Global Insight: 17th December 2018

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Global Insight: 17th December 2018

This will be the final Global Insight for this year and also the final Global Insight ever.  The IGov project will be running until end September 2019 but we have decided – although GI’s are popular – that we should spend our time producing other outputs (such as blogs, research, presentations) which will continue to be posted on the IGov website. For those of you who wish to keep up with US news, the best websites to follow are Utility Dive, CTN (Clean Technica), RMI, RAP and Naruc. For Australia, RenewEconomy, The Guardian, for markets AEMO, regulation AER, rules AEMC and consumers ECA.  For Europe we recommend Clean Energy Wire , and for the wider globe International Renewable Energy Agency, International Energy Agency, Sustainable Energy for All, Bloomberg New Energy Finance and Energy Foundation Beijing.

We wish you all a Merry Christmas and a Happy New Year from the IGov Team: Catherine Mitchell, Richard Hoggett, Matthew Lockwood, Anthony Froggatt, Jess Britton and Helen Poulter.

AUSTRALIA

Underwriting new generation investment bad news for renewables

The Coalition government released the Underwriting New Generation Investments – call for interest guidance document this week which has met with very mixed reviews.   It has been welcomed by the coal lobby who see it as an over-due step in securing baseload power generation.  Renewable commentators see it as a document which can be tailored to suit the government’s  interests, which includes extending the life of existing coal and gas generators.  This has led to activist groups warning  banks that  ‘the provision of finance for new coal, or retrofits of old coal-fired power stations, would be inconsistent with their public commitments to the Paris agreement’.

Regulator reduces the rate of return for network businesses

The Australian Energy Regulator (AER) has released its final decision this week regarding the rate of return (RoR) that network businesses are able to earn.  The news has been welcomed by Energy Consumers Australia (ECA) as the best method to reduce rising energy bills.  The RoR has been considered too high for what is a low risk business – as the regulator guarantees network revenues.  The networks have not responded quite so happily stating that the RoR is comparable with other countries and that reducing it ‘will discourage energy networks from investing in the technologies needed to modernise the 20th century grid to accommodate the rapidly increasing amounts of solar and storage that customers want and government policy is driving’.  The fact that the networks use the UK as a comparison is interesting considering the report from Citizens Advice released earlier this year that returns for the British networks were having an adverse effect on consumer bills.

USA

NERC winter reliability assessment released

The North American Electric Reliability Corp. (NERC) released its winter reliability assessment last Wednesday. Overall,  it finds that there are adequate resources to reliably serve demand this winter and sets out what those steps are, and where. The winter of 2013-2014 led to the US Polar Vortex with many resources shutting down (including coal and nuclear) with DSR being one of the key factors in maintaining reliability.

Falling solar

US Solar implementation fell by 50% in the last quarter of 2018, and is expected to fall in 2019.

6th largest coal company in US files for bankruptcy

Westmoreland coal company has filed for bankruptcy after reporting $1.4bn in debt.  A statement released about the filing suggests that the bankruptcy is an indicator of the irreversible decline of the coal industry.  A contributing factor to the bankruptcy is that several of the companies key customers not continuing with their use of coal.

EUROPE

Germany abstains from call for stronger EU carbon pricing, while Greens call for more action 

With Germany’s draft Climate Action Law expected in early 2019, the Green Party has called for the Law to include a price for CO2 with revenue partly reimbursed as a per capita energy allowance. The Green Party argue that this would mainly benefit low-income households with lower CO2 emissions. However Germany chose to abstained from a call by nine other European countries for a stronger and extended role of carbon pricing at the COP climate conference in Katowice. The German environment ministry said it did not want to pre-empt the country’s coal commission in charge of defining instruments for an exit path from coal-fired power generation. The nine signatories called for an extension of the European Emission Trading System (EU ETS) with the aim of strengthening the carbon price. Currently, only 52 percent of all EU emissions are covered by an explicit carbon price. The countries therefore suggest that mechanisms such as carbon price floors or carbon pricing in non-ETS sectors would provide would trigger more effective decarbonisation.

German mine closure signals end of an era

Germany’s last hard coal mine will close this week, signalling the end of an era. The Government announced this year that it would end subsidies to hard coal – with an estimated €150 billion already spent on keeping struggling mines going. This means that the Prosper-Haniel complex near Bottrop in the Ruhr will close on December 21.

WIDER GLOBE 

European Energy Regulators Report on Renewables

The Council for European Energy Regulators (CEER) have published their annual review of the status of renewable support schemes in the majority of members states of the EU, where they note that there was a 12.6% fall in the cost of support for renewables between 2015-2017, with a decrease – on top of the market price of electricity – from €110/MWh to €96/MWh.   In total across the CEER members €56.7 billion of financial assistance was awarded to renewables and with a total gross production of electricity of 3400 TWh, the average cost of support per unit of electricity was €17.6/MWh, with the UK averaging €10.54/MWh.  It is important to note that this is the cost for all renewable installations and the CEER do not have enough data to provide information for those installations which started operating in 2017 – which would show a significant fall from the average from all renewables.  The report also notes that although there is a growing importance of self – consumption and net–metering in most countries, the data availability is still limited to allow for a comprehensive assessment of the framework in place.

The report also looks at the balancing responsibilities and notes that in about one third of countries, renewable producers have the same financial responsibility for balancing as conventional producers (Belgium, Bulgaria, Estonia, Finland, Netherlands, Norway, Romania, Spain, Sweden and the UK), while in one third they have no responsibility with in about one third, only responsibility for some renewables.

Renewables are now more than 20% of India’s power capacity

As of the beginning of November, the total installed electricity capacity in India was 347.37 GW, with renewables providing 73.35 GW (21.12 %) up from 15 % (46.33 GW) two years ago.  Of these, wind has 34.98 GW, solar 24.33 GW, bioenergy 9.54 GW and small hydro 4.5 GW. Furthermore, 21.55 GW (13.8 GW in solar and 7.02 GW in wind) of additional capacity are under construction and a further 25.2 GW (22.8 GW of solar and 2.4 GW of wind) out to tender. India now ranks the fifth largest solar market and fourth largest markets in the world.

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