Archive for May, 2014
Investing with The Blue Circle in the Mekong Region
Armstrong Teams Up with The Blue Circle for Wind & Solar Project Financing in Mekong Region
Announcement Singapore 16 May 2014
Armstrong Asset Management has agreed to commit up to US$40 million in equity to fund the construction of wind and solar projects in a number of Southeast Asia countries.
This will be in partnership with The Blue Circle, a vertically integrated renewable energy developer operating in the Mekong Region (Vietnam, Thailand and Cambodia) in which Armstrong will also take a minority equity stake.
Andrew Affleck, Managing Partner of Armstrong Asset Management, said he is excited by the opportunity to work with Olivier Duguet, CEO of the Singapore-based The Blue Circle Pte Ltd. “Over the last 15 years, Olivier has achieved a successful track record of working with Private Equity in developing, constructing and selling a renewable energy portfolio in Europe, which included 115MW of operational and 850MW of development projects. With Armstrong’s local experience and established regional network, we aim to replicate that success here in Southeast Asia together with The Blue Circle.”
Currently the developer has a pipeline of over 600 MW renewable energy projects under evaluation or negotiation in the Mekong Region.
“Having an institutional investor like Armstrong as a shareholder and project equity partner, with their extensive operational experience in Southeast Asia and specialization in renewable energy, will certainly accelerate the growth of The Blue Circle portfolio and strengthen our financing ability” said Olivier Duguet, on the announcement of the new funding partnership.
The agreement between the two Singapore based companies means that The Blue Circle will also benefit from Seed Capital Assistance Facility (SCAF) funding http://scaf-energy.org/ . An initiative by UNEP, ADB and GEF, SCAF is designed to help project developers overcome some of the challenges of Greenfield project development, such as high due diligence or transaction costs.
Armstrong closed its Clean Energy Fund when it reached US164 million last November. Prior to the latest deal, it has made two investments from the fund : a capital commitment of up to US$30 million to Annex Power for solar PV and biogas projects in Thailand, Indonesia and the Philippines, and an equity stake in Symbior Elements to develop a portfolio of solar generation in Central and Northeast Thailand.
Last month, Armstrong and Mandiri Investment Management entered into a co-investment arrangement to work together to invest in renewable energy projects in Indonesia. They will start their collaboration by focusing on the emerging hydro sector in Indonesia, in particular mini hydro-electric power plants.
About Armstrong Asset Management
Armstrong Asset Management is an independent asset manager, based in Singapore, focused on the clean energy sector in Southeast Asia’s emerging markets. Armstrong invests in small-scale infrastructure projects and achieved a final close on its debut clean energy fund of US$164m in November 2013, with institutional investors such as IFC, DEG, FMO, Proparco, SIFEM, GEEREF and Unigestion. Operating with a multidisciplinary team of investment professionals, all of whom possess deep sector knowledge and a collective 80 years of Southeast Asia operating experience, Armstrong Asset Management integrates strict environmental, social and governance compliance into its investment process to deliver tangible benefits and reduce risks for all of its stakeholders. www.armstrongam.com
About The Blue Circle
The Blue Circle focuses on developing wind and solar energy projects in Thailand, Vietnam and Cambodia. The Singapore based company looks to bridge the gap in project development in the Mekong Region by bringing international project development experience, financial expertise and capabilities together with local market understanding. Its growth strategy is twofold: through the development of its own projects and through acquisition or partnership with local developers. By being vertically integrated, The Blue Circle can identify Greenfield sites; pursue project development milestones up until financing and operating of the generating assets.
A new higher tariff for electricity purchased from mini-hydropower plants has been set by the Energy and Mineral Resources Ministry to make the sector more attractive for industry players. The new tariff has been set at Rp 1,075 (9 US cents) per kilowatt hour (kWh) from the previous level of Rp 656, nearly a 64 percent increase, according to a new regulation signed by Energy and Mineral Resources Minister Jero Wacik. Read More
Power tariff set to help mini-hydro plants attract developers
Raras Cahyafitri, The Jakarta Post, Jakarta | Business | Tue, May 06 2014, 11:29 AM
A new higher tariff for electricity purchased from mini-hydropower plants has been set by the Energy and Mineral Resources Ministry to make the sector more attractive for industry players.
The new tariff has been set at Rp 1,075 (9 US cents) per kilowatt hour (kWh) from the previous level of Rp 656, nearly a 64 percent increase, according to a new regulation signed by Energy and Mineral Resources Minister Jero Wacik.
Mini-hydro plants are those considered to have less than a 10-megawatt (MW) capacity.
“We hope the price will support mini-hydro plant development,” Jero said during the signing of a cooperation agreement in hydro power plant development with the Austrian transportation, innovation and technology minister on Monday.
The new price will be applicable for the first year until the eighth year, while after the power tariff will be reduced to Rp 775 per kWh until the 20th year starting this year, according to the ministry’s director general for renewable energy, Rida Mulyana.
The new tariff is expected to speed up the breakeven point for developers that invest in mini-hydro power plant projects.
“I’m hoping that the quicker the breakeven point, the more investors are interested to look for other locations for more [mini-hydro] development,” Rida said, adding that it would also ease requirements for banks to disburse lending to the sector.
Indonesia is trying to diversify its electricity sources, which remain dominated by power produced by fossil sources, particularly oil-fueled and coal-fired power plants.
Electricity demand in the country is estimated to grow around 8.4 percent per year from 2013 to 2022.
To meet demand, the country will have to have an additional capacity of 60 gigawatts during this period.
Under the long term plan, around 6.5 gigawatts are expected from hydro and mini-hydro power plants.
Business players welcomed the new tariff.
“It will make mini-hydro plant projects more economical and players will expand to other projects, particularly the smaller plants in remote areas,” said Fazil Alfitri, the president director of Medco Power, which is developing five mini-hydro projects.
The new tariff will be applicable for new projects.
Meanwhile, mini-hydro projects already established but that have yet to sign power purchase agreements are allowed to negotiate with an average tariff of Rp 880 per kWh, according to Rida.
Indonesia is estimated to have a 75,000-MW hydropower potential, but the utilization of resources remained low, with a total 3,935-MW hydropower plant capacity in operation as of the end of last year.
Of the total hydro plant capacity, 67.6 MW mini-hydropower plants operate in the country, according to figures from the ministry.
As many as 37 mini-hydro projects, with a combined capacity of 172 MW, are being constructed.
Meanwhile, 55 projects with a total capacity of 286.5 MW are still at the funding stage.
While business players will benefit from the new feed-in-tariff, concerns are growing over the higher cost that must be paid by the off-taker of the electricity, particularly state-owned PT Perusahaan Listrik Negara (PLN), which will likely suffer from the higher price.
However, PLN president director Nur Pamudji toned down the worries.
“It doesn’t matter whether the price is high or low. The most important thing is that the plants are completed. So, pick a price that will make the [mini-hydro development] programs work,” Pamudji said.
Distributed generation (DG) offers opportunities that can help overcome Thailand’s energy issues, with Thai government incentives such as feed-in tariffs making it more attractive. Wärtsilä Power Plants reports that Electricity generation today is moving towards a more decentralised model where generation is close to demand, offering improved energy efficiency and increased security of supply. Read More
Distributed Generation Shines in Thailand
Distributed generation (DG) offers opportunities that can help overcome Thailand’s energy issues. Thai government incentives such as feed-in tariffs will make DG more attractive. DG development therefore aims for high penetration across the country.
Wantana Somcharoenwattana, Business Development Manager, Wärtsilä Power Plants
April 15, 2014
Electricity generation today is moving towards a more decentralised model where generation is close to demand. Possible benefits are diminished transmission and distribution losses and investments, improved energy efficiency, and increased security of supply. Implementing a large central power plant is extremely challenging in terms of site availability, as well as public concern about environmental issues.
Distributed generation (DG) offers opportunities that can overcome these issues. Due to Thai government incentive schemes such as the feed-in tariff, DG will be more attractive for developers and investors going forward. DG development is therefore aiming at high penetration across the country. Small Power Producer (SPP) and Very Small Power Producer (VSPP) programmes are examples of success stories under the DG schemes. Both the SPP and VSPP programmes are implemented in order to promote primary energy savings and encourage the use of alternative energy in the power generation sector.
As of December 2013, the government has released SPP licences (power purchase agreements or PPAs) for 11,988 MW (129 projects) and VSPP licences for 3727 MW (888 projects), and more than 3250 MW are in the process of being licenced. Furthermore, future DG in Thailand will continue the growth that has allowed it to align with the country’s power development plan and national policy, which increased the renewable energy target to 25 percent of generation in 2012.
The new power development plan (2013–2030) targets the addition of DG. New SPP cogeneration of 6347 MW and renewable energy generation of 13,937 MW are to be added to the system by 2030.
Power Generation Mix
Thailand’s total power generation was 33,681 MW as of December 2013, which is 3.3 percent up from the previous year. Growth in power demand averages around 4 percent annually. Thailand’s generation system consists of the Electricity Generating Authority of Thailand (EGAT), a state-owned utility, at 45 percent; independent power producers (IPPs) at 38 percent; SPPs at 10 percent, and imported electricity at 7 percent. Power system planning is based on a long-term national power development plan (PDP). The PDP is implemented based on electricity demand growth rate, Thai GDP, government policy, a national energy efficiency development plan (EE plan) and an alternative energy development plan (AEDP).
The PDP2010 Rev3 (2012-2030) is currently in use, although the new PDP2014 (2013–2030) has been prepared and its approval is expected this year.
Under the current PDP2010 Rev3, new generation capacity of 55,130 MW is planned to replace the retired power plants (16,839 MW), which will result in a total national generation capacity of 70,686 MW at the end of 2030, as shown in Table 1.
The majority of new power plants are combined-cycle natural gas turbine (CCGT) plants, at 25,451 MW, and SPP cogeneration plants at 6476 MW.
However, the government is also focusing on promoting renewable energy in order to diversify the fuel type usage in the power sector. The renewable target was originally set at 9481 MW, but has been adjusted to 13,603 MW to be in line with the new Alternative Energy Development Plan, AEDP 2012–2021, as shown in Table 2.
The draft PDP 2014 (2013–2030), will retain the same complement of new natural gas plants — cogeneration, CCGT power plants and simple-cycle gas turbine plants. However, the major change from the previous PDP will be that renewable energy capacity will increase from 9481 MW to 13,603 MW.
In July 2013, the government approved the AEDP 2012–2021 to accelerate alternative energy consumption. The overall ratio of alternative energy will target a 25 percent share of total energy consumption in 2021. A breakdown of the contributions from different renewable energies to the power generation sector can be seen in Table 2.
According to this plan, biomass and biogas power plants will continue their development and are targeted at 4800 MW and 3600 MW respectively. However, solar power plants are currently a focus of the government promotion scheme, as solar projects currently show very little progress (550 MW in 2013) compared to government targets. The target for solar power plants is set at 3000 MW in the next 10 years. The government has initiated various programmes to stimulate solar projects across the country. Current solar support programmes from the government are:
1. Solar PV rooftop programme
The government has launched a special feed-in tariff (FiT) for rooftop solar photovoltaic (PV) projects in order to encourage investment in the household, factory and small, medium and large enterprise sectors. The FiTs are supported for a 25-year period and are categorised according to installed capacity:
Household (0 kW–10 kW) = THB6.69 (US$0.21)/kWh
Small enterprise (10 kW– 250 kW) = THB6.55/kWh
Medium-to-large enterprise (250 kW–1000 kW) = THB6.16/kWh
2. Solar PV for community (city) initiative programme
The government has encouraged community participation in renewable energy development via direct investment. An investment fund of THB60 million has been released to villages and communities in order to meet the solar PV community target of 800 MW. The project is aiming at 1 MW per village or community and will be supported for a 25-year period.
3. Solar PV programme for government buildings
The government will install rooftop solar PV for:
All town hall buildings in the 76 provinces of Thailand (except Bangkok), totaling 25 MW;
450 mid-sized hospitals with a 20 kW project size, totaling 9 MW;
350 vocational schools and colleges with a 40 kW project size, totaling 14 MW.
In addition to the special programme for solar PV, the government also has a core FiT scheme for all renewable energy. Table 3 presents the FiT rates that currently apply for renewable energy in SPP and VSPP schemes.
The SPP programme was originally initiated to promote energy efficiency in the industrial sector. In the past, boilers were mostly used in industry as a source for process steam and hot water. To promote the replacement of those conventional boilers with more efficient technologies, the government developed the SPP scheme for cogeneration plants fuelled by natural gas or coal. Recently, renewable energy for potential on-site generation has been included in the SPP scheme.
SPP cogeneration can provide an economical and reliable source of electrical and thermal energy for industry, increase overall system efficiency by contributing to the grid during peak load times, avoid big investment costs for large centralised power plants, and reduce transmission and distribution losses.
To qualify as a SPP cogeneration, a plant must utilise 5 percent of waste heat; and must demonstrate performance achievement through primary energy saving (PES), with PES ≥10 percent to get the full FiT (THB0.36/kWh).
The SPP scheme offers two types of contract: a ‘firm’ contract for 20–25 years, and a ‘non-firm’ contract for five years. Under such a contract, the SPPs sell electricity to EGAT, but they are also allowed to sell electricity directly to industrial customers. Both contracts allow the sale of up to 90 MW to EGAT based on their guaranteed generating capacity. A firm contract will receive a capacity payment and an energy payment, while a non-firm contract will receive only an energy payment.
As of December 2013, the majority (70 percent) of SPPs under operation are natural gas-based CHP plants which are running under firm contract. The rest are coal or lignite-based cogeneration plants (12 percent) and renewable energy plants (18 percent).
An example of the electricity tariff for firm SPP natural gas-based cogeneration includes a capacity payment (CP), an energy payment (EP) and a fuel saving (FS) payment.
The CP represents the base capacity payment (CPo) of the long-run avoided cost of an EGAT large combined-cycle power plant, which is valued at THB420/kW and adjusted for exchange rate variations compared to the base exchange rate of that month.
The EP represents the base price of gas (EPo) per kWh, adjusted for fluctuations in the gas price (Pt) at the time it is purchased from the Petroleum Authority of Thailand (PTT).
The FS payment represents the efficiency of the cogeneration plant compared to separate conventional electrical and thermal generation through the PES principle. A fuel saving incentive ranges between THB0–0.36/kWh, depending on the PES achievement. To get the full incentive of THB0.36/kWh, the plant must achieve a minimum PES of 10 percent.
For a non-firm gas cogeneration contract, the tariff includes only the EP, which is based on the price of natural gas price announced every month by EGAT. The EP will be adjusted by a factor based on the selling time during on and off-peak times. The non-firm tariff is commonly lower than that of a firm contract, as shown in Figure 1.
Under both contracts, electricity tariffs are based on the passed on fuel cost, as depicted in Figure 2. Therefore, the more the gas price increases, the more the SPP electricity tariff income increases. This is one reason why the SPP cogeneration market in Thailand provides a secured project cash flow even in a high gas price environment.
Figure 2 shows the trend of natural gas price increases over the last three years. The electricity tariff for SPP gas cogeneration moves in the same direction as the natural gas price, so there is no negative impact on SPP in a high gas price situation because the tariff has been constructed in such a way that the impact is absorbed.
Since the initiation of the framework, the SPP scheme has grown to its third iteration, SPP3. The status of total SPP projects as of December 2013 is given in Table 4. The total amount of SPP in operation is now 6675 MW (80 projects), while 49 projects (5313 MW) are under implementation and construction, which means that SPP licences have been released for 11,988 MW (129 projects). In addition, around 2012 MW (28 projects) currently under the PPA signing process will also be added to the system.
SPP firm contracts are mostly for natural gas-based cogeneration plants; the rest use commercial fuel. The average capacity of a SPP firm contract is in the range of 110 MW–120 MW. For SPP non-firm contracts, renewable energy will generally be suitable for this dispatching profile, generating up to its availability. The majority of new and coming SPP non-firm renewable plants are solar PV projects.
SPPs have been continuously added to the grid over the past decade. Figure 3 shows the progress of SPP generating capacity additions to the grid during the past decade, from 2001 to 2013. The total SPP generating capacity added to the grid is now 3525 MW. The development of SPP plants is now dominated by natural gas-fueled cogeneration and, to a lesser extent, renewable energy — see Figure 4.
Along with the SPP programme, the government has also released the Very Small Power Producer (VSPP) programme to support the generators that are small and selling less than 10 MW to the grid. The average size of a VSPP project is generally below 10 MW. The majority of VSPP projects in operation are small renewable energy plants (1471 MW). There are also natural gas-based cogeneration plants, however these are present in a small number (113 MW) because the generation cost of high natural gas prices in a small-scale project may not always be competitive with the grid electricity tariff.
The total amount of VSPP projects in operation is now 1585 MW (476 projects) and 2142 MW (412 projects) are under implementation and construction, which means VSPP licences have been released for 3727 MW (888 projects).
In addition, 1244 MW (313 projects) currently undergoing the PPA signing process will also be added to the system. The total capacity of VSPP projects in operation, construction and PPA process will be 4971 MW (1201 projects), and the majority will be solar power plants with a total capacity of 2465 MW (572 projects), as shown in Table 5.
A Bright Future
In summary, DG in Thailand has been significantly developed through national energy polices and government supporting schemes over the past decade and it will continue to have a bright future for the next 20 years.
Various measures have been initiated and applied to encourage investors, such as the FiT programme, government funding programme and energy efficiency funding. As a result, even high penetration of DG in the country can be expected.
However, these successful stories of DG development so far illustrate good progress when viewed from the generation side. In terms of grid operation, transmission and distribution for DG, challenges remain. Integration of DG into the system, fluctuation of renewables dispatching profiles, system stability and reliability are key challenges when there is high penetration of renewables-based DG.
The Thai government has foreseen these key obstacles and has started to explore options to cope with future generation by appointing a Thailand Smart Grid Committee and drawing up a roadmap. Nevertheless, the Smart Grid roadmap is still in its initial phase of foundation and framework study. The completion of a Smart Grid for full-scale integration would therefore be quite some time in future — planned for 2028–2032.
Wantana Somcharoenwattana, Business Development Manager, Wärtsilä Power Plants, Thailand.
IFC, a member of the World Bank Group, and Asia Green Capital Partners, a developer and investment company dedicated to niche markets in the renewable energy sector, have entered into a joint development agreement to promote renewable energy generation, such as wind and solar power, in Indonesia and other markets across Southeast Asia. The first project under development is the 62.5 MW Jeneponto 1 wind farm in Indonesia’s South Sulawesi province. Read More
IFC and Asia Green Capital Agree to Develop Wind Power in Indonesia, Supporting Sustainable Energy
Jakarta, Indonesia, May 6, 2014—IFC, a member of the World Bank Group, and Asia Green Capital Partners, a developer and investment company dedicated to niche markets in the renewable energy sector, have entered into a joint development agreement to promote renewable energy generation, such as wind and solar power, in Indonesia and other markets across South East Asia.
The joint development agreement will enable IFC InfraVentures, IFC’s early stage project development fund, and Asia Green Capital Partners to develop a series of renewable energy projects to help address Indonesia’s growing demand for power in a cleaner and more sustainable way. The first project under development is the 62.5 MW Jeneponto 1 wind farm in Indonesia’s South Sulawesi province. This project will be IFC’s first wind investment in East Asia through IFC InfraVentures.
Indonesia has emerged as a vibrant middle-income economy with a fast-growing private sector. At the same time, Indonesia still struggles with one of the lowest electricity supply rates in South East Asia as around 30 percent of the population are without access to a reliable source of electric power. Under-investment in infrastructure, particularly in electricity generation, needs to be addressed to allow Indonesia reach its full economic potential.
“Asia Green Capital Partners is excited to start cooperating with IFC in developing a number of renewable energy projects in the region,” said Edgare Kerkwijk, Asia Green Capital Partners’ Director. “With IFC as our partner, we are confident that we can complete development of our first wind project this year and start construction in 2015. Together with IFC, we will also continue to develop our other existing wind and solar projects and look for new opportunities in the region.”
Sarvesh Suri, IFC Country Manager for Indonesia, said: “Through our first IFC InfraVentures wind investment in East Asia, we will work with Asia Green Capital Partners to develop viable and sustainable opportunities for providing access to power in Indonesia and other countries in the South East Asia region. The Jeneponto 1 wind farm will add clean power to the energy mix of the South Sulawesi grid, reducing its reliance on fossil fuels, in line with the Indonesian government’s plans to diversify the country’s energy sources and control carbon emissions.”
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in more than 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and promote shared prosperity. In FY13, our investments climbed to an all-time high of nearly $25 billion, leveraging the power of the private sector to create jobs and tackle the world’s most pressing development challenges. IFC has established IFC InfraVentures to provide early stage risk capital and pro-actively support the development of private and Public-Private Partnership infrastructure projects in developing countries. For more information, visit www.ifc.org
About Asia Green Capital Partners
Asia Green Capital Partners is a dedicated clean energy project developer, committed to investing into clean energy infrastructure assets that leave a long term positive impact on society and the natural environment. The firm has a special focus on the development of wind and solar projects in Southeast Asia. www.asiagreencapital.com
Best Conditions for Renewable Energy Exist in Developing Countries
The latest Intergovernmental Panel on Climate Change IPCC) Report says global emissions of greenhouse gases have risen to unprecedented levels, growing more quickly between 2000 and 2010 than in each of the three previous decades. It also shows that it is not the availability of renewable resources but the public policies that will either expand or constrain renewable energy development over the coming decades. Developing countries, where most of the 1.4 billion people without access to electricity live, is also where some of the best conditions exist for renewable energy deployment. Read More
IPCC report BERLIN, 13 April
BERLIN, 13 April – A new report by the Intergovernmental Panel on Climate Change (IPCC) shows that global emissions of greenhouse gases have risen to unprecedented levels despite a growing number of policies to reduce climate change. Emissions grew more quickly between 2000 and 2010 than in each of the three previous decades.
According to the Working Group III contribution to the IPCC’s Fifth Assessment Report, it would be possible, using a wide array of technological measures and changes in behaviour, to limit the increase in global mean temperature to two degrees Celsius above pre-industrial levels. However, only major institutional and technological change will give a better than even chance that global warming will not exceed this threshold.
The report, entitled Climate Change 2014: Mitigation of Climate Change, is the third of three Working Group reports, which, along with a Synthesis Report due in October 2014, constitute the IPCC’s Fifth Assessment Report on climate change. Working Group III is led by three Co-Chairs: Ottmar Edenhofer from Germany, Ramón Pichs-Madruga from Cuba, and Youba Sokona from Mali.
“Climate policies in line with the two degrees Celsius goal need to aim for substantial emission reductions,” Edenhofer said. “There is a clear message from science: To avoid dangerous interference with the climate system, we need to move away from business as usual.”
Scenarios show that to have a likely chance of limiting the increase in global mean temperature to two degrees Celsius, means lowering global greenhouse gas emissions by 40 to 70 percent compared with 2010 by mid-century, and to near-zero by the end of this century. Ambitious mitigation may even require removing carbon dioxide from the atmosphere.
Scientific literature confirms that even less ambitious temperature goals would still require similar emissions reductions.
For the report, about 1200 scenarios from scientific literature have been analyzed. These scenarios were generated by 31 modelling teams around the world to explore the economic, technological and institutional prerequisites and implications of mitigation pathways with different degrees of ambition.
“Many different pathways lead to a future within the boundaries set by the two degrees Celsius goal,” Edenhofer said. “All of these require substantial investments. Avoiding further delays in mitigation and making use of a broad variety of technologies can limit the associated costs.”
Estimates of the economic costs of mitigation vary widely. In business-as-usual scenarios, consumption grows by 1.6 to 3 percent per year. Ambitious mitigation would reduce this growth by around 0.06 percentage points a year. However, the underlying estimates do not take into account economic benefits of reduced climate change.
Previous IPCC reports showed clearly that renewable energy could account for almost 80% of the world’s energy supply within four decades – but only if governments pursue the policies needed to promote green power.
IPCC said that if the full range of renewable technologies were deployed, the world could keep greenhouse gas concentrations to less than 450 parts per million, the level scientists have predicted will be the limit of safety beyond which climate change becomes catastrophic and irreversible.
Investing in renewables to the extent needed would cost only about 1% of global GDP annually, said Rajendra Pachauri, chairman of the IPCC.
Renewable energy is already growing fast – of the 300 gigawatts of new electricity generation capacity added globally between 2008 and 2009, about 140GW came from renewable sources, such as wind and solar power, according to the report.
The investment that will be needed to meet the greenhouse gas emissions targets demanded by scientists is likely to amount to about $5trn in the next decade, rising to $7trn from 2021 to 2030.
Ramon Pichs, co-chair of one of the key IPCC working groups, said: “The report shows that it is not the availability of [renewable] resources but the public policies that will either expand or constrain renewable energy development over the coming decades. Developing countries have an important stake in the future – this is where most of the 1.4 billion people without access to electricity live yet also where some of the best conditions exist for renewable energy deployment.”
Sven Teske, renewable energy director at Greenpeace International, said: “This is an invitation to governments to initiate a radical overhaul of their policies and place renewable energy centre stage. The onus is clearly on governments to step up to the mark.”
He added: “The IPCC report shows overwhelming scientific evidence that renewable energy can also meet the growing demand of developing countries, where over 2 billion people lack access to basic energy services and can do so at a more cost-competitive and faster rate than conventional energy sources. Governments have to kick start the energy revolution by implementing renewable energy laws across the globe.”
The 1,000-page Special Report on Renewable Energy Sources and Climate Change Mitigation (SRREN), released first in 2011, marks the first time the IPCC has examined low-carbon energy in depth, and the first interim report since the body’s comprehensive 2007 review of the science of climate change.
Investing in renewables can also help poor countries to develop, particularly where large numbers of people lack access to an electricity grid.
Editor’s note: This article incorporates some findings from the 2011/12 The IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation (SRREN), which provides a comprehensive review concerning these sources and technologies, the relevant costs and benefits, and their potential role in a portfolio of mitigation options.
Led by Asia and other developing regions, the global wind market will grow at an annual cumulative capacity rate of more than 10 percent over the next five years, according to the Global Wind Energy Council (GWEC). In terms of annual markets for wind power, China is the leader and will remain in that spot for the foreseeable future. Read More
Even though the major wind markets of the past few years have slowed, overall global growth of wind energy will remain solid for the foreseeable future.
Jennifer Runyon, Chief Editor, RenewableEnergyWorld.com
April 10, 2014
New Hampshire, USA — Led by Asia and other developing regions, the global wind market will grow at an annual cumulative capacity rate of more than 10 percent over the next five years, according to the Global Wind Energy Council (GWEC). The group released its annual report yesterday and discussed its findings on a press call.
The Wind Market in 2013 — An “Off” Year
The past year was a rough one for wind enegy due to the fact that for the first time in history less wind energy capacity was installed in 2013 than was installed in 2012. From 1996 through to 2012, annual installed capacity for wind grew at an average rate of more than 20 percent but that percentage dropped dramatically in 2013 “caused by political uncertainty surrounding the tax laws in the U.S.,” according to Steve Saywer, GWEC Secretary General. The U.S. only installed about 1 GW of wind power in 2013, compared to more than 12 GW the year before. The chart below shows global annual installed wind capacity (courtesy GWEC).
In terms of annual markets for wind power, China is the leader and will remain in that spot for the foreseeable future, said Sawyer. “Germany had a very strong year as did the UK but probably for the first time in history, Canada installed more wind energy than the United States,” he said. Sawyer said that in 2014 Brazil could have a very good year. “It could be third next year.” The charts below (courtesy GWEC) show the top 10 countries for cumulative installed wind power today and the top 10 countries for annual installations of wind power in 2013.
When we look at cumulative installed capacity for wind power, however, a much brighter picture emerges, according to the GWEC report. In total, installed wind power capacity grew by 12.5 percent in 2013. “Not bad growth in cumulative terms,” said Sawyer, who added, “actually if you exclude the U.S. from the equation, we had modest growth in most parts of the world last year.” The chart below (courtesy GWEC) shows cumulative installed capacity for wind power. Today the world’s installed capacity for wind power sits at about 318 GW.
The Road Ahead – A Steady March into Emerging Markets
Looking at the top 10 countries in terms of cumulative installed capacity, China is way out in front, followed by the U.S., Germany, Spain, India and the UK. Sawyer sees this changing with more emerging markets installing more wind power capacity going forward. “India will overtake Spain in the relatively near future and probably by the end of this year we’ll have Brazil displace Denmark in the top 10,” he said. Sawyer added that “a number of emerging markets [will start] slowing moving up the top 10 chart as the years go by.”
One of the upsides of 2013 being a down year for annual installations is that 2014 is expected to be an excellent year for wind. GWEC predicts an annual growth rate of 34 percent in 2014 and a cumulative growth of 14.9 percent for this year with a total annual installed capacity of 47 GW. “After that we are projecting that things will return to more normal rates of growth,” said Sawyer. The chart below (courtesy GWEC) shows the market forecast for 2014 – 2018. Note that by the end of 2018, GWEC predicts that there will be just about 600 GW of installed wind power capacity, almost double where the industry is today.
Wind Around the World
Markets around the world will continue to install wind capacity with the biggest regions – Europe, North America, and Asia – still installing the lion’s share. In North America, Sawyer said that Mexico is a hot market for wind power. Sawyer explained that Mexico’s new energy reform legislation basically challenges the country to install about 2 GW of renewable energy capacity per year from now until 2024 to reach the target of 35 percent renewables by 2024 “and most of that is going to be wind,” he said.
Brazil is expected to double its wind power installed capacity in 2014, according to Sawyer. The country has a total installed capacity of 4 GW now and plans to install that much wind power in 2014. “The cumulative impacts of auctions and the build-out of the grid that is happening now is going to facilitate some fairly dramatic growth in Brazil over the next couple of years,” he said, adding that depending on what happens in the country’s elections and if Brazil can bring more stability to its economy, “it could be much larger.”
Another hot market for wind power is South Africa, according to GWEC. There is almost 1.2 GW of wind power either under construction or ready to start construction right now and another 800 MW that has been awarded a contract and is awaiting funding. “We expect [those 800 MW] to get financial close during the first half of this year,” said Sawyer. Sawyer said that the South African government has called for 9 GW of wind energy to be installed by 2030.
Sawyer mentioned other African markets such as Tanzania, Kenya and Ethiopia as poised for good growth in wind power. Ethiopia, in particular, has “some of the best wind resources in the world and has a fully developed plan to get up to about 7 GW by 2030,” he said.
Moving into Asia, Sawyer believes that there are many “potentially substantial” markets besides China, India and Japan. Even though it is one of the smallest in terms of population and electricity demand, Mongolia could be a very big wind market, said Sawyer. “There are tremendous opportunities for not only powering the growth in the country with the highest GDP growth rate in the world, but also exporting that power to China and through China to other countries in Asia,” he explained.
Vietnam, Pakistan and Sri Lanka all have excellent wind resources, a need for power, and projects coming online in the near future, according to Sawyer. In addition, Thailand has “a very good regime” for wind power, he said.
GWEC is watching the elections in India and remains optimistic that the country could end up with a much more “activist” government in terms of “developing the infrastructure that is necessary to spur significant growth in that very dynamic and growing economy,” said Sawyer.
In Latin America, beyond Brazil GWEC is seeing positive signs in Chile, Uruguay, Nicaragua, Panama, Costa Rica and some of the smaller Caribbean islands. The charts at the bottom of the page (courtesy GWEC) show the annual and cumulative market forecasts by region from 2013-2018.
Considerations for Manufacturers
Downward price pressure on wind turbines will continue, according to GWEC. The drive to be more competitive than “the incumbents” and the continued oversupply of turbines will keep pressure on manufacturers, straining margins and forcing them into new markets. Sawyer said that many companies were “hurt over the last several years” because their domestic markets took a hit. “They are realizing that being based in a single home market is a dangerous strategy,” he said.
Finally, unless and until there is a global carbon price, wind power won’t reach its maximum potential, said Sawyer. The 2015 climate meetings could result in such an agreement however even if one were to be put in place “we can’t expect that to have a major impact until sometime after 2020,” he said.
Without a global climate agreement, GWEC will remain focused on regional markets and legislation. The drivers that brought wind to where it is today remain in place, he said. Energy security, cost stability, local economic development and job creation are still some of the benefits that wind energy offers. These are “increasingly prominent” said Sawyer.
“And so we look forward to a strong signal from governments about our efforts to protect the climate but in the meantime we have to get on with it on a market-by-market basis,” he concluded.
According to Global Trends in Renewable Energy Investment 2014 – produced by the Frankfurt School-UNEP Collaborating Centre for Climate and Sustainable Energy Finance, the United Nations Environment Programme (UNEP) and Bloomberg New Energy Finance – the investment drop of $US35.1 billion was partly due to the falling cost of solar photovoltaic systems. The other main cause was policy uncertainty in many countries, an issue that also depressed investment in fossil fuel generation in 2013. Read more
Global Trends in Renewable Energy Investment 2014
The latest edition of this authoritative annual report tells the story of the latest developments, signs and signals in the financing of renewable power and fuels. Packed full of statistics, charts and illuminating narrative, it explores the issues affecting each type of investment, technology, region.
According to Global Trends in Renewable Energy Investment 2014 – produced by the Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance, the United Nations Environment Programme (UNEP) and Bloomberg New Energy Finance — the investment drop of $US35.1 billion was partly due to the falling cost of solar photovoltaic systems. The other main cause was policy uncertainty in many countries, an issue that also depressed investment in fossil fuel generation in 2013. Download the entire Report here.
Total investments fell in 2013 by 14% to $214 billion worldwide, reflecting significant cost reductions and the impact of policy uncertainty.
Solar PV, in particular, improved its cost-competitiveness: some 39GW were installed, up from 31GW in 2012, for fewer dollars invested.
The number of markets that can compete without subsidies is increasing.
Renewables excluding large hydro account for 43.6% of 2013’s newly-installed generating capacity.
Wind investments remained roughly the same, while solar PV outlays dropped 20% despite a record amount installed.
In 2013, China for the first time invested more in renewable energy than Europe.
Renewable energy investment in Japan increased by 80 % during the last year.
For the full report and more information go to the source.
Renewable electricity generation in the United States is projected to grow by 69 per cent from 2012 to 2040 in the Annual Energy Outlook 2014 reference case, including an increase of more than 140 per cent in generation from non-hydropower renewable energy sources. This was announced on the same day that the White House released the congressionally mandated National Climate Assessment, admitting that climate change is having a present-day, negative impact on Americans’ everyday lives and damaging the US economy as extreme weather brings flooding, droughts and other disasters to every region in the country. Read More
Taking America’s renewables temperature
GWENDOLYN BREDEHOEFT (7 May 2014):
CLIMATE RENEWABLE ENERGY SOLAR ENERGY WIND POWER
Renewable electricity generation in the United States is projected to grow by 69 per cent from 2012 to 2040 in the Annual Energy Outlook 2014 reference case, including an increase of more than 140 per cent in generation from nonhydropower renewable energy sources.
While projected hydropower generation is almost completely insensitive to alternative assumptions related to cost, policy, and general economic conditions, the level of nonhydropower renewable electricity generation varies significantly with different assumptions.
The 2014 outlook reference case is based on current laws and policies (including the expiration of laws with scheduled expiration dates), and known technology and demographic trends. Nonhydropower renewable generation projections are highly sensitive to assumptions regarding policies that affect the attractiveness of renewable technologies (such as the production tax credit for certain renewable generation technologies), the costs and performance of the technologies, the costs of competing generation sources, and general macroeconomic conditions. In order to address such uncertainties, the 2014 outlook includes alternative cases that provide insight regarding the direction and magnitude of sensitivities in the projections to shifts in assumptions.
These side cases include:
– An extension of policies such as the production and investment tax credits through the end of the projection period (No Sunset)
The application of a $25/metric ton fee on carbon dioxide emissions that increases 5 per cent each year until the end of the projection period (GHG25)
– Higher/lower growth in demand for electricity resulting from higher/lower economic growth rates (High/Low Macroeconomic Growth)
– Lower renewable technology costs (Low Renewable Technology Cost)
– Higher/lower natural gas prices resulting from lower/higher oil and gas resource assumptions (High/Low Oil and Gas Resource)
– Changing these key assumptions can significantly affect projections for nonhydropower renewable electricity, particularly in the later years of the projection. For example, in the GHG25 case, total nonhydropower renewable generation in 2040 is 83 per cent higher than in the Reference case, and in the High Oil and Gas Resource case, total nonhydropower renewable generation in 2040 is 12 per cent lower than in the Reference case.
Although nonhydropower renewable generation more than doubles between 2012 and 2040 in the AEO2014 Reference case, its contribution to U.S. total electricity generation is still just 16 per cent, well behind the natural gas and coal shares of 35 per cent and 32 per cent, respectively. In contrast, renewables account for 24 per cent and 27 per cent, respectively, of total electricity generation in 2040 in the No Sunset and GHG25 cases. In fact, renewable penetration of electricity supply in both cases meets or surpasses 16 per cent by 2020, which is the level attained in the Reference case by 2040. Some additional results include the following:
The responsiveness of EIA’s nonhydropower renewable electricity projections to these particular uncertainties is not necessarily symmetric. Changing these key assumptions can lead to significantly higher levels of renewable electricity generation, but generally do not result in renewable generation levels significantly below Reference case projections.
Changing key assumptions generally affects long-term nonhydropower renewable electricity projections to a much greater degree than near-term projections.
Individual renewable technologies are not proportionately affected by changes in key assumptions. Solar and wind generators are generally more responsive to assumption changes than biomass, waste, or geothermal generators.
Additional analysis can be found in the Issues in Focus discussion of variations in nonhydropower renewable electricity projections.
This Issues in Focus article is intended to emphasize that there is a great deal of uncertainty related to factors such as policy, project costs, and natural gas prices – and that a shift in any of these factors could significantly change EIA’s renewable projections, generally in the positive direction. However, even in the 2014 outlook reference case, EIA projects that more than 15 gigawatts of new wind capacity would be able to take advantage of the extension of the production tax credit, which is available to projects starting construction or in significant development before January 1, 2014. In comparison, recent reports from the American Wind Energy Association indicate that as much as 12 GW of wind projects met that deadline and are currently in the construction pipeline.
Originally published on the US Energy Information Administration.
Climate change already hurting economy
ALICIA MUNDY & COLLEEN MCCAIN NELSON (7 May 2014):
CLIMATE POLICY & POLITICS SCIENCE & ENVIRONMENT
Dow Jones Newswires
Climate change is having a present-day, negative impact on Americans’ everyday lives and damaging the US economy as extreme weather brings flooding, droughts and other disasters to every region in the country, a federal advisory committee has concluded.
The congressionally mandated National Climate Assessment, produced by more than 300 experts overseen by a panel of 60 scientists, concludes that the nation has already suffered billions of dollars in damages from severe weather-related disruptions, which it says will continue to get worse.
The document, considered the most comprehensive analysis of the effects of climate change on the US, is to be released by the climate advisory panel after a final vote Tuesday morning. President Barack Obama is planning to promote it in a series of events this week calling for action to combat the trend, and using the report to bring public attention to climate change-related problems.
“The findings in this National Climate Assessment underscore the need for urgent action to combat the threats from climate change, protect American citizens and communities today, and build a sustainable future for our kids and grandkids,” the White House said.
The report, by the Federal National Climate Assessment and Development Advisory Committee, details the effects of climate change on every state in the country and every sector of the economy, from rapidly receding ice in Alaska to heat waves and coastal flooding in the Northeast. Rising seas in the South put major cities such as Miami at risk, it says.
The report says it isn’t too late to implement policies to reduce the carbon emissions that cause greenhouse gases, and calls on governments at all levels to find ways to lower emissions, particularly from energy production. The report also emphasises adaptation — the notion that society needs to find ways to prepare for and adjust to some of the changes.
The report pins much of the increase in climate change on human behaviour and resource usage patterns designed to highlight problems even at the community level. Superstorm Sandy which destroyed much of northern New Jersey’s beaches in 2012, and the heat wave in the Midwest are among examples the administration will use this week to try to raise concerns among average Americans about climate change.
“Every American will find things that matter to them in this report,” said one of the lead authors, Donald Wuebbles, a professor of atmospheric science at the University of Illinois.
The last climate assessment, released in 2009, said generally that climate change is affecting the country. The new report, Mr Wuebbles said, shows how further shifts in each area could hurt sectors of the economy such as transportation or force local populations to move.
The White House campaign to publicise the report will include eight television meteorologists. Americans feel “comfortable” with local weather reporters, who can discuss climate change warnings without being politicised, said an administration official.
The president will do one-on-one interviews Tuesday with NBC Today Show co-anchor Al Roker and ABC Good Morning America’s Ginger Zee, as well as some regional weathercasters, said the official.
Several authors said the strong warnings in the assessment weren’t presented to “scare” people, but to convey the importance of preparation and mitigation in, for example, US ports.
But the report will almost certainly generate pushback from conservatives, some who say that proposed mitigation measures cost business too much and will hurt the nation’s economic recovery, and others who say it exaggerates the problem altogether.
Those concerned about climate changes applauded the assessment. The authors, “show the urgency of climate change issues in major cities and small towns across the country,” said Daniel J Weiss, senior fellow at the liberal-leaning Center for American Progress. He said the report is too specific about effects such as droughts, eroding shore lines and flooding to be ignored.
The national climate assessment was mandated by Congress in 1990 as a quadrennial review. Environmental issues haven’t been among recent administrations’ hottest issues. There have only been two other reports, in 2000 and in 2009. It doesn’t offer specific remedies because of its limited scope but does suggest a need for urgency.
The report bolsters tough air and water pollution limits promoted by Mr Obama, administration officials said. Its release could help buffer backlash from new regulations restricting carbon emissions from the US existing coal-fired power plants, due to be unveiled the beginning of June.
Climate change also presents an election-year conundrum for the president, as global warming ranks low among the public’s priorities and poses problems for Democratic candidates aligned with the energy industry.
A Wall Street Journal/NBC News poll in January found that climate change ranked last on a list of 15 issues when people were asked what the administration should make its priorities. Only 27 per cent of respondents said addressing climate change should be an absolute priority this year, with 41 per cent saying that it could be delayed until next year and 29 per cent saying it shouldn’t be pursued.
“The issue has ranked relatively low, because the threat is abstract,” said Daniel J Weiss, senior fellow at the liberal-leaning Center for American Progress. The White House will argue that the impacts are real and immediate, he added.
John Podesta, a top White House adviser on climate change, said there was overwhelming evidence it already is affecting people’s lives.
“If you…want to try to side with the polluters and argue to the American public that climate change is not happening today, tomorrow and certainly in the future, that’s going to be a losing argument,” he said.
The new assessment is getting very different treatment than its predecessor, released in June 2009, with almost no fanfare.
The report’s rollout also serves as the curtain-raiser for new regulations limiting carbon emissions from existing coal-fired power plants, which will be released in early June by the Environmental Protection Agency.
GOP lawmakers and coal-state Democrats already tried to derail emission limits for new coal plants, which were released earlier this year. For months, coal-industry lawyers have been preparing maneuvers to stop rules for existing plants.
The rules might prove tricky for Democratic candidates in conservative and coal-rich states.
Mr Podesta said Democrats should argue they have bolstered oil and gas production while backing clean energy. Kevin Book, managing director at analysis firm ClearView Energy Partners, said Mr Obama’s focus on climate may help red-state Democrats as an issue on which they can distance themselves from the president.
Renewable Energy Project Resource Center is a platform created in partnership with Energypedia and the World Bank to bring together documents on renewable energy projects in developing countries and to remove knowledge barriers as well as address the crucial question of how universal and sustainable energy access for all can be achieved. Read More
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