Global Insight 12: 11th July 2017

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Global Insight 12: 11th July 2017

Australia

New rule for wind generation back-up

A new rule put into force this week by the Australian Energy Market Operator (AEMO), will constrain intermittent generation to 1200MW unless 4 gas generators are online in order to protect power system security. In SA this week this meant that wind generation was curtailed to 1100MW as only three gas generators, providing synchronous generation, bid into the market. This may end the reduction in wholesale electricity prices that have been achieved due to high wind generation – which can sometimes achieve negative spot prices, forcing the average wholesale price to increase due to the high cost of gas generation in the country.

World’s largest battery to be installed in South Australia

South Australia and Elon Musk have agreed to begin installation of the world’s largest battery storage unit at the Hornsdale Windfarm. The 100MW unit will be finished in 100 days from the signing of the grid interconnection agreement or Tesla will install it for free (at a cost of $50m+ to Tesla). It has not been stated how this will affect AEMOs new ruling above – whether the synthetic inertia provided by the battery unit will be acceptable or whether real inertia, as mentioned in the Finkel review, will still be needed to provide system security.

Nearly a quarter of Australian homes now have solar PV

New data released this week shows the Australian average for domestic solar ownership is now at 23.2%. South Australia leads the way with 32.8% of households, flowed by Queensland – 30.2%, Western Australia – 26.6%, Victoria – 21%, Northern Territory – 18.2%, New South Wales – 17.7% and Tasmania – 17.3%. This is an increase of c6% since the end of 2016. In December 2016 the governments ended their Feed-in-Tariffs for small solar, so this can be seen as a reaction to rising electricity prices and with the addition of storage, a way to protect themselves against future blackouts.

Europe

New E.On trading arm to leverage renewables, DG and storage

Like several other large European utilities, E.On now appears to be moving to reposition itself in the quickly emerging new energy system. It has recently announced the launch of a new trading division operational in Germany, UK and Swedish markets. The intention is to offer a route to market for customers who have bought into their solar+storage offering in those countries, announced earlier this year.

France announces new climate ambitions

Following on from Sweden’s recently announced intention to become carbon neutral by 2045, France had now declared that it will aim for carbon neutrality by 2050. It will also end the sale of petrol and diesel cars by 2040, backed up by a scrappage reward scheme for turning in old diesel cars. The plan has a circular economy element, as well as a commitment to end the use of coal for electricity generation by 2022, a goal now adopted across other European countries.

Small LED projects bundled for institutional finance

Swiss-based investment advisor SUSI has created an Energy Efficiency Fund that will channel institutional capital into the retrofitting of LEDs into commercial buildings in Ireland. The work will be undertaken by energy services company UrbanVolt, which shares the value of the energy savings with the client companies. According to SUSI this is a first in bundling a number of small-scale projects together in a standardised way to reach a scale that institutional investors can buy into.

Finnish University says renewables will be cheapest form of power by 2030

Lappeenranta University in Finland has produced a report for Greenpeace Germany, timed for the Hamburg G20 summit, which says that renewables will be cheaper than all other forms of power generation in G20 countries by 2030. The report found that wind is already the cheapest form of power in parts of Europe, South America, China the US and Australia.

US

Hawaii Verge Conference last week

Participants interested in Hawaii’s energy future gathered in Honolulu last week. In early July the Hawaii Public Utilities Commission (HECO) submitted its second attempt at a grid modernization plan which calls for spending about $205 million over six years, a steep drop from the approximately $340 million plan that was rejected by the HECO in December. As of the end of 2016, about 26 percent of HECO’s combined customer energy needs came from renewable sources, according to data released earlier this year. Of that, customer-owned solar dominated with 34 percent of the total, followed by wind at 29 percent and biomass at 19 percent. The share of energy provided by renewables was even higher outside the state’s most populous island of Oahu, reaching 37 percent on the islands of Maui and Molokai and 54 percent on the Big Island. However, Hawaii has specific issues because it cannot call on interconnectors between other States. One point of interest in the second grid modernization plan is that Hawaii has moved on from ‘smart meters’ to IEEE 1547 standard for smart inverters – a ‘smart’ smart grid attempt.

Wider US Roundup

Secretary Perry puts forward his ideas for energy dominance, notably different from energy independence. Partly in response to this, a heavyweight critique of Donald Trump’s energy policy and what energy dominance means was published in Foreign Affairs by Jason Bordoff of the Columbia University Centre for Global Energy Policy.

California, Assemblyman Ting, is putting forward a proposal for a $3bn support package for electric vehicles – which is a huge leap up in support so far.

A new Lawrence Berkeley National Lab tool could make it easier for investment decisions between gas and renewable energy generation to be made. With wholesale power prices low and federal power regulations in limbo, choosing the right generation investments has never been trickier, or riskier, for utilities and independent power producers. The new LBNL study could help. In 2016, natural gas provided 42% of U.S. power capacity and provided 34% or total generation, higher than any other resources. However, solar led in capacity added with more than 14,700 MW, accounting for 39% of the U.S. total. And wind energy accounted for 30% of the capacity installed since 2012.

Massachusetts is the latest in a series of US States set to procure storage, with plans for 200 MW. Other examples include California which set the nation’s first and largest storage target in 2013, targeting 1.3 GW by 2020. In May, regulators in the state directed utilities to procure an additional 500 MW of behind-the-meter storage. Whilst in Nevada the governor signed a bill earlier this month for an energy storage incentive. Maryland also has a 30% tax incentive for storage facilities. New York is the most recent example of this trend. Lawmakers passed bills mandating state agencies to develop an Energy Storage Deployment Program and include a storage procurement target for 2030. However, exactly what this will be is still not known.

Two no-regret strategies for utilities in US came out of Greentech Media’s Grid Edge World Forum 2017 conference in San Jose – the annual get together for ideas and practice out of the mainstream. These were 1) renewable energy and 2) anything that gets them closer to customers – a fact that is reflected in the commercial acquisitions utilities are making in both Europe and the US currently.

Wider Globe

G20 and Climate Action

The annual review of climate and energy attractiveness index of the G20 countries published by the insurance group Allianz, once again placed European countries at the top of the rankings, with Germany, UK and France, filling the top three places, as they did in 2016.  Those countries that have risen-up the league table were Japan, United States, Indonesia and Russia, with those falling, Italy, Australia, Turkey and Saudi Arabia. The report notes that “2016 also saw renewables growing due to falling technology costs despite cumbersome policy environments in some countries. Most striking example has been the US. Favourable general investment conditions and a ready market mask the increasingly unsupportive federal policy environment”.  The US’s position on climate change remained one of the points of divergence at the Summit itself, but despite this the communique concluded: “We remain collectively committed to mitigate greenhouse gas emissions through, among others, increased innovation on sustainable and clean energies and energy efficiency, and work towards low greenhouse-gas emission energy systems”

China’s Solar (Panda) Revolution

In China, at the end of May, the appropriately named company, Panda Green Energy, connected to the grid a solar plant laid out in the shape of a giant Panda. It has used a combination of darker monocrystalline silicon (the light-absorbing material in most solar cells) and lighter-coloured thin film solar cells to design the solar farm in the likeness of China’s national animal. The 100 MW is expected to produce 3.2 billion kWh of green electricity in 25 years, equivalent to saving 1.056 million tons of coal, or reduce 2.74 million tons of carbon dioxide emissions. In 2016, 36 GW of solar energy was connected to the grid, nearly doubling China’s capacity and installing a quarter of the global total.

Volvo – Every new car to have an electric engine by 2019

The race to electrify the transport sector speed up at the start of July with a flurry of new announcements and initiatives. Most significant was that of Volvo, the Swedish car manufacture, that announced that all its cars built after 2019 would be hybrid or purely electric, the first major car producer to do so. Bloomberg New Energy Finance have now revised their forecasts and have suggested that by 2040, over half of all new car sales will be electric and that EVs are expected to be cheaper than internal combustion engines models in most countries by 2029. However, some countries are likely to move much quicker than the BNEF global average, with France announcing that it will ban the sale of petrol and electric cars by 2040. The roll-out of electric vehicles will have a profound impact on the power sector, through increased and flexible demand, cheaper electric storage technology and the cross-over between actors in the utility and car manufacturing markets.

 

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