore
Meanwhile, the UK’s Carbon Trust
announced a plan to conduct
full-scale advanced controls trials
at an operational offshore wind
farm back in December 2017. At
the undisclosed wind farm, several
measurement systems are to be
installed, including strain gauges,
eight nacelle-mounted LiDARs and
one scanning LiDAR.
Project Manager of the Wind
Farm Control Trial at the Carbon
Trust, James Sinfield, said in a
statement: ‘The project has the
potential to have a significant
impact on cost reduction with a
win-win on improving annual
energy production and at the same
time reducing operational and
maintenance costs.’
According to the Carbon Trust,
pitch and yaw-based control
strategies could collectively deliver a
0.5–3.5% increase in farm-wide
energy yield. It further indicates
that load reductions of up to 50%
may be possible for certain
components.
The Carbon Trust project is
running various scenarios in order
to understand whether the overall
output is increased by, for example,
effectively de-rating the front row of
turbines by adjusting the pitch
angle of the blade to decrease
energy extraction, but allowing
more wind to effectively flow
through to a downwind machine. It
is also looking at actively managing
downwind wake effects by yawing
upwind turbines to kick the wake
out so that it is impinging on
downstream machines.
Part of the Offshore Wind
Accelerator programme and backed
by EnBW, E.ON, innogy, Statoil and
Vattenfall, the €2.3mn Wind Farm
Control Trials (WFCT) aims to
demonstrate these new control
strategies. It is due to report its
findings this year.
And in the US
Elsewhere, in the US, the National
Renewable Energy Laboratory
(NREL) is conducting tests of
its modelling and optimisation
software designed to allow
wake steering. With trials being
conducted at the Peetz Table Wind
Energy Center (PTWEC) in Colorado,
NREL engineers say they expect
to see the plant-wide energy
production up by a several percent.
NREL is researching new control
methodologies for both on and
offshore wind turbines.
Similarly, at the US National
Wind Technology Center (NWTC)
advanced controls algorithms are
being field tested on two 600 kW
machines equipped with LiDAR.
Better understanding of wake
effects and more sophisticated wind
farm control algorithms are not only
expected to have a positive impact
on energy production and lower
O&M cost, they are also likely to
influence wind farm design, taking
into account the effect of energy
and loading.
For example, NREL’s Simulator for
Wind Farm Applications (SOWFA)
employs computational fluid
dynamics (CFD) to investigate wind
farm performance under a full
range of atmospheric conditions
and terrains.
According to NREL, the tool offers
designers an opportunity to
examine and thus minimise the
impact of turbine wake effects on
plant performance, either by
locating the wind turbines
judiciously or by yawing upwind
turbines to direct wakes away from
downwind machines.
As DNV GL’s Ferraro observes:
‘There are a lot of analytical tools
and models that we use, for instance
to estimate what the wake effect is
going to be on wind turbines. What
we are doing at the moment is
trying to understand amongst all
the different models which ones are
more suitable for which conditions.’
Floating the next generation
Although still in the pilot
project stage of its commercial
development pathway, great leaps
in development are anticipated
over the coming years in floating
foundation offshore wind turbine
technology. Capitalising on
breakthroughs from the bottom-
The wind fixed foundation offshore industry,
industry has again, control systems are expected
been exploring to play a significant role in the move
towards floating offshore wind.
wind farm asset As Ferraro explains: ‘Floating
optimisation wind turbines are complicated
control systems, considering their
strategies combined sea-wind interaction and
controllers can play a key role. A lot
– rather than can be achieved by sensing the
machines accelerations and acting to control
operating the movement of the platform/
selfishly, the goal turbine assembly and reducing the
loads.’
is wind farms Researchers at the NWTC are
that will operate already designing advanced control
collectively as a algorithms for offshore floating
single, efficient wind turbines to maximise energy
production, reduce structural loads,
power station limit platform motion, and increase
reliability. For example, in a project
Renewables
with Statoil, NREL used its SOWFA
software to model the effect of
wake-generated turbulence on the
fatigue loading of mooring lines for
offshore turbines. DNV GL has also
designed these kinds of algorithms
for key OEMs.
Grid support services
Alongside drivers for better LCoE,
there is also growing demand for
renewables to offer grid support
services by helping to maintain
voltage and frequency or balancing
for instance. More sophisticated
controls can help here too. The
advent of power electronics allows
wind farms to potentially offer
grid control capabilities and entry
into the ancillary services sector
with their revenue streams. There
is no doubt that there is a growing
market for generation capacity that
is able to respond to dynamic grid
requirements by supplying reactive
power, for instance.
Advanced control algorithms are
also expected to form a central part
in the next generation of tools to
improve LCoE for wind by informing
digital twin models – precise digital
counterparts to existing machines.
Ferraro explains: ‘Digital twins
enable us to look at the operational
phase of wind turbines in a
completely new way. We can for
instance assess how much loading
the machine experiences, gauge the
residual fatigue life and potentially
extend it. We monitor multiple
parameters on a turbine-by-turbine
basis and gauge their effects on
components and systems health
status alongside performance. We
can identify underperforming
machines based on changes in
production trends, and starting
prompt investigations before the
revenue tells us there is a problem.’
It is clear that advanced control
strategies are a significant
opportunity to increase production,
reduce operating costs and extend
plant lifetimes. Indeed, because only
the turbine input parameters are
altered, often no significant turbine
modifications are required –
allowing advanced control
strategies to be realised right across
the existing turbine fleet.
Considerable technical and
economic risks remain, but by
demonstrating the effectiveness of
controls at scale, researchers are
steadily increasing confidence in
wind farm control algorithms. This
means that we can now start to look
at a wind farm not as a group of
individual units, but as a whole
power station. l
David Appleyard is a freelance journalist.
Energy World | February 2019 21
Renewables
HEAT PUMPS
Smart hybrid technology for
heat decarbonisation
There are many routes to decarbonisation of heating, but
the use of heat pumps – alongside gas boilers and controls
designed to minimise costs and emissions – could be influential.
PassivSystems’ Colin Calder writes.
D
omestic heating is not
usually a topic to get people
excited. But the recent report
published by the Committee on
Climate Change (CCC): Hydrogen in
the low-carbon economy, proposed
the deployment of 10mn hybrid
heat pumps by 2035. This would
represent an exciting step-change
in the way we heat our homes – a
change that would bring significant
benefits to consumers, gas and
electricity network operators and
the environment.
PassivSystems’ Freedom Project,
a trial of hybrid heating across 75
homes, provided the hard evidence
needed by CCC to conclude that heat
pumps offer the most effect
pathway to decarbonising heat. It
measured the consumer, network
and energy system implications of
hybrid heating system deployments,
where domestic heating systems
had the option of operating using a
standard gas boiler, an air source
heat pump (ASHP), or both.
The collaborative project,
managed by PassivSystems, proved
beyond doubt how multi-fuel,
hybrid home heating systems can
play a pivotal role in reducing
carbon emissions to the 2050 levels,
as mandated by the Climate Change
Act.
Freedom demonstrated how
hybrid heat systems can
significantly lower running costs for
consumers – both on and off the gas
grid – while improving comfort
levels. The project further showed
how hybrid heating can help to
decarbonise domestic heating with
no increase in peak load, if
operating within the context of a
demand ‘flexibility’ solution that is
designed specifically for
householders.
Lord Deben, Chairman of the CCC,
commenting on the report,
recognised the potential of the
technology, and said, ‘Most exciting
of all is the prospect of producing
low carbon heat; using smart hybrid
22 Energy World | February 2019
Two air source heat pumps heat pumps in combination with
connected to homes in the natural gas in the short-term, with
Bridgend trial
the potential for hydrogen in the
Photo: PassivSysyems
long-term.’
The Freedom Project
The Freedom project’s hybrid
heating system comprises an
exterior ASHP, a reliable, high-
efficiency boiler inside the home,
and a hybrid control panel. The
hybrid heating solution was
installed in 75 homes – a mix
of social and private housing,
including some that are off the
gas grid – in and around Bridgend,
South Wales.
For the first time, this project
brought together the gas and
electricity network operators in the
field trial region and provided
robust, field-tested data to enable
long-term network investment
planning. The cross-sector scope
made this a unique project, which
set the benchmark for holistic,
‘whole systems’ projects.
Designing heating systems that
combine gas boilers with ASHPs,
while employing smart switching
between the gas and electric load,
enables the choice of fuels to match
consumer demand for heat. This
highly flexible approach delivers
multiple benefits.
Decarbonising heat
Recent developments in the CCC’s
modelling of future energy system
scenarios have helped inform its
assessment of the most feasible
approach to decarbonising heat for
buildings.
According to the CCC, the path to
near-full decarbonisation by 2050
now entails near-term deployment
at scale of hybrid heat pumps in
buildings on the gas grid, alongside
substantial improvements in energy
efficiency, low carbon new-build
and other ‘low-regrets’ heat
decarbonisation deployment.
The CCC acknowledges that
retrofitting smart hybrid heat
pumps: ‘would lead to greater
reductions in near-term emissions
from buildings and provide greater
confidence that very low levels of
emissions can be reached by 2050.
This would keep open the option of
switching the remaining gas supply
to hydrogen at a later date…’
Reducing costs
Hybrid heating systems can help
householders save money on
heating and hot water bills while
supporting the shift towards the
decarbonisation of heat. Avoiding
the use of electricity during times
of peak demand will help reduce
the need for further investment
in generation capacity. It also
enables the heating system to take
advantage of time-of-use price
differences between the two fuels –
so-called ‘fuel arbitrage’.
The heating system is especially
cost effective in homes off the gas
grid. One family, who live in a rural
former hill-farmer’s cottage in the
Welsh Valleys, saved £736 on their
heating bill between October 2017
and April 2018. This significant
saving was achieved without the
need to improve the thermal
efficiency of the cottage or replace
any radiators.

According to the homeowner:
For the first ‘Before having our new heating
time, this project system installed, we used LPG gas,
brought together which was very expensive. We
wanted to find a solution that kept
the gas and us warm, was cheaper and greener
electricity too.’
network The systems optimise fuel use
operators in the for a range of fuel price scenarios.
For example, gas boiler use is
field trial region strongly favoured due to the very
and provided low cost of gas compared with
robust, electricity. However, homes running
field-tested data on liquified petroleum gas (LPG)
achieved cost savings by switching
to enable around 80% of their heating load to
long-term the ASHP.
network
investment Supporting flexibility
As the UK replaces its traditional,
planning centralised power stations with
distributed renewables on the grid,
the lack of flexibility inherent in
renewable sources of power leads
Past clients include:
to increasing difficulty in balancing
• RBS Mentor supply and demand.
• Carillion FacilitiesDemand-side
Managementresponse (DSR) –
• Co-operative Group
the ability to turn down, turn off or
time-shift electrical loads in
• Emirates National Oil Company (ENOC)
response to a request from the
Yorkshire Water National Grid – is an established
approach to grid balancing in
Nottingham City Council
EDF Energy
industrial and commercial contexts.
DSR provides a valuable source of
BT
flexibility back to the grid.
The Freedom hybrid heating
system trials show that smart
switching between the gas and
Membership
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role, you could be eligible to upgrade your membership to
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Anyone can apply to become a Fellow. To be successful, you’ll
to show that you have played a significant role in providing
innovation, problem-solving and thought-leadership in the
sector.
energy-inst.org/membership
electric load can be effective in
delivering flexible DSR in a domestic
setting.
PassivEnergy, PassivSystems’
smart energy management
platform, considers the heat storage
of the home (including the thermal
mass of the building, multi-vector
heat, and hot water storage). It
switches to gas or oil when the
carbon intensity of the grid is at its
highest, or when the heat pump
needs additional energy to provide
the heat needed, such as on very
cold days when the coefficient of
performance is low, or the heat
pump can’t provide enough heat.
A typical scenario would see the
heat pump warm the house using
cheap electricity overnight ready for
the morning. Come mid-afternoon,
the smart controls call on the gas
boiler to quickly reheat the property.
During early evening, the smart
control system can switch between
the gas boiler and electric heat
pump to avoid adding to peak
electricity demands on an
overloaded grid.
The system uses smart controls
to manage network load using two
strategies. The heating controls use
predictive optimisation of running
costs so that the heat pump can
pre-heat the building ahead of an
occupancy period. This spreads the
heating load, timing the demand
ahead of current system peaks, and
Visit our
website to
find out
more
Renewables
enabling the ASHP to operate at a
low flow temperature for efficiency.
In addition, the aggregated load of
all homes was forecast by the half
hour for the coming 24-hour period.
The demand forecast uses
weather data, learned building
thermal properties and schedules
for each home to predict the
expected demand shape. Demand
can be constrained individually for
each home or at a portfolio level.
Key results
According to Freedom project
partner Imperial College, using gas
in conjunction with an air source
heat pump and conventional
boiler could achieve savings up
to £15bn per year – compared to
full electrification – in a 25 g/kWh
energy system.
With smart hybrid heating
technology, the UK has an
opportunity to transform the
domestic heating market to deliver
carbon reduction obligations whilst
creating jobs and export
opportunities in markets targeted
by the UK’s industrial strategy. l
Colin Calder is the CEO at PassivSystems,
passivsystems.com
Download the Committee on Climate Change
report: Hydrogen in a low-carbon economy
report at: theccc.org.uk
Download the Freedom project report at:
wwutilities.co.uk/media/2829
Book now
Renewables
RESOURCES
Waste-to-energy – a viable
part of the UK energy mix
Waste-to-energy technology has
been around for a long time but,
argues Arup’s Ben Glover, the
industry needs to up its game with
respect to efficiency to maximise
benefits. The waste-fuelled CHP
facility being built at Kemsley in
Kent shows the way forward.
I
t’s hard to escape the headlines
of late, with Brexit casting
uncertainty over the future of
many of the UK’s industrial sectors,
and indeed the future of our energy
infrastructure. The challenge,
and opportunity, lies in creating
a future-proof energy system for
the UK – one that can, for example,
better weather political storms and
times of economic uncertainty.
This article looks at the position
of waste-to-energy as a credible and
viable part of the UK energy mix,
and how by responsible
development of these projects we
can maximise efficient use of
resources. As a nation we need to
strive to design out waste, and in
the interim, make the most of the
resources we have available.
Waste is a complex mix of
organic and inorganic, composite,
and difficult-to-separate materials.
Designing out waste is about
retaining raw materials in a usable
state so they can be used again and
so they maintain value. But what do
we do with the residual waste that
can’t yet be recycled?
In the UK, the residual waste
market accounts for around 35mn
tonnes of waste per year. Residual
waste is defined as non-hazardous,
solid, combustible mixed waste
which remains after recycling
activities. Approximately 35% of
this is treated by UK waste-to-
energy facilities, but this leaves
around 50% in landfill and around
12% of our valuable waste resource
being exported. This is waste which
could be used in the UK as a fuel.
It is estimated that the average
family produces around one tonne
of waste each year. Every tonne
buried in landfill costs more than
£100 to dispose of but could power
24 Energy World | February 2019
a dishwasher for a year. And for
every tonne exported, the cost is
slightly less than £100, with a large
proportion of this being paid to
European waste-to-energy facilities
in order for them to accept the fuel,
known as a gate fee. In order to
avoid this, our waste-to-energy
infrastructure needs development.
Looking to Kemsley
Starting with a specific example,
Wheelabrator Kemsley is a
combined heat and power
(CHP) waste-to-energy facility
currently under construction in
Kent. Construction of this plant
recognises that the valuable
residual waste fuel source we
currently send to Europe could
provide a local alternative to landfill
and export. The facility is located
adjacent to an industrial site, which
requires steam, making the CHP
plant efficient too.
The adjacent industry is DS
Smith’s paper recycling facility – its
heavy reliance on steam is already
partly serviced by one CHP plant on
site. DS Smith’s sustainability
aspirations are strong, and their
sustainability strategy targets a
30% reduction in carbon emissions
by 2030 and zero waste to landfill.
This project is a step in the right
direction for both targets.
The existing plant is a gas
turbine CHP, with steam and
electricity being supplied to the
paper mill. DS Smith’s requirements
are such that more steam is now
needed and so the waste-to-energy
facility will provide electricity for
export to the grid, as well as steam A 3D image of the Kemsley
waste-fuelled CHP plant
for the paper mill. The energy-from- currently under construction
waste facility is to be powered by Photo: Arup-CNIM-UMC
post-recycled waste as DS Smith Architects
looks to decarbonise the production
of recyclable packaging for the
retail industry. The plant will be in
operation later this year.
The energy-from-waste facility’s
siting, adjacent to an industrial
steam user, makes full use of the
waste heat, increasing the
efficiency of the facility from
around 25% for a typical electricity-
only waste-to-energy facility, to
around 60%. This is an unusual
situation in the UK as waste-to-
energy facilities are usually sited in
out-of-town locations, frequently
out of reach of any significant
steam users.
Planning consent was awarded
by Kent County Council in 2012 and
the environmental permit was
granted in 2011 by the
Environment Agency.
Wheelabrator Kemsley is
currently permitted to process up to
550,000 tonnes per year of post
recycled waste provided by a range
of waste management companies,
utilising local and regional waste
from Kent and the South East
region. This waste, left after viable
recyclables have been removed
from the waste stream, will be
converted into both electricity (up
to 49.9 MW gross) for export to the
grid, as well as providing steam for

DS Smiths’ paper mill.
In addition, each year
approximately 125,000 to 140,000
tonnes of bottom ash produced at
the plant will be recycled for re-use
as construction aggregates, and
over 16,500 tonnes of ferrous and
non-ferrous metals, also recovered
at the plant, will be recycled and
reused. Wheelabrator is currently
preparing a Development Consent
Order (DCO) application to allow for
an increase to the tonnage
throughput and a power upgrade of
the facility (up to 75 MW gross).
Waste will be delivered into a
large concrete bunker which
measures 50 m by 30 m in plan and
is around 26 m deep. The boiler hall
is 50 m high and packed full of
process equipment; less of a
building, more of a large-scale
machine. Overall the facility
provides over 20,000 m2 of
floorspace located on a 10 ha site.
Financing the facility
The waste-to-energy industry in the
UK is underpinned by a complex,
yet an important to understand,
contracting process.
The facility was financed by a
range of institutions, which need to
see a robust approach to the
delivery and operation of the
facility for the duration of their
investment, so their money is not
put at risk. This involves agreeing a
lump sum for the construction of
the facility and certainty over the
volume of post-recycled waste that
is contracted and delivered to the
facility each year.
In the UK, projects are most
typically delivered through an
Engineering, Procure and Construct
(EPC) contract. An EPC contractor
takes the risk for delivery in an
agreed time scale. After
commissioning, the facility is
handed over to the operators.
Operators typically must have
entered into waste supply contracts
with waste providers to get
funding, so these contracts are put
in place long before the facility is
operational. Contracts are long in
duration, typically guaranteeing
waste supply for decades.
While electricity is typically sold
to the grid on a merchant basis,
Wheelabrator Kemsley was
awarded a 15-year Contract for
Difference with the UK government
for approximately 50% of the
facility’s power output, a system
that provides long-term revenue
stabilisation for low carbon
generators.
Wheelabrator Technologies, the
second largest US waste-to-energy
business and now developing the
Kemsley plant, will own and
operate the facility. The company
currently has 19 waste-to-energy
facilities across the US and UK
(three under construction in the
UK). Wheelabrator currently has an
annual waste processing capacity of
over 7mn tonnes, and a total
combined electricity generating
capacity of 780 MW.
For the construction of
Wheelabrator Kemsley, Clugston is
subcontracted to provide the civil
works. Arup is providing consulting
engineering services to Clugston,
and this is where I fit in; as Design
Team Leader.
Energy Recovery in the UK
The UK government has recently
published: Our Waste, Our Resource:
A Strategy For England. This
guidance positively reinforces the
message outlined here that we need
to drive greater efficiency of energy-
from-waste plants by encouraging
use of the heat the plants produce.
It notes that only eight of around
Renewables
40 plants in England operate in CHP
mode.
The government acknowledges
the need for more waste-to-energy
facilities that increase plant
efficiency, minimise environmental
impacts and progress technologies
that produce outputs beyond
electricity generation where these
are environmentally sound and
economically viable. The
government wants to export less
waste, coupled with a desire to
minimise the use of landfill as
much as possible.
Nevertheless, despite great
progress being made, we have a lot
to learn from our European
neighbours. In Denmark, waste-to-
energy facilities are placed in the
heart of the communities that they
serve, no matter how affluent, so
that the heat of burning post-
Principles of the waste- recycled waste can be efficiently
to-energy process – note piped into homes, thus lowering
both heat and power heating costs. Planners separate
offtakes at the top
residential traffic from trucks
delivering waste, and some of the
newest waste-to-energy facilities
are encased in elaborate outer
shells that resemble sculptures.
Local governments run waste
collection as well as the waste-to-
energy facilities and recycling
centres, and laws and financial
incentives ensure that recyclable
materials are extracted from the
waste stream prior to treatment.
Compare this to the UK, where
everything is outsourced, and the
public are left wondering if their
carefully sorted recycling is actually
recycled or landfilled.
Final thoughts
Developing sustainable
infrastructure must make full
use of the waste heat from these
facilities. This will increase the
revenue potential for the facility
and allow some flexibility over
the gate fee. With a reduced gate
In Denmark, fee, we may be able to compete
waste-to-energy with the export market. We do
facilities are need government support to be
able to secure financial incentives,
placed in the and cooperation from planning
heart of the authorities to build these facilities
communities in the right strategic location.
that they serve, In 2019 and beyond, we need to
consider how we design everything
no matter how to maximise the usefulness of the
affluent, so that materials we use. This is not going
the heat of to be an easy route, so we must
burning post- push ourselves to tackle the issue
now. l
recycled waste
can be efficiently Ben Glover is an Associate Director at Arup,
arup.com
piped into
homes
Energy World | February 2019 25
Renewables

Peer-to-peer investment
delivers for tidal energy project
P
eer-to-peer ethical investment
company Abundance has closed its
largest fund raise to date, acheiving
£7mn for Scottish tidal energy company
Orbital Marine Power. Orbital will use the
funds raised to build its first production
model Orbital O2 2 MW turbine, a floating
tidal turbine platform that, says the
company, can be towed, installed and easily
maintained.
The project already has secured a
number of supporting grants, as well as
equity funding, including from the Scottish
government.  ‘2019 promises to be the best year yet for
The Abundance offer of 2.5-year
debentures with an annual return of 12%
attracted 2,278 individual investors, with
over half investing via an Innovative Finance
ISA for a tax-free return. The average
investment was approximately £3,000, with
the project attracting particularly strong
interest from investors in Scotland.
With this new investment, Orbital plans
to build its 2 MW turbine over the next 12
months, for deployment at Orkney’s
European Marine Energy Centre (EMEC)
during 2020. The turbine comprises a 73 m
long floating superstructure, supporting
1 MW turbines on either side. The new
turbine will draw upon the success of
Orbital’s previous turbine, which produced
more than 3 GWh of electricity over its
initial 12-month test programme at EMEC.
Bruce Davis, co-founder and joint
Managing Director of Abundance, said:
the environmental and social investment
sector. The UK can rightly claim to be a
world leader in tidal generation technology
and our customers have backed it
enthusiastically.’
‘From those who invest the minimum of
just £5, to larger investors with tens of
thousands to put to work in the green and
social economy, each of our customers is
playing a part in building a better world
while helping achieve their own life goals.
Expect to see more larger offers like this
one as issuers take advantage of the change
in EU rules on crowdfunding prospectus
limits,’ added Davis.
Abundance also recently closed a wind
energy investment, E2 Energy, a 16-year
investment in a portfolio of farm-scale
wind turbines paying an annual return of
5%, which raised £2.9mn. Currently open
for investment is CoGen Limited, a
debenture offer for a developer of waste
gasification facilities. The 4.5-year
debenture, paying 10% a year, launched
shortly before Christmas, and has already
raised over £1.2mn, 40% of its minimum
target. l
abundanceinvestmnent.com

Roof-mounted solar
electricity each year for the local
residents and save an estimated
136 tonnes of carbon dioxide
emissions, says Photon.

power everywhere
PV panels installed on the
roofs of the North West
Cambridge Development
Photo: The North West
Cambridge Development
Meanwhile, solar power
systems installed on a range of
Nottingham City Council buildings
have generated one million
kilowatt hours – 1 GWh – of green
energy during 2018. City buildings
including libraries, leisure centres,
schools and offices all host the
council’s solar infrastructure.
Britain’s heatwave last summer
helped boost the generating
capacity at these sites and some
council sites experienced periods
of being entirely powered by solar,
says the Council.
It adds that installing solar PV

T
he first phase of building
the North West Cambridge
development at the
University of Cambridge has been
completed – and it features
384 kWp of solar photovoltaic
(PV) panels, mounted on nine
apartment blocks.
The development is being built
in a number of phases and will
provide up to 3,000 new homes
and community facilities to help
overcome problems with
overcrowding and rising land
prices in the city.
Photon Energy won the tender
from main contractor Wates to
install solar PV at Lot 2 of the
development, comprising key
worker units, local shops and a
on operational sites has made
café, positioned around a market
sound economic sense – and has
square. This development has been
offset the need to buy peak-time
created with sustainability in
electricity from the grid. Further
mind. The apartments have been
cost savings were achieved by the
built to the Code for Sustainable PV panels on the roof of a solar installations being carried
Homes Level 5 and contain leisure centre in Nottingham
out by the council’s own energy
features including triple layers of Photo: Nottingham City
Council Energy Services delivery team. l
insulation, brown roofs and a
district heating system, as well as
the solar PV arrays.
SunPower 327 PV modules were
chosen to ensure the maximum
possible output, with a total of
1,175 being installed. The modules
were fixed to a K2 Systems D-Dome
mounting system, ideally suited to
flat roofs, then connected to
Zeversolar inverters.
The solar PV will generate
approximately 260 MWh of

26 Energy World | February 2019

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Renewables
POWER-TO-GAS
Towards decarbonisation
T
here is growing recognition
that the world needs to do
more if it is to achieve the
ambitious goals to limit climate
change to ‘well below 2°C’ as set
out at the COP21 meeting in Paris
in December 2015. In general, the
electricity sector has made good
progress, mainly thanks to the rapid
increase in implementation of wind
and solar generation. Indeed, the
EU now gets more than 30% of its
electricity from renewable sources,
up from 12% in 2000. Largely as
a result of that, together with a
significant amount of switching
power generation from coal to gas
(in some countries, but notably not
in Germany), the EU is well on track
to meet its 2020 target reduction of
carbon dioxide (CO2) emissions by
20% from 1990 levels.
Meeting the 2030 target of 40%
reduction looks much more
difficult. It is clear that current
policies will not be sufficient. In
particular, the heat and transport
sectors have barely started on the
pathway to decarbonisation. Even
in the electricity sector, as the
share of renewables rises, the
challenge of managing
intermittent generation from wind
and solar becomes greater. While
burning natural gas emits less CO2
than coal, continuing to burn
significant quantities of fossil-
derived methane will not be
compatible with climate targets.
An emerging technology –
Figure 1: Power-to-gas schematic overview of the various ways in which P2G could be
deployed into the overall energy system
Source: OIES
28 Energy World | February 2019
Martin Lambert, Senior Research
Fellow at the Oxford Institute for
Energy Studies (OIES), considers
how gas production using surplus
renewable electricity can help meet
decarbonisation targets.
power-to-gas (P2G) – may be able
to help both by managing
intermittent renewable generation
and producing a low-carbon
substitute for natural gas. This
could contribute to decarbonising
the heat and transport sectors, if
the significant challenges of cost
and scale-up can be overcome. This
could lead to closer integration of
the gas and electricity systems,
captured in the phrase ‘sector
coupling’.
What is power-to-gas?
P2G relies on the principle of
electrolysis – using electricity to
separate water into its component
parts of hydrogen and oxygen. That
principle has been known since
the 19th century, but it becomes
more relevant as renewable power
generation increases in capacity
and reduces in cost such that
available electricity supply is likely
to exceed immediate customer
demand.
The first step is to produce
hydrogen (with oxygen as a
by-product). An electrolyser is
broadly the reverse process of a
fuel cell (which turns hydrogen
into electricity), and considerable
research is underway to lower the
cost and increase the performance
of electrolysers. The hydrogen can
then be used in several ways:
Electricity storage – The hydrogen
can be stored, potentially in large
quantities for several months, and
later used to generate electricity
again. It is thus playing a similar
role to a battery; but with current
technology, batteries would
struggle to provide the long-term,
large-scale seasonal storage which
hydrogen can provide.
Transport fuel – Hydrogen has the
potential to displace oil products
for long-distance heavy-duty
transport, including railways and
perhaps marine transport. For
short-range light-duty transport it
appears likely that electric vehicles
will have the competitive edge.
Heat production – Electricity
is likely to be the solution
to decarbonise many heat
applications, for example using
heat pumps. However, in other
applications, hydrogen can play a
role, particularly where processes
require higher temperatures
than can easily be achieved with
electricity.
Blending into the gas grid – Current
gas grid specifications typically
have very low limits for hydrogen
(1% by volume or less). Higher
hydrogen content can cause issues
with gas grid infrastructure and/
or end user equipment, but some
tests are planned (eg HyDeploy in
the UK) to test blends up to 20%.
Methanation – Using either a
catalytic or biological process, the
hydrogen can be reacted with a
carbon source to produce synthetic
methane of a quality suitable for
injection into the gas grid. When
co-located with a biogas plant,
methanation can convert the
biogas CO2 output to effectively
double the quantity of biomethane
available for grid injection.
The ability for the hydrogen
from P2G to be used in such a
range of different applications, all
starting from renewable electricity,

has the potential to introduce
valuable integration and
flexibility into the overall energy
system. Hence the growing interest
in P2G and sector coupling.
Case studies
It must be stressed that P2G is at
an early stage of development, and
all current operational facilities are
tiny in the context of the overall
energy system. Some specific case
studies, however, demonstrate the
level of interest in the technology
and some potential applications.
EU Horizon 2020 ‘Store&Go’ project
– The project, which has received
funding from the European Union,
involves collaboration between
27 partner organisations across
Europe to test the integration
of power-to-methane in the
daily operation of European
energy grids. It is deliberately
testing different technologies to
produce synthetic methane from
renewable power and different
ways of connecting to the gas grid.
There are three test sites under
construction at Falkenhagen in
Germany, Soloturn in Switzerland
and Troia in Italy. All are relatively
small, using electrolyser capacities
around 1 MW or less.
Audi e-gas – The car manufacturer
Audi, anxious to offer its customers
a climate friendly fuel option
to promote sales of its cars
(particularly the ‘g-tron’ range of
natural gas vehicle models), has
been developing an ‘e-gas’ offering.
This low carbon ‘e-gas’ can be
biomethane, but the company
has also developed two of its own
power-to-methane manufacturing
plants. One of these, at Werlte in
Germany, with 6 MW electrolyser
capacity has been in operation
since 2013 and is still the largest
operational power-to-gas plant in
the world.
ITM Power/Shell – ITM Power is a
UK company which manufactures
integrated power-to-hydrogen
solutions, and which has developed
several hydrogen vehicle refuelling
stations. In September 2017,
Shell and ITM Power announced
a project to construct a 10 MW
electrolyser, claimed to be the
largest in the world, at the Shell
Rhineland refinery in Germany.
While this is significant by
demonstrating the next stage of
scale-up, the 10 MW electrolyser
will supply just 1,300t/y, or around
1% of the refinery’s total hydrogen
requirement.
The last example illustrates the
very large scale-up challenge still
to be overcome if P2G technology
is to play a significant role in the
European energy system. The total
current annual demand for natural
gas in Europe is around 500bn cm.
To produce 1bn cm/y of synthetic
natural gas would require
electrolyser capacity of around
2,500 MW operating continuously,
or a capacity of around 5,000 MW
operating 50% of the time – which
is more realistic when running on
surplus renewable power.
Costs and carbon impact
The greenhouse gas (GHG)
emissions from P2G are highly
dependent on the source of
electricity used. On the assumption
that electricity is derived from
wind power, electrolysis is
estimated to have one of the
lowest GHG impacts of any route
to production of hydrogen – apart
from biomass gasification with
carbon capture and storage
(CCS), which can enable negative
emissions. In the case of power-to-
methane, it will also be important
to minimise any risk of methane
leakage along the supply chain,
given the significantly higher
global warming potential of
methane compared to CO2, in line
with recent initiatives by various
industry players to tackle this
issue.
Similarly, the cost of gas from
P2G is highly dependent on the
cost of electricity, as well as the
capital cost of the electrolyser and
its running hours. Given the very
early stage and small scale of
existing developments, there is a
wide range of uncertainty
regarding future cost projections.
Estimates of the levelised cost of
hydrogen range from €50/MWh
where abundant low cost
electricity is available to as high as
€150/MWh. Methanation of the
hydrogen to produce grid-quality
synthetic natural gas is estimated
to add a further €40–50/MWh.
Even the lower end of that cost
range is significantly more
expensive than fossil-derived
natural gas (current wholesale
price around €25/MWh),
underlining the assumption that
decarbonisation of the energy
system has to be the primary
driver to pursue P2G, and further
development will be driven by
government policy rather than
commercial economics.
Possible path forward
There is a general consensus
that the share of intermittent
renewable power generation
is set to increase in the coming
years. This provides a potential
opportunity for P2G both as a route
to long-term seasonal storage of
Renewables
electricity and to synthetic gaseous
fuel, but considerable challenges
remain. Significant progress will
need to be made in scaling up the
technology and reducing unit costs.
There is also a major
uncertainty regarding the future
role, if any, for gaseous fuels in a
decarbonised world. Some studies
suggest that decarbonisation could
best be achieved by converting
nearly all applications (including
the majority of the heat sector) to
electricity. Other studies, however,
show that this would be a much
more expensive pathway than
continuing to use the existing large
investments in gas transmission
and distribution infrastructure.
Where existing gas
infrastructure is used, there is a
further debate regarding whether
it should be upgraded to carry
renewable hydrogen, or whether it
should continue to carry methane
– albeit either biomethane or
synthetic methane derived
from P2G.
Various countries in Europe are
currently exploring different
pathways. In the UK, for example,
two distribution companies have
produced an initial study
contemplating conversion of
nearly 4mn consumers in the
North of England to hydrogen,
which it is envisaged would
primarily be produced using steam
methane reforming of natural gas
with CCS, plus a small amount of
electrolysis. In France, on the other
hand, a study has contemplated
supplying the current natural gas
demand with renewable methane
from a combination of biomethane
(both anaerobic digestion and
gasification) and power-to-
methane.
While there is a wide range of
options for the path forward, there
is at present very little clarity
regarding how the required
decisions to implement
widespread decarbonisation of the
energy system will be achieved. An
essential first step will be for
industry and governments to work
together to test the technology
options at scale and to define clear
strategies to justify the significant
investments required. ●
This article is based on a paper entitled
Power-to-gas: Linking electricity and gas in a
decarbonising world? published by the OIES
in October 2018. Visit bit.ly/2sgQU6t
Energy World | February 2019 29
Energy in Conversation
EVOLVING MARKETS
Malcolm Brinded CBE,
FREng, EI President
Malcolm, your global career has
spanned over 40 years, bringing a
wealth of experience and insights.
Between your start as a young
engineer and today, what are some
of your biggest take-aways about the
energy industry?
I find it simply astonishing that
in my lifetime, global average life
expectancy has increased by 50%
– an increase of 24 years from 48
to 72. In China, it’s up from 41 to
76. And in Africa, from just 36 to
over 60.
It is of course down to advances
in nutrition and medicine. But,
enabling all of these is a sustained
increase in global GDP per head –
up by 75% in real terms purchasing
power parity since 1990.
Driving all that has been a huge
increase in access to energy, where
the world is using 55% more than in
1990. Meeting that huge increase in
energy needs has been an immense
triumph of our industry – and
underpinning that, the astonishing
progress in energy technology.
On that last point, we know the
energy sector must continue to
evolve to meet the challenges of
rising energy demand. Can you
provide some examples of the
exciting developments since 2000?
30 Energy World | February 2019
Energy is
improving
life for
billions
Continuing the ‘Energy in Conversation’
series of discussions, Petroleum Review
Editor Kim Jackson speaks with Malcolm
Brinded CBE FREng, President of the
Energy Institute, Trustee of the Shell
Foundation and former Executive
Director of Royal Dutch Shell.
In East Africa over the last decade, equivalent of over 8mn b/d of oil.
a quiet revolution has been taking US shale oil has added another
place, with the installation of solar 5mn b/d, mostly in the last six
home systems designed for people years. Together, this is a massive
living off-grid and on say $4–30/d. energy windfall for the US and for
These systems typically have an the world.
8 W solar panel, four LED bulbs, a Furthermore, by displacing coal
control unit with a lithium battery, in the US – and in Asia via LNG
a phone charging port, a radio and exports – this shale gas supply looks
an LED torch. Many are made by more likely to ease, rather than
MKOPA Solar, one of the innovative increase, climate stresses.
enterprises supported by the Shell
Foundation. Customers buy a solar With these developments and many
home system on credit and make more as a backdrop, how have
daily payments through a mobile you seen the global energy mix
money platform called MPESA to transforming?
keep the lights on. After a year they Surprisingly, the overall primary
own the whole system outright. energy mix in percentage terms has
By embedding mobile changed little from when I started
technology into a solar product, work, with over 80% of it still
MKOPA pioneered the ‘pay-as-you- coming from fossil fuels.
go’ solar movement which is The big shift is that the world
transforming rural Africa – the uses an incredible two and a half
system costs less per day for the times as much energy now. It is also
user to buy than they previously encouraging to see the rapid growth
paid for kerosene for one smoky now coming in renewable power.
lamp. However, the impact so far on the
Solar home systems are one overall energy mix has been minor.
revolution. But for the energy Indeed, shale oil and gas just from
revolution of our lifetime, US shale the US is today supplying 30% more
could also be seen as the current energy than all the global wind and
winner. solar combined.
In just 10 years, US shale gas We’ve seen some remarkable
output increased by a factor of 13, and rapid advances – but we are on
and now produces the energy the brink of an era of yet greater

opportunity and more rapid
change, which offers huge scope for
more energy research and
innovation.
As you have said, we are on the
brink of even greater opportunities
– what do you see as the biggest
opportunities for energy in the next
50 years?
Let me highlight one opportunity,
and I’ll draw on Hans Rosling’s
brilliant book Factfulness1. He
doesn’t talk about the developed
and the developing world, but
shows the world as broadly split
between four income levels.
There are about 800mn people
living at Level 4, on over $32/d per
person – mostly in the OECD. And
sadly, another 800mn live at Level 1,
in desperate poverty on less than
$2/d, mostly in Africa and South
Asia.
The UK mostly sits at Level 4 –
and so, unsurprisingly, UK energy
research is also mainly focused on
this income level. But Level 4 is not
where the real issues of energy
supply or climate change will be
played out in the next 50 years.
Indeed, energy demand from people
today in Level 4 will very likely fall.
But whether we can meet 2°C, or
even 1.5°C, will be determined by
Levels 2 and 3 – where nearly 6bn
people live today, all of whom very
understandably aspire to move up
one or two levels.
There are really two issues here – to
raise living standards of billions of
people, and to do so in a way that
doesn’t harm the environment. If
we look at those people living at
Level 1 and 2, who have the acutest
needs, how can we meet these dual
challenges?
In Rosling’s analysis, 4.5bn people
today live on less than $8/d – that’s
about the cost of two coffees!
Let’s consider their two toughest
energy and climate challenges.
Firstly, access to affordable, clean
energy, as 1bn people still live
without electricity today and 3bn
still do all their cooking on open
fires. Secondly, sustainable urban
transportation, as the global urban
population has more than
quadrupled in the last 50 years and
is set to add another 2.5bn by 2050,
nearly all in the developing world.
Those 3bn people whose cooking
is done on open fires, mostly inside
their homes, are exposed to choking
smoke – which kills over 4mn
people a year.
I’ve been impressed by tech
entrepreneurs Envirofit who
research clean, low cost wood and
charcoal cookstoves, and then take
them to market at scale, with 1.6mn
sold so far.
These cookstoves reduce
dangerous emissions by up to 80%,
cut CO2 significantly, and save costs
and time buying or gathering the
wood and charcoal, time which can
be spent working to improve
education or livelihoods.
Envirofit’s latest product targets
the hundreds of millions in Africa
and India moving up from Level 2,
so above $8/d, helping them climb
the energy aspiration ladder,
coupling a modern LPG stove with a
mobile-money-based pay-as-you-go
payment system which only opens
the gas valve when in credit.
It’s another simple example of
combining new technology and
innovative business models to meet
people’s energy needs.
Are there any technologies with
the potential for benefitting the
community on a larger scale?
Successful communities need
reliable power at much greater scale
to run businesses, water treatment
plants, clinics and schools. That is
where mini-grids come in if the
main grid is still missing or simply
very unreliable.
One such company is Husk
Power. They design, install and
operate small-scale 25 kW power
plants that use solar energy and
agricultural waste gasification for
power in rural India and East Africa.
By using solar power in the day, and
biomass gasification for power at
night, Husk is providing electricity
24/7 at a cost 30% less than
small-scale diesel. Clever innovation
and simple technology are key to
their solution.
Even when villages are on the
grid, it often cannot meet peak
power demand. In India, 50% of
states have over 20% peak energy
deficit, leading to power outages of
over 10 hours a day in many places.
This greatly disrupts
refrigeration effectiveness – and
adds huge wastage in the food
supply chain due to rotting food.
Inficold design, make and sell
affordable thermal energy batteries
for the cold food chain, both on and
off-grid. They are now growing fast
in India, especially in the small
dairy business, since milk is a
$100bn/y business there that
suffers greatly from unreliable
refrigeration.
You mentioned urban transport –
what do you see as credible ways
forward in this area?
Every year there are more and
bigger cities around the world, with
over 40 megacities predicted by
2030, and Lagos set to pass 80mn
people by 2070.
Travel in these cities is a
nightmare for the urban poor – who
Energy in Conversation
spend disproportionate time and Urban transport is a chronic
money getting to and from work problem, with huge health,
social and economic costs
and essential services, and face – it is an issue that UK
chronic air pollution, in cities from researchers, entrepreneurs
Delhi to Cairo to Rio. The health, and impact investors are
well-placed to address
social and economic costs are huge. Photo: Yisong Yue/Flickr
We need innovative technology and
businesses to address this misery,
such as better urban planning,
leveraging advanced people
movement modelling; big-data
enabled traffic signals and traffic
management; hybrid and electric
minibuses and BRT systems; more
CNG taxis, and hydrogen and
LNG-powered buses.
UK researchers, entrepreneurs
and impact investors are well-
placed to address this chronic
problem.
Finally, are you optimistic about
what innovative technology and
businesses together can achieve?
Yes, given the right enabling
policies and financial support.
Rosling uses UN central GDP
growth forecasts to highlight
the huge benefit of sustained
economic growth, lifting 1.4bn out
of Levels 1 and 2 by 2040 and – with
population growth – meaning 3.1bn
more people will be living pretty
decently in Levels 3 and 4.
I hope we can do even better –
given more backing of early stage
technology and entrepreneurs. Such
an outcome would be simply
terrific! ●
1. Factfulness, Hans Rosling, with Ola
Rosling and Anna Rosling Ronnlund,
Sceptre/Hodder & Stoughton, 2018.
In our March 2019 issue, Malcolm will
discuss UK energy research priorities given
the challenges outlined above.
Energy World | February 2019 31
Finance

DIVESTMENT

Beyond coal? The outlook for

divestment Jennifer Johnson looks at why some of the world’s
biggest investors have yet to turn their back
on coal – and what this means for the growing
divestment movement.

Carbon Tracker believes that
72% of the global coal fleet
will be cashflow negative
by 2040.
Photo: Shutterstock
I
n the past decade, some of the
world’s wealthiest pension
funds, insurance firms and
educational institutions have
vowed to limit their financial
support for fossil fuels. The
divestment movement began in
2011, with students at a handful
of US universities calling on
administrators to stop investing
institutional endowments in coal,
oil and natural gas. As of December
2018, more than 1,000 global
organisations with a combined
total of $8tn in assets had made
divestment pledges of their own.
Many institutional investment
funds are large enough to own
significant parts of publicly-listed
fossil fuel companies. This has
made them a focus for concerned
citizens – such as students, savers
and pension payers – whose own
money is pooled and invested by
organisations to generate income.
Pressure from these individuals
has led some institutions to shrink
or eliminate their fossil fuel
holdings, while others have chosen
to divest because they feel there’s
an ethical imperative to do so.
The Church of England, for
instance, has promised to sell its
shares in companies that are slow
to tackle global warming,
beginning in 2023. With a £12bn
endowment behind it, the Church
has stated that it feels compelled to
‘exercise moral leadership on the
urgent issue of climate change’.
However, there is also a sound
financial case to be made for
divestment. Assets such as oil fields
and coal mines could be drastically
devalued – or ‘stranded’ – if
governments begin imposing strict
limits on fossil fuel use, or if
renewables become cheap enough
to drive down fossil fuel demand.
According to a 2015 study
published in Nature, around one
third of oil reserves, half of gas
reserves and 80% of known coal
reserves must never be extracted if
the world is to align with the
temperature targets set out in the
Paris Agreement. Coal is the most
carbon-intensive fossil fuel,
therefore phasing it out is an
obvious short-term target for both
policymakers and divestment
campaigners. So why are some
major investors increasing their
thermal coal holdings?
Passive approach
A new report from InfluenceMap, a
UK non-profit that tracks corporate
influence on climate policy, has
found that the world’s 15 largest
asset management groups have
upped their holdings of thermal
coal reserves by 20% since the Paris
Agreement was signed. These firms
manage investments on behalf of

32 Energy World | February 2019


clients – known as ‘asset owners’
‘President – such as insurance companies,
Trump has said pension funds and wealthy
that he’s pulling individuals. While some asset
owners also manage their own
out of the Paris investments, others entrust part, or
Agreement, and all, of the job to asset management
yet he can’t companies.
undo the fall of In its latest report, the UN’s
Intergovernmental Panel on
coal power in the Climate Change (IPCC) estimated
United States, that the world has a remaining
where more carbon budget of 420 gigatonnes
plants are (Gt) of carbon dioxide emissions to
maintain a 66% chance of meeting
closing than the 1.5°C global warming target.
ever. If investors InfluenceMap reports that the
are counting on current thermal coal holdings of
a strong leader the 15 largest asset management
groups account for over 3% of this
to protect fossil carbon budget.
fuel assets, then While the report admits that
they should be this is not a significant proportion,
wary.’ it emphasises that the actions of
large asset managers are ‘hugely
Laurence Watson, influential to the overall financial
Carbon Tracker market and, importantly, to the
overall economy.’
The motivations behind this
20% increase are somewhat
unclear, but part of it has to do
with the way that investment
products known as ‘listed funds’
are structured. Institutional or
individual investors can buy shares
in a listed fund, which is a
collective pool of money used to
purchase tradable financial assets,
such as stocks and bonds.
Some funds are actively
managed, meaning that there is a
team of investors making decisions
about which assets are included in
a portfolio based on market trends
and geopolitical shifts. Others are
‘passively’ managed, which means
they’re structured to mimic the
contents of a given market index,
such as the S&P 500.
In recent years, many investors
have come to favour passively-
managed funds because the
management fees associated with
them tend to be lower. However,
asset managers and their clients
don’t get a say in which companies
are included in an index – this is
the role of an index provider – and
this partially helps to explain the
presence of coal in the portfolios of
major asset managers.
‘The amount of thermal coal in
the listed company universe has
increased by 6% in the last two
years as the result of two bankrupt
US coal companies, Peabody
Energy and Arch Coal, coming back
into the market,’ explains Dylan
Tanner, Co-Founder and Executive
Director of InfluenceMap. ‘They
have naturally been acquired by a
lot of the funds after being
included in the major indexes.’
According to the report,
BlackRock, the world’s largest asset
management firm, also has the
largest holdings in thermal coal.
When questioned by the Financial
Times, the company said that much
of its exposure to coal comes from
its passive funds, therefore it could
not divest and would instead
engage with companies to
understand how they’re managing
climate concerns.
Transparent trading
In the last 10 years, major asset
managers have begun offering
environmentally-sensitive
funds to clients concerned about
the climate impact of their
investments. To create these
products, many managers rely on
external index providers to develop
‘green’ indices. For instance, S&P
has created an index that measures
the performance of companies in
the S&P 500 that don’t own any
fossil fuel reserves.
However, the contents of many
‘fossil fuel free’ funds and indices
are not publicly available, making
it difficult to verify whether they’re
as climate-friendly as they say.
In its research, InfluenceMap
was also able to identify 13 funds
marketed with ‘climate related’
language whose constituent
companies have thermal coal
holdings. Some of these funds
don’t wholly follow green indices
and the contents of the portfolios
may have been optimised – or
tweaked – by fund managers.
Consequently, the report says, it’s
difficult to determine whether the
index provider or the fund
manager have included fossil fuel
holdings.
‘There has been a tendency for
asset managers to say they’re
responding to passive trading, and
the index providers to say they’re
responding to demand from their
clients,’ Tanner says. ‘Everyone’s
pointing the finger at everyone
else. Ultimately, demand for clean
funds will be driven by asset
owners who want to express their
values in terms of their
investments. The people who will
have to act will be the large fund
managers like BlackRock and
Vanguard because they’re so
powerful in the marketplace.’
‘No brainer’ closures
While it’s not clear when – or
how – asset managers will go
about cutting coal from their
portfolios, the risks of not doing so
are increasing. In many developed
economies, such as the US and
Europe, coal-fired power stations
are already massive lossmakers.
Two years ago, analysis by the
climate think tank Carbon Tracker
Finance
revealed that 54% of the European
Union’s coal plants were losing
money. In a new report, Powering
Down Coal, the group predicted
that 72% of the global coal fleet
will be cashflow negative by 2040.
While there has been a resurgence
in political support for coal in the
US, this is unlikely to keep the
industry afloat for long.
‘In any region, there is little you
can do to stop renewables costs
coming down in the long term,’
says Laurence Watson, Data
Scientist at Carbon Tracker.
‘President Trump has said that he’s
pulling out of the Paris Agreement,
and yet he can’t undo the fall of
coal power in the United States,
where more plants are closing than
ever. If investors are counting on a
strong leader to protect their fossil
fuel assets, then they should be
wary.’
Carbon Tracker has identified
three ‘inflection points’ that
investors and policymakers should
be aware of when trying to limit
their stranded asset risk. The first is
when new renewables and gas
outcompete new coal; the second is
when new renewables and gas
outcompete operating existing
coal; and the third is when new
dispatchable renewables and gas
outcompete existing coal. Carbon
Tracker believes that the first
inflection point will be reached by
2025 at the latest – and the second
won’t be far behind.
‘Coal is already more expensive
on a levelised cost of energy basis
in almost all markets,’ Watson
explains. ‘For a lot of places, new
renewables will be cheaper than
running existing coal within the
next 10 years, and this second
point is crucial in terms of phase
out. Closing coal becomes a
no-brainer at that point.’
Powering Down Coal argues that
coal is going to become an
increasingly high-cost form of
power generation in the coming
years – with or without climate
policies that would restrict its use.
While the International Energy
Agency (IEA) has predicted that
global coal demand will remain
stable until 2023, its long-term
decline is now all but certain.
Timelines for coal closures vary,
but the economic case for
divestment is getting stronger all
the time. This means that investors
who have thus far been able to
ignore ethical arguments may soon
have to acknowledge the financial
necessity of divestment. It’s a
matter of choosing the right
moment to sell up and move on. l
Energy World | February 2019 33
Finance
ENERGY ACCESS
Energising finance – is global
energy access achievable by
2030?
A growing number of
policy makers and experts
consider off-grid solutions
to be among the most quick
and cost-effective ways of
providing energy access.
Photo: SEforALL
34 Energy World | February 2019
Significant finance is still needed to guarantee energy access for
the world’s most vulnerable people, according to a new report from
development organisation Sustainable Energy for All (SEforAll).
U
rgent action is needed to
keep the UN’s Sustainable
Development Goal 7 –
affordable, reliable, sustainable
and modern energy for all – within
reach, says a new report from
SEforALL. The study, Energising
Finance, analysed finance flows for
electricity and clean cooking access
in the countries across Africa and
Asia with the most significant
energy supply gaps
Research has shown that an
annual investment of $52bn is
required to meet universal
electrification targets. However,
finance commitments for
electricity in the 20 ‘high impact’
countries – which are home to 76%
of people without electricity access
– have only slightly increased to an
average of $30.2bn annually. Today,
with 12 years to reach the targets
established in Sustainable
Development Goal 7, there are still
roughly one billion people across
the world who lack access to
electricity.
Almost three billion people also
lack access to clean cooking
technologies – and the report
found that investment in this area
fell by 5% from $32mn in 2013-14
to $30mn in 2015-16 across the 20
countries with the largest access
gaps. An estimated $4.4bn is
needed annually to provide people
with equipment that will allow
them to cook indoors without
inhaling smoke.
Spotlight on electricity
SEforALL found that investment
heavily favours non-residential
customers (eg industrial,
commercial and public sector) over
residential customers. Just over a
quarter of all electricity finance
in the high-impact countries –
roughly 28%, or $8.6bn – is being
used to support new or improved
access for residential consumers
of electricity. The major share, on
the other hand, is going toward
expanding electricity supply to
non-residential consumers, and
to support wider growth in the
economy.
In terms of technologies, more
than half of the finance for
electricity committed in 2015-16
($16.2bn or 54%) was channeled
into grid-connected renewable
technologies, with finance for solar
PV increasing dramatically by
nearly five times. While this is
good news, the global community
may be concerned to note that
investment in grid-connected fossil
fuel plants accounted for $8bn a
year, or 27% of finance for
electricity in 2015-16, doubling the
2013-14 levels.   portion of finance commitments
Coal plants, in particular,
received two and a half times as
much investment in high-impact
countries, growing from $2.8bn in
2013-14 to $6.8bn in 2015-16,
when 17 coal plants were financed
across the 20 high-impact
countries. The Philippines, India
and Bangladesh are the top three
countries receiving financing
commitments for coal, with Kenya
coming in fourth due to one large
investment commitment ($1bn) in
2015-16.
While fossil fuel energy-based
projects contribute to increasing
electricity into grids, they do little
to address access for those beyond
and below the power lines, and
these facilities lock in high-carbon
assets for 30 years or more. The
benefits they may bring in terms of
energy access are countered by the
negative impacts on human health
and their contributions to global
climate change. They also pose a
stranded asset risk to the global
financial system, due to increased
environmental scrutiny and
long-term climate risks.
Investments in off-grid
solutions (OGS) also require a close
examination; a growing number of
policy makers and experts consider
OGS to be among the most
cost-effective and quickest ways of
providing energy access, especially
in rural terrains. It is therefore
encouraging to see that finance
commitments for off-grid
solutions, including mini-grid
technologies, nearly doubled
between 2013-14 and 2015-16,
growing from $210mn to $380mn
per year on average. While a
positive trend, these investments
remain a small portion (1.3%) of
the total finance tracked.
This low level of finance for OGS
is substantiated by the report’s
findings on finance for the quality
and availability of electricity
access, as defined by the Multi-Tier
Framework (MTF). The largest
for residential electricity access
(96%, or an annual average of
$8.2bn), supported a medium or
higher tier of electricity access
(Tiers 3, 4, and 5) in 2015-16 – ie it
provided at least enough electricity
to sustain medium power
appliances and guaranteed a
minimum of eight hours of
electricity supply a day.
Very little finance was allocated
to Tiers 1 and 2, the lower access
tiers associated with basic energy
connections. It is these basic
energy connections, often off-grid
or decentralised solutions, that can

represent an important step
forward for increased quality of
life and bring electricity access
relatively quickly and cost-
effectively to rural communities.
Case study: India
The case study analysis on India
shows a tremendous increase in
private domestic investments
by corporations and project
developers, from $1.6bn a year in
2013-14 to $10bn a year in 2015-
16, substantiating the findings of
the report’s global analysis. Of this
amount, about 87% of investment
in 2015-16 was allocated to
grid-connected solar and wind
projects. In parallel, commitments
to eight coal-powered plants in
2015-16 were identified, of which
only one commitment was made
by a private sector company.
However, India has stated there
are no further coal-based capacity
additions on top of those that are
already under construction to meet
its energy demand through 2022.
In April 2018, India’s Ministry of
Power announced that 100% of its
villages, comprising 85% of its
population, had gained some form
of access to electricity under a
national rural electrification
program. While 22mn households
(roughly 130mn people) still
remain without access to
electricity, the marked increase in
electricity access finance,
especially for renewable sources
and the resulting increase in
energy access, is notable.
To fill the remaining electricity
access gap, India needs to utilise
well-calibrated, multi-pronged
approaches to efficiently use
centralised and off-grid electricity
technologies, the latter of which is
particularly critical. Largely driven
by India’s aggressive policy target
of 175 GW of renewable energy
generation by 2022 and the private
sector’s growing certainty around
renewable technologies with more
predictable cash flows, India
represents a bright spot in the
energy access landscape that other
countries can learn from.
Clean cooking concerns
The report’s analysis shows that
finance for clean cooking dropped
5% from $32mn in 2013-14 to
$30mn in 2015-16. This investment
is a tiny percentage of the $4.4bn
annual investment needed by
2030 to address a problem faced by
three billion people, highlighting
the pressing need for dedicated
and accelerated action.
The 5% decrease is in spite of
increasing global awareness of the
health and climate benefits of
clean cooking technologies and
fuels, which may have translated
to an increase in the number of
total clean cooking transactions;
these rose from 119 in 2013-14 to
178 in 2015-16. The majority of the
related commitments financed
biogas digesters (55%), followed by
improved biomass cookstoves
(27%).
Nearly all finance for clean
cooking originated from
international sources (92%), a
similar portion and amount as in
2013-14 (94%). The public sector
remains the largest source of
financing (69% of total finance),
with private finance increasing
from 19% in 2013-14 to 31% in
2015-16. Nearly all public funding
was committed in the form of
grants, while equity investments
were the predominant instrument
of private actors.
Sub-Saharan African countries
received most of the funding (72%,
or $22mn) tracked in 2015-16,
largely going to Ethiopia and
Kenya. Several countries with low
access to clean cooking solutions,
such as the Democratic Republic of
Congo, Madagascar and
Mozambique, received very little to
no funding. In addition to
accelerated action on clean
cooking, there is also an important
role for greater transparency and
better data on finance in this
sector.
Overall, while methodology and
data sources have improved since
the first (2013-14) review of clean
cooking finance, the flows tracked
in the report through the global
tracking methodology still
represent a likely underestimation
of the global finance for clean
cooking. This field is impacted by a
severe lack of investment data and
complex methodological issues,
resulting in the
underrepresentation of two key
areas: domestic public subsidies for
liquid fuels used for cooking, and
the LPG supply chain.
Case study: Indonesia
In Indonesia, government subsidies
have been crucial to accelerate the
adoption of liquified petroleum gas
(LPG) cooking solutions in millions
of households spread across
thousands of islands, replacing
kerosene as the main cooking fuel,
and resulting in important health
and carbon benefits.
As part of a countrywide
cooking fuel conversion program
that started in 2007 to phase out
kerosene and other traditional
cooking methods, the Indonesian
government spent an annual
average of $1.8bn on subsidies to
support LPG use over the 2015-16
period.
Finance
The programme reduced
kerosene use from a 37% share in While fossil fuel
2007 to 3.8% in 2016 and increased energy-based
LPG use from an 11% share in 2007 projects
to 72% in 2016. The analysis of
clean cooking financing in
contribute to
Indonesia shows the crucial increasing
importance of domestic public electricity into
budgets, which, in some cases, may grids, they do
far outweigh spending by
international partners or the
little to address
private sector captured in this access for those
global analysis. In fact, between beyond and
2013 and 2016, just $9.3mn was below the power
identified as committed by
international partners for clean
lines.
cooking solutions in Indonesia,
mainly for biogas digesters and
advanced biomass stoves.
Conclusions
Ultimately, SEforALL has found
that finance for sustainable energy
access is still not on track to meet
universal energy access needs.
Indeed, with each passing year, the
gap between investment needed
and investment committed is
getting bigger. There is increasing
urgency for action on clean
cooking and off-grid solutions for
residential consumers, especially
in Sub-Saharan Africa.
The organisation says its
findings should serve as a sobering
reality check and be an urgent call
to action to the global community
as well as countries themselves to
further scale up targeted action
and finance for energy access in
those high-impact countries where
financing needs are falling behind.
Urgent actions include:
• setting ambitious national
targets that give the private
sector confidence to invest –
particularly in underserved
countries;
• increasing domestic
investment in energy access
solutions;
• accelerating policy reform to
create markets for energy
access solutions;
• increasing concessional finance
across the board;
• putting more into off-grid
solutions; and
• creating a community of
practice to address data and
tracking gaps. l
This piece is an extract from Sustainability
Energy for All and the Climate Policy
Initiative’s ‘Energising Finance 2018’ report.
Energy World | February 2019 35
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