www.teitimes.com
May 2019 • Volume 12 • No 3 • Published monthly • ISSN 1757-7365
THE ENERGY INDUSTRY TIMES is published by Man in Black Media • www.mibmedia.com • Editor-in-Chief: Junior Isles • For all enquiries email: enquiries@teitimes.com
Sleepless nights? Getting closer
Energy storage and digitalisation are
two areas that are keeping energy
executives awake at night.
Page 13
Europe’s Clean Energy Package
should bring markets closer together
but some of its provisions need further
clarication. Page 14
News In Brief
Wind to become “truly
global market” in ve years
The Global Wind Energy Council
forecasts that 300 GW of new wind
capacity will be added globally by
2024.
Page 2
Opportunity Zones offer tax
breaks
A tax break offered to investors in
so-called ‘Opportunity Zones’ may
provide extra capital for renewable
energy developers in the USA
as other support mechanisms are
phased out.
Page 4
Coal still part of balanced
energy mix
The Philippines still sees coal as an
important part of its future energy
mix, as developers continue to
outline plans for future coal red
power plants.
Page 6
Ofgem addresses supplier
rules
A series of company collapses in the
UK’s energy retail sector has forced
the regulator to revise the rules for
new entrants.
Page 7
Congo wins support for
green mini-grid
The Democratic Republic of
the Congo is to boost off-grid
renewables with the implementation
of a green mini-grid programme.
Page 8
EC nes GE over
‘misleading’ LM information
GE will pay a €52 million ne
following an investigation by
the European Commission into
information provided by the
American rm during its 2017
takeover of LM Wind.
Page 9
Technology: GT26 gets a
HE upgrade
GE has launched a signicant
upgrade for the GT26 gas turbine.
The high efciency (HE) upgrade
will deliver improved efciency,
power output and exibility while
reducing maintenance costs for its
customers – the rst of which will be
Uniper, at its plant in Eneld, UK.
Page 15
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The EU has concluded negotiations on its Clean Energy Package but recent research shows that
National Plans might not deliver the previously agreed 32 per cent renewables target. Junior Isles
Financial sector warned on climate risks
THE ENERGY INDUSTRY
TIMES
Final Word
We live in a rebellious
climate, says Junior Isles.
Page 16
Europe’s draft National Energy and
Climate Plans are insufcient to de-
liver the EU’s 32 per cent renewables
target for 2030, according to analysis
released by WindEurope.
The analysis shows that some EU
countries are pledging to deploy
good volumes of wind in their Plans.
But the Plans are badly lacking in the
detailed policy measures that will de-
liver these pledges – which means the
pledges are not meaningful, says the
organisation.
WindEurope CEO Giles Dickson
said: “Europe has a clear target: 32 per
cent renewable energy by 2030. Each
country has now drafted a National
Plan saying how they’ll contribute to
this. But none of the Plans properly
spell out the policy measures by which
countries will deliver on the objec-
tives they outline.”
European countries agreed last year
to draw up National Energy and Cli-
mate Plans to ensure Europe delivers
on its climate and energy targets.
WindEurope’s analysis rates every
country either insufcient or poor for
the policy measures outlined in the
draft Plans.
Most of the draft Plans give no
long-term visibility on renewable en-
ergy auctions, doing little to support
investment certainty. Only Germany
provides an auction schedule to 2030.
Nor does any country commit to
simplifying rules on planning and per-
mitting, such as common sense re-
strictions on distance or wind turbine
tip height. This is key, as obtaining
permits for new wind farms is becom-
ing increasingly difcult and more
expensive in many parts of Europe.
The National Plans are supposed to
detail not only new renewables capac-
ity but also what countries will do
with renewables that come to the end
of their operational life between now
and 2030. For wind the latter is up to
60 GW. But no country provides poli-
cies to deal with this. And only six
countries even recognise the issue
(Belgium, Denmark, France, Germa-
ny, Italy and Spain), said WindEurope.
Another issue the Plans need to ad-
dress is how to get more renewables
into heating and transport. This is es-
sential for the decarbonisation of en-
ergy, because heating and transport
accounts for three quarters of energy
consumption. But the draft Plans pro-
vide few detailed proposals or mea-
sures for electrifying heating and
transport. No European country has
planned to simplify corporate renew-
able Power Purchase Agreements
(PPAs), which is explicitly mandated
in the Renewable Energy Directive.
The report came as the EU ratied
its Clean Energy for All Europeans
Continued on Page 2
A recent report has warned that climate
change could wipe out $20 trillion
worth of assets globally.
According to the report by the Net-
work for Greening the Financial Sys-
tem (NGFS), there is still a signicant
amount of analytical work to be done
in order to equip central banks and
supervisors with appropriate tools to
identify, quantify and mitigate cli-
mate risks in the nancial system. To
address the issue, the NGFS says it
will prepare a number of technical
documents.
The report provides a number of rec-
ommendations for central banks and
supervisors, including integrating cli-
mate related-risks into nancial sta-
bility monitoring and micro-supervi-
sion. It also recommends bridging the
gap by making climate-related data
publicly available.
Following this report, an open letter,
published on behalf of the Bank of
England, Banque de France and the
Network for Greening the Financial
System, called for the nancial com-
munity to act on recommendations
provided by the NGFS to ensure the
transition to a low carbon economy.
The letter, in support of the report,
states that the catastrophic effects of
climate change are “clearly visible”
around the world and that nancial
policy makers and prudential supervi-
sors cannot ignore the “obvious” risks.
Banks have already been taking ac-
tion to reduce carbon-related assets.
In recent months, there has been a
growing wave of nancial institutions
announcing they would either tighten
rules on nancing new coal red
plants or not nance them at all.
In April, Standard Bank became the
latest nance corporation to stop -
nancing coal red power plants in the
future, unless they met strict parame-
ters set by the bank. It was the second
to do so in the space of a week.
Energy expert Chris Yelland said it
appeared as if all the major banks
were pulling out of funding coal red
plants. “Nedbank, First Rand, and
now Standard Bank – which has been
on the cards for some time – have all
pulled out.” Standard explicitly stated
it would not be funding the Thabam-
etsi or Khanyisa plants in South Afri-
ca. “It is a signicant move by all the
banks as they are under pressure not
to nance independent coal power
producers,” said Yelland.
In late March, UBS Group AG said it
would no longer provide project-level
nance to new coal red power plants
around the world, as it outlined tighter
rules on funding such transactions.
Switzerland-based UBS noted it
will only nance existing coal red
operators – dened as being more
than 30 per cent reliant on coal – that
have a transition strategy that sup-
ports the Paris climate agreement, or
transactions that are related to renew-
able energy. UBS said its carbon-re-
lated assets amounted to $2.7 billion
in 2018, down from $6.6 billion a year
before. Climate-related sustainable
investments totalled $87.5 billion, up
from $74 billion in 2017.
National Plans
will not deliver
renewables
target
WindEurope’s Giles Dickson says none of the
plans properly spell out policy measures
THE ENERGY INDUSTRY TIMES - MAY 2019
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The Philippines still sees coal as an
important part of its future energy mix,
as developers continue to outline plans
for future coal red power plants.
In April, San Miguel Corp. (SMC)
announced that it intends to continue
developing clean coal power plants.
SMC Global Power said it plans to
expand its portfolio through strategic
development of greeneld power proj-
ects and acquisition of existing power
plants.
In setting up new projects, SMC said
it would not close the door on coal red
power plants, particularly clean coal
technology, which it says “remains the
most reliable and cost-efcient fuel
source for greeneld power projects”.
The company said it would therefore
continue to consider putting up the
4x150 MW circulating uidised bed
(CFB) coal red power plant in Mariv-
eles, Bataan, and the 600 MW coal
power plant in Pagbilao, Quezon.
Separately, Aboitiz Power Corp.
also indicated it would continue to
invest in thermal power generation.
Last month it inked a $300 million
facility agreement with four interna-
tional banks to partially nance its
acquisition of a share in AC Energy
Inc.’s thermal portfolio.
“The proceeds of the loan will be used
to partially nance the acquisition by
Aboitiz Power of a 49 per cent voting
stake and 60 per cent economic stake
in AA Thermal Inc.,” the power rm
said.
Under the deal, Aboitiz Power will
take stakes in GNPower Mariveles
Coal Plant Ltd. Co., the owner and op-
erator of an operating 2x316 MW coal
plant in Mariveles, Bataan, and in GN-
Power Dinginin Ltd. Co., the devel-
oper and owner of a 2x668 MW super-
critical coal plant project in Dinginin,
Bataan currently under construction.
Aboitiz Power COO, Emmanuel Ru-
bio, said: “Aboitiz Power is committed
to addressing the country’s energy tri-
lemma of adequate supply, cost of
power, and protection of the environ-
ment. This is part of our strategy to
reach our 4000 MW net attributable
capacity by 2020 through our balanced
mix strategy.”
The company also announced that it
has opened a new coal red power
plant in Toledo City, Cebu, which will
add 170 MW of supply in Visayas.
The second unit of the project will be
online in May to add another 170 MW.
The project uses CFB technology
and best available control technology
to minimise emissions.
Meanwhile, nal work is ongoing
on the 335 MW Unit 3 expansion of
the Masinloc power plant. The plant
being built by SMC is expected to
commence commercial operation
during 2Q of 2019.
While announcing its continued
commitment to coal, SMC noted,
however, that it is also focused on
investing in battery energy storage
systems (BESS) and renewable en-
ergy projects as part of its objective
to operate in an environmentally re-
sponsible manner while considering
energy security and affordability.
“SMC Global Power also actively
seeks to identify and pursue renewable
energy investments in hydro electric
and solar projects, subject to the out-
come of viability and feasibility analy-
ses,” the rm said. Last year, SMC
President and COO Ramon Ang said
the company is targeting up to 10 000
MW of new renewable energy capac-
ity in the next 10 years.
Syed Ali
Australia is making progress in trans-
forming its energy sector, with signi-
cant announcements that demonstrate
its continued shift towards a cleaner,
more advanced power sector.
In late March Queensland celebrated
the state’s rst ever delivery of green
hydrogen to Japan, marking a signi-
cant step forward for its hydrogen in-
dustry. The Queensland government
also said it plans to release its Hydrogen
Strategy later this year.
Exported by JXTG, Japan’s largest
petroleum conglomerate, the hydro-
gen was produced at QUT’s solar cell
facility, located at the Queensland gov-
ernment’s Redlands Research Facility.
“This demonstration of renewable
hydrogen being successfully exported
overseas is an exciting rst step in pro-
ducing and exporting hydrogen at a
commercial scale in the future,”
Queensland Premier Annastacia
Palaszczuk told Parliament during a
hydrogen showcase event. “My gov-
ernment’s commitment to backing
renewable resources combined with
our existing gas pipeline infrastructure
and export facilities make us the ideal
state to lead the future production and
export of hydrogen,” she added.
Palaszczuk also announced $250 000
in funding for the establishment of a
renewable hydrogen pilot plant at the
Redlands Research Facility.
The use of solar to produce hydrogen
is further evidence of the importance
of solar in the country’s energy future.
In a move that will be signicant in
advancing solar deployment, in April
Oxamii, a startup based in Adelaide,
announced that an online platform to
connect medium to small-scale solar
energy producers with independent
electricity buyers will launch in the
coming months in South Australia.
The company said it has developed
a system to make it easier for owners
of solar arrays producing a minimum
of 200 kW to sell power on the spot
market.
Founders Aaron Yew, Luke Marshall
and Ray Carclaw have secured a num-
ber of investors for the online platform
and plan to launch before July.
Their platform connects buyers and
purchasers by making Oxamii the
agent that monitors energy ows,
calculates bills and manages loads for
its customers.
Oxamii is targeting farmers who have
existing solar energy they want to sell
on the market, or farmers looking at
gaining a second source of income
through establishing a solar farm.
n Australian researchers are develop-
ing short-term weather forecasts for
solar farms to help them precisely
predict output as little as ve minutes
in advance. The $A1.2 million proj-
ect, which ofcially started in April,
will use data generated by real-time
sky cameras, satellite images and sta-
tistical modelling to design a world-
rst, short-term forecasting model to
more accurately predict weather con-
ditions from ve minutes up to two
hours. University of South Australia
Professor of Environmental Mathe-
matics John Boland said inaccurate
short-term forecasts relating to wind
and solar generation have cost Aus-
tralia’s renewable energy sector about
$5 million in the past decade. He said
precise self-forecasting would also
help solar farms with battery storage
capabilities predict when best to sell
or store their electricity.
6
THE ENERGY INDUSTRY TIMES - MAY 2019
Asia News
Australia continues to
transform energy sector
Coal still part of balanced
energy mix
Progress with plans for new coal red plants illustrate the Philippines’ desire to keep coal as part of its energy mix.
Syed Ali
Pakistan is planning to increase the
share of renewables in its total power
generation mix to 30 per cent by 2030
under a plan suggested by the country’s
new government.
In a recent announcement the World
Wind Energy Association (WWEA)
proposed to lift that share from the
current 4 per cent by enhancing gen-
eration from wind, solar, small hydro
and biomass plants. The share of large-
scale hydropower (more than 50 MW)
is also set to expand to 30 per cent
from around the current 25 per cent.
Pakistan’s Cabinet Committee on
Energy is expected to approve the
country’s 2019 renewable energy
policy that will include all future re-
newable energy projects. According to
WWEA the government’s plan to have
around 18 GW of installed renewable
energy capacity by 2030 could limit
the expansion of coal red capacity
of over 5 GW. It also noted that the
new policy should include a strategic
action plan creating a favourable en-
vironment for coordination between
various departments in the renewable
energy sector.
During the last week of February,
the Cabinet Committee on Energy
(CCoE), chaired by the Finance Min-
ister, approved proposals from the
Ministry of Energy (Power Division)
for all future renewable energy proj-
ects to be treated under the Renewable
Energy Policy 2019. The new policy,
whose guiding principles have al-
ready been approved by the CCoE, is
being reviewed by different stake-
holders and will be formally adopted
by the CCoE later.
Pakistan looks to
boost renewables
share
The Vietnamese government is aiming
to raise wind power capacity to 1000
MW by 2020 and 6200 MW by 2030
with a view to optimising the use of
this renewable energy for enhancing
the country’s socio-economic develop-
ment and energy security.
In a bid to step up green growth and
sustainable development, Vietnam has
been accelerating wind power expan-
sion with existing wind farms yielding
a combined capacity of 197 MW.
In addition, construction on many
wind farms has begun, which is ex-
pected to increase the total capacity
to 263 MW. Many more projects are
waiting for approval from authorities.
Once granted, these would add a total
capacity of 412 MW.
As much as 4236 MW to be produced
by wind farms nationwide has been
added to the country’s power develop-
ment plan while there are some 10 279
MW of wind projects registered.
Most recently, German wind, solar
and decentralised project developer
EAB New Energy GmbH announced
the inauguration of the 37.6 MW Mui
Dinh wind power plant. Ninh Thuan
has attracted many wind and solar
power projects, with a combined ca-
pacity of 2800 MW. As many as 18
solar projects and three wind power
plants are under construction in the
locality. Nine projects with a combined
capacity of 600 MW were scheduled
to go into operation this month.
Vietnam has set a goal of 10 per cent
renewables integration by 2030 and
took an important step to facilitating
that goal with the award of a battery
storage feasibility study to GE’s En-
ergy Consulting business. The study is
being funded by the US Trade and De-
velopment Agency (USTDA).
Vietnam eyes more wind power capacity
n First ever delivery of green hydrogen to Japan
n Online platform will make it easier for small solar
generators to sell power on spot market
THE ENERGY INDUSTRY TIMES - MAY 2019
9
Companies News
Siân Crampsie
German wind turbine maker Senvion
has shored up its nances with a €100
million loan facility from its main lend-
ers and bond holders.
The loan came in mid-April and just
days after Senvion said it had led an
application in Germany for self-ad-
ministration proceedings, a pre-emp-
tive insolvency process.
In a statement dated April 17, Sen-
vion said the 12-month, €100 million
debtor-in-possession (DIP) facility has
“received board approvals and allows
substantial drawings already this week,
thus enabling the company to stabilise
its business operations and provide
funds to its non-insolvent subsidiaries.”
The company added that it would
stay in the self-administration pro-
ceedings, which enable its manage-
ment to retain control of the business
with oversight from a supervisor act-
ing on behalf of creditors.
“We would like to thank both our
lenders and main bond holders for their
support in agreeing to provide us with
a DIP facility that will enable us to
continue our operations,” said Chief
Executive Yves Rannou.
Rannou said that the loan facility
was “particularly helpful” as the com-
pany had managed to signicantly
increase installations in the rst quar-
ter of 2019, installing 366 MW world-
wide in the period, more than twice as
much as a year ago.
Deployments included 120 MW in
Chile and Argentina and nearly 110
MW in Australia. Senvion also built
and installed its rst turbine in India.
Senvion embarked on a restructur-
ing programme in January 2019 and
maintains that it has a fundamentally
sound and strong business model. The
trading environment for wind turbine
makers has been challenging, how-
ever, with strong competition and fall-
ing prices globally.
Senvion has also faced delays and
penalties related to big projects. It has
over €1 billion of debt. Its transforma-
tion plan includes programmes to re-
focus operations, concentrate on the
most attractive markets, streamline the
product portfolio, improve installation
execution and realise efciency gains
in the service business.
At the end of rst quarter 2019, Sen-
vion’s total installed capacity under
service amounted to 14.1 GW. It main-
tains close to 80 per cent of this capac-
ity, with an order book of around €2.8
billion.
Battery rm Saft says that a new joint
venture will help it to expand its op-
erations and meet growing demand
for its products in China’s electric
vehicle (EV) and energy markets.
Saft, a subsidiary of French energy
giant Total, has created a joint venture
with Chinese rm Tianneng Energy
Technology (TET) to expand lithium
ion (Li-ion) battery manufacturing in
China.
The joint venture will be 60 per cent
owned by TET and 40 per cent by Saft,
with manufacturing based at the
Changxing gigafactory, with a poten-
tial capacity of 5.5 GWh. It will pri-
marily focus on the development,
manufacturing and sales of advanced
Li-ion cells, modules and packs for
China and worldwide markets.
E-bikes and EVs, as well as energy
storage solutions (ESS) will be the
target markets, Saft said.
“This is a rst strategic move driven
by Total, following the acquisition of
Saft in 2016, to grow Saft’s activity
in China, the world’s largest renew-
ables market, as well as in the ESS
segment as an essential component to
the large scale development of inter-
mittent renewable energies,” said
Patrick Pouyanné, Chairman and
CEO of Total. “The joint venture will
allow Saft to join forces with a Chi-
nese partner, a world leading lead acid
battery manufacturer, willing to de-
velop its lithium-ion activities.
“It will also give Saft access to Chi-
na’s booming battery market as well
as highly-competitive mass produc-
tion capacity to accelerate its growth.”
“We are delighted to start building
a long-term partnership with Tian-
neng with a shared industrial vision,”
said Ghislain Lescuyer, Saft CEO.
“This joint venture will allow us to
make a step-change and signicantly
increase our footprint in the Chinese
Li-ion market that will represent over
40 per cent of the global demand by
2025 and to develop our worldwide
activities.”
Statkraft is to join up with energy stor-
age rm redT energy plc in a new part-
nership that will offer solar-plus-stor-
age solutions for UK commercial and
industrial clients (C&I).
The two companies have signed
heads of terms to partner on the project
that will see them install solar panels
with redT battery storage at no upfront
cost. The move will mark the rst time
such a product, nanced under a pow-
er purchase agreement (PPA), is of-
fered on the UK market, according to
a statement from redT last month.
The companies will initially install
10 MWp of solar photovoltaic (PV)
capacity and 6 MWh of battery storage
capacity, and are aiming to increase the
size of the portfolio to 100 MWp and
60 MWh over the next three years.
They will sell the generated electric-
ity from the facilities under 25-year
power purchase agreements (PPAs)
with Statkraft. The latter will also pro-
vide exibility optimisation services
using its in-house virtual power plant.
“With this roll out of low cost solar
coupled with heavy cycling, ow ma-
chine technology, we hope to acceler-
ate the deployment of energy storage
providing low-risk energy savings to
commercial energy users, and creating
an effective, hedge against rising en-
ergy prices,” said Neil O’Brien, ex-
ecutive chairman of redT.
Statkraft and redT estimate the C&I
users opting for the new product will
be able to reduce energy costs by up to
20 per cent over the 25-year term of
the PPA.
n Statkraft says it will stop investing
in wind power in Norway after it com-
missions three new wind farms in the
country. It plans to complete the Fosen,
Kvinesdal and Remmafjellet projects
before shifting focus to building main-
land-based wind farms in other coun-
tries in Europe, South America and
Asia. The move is due to falling pow-
er prices in its home market.
GE will pay a €52 million ne follow-
ing an investigation by the European
Commission into information pro-
vided by the American rm during its
2017 takeover of LM Wind.
The European Commission says that
GE provided misleading information
to regulators who were reviewing the
$1.65 billion takeover of the Danish
rotor blade manufacturer. “Our merger
assessment and decision-making can
only be as good as the information that
we obtain to support it,” said Commis-
sioner Margrethe Vestager, in charge
of competition policy. “Accurate infor-
mation is essential for the Commission
to take competition decisions in full
knowledge of the facts.
“The ne imposed… on General
Electric is proof that the Commission
takes breaches of the obligation for
companies to provide us with correct
information very seriously.”
EU merger regulations require com-
panies to provide correct and non-
misleading information for merger
investigations. According to the Euro-
pean Commission, GE notied it of its
plans to buy LM Wind in January 2017,
but said that it did not have any higher
power output wind turbine for offshore
applications in development beyond
its existing 6 MW turbine.
However, through information col-
lected from a third party, the Commis-
sion found that GE was simultane-
ously offering a 12 MW offshore wind
turbine to potential customers.
GE then withdrew its notication of
the acquisition of LM Wind, and later
GE re-notied the same transaction,
this time including complete informa-
tion on its future project.
The European Commission ap-
proved the deal in March 2017.
The Commission can impose nes of
up to one per cent of the aggregated
turnover of companies, and takes into
account the nature, gravity and dura-
tion of infringements.
“GE committed an infringement by
negligently providing incorrect infor-
mation in the merger notication
form,” the Commission said in a state-
ment. “The Commission considers that
this infringement is serious because it
prevented it from having all relevant
information for the assessment of the
transaction.
“Moreover, the Commission con-
siders that GE, with whom it had
continuous contacts during the merg-
er review process, especially on the
subject of GE’s pipeline products in
this market, should have been aware
of the relevance of the information
for the Commission’s assessment,
and of its obligations under the merg-
er regulation. Therefore, GE’s breach
of procedural obligations was a seri-
ous infringement.
“On the basis of these factors, the
Commission has concluded that an
overall ne of €52 million is both de-
terrent and proportionate.”
EC nes GE over
‘misleading’ LM
information
Saft targets
China for battery
scale-up
Statkraft tie-up with redT for solar-plus-storage
The signing of a 12-month, €100 million loan facility has given Senvion the lifeline it needs to continue operations and
complete its planned business transformation.
n LM merger approval stands
n Fine in line with “serious infringement”
Senvion stabilises with
loan deal
contributing to the discussion on
how to implement Citizens Energy
Communities.
As part of the governance regula-
tion, the national energy and climate
plans should become valuable tools in
assessing collective progress towards
2030 targets and electrication. Eur-
electric is currently analysing the
draft plans and will advise the Com-
mission based on the ndings. For
instance, it is of critical importance
that these plans are clear about how to
increase the level of electrication but
also that they assess the potential im-
pact of other policy tools on the EU
Emissions Trading System, the Euro-
pean CO
2
market.
Beyond the improvements brought
by the CEP, major investment chal-
lenges lie ahead. In a world with
ramping shares of renewables, a low
level of wholesale price, including an
increase of close to zero or negative
prices, there is a need to ensure energy,
exibility and reliability are properly
valued. In several countries, there are
inadequate price signals both for the
closure of plants and for new invest-
ments, including those that are needed
to ensure security of supply and ex-
ibility. It is unlikely that the CEP will
provide the necessary long-term in-
vestment signals for a cost-efcient
energy transition.
Eurelectric will soon publish its
analysis of the investment environ-
ment in the EU power sector and its
diagnosis of the improvements
brought by the CEP. Under the man-
date of the incoming European Com-
mission, Eurelectric will also focus
on the review of the energy and envi-
ronment state aid guidelines, taking
stock of the great achievements of the
power sector, and the challenges and
opportunities lying ahead.
Infrastructure will also be a key is-
sue: which type of infrastructure
should be deployed and where should
structural funds go? An electric, inter-
connected and digital network will be
the backbone of a society where
transport is increasingly electric,
buildings become smarter and ef-
cient, and where industrial sectors
adopt electrication, clean hydrogen
or power-to-X. This topic will be
critical under the next mandate of the
European institutions.
This is the year of revitalisation.
With new policymakers making their
debut in Brussels, we all take stock of
what was achieved and establish for-
ward looking goals. Who will lead the
electrication agenda?
On 20 and 21 May, in Florence,
utility CEOs and industry captains
will come together with thought lead-
ers, disruptors, customers, policy-
makers, consultants and think-tanks
at this years Eurelectric Power
Summit to discuss the multi-level as-
pects of “New Leadership”. Climate
change, customers’ proactivity, in-
dustry adaptations, technological in-
novations – all have a say about to-
morrow’s New Leadership.
Blandine Malvault is Advisor Whole-
sale Markets & Network Codes, Eur-
electric; Marion Labatut is Eurelec-
tric’s Director of Policy Issues.
T
he Paris agreement has set clear
objectives to limit the rise of
global temperatures and to pur-
sue efforts to stay below 1.5°C. The
European Union (EU) has so far com-
mitted for 2030 to a reduction of emis-
sions of at least 40 per cent below 1990
levels, while establishing targets for
energy efciency and renewable en-
ergy sources (RES).
In view of dening its trajectory
towards 2050, the European Com-
mission published its ‘Strategic
long-term vision for a prosperous,
modern, competitive and climate-
neutral economy’, last November.
The document outlines six scenarios
for 80 and 90 per cent greenhouse gas
(GHG) emissions reductions and two
scenarios where Europe moves to-
wards carbon-neutrality by 2050.
Change and commitment are also
visible at the level of Member States.
While Sweden has pledged for car-
bon-neutrality, Austria has an-
nounced to have a 100 per cent re-
newable production of electricity by
2030. France has also introduced
legislation to achieve carbon-neutral-
ity by 2050.
The electricity sector is leading
Europe’s energy transition. Today, 60
per cent of the electricity produced in
Europe comes from carbon-neutral
sources and the EU electricity sector
forcefully spearheads the energy
transition. Speeding up its own decar-
bonisation process, the industry has
pledged to become carbon-neutral
well before 2050 and to help other
sectors decarbonise through electri-
cation. This will require massive in-
vestments throughout Europe and
rely on the involvement of govern-
ments and regulators to ensure speedy
implementation of the Clean Energy
Package (CEP). The different starting
points of Member States in terms of
energy mix will also have to be taken
into account to ensure a fair and in-
clusive transition. The commercial
availability of transition-enabling
technologies will also be critical.
Eurelectric’s recent ‘Decarbonisa-
tion Pathways’ study nds that the
electrication of transport, buildings
and industry is the most sensible way
to curb emissions. In practice, this
means that to achieve deep decar-
bonisation of the EU economy, 60 per
cent of all nal energy consumption
has to be electric. To get there, elec-
tricity will massively turn to renew-
ables. By 2045, the electricity gener-
ated from RES is indeed expected to
be over 80 per cent.
Eurelectric’s study shows the mag-
nitude of the investments needed to
deliver on this journey. On average, a
total capital investment of €89-111
billion per year in generation and
storage will be necessary. According
to the European Commission Long
Term Strategy, if Europe moves to-
wards reaching net zero emissions by
2050 additional annual investments
in power grids will amount to around
€90-100 billion.
Over the past few years, there have
been efforts to establish a single Eu-
ropean electricity market that allows
for price signals to trigger invest-
ments. Some headway has certainly
been made. For instance, the 2009
Third Energy Package introduced
network codes to harmonise whole-
sale market rules, improve cross-
border capacity management and
streamline system operation.
Yet, there is still a patchwork of
nationally regulated energy systems,
which hinders the prospect of a real
level playing eld at European level.
National solutions are mostly a real-
ity for what concerns support
schemes for RES, capacity mecha-
nisms, generation taxes and retail
price regulation.
The recently adopted Clean Energy
Package continues to improve the
level of integration in the European
electricity market. Miguel Arias Ca-
ñete, EU Commissioner for Climate
Action and Energy, celebrated the
agreement, saying: “The agreement
on the future electricity market design
is a vital part of the package. The new
market will be more exible and fa-
cilitate the integration of a greater
share of renewable energy. An inte-
grated EU energy market is the most
cost-effective way to ensure secure
and affordable supplies to all EU citi-
zens. The new rules will create more
competition and will allow consum-
ers to participate more actively in the
market and play their part in the clean
energy transition.”
The functioning of short-term mar-
kets is also signicantly improved by
the CEP. It notably: ensures the non-
discriminatory access to balancing
markets; requires participants to
manage all imbalances; and offers the
possibility to act in the market either
individually or through aggregation.
These changes are key in a system
where variable RES play an increas-
ing role. Market players and consum-
ers must get the right signals to pro-
vide exibility and be remunerated
for this service. Moreover, the CEP
establishes a clear framework for the
implementation of capacity mecha-
nisms, which requires adequacy as-
sessments (analysis of the security of
supply situation) being made at both
national and European level.
Nevertheless, a number of provi-
sions in the CEP need further clari-
cation. This is particularly the case
with those related to capacity alloca-
tion and congestion management. It
has been emphasized in the two last
editions of ‘ACER Market Monitor-
ing Report’ that interconnectors have
not been utilised to their full potential.
Therefore, the electricity regulation
of the CEP introduced an obligation
on Transmission System Operators to
allocate a minimum of 70 per cent of
interconnector capacity to the market
to maximise the benets of market
integration. Yet, Eurelectric and other
stakeholders cautioned against such
an approach throughout the legisla-
tive process, arguing that cross-border
capacities should be maximised in a
cost-effective manner. It is unsure
if this ‘one-size-ts-all’ approach will
ensure the most efcient use of inter-
connection capacity.
The CEP recognises the central role
of distribution system operators
(DSOs) in the energy transition. With
90 per cent of new renewables being
connected to distribution networks
and the planned development of
electric vehicles, DSOs will be the
ones enabling decarbonisation and
electrication of the economy. The
recent EY report developed in coop-
eration with Eurelectric outlines dif-
ferent stages of the DSO evolution
towards new business models sup-
porting the transition. The integration
of decentralised and new sources, the
access to exibility through new
platforms and the full digitalisation of
the grid are the new frontiers of distri-
bution system operation.
A clear sign of this is the creation of
the EU DSO entity. This novel Euro-
pean organisation for distribution
system operators will contribute to
the drafting of new network codes,
especially in the area of exibility and
cyber security.
With the CEP, consumers are also
put at the centre of the clean energy
transition. The right to self-produce
and self-consume is enshrined in the
new legislation, together with the
customers access to a range of tools
to value their exibility. For instance,
the Electricity Directive allows the
development of innovative demand
response services, giving consumers
control over their electricity con-
sumption. Moreover, it provides a
clear framework for demand response
aggregators to operate in the electric-
ity market, making them responsible
for the imbalances they might cause.
This last provision allows for an ef-
cient overall framework.
The CEP also introduces the concept
of “Citizen Energy Communities”
and “Renewable Energy Communi-
ties”. These Communities will,
among other things, give consumers
the opportunity to organise them-
selves and invest in their own means
of generation. Eurelectric welcomes
the new framework set up by the CEP
in this regard, as it elaborates key
provisions for an efcient develop-
ment of Energy Communities.
While acknowledging the participa-
tion of a new category of actors in the
market, the text also requires that they
are put on a full level playing eld
with other actors. Energy Communi-
ties are therefore subject to fair, pro-
portionate and transparent procedures
and to balancing responsibility.
Moreover, they shall be subject to an
appropriate network tariff reective
of any use of the distribution grid.
The text also requires that consum-
ers who are part of such structures
should be entitled to maintaining their
rights and obligations as nal con-
sumers. Some clarications will still
be required when it comes to the im-
plementation of these new provisions,
especially when many Member States
already have some communities in
place. Eurelectric is actively engag-
ing in this assessment and will soon
publish its analysis.
The actual implementation of the
CEP is now critical. The European
Commission is working on the re-
quired implementing/ delegated acts,
and Member States and national regu-
lators must also follow suit. Eurelec-
tric will monitor the implementation,
for example we are currently actively
THE ENERGY INDUSTRY TIMES - MAY 2019
Energy Outlook
14
Europe’s electricity
sector has identied
its priorities
and key policy
recommendations
with regard to the
different elements
of the Clean
Energy Package
(CEP). Eurelectric
elaborates on the
key CEP objectives
and outlines what
it sees as the main
drivers and enablers
to achieve these
objectives.
Blandine Malvault
and Marion Labatut
Bringing electricity
markets closer together
THE ENERGY INDUSTRY TIMES - MAY 2019
15
Technology
GE has launched
a signicant
upgrade for the
GT26 gas turbine.
By incorporating
advanced technology
from its F- and
H-class machines as
well as 3D printing,
the high efciency
(HE) upgrade will
deliver improved
efciency, power
output and exibility
while reducing
maintenance costs
for its customers –
the rst of which will
be Uniper, at its plant
in Eneld, UK.
Junior Isles
I
n spite of arguments by environ-
mentalists that fossil fuels should
stay in the ground, gas is predict-
ed to continue to play a signicant
role in the power generation land-
scape for the foreseeable future.
In its 2019 ‘Energy Outlook’, BP
says that by 2040, the power sector
will account for around 75 per cent
of the increase in primary energy. It
also forecasts that 85 per cent of the
growth in energy supply will be gen-
erated through renewable energy and
natural gas, with renewables becom-
ing the largest source of global pow-
er generation by 2040. According to
the Outlook natural gas is the only
fossil fuel that will continue to grow
its share of global energy demand
before plateauing and then showing
a decline after 2035.
International Energy Agency fore-
casts are slightly less bullish but pre-
dict that the share of natural gas in
electricity generation remains steady
at about 20 per cent. Nevertheless, it
is clear that renewables and natural
gas will dominate the generation
landscape, with renewables under-
pinning growth in the sector.
The situation is even more acute
in Europe, where, according to a re-
cent report by Wood Mackenzie
Power & Renewables, coal genera-
tion was overtaken by wind and so-
lar for the rst time in ve key Eu-
ropean markets last year.
It said that the uplift in renewables
squeezed out supply from coal and
gas in every market except the UK.
Although the UK’s renewable share
reached an all-time high, nuclear
outages highlighted the market’s re-
liance on gas.
It is no wonder then, that genera-
tors are still looking at ways to in-
crease the value of their gas red
assets, and gas turbine manufactur-
ers are working to improve the
competitiveness of their installed
gas turbine eet.
In a move that GE is seeing as a
major step forward, in March it an-
nounced the launch order for its
new GT26 HE (high efciency) gas
turbine upgrade with Uniper for the
utility’s Eneld Power Station in
greater London, United Kingdom.
The upgrade marks the rst time
that GE has taken technology and
capabilities from its F and H class
eets to create a solution for opera-
tors of the GT26, developed by Al-
stom. Since GE’s acquisition of Al-
stom, it also represents the rst
upgrade that blends GE and Alstom
technologies and expertise across all
major components of a gas turbine.
Commenting on the rationale be-
hind the introduction of the GT26
HE, Michael Rechsteiner, CEO of
GE’s Power Services business in
Europe, said the new market dy-
namics mean there will be more op-
portunity for gas going forward. He
noted this was especially the case in
Europe, which is preparing for nu-
clear phase-outs in some countries
and is seeing higher CO
2
prices.
“We believe the installed capacity
of gas [red generation] in Europe
will grow slightly in the next 10
years,” he predicted. “Actual gener-
ation from gas assets in the future,
however, will be at. Gas turbines
will have a totally different operat-
ing regime... in the past they were
optimised for base load. Today, with
very low electricity prices and re-
newables coming up, they have to
be able to compensate for uctuat-
ing renewables. So our units today
need the capability to be parked at
low load, start-up quickly and
ramped up and down. This is why
we came up with the high efciency
solution to help our customers.”
The GT26 has an installed base of
about 90 units across 21 countries in
four regions, but mostly in Europe.
Although designed for base load op-
eration, a signicant portion (28 per
cent) of these are now in low utilisa-
tion. At the same time, GE has about
1400 F- and H-class gas turbines in
operation.
Amit Kulkarni, general manager of
F-Class turbines for Power Services,
commented: “We had to look at how
to make them [the GT26] competi-
tive in the market. This is the rst
upgrade where we are bringing H
technology into an F-class machine.
“When we talk about upgrades,
we typically do modules – we do
components. For example, the hot
gas path of the turbine or the com-
bustor or compressor. The HE
upgrade is the entire gas turbine –
the turbine, compressor and the
combustor. It is the biggest upgrade
the GT26 has seen in 20 years –
since it was developed.’
While there has been investment
over the years to drive efciency
and output, Kulkarni says the HE
upgrade is “a huge step-change”.
Although the GT26 architecture
has been maintained, with the same
rotor and structural parts, the rotat-
ing parts and combustion compo-
nents have been changed.
GE has re-designed the rst three
stages of the low-pressure (LP) tur-
bine. The blade and vanes have im-
proved aero proles and the ow
path around the rst stage has been
enlarged. The intricate cooling de-
sign featured in the H-class has also
been utilised.
GE has adopted thermal barrier
coatings from the H-class that will
allow higher turbine inlet ring
temperature and subsequently better
efciency.
To improve durability, vane 2 has
been coated with new, more oxida-
tion resistant, material and stage 1
blades feature heat shields that have
an abradable coating that permits
improved clearance control and sub-
sequently improved performance.
GE has also incorporated 3D print-
ing, or additive manufacturing, into
some of the components. This al-
lows very intricate cooling designs
that cannot be achieved with tradi-
tional manufacturing processes.
Kulkarni noted: “The lance at the top
of the SEV (sequential EV) combus-
tor has 3D printed parts. The frame
at the bottom is also 3D printed.”
GE has also put a great deal of ef-
fort into improving the machine’s
operating range through the use of
devices such as high and low fre-
quency dampers. However it manag-
es to maintain low NOx levels across
the wider operating range, in spite of
the higher ring temperature in the
turbine.
“We have done some interesting
things with the burner that allows
better air-fuel mixing so we can stay
within emissions compliance, while
giving a wider operability window,”
said Kulkarni.
The HE upgrade also has a brand
new compressor, with 3D aerofoils.
All of these changes have served
to improve combined cycle base
load efciency by 2 per cent. Based
on a gas price of $7/million Btu, ac-
cording to GE’s calculations this
translates to as much as $4 million
in fuel savings annually per unit.
Meanwhile, efciency in part-load
is improved by 1 per cent, yielding
up to $1 million in fuel savings a
year per unit.
Plant output is increased by be-
tween 15-55 MW per unit, depend-
ing on the unit being upgraded and
site conditions. This in turn im-
proves revenue opportunities.
Another key benet is extended
inspection intervals, which are in-
creased from 24 000 hours to 32
000 hours. This reduces mainte-
nance and operating costs.
Such benets were sufcient to
entice Uniper to enter into an agree-
ment with GE that would see its En-
eld plant become the site for vali-
dation and demonstration of the
upgrade. The unit at Eneld has
been in operation since 1999 and
the upgrade will also add another 15
years to the unit’s life.
Eckhardt Rümmler, CEO, Uniper
SE, said in a statement: “In Great
Britain’s very competitive and chal-
lenging power generation environ-
ment, investing to keep our plants
competitive by lowering operational
and maintenance costs, at the same
time as increasing efciency and
exibility, is critical for the long-
term success of our eet.”
During the press launch, Pedro
Lopez Estebaranz, Director of Oper-
ations CCGT Asset Operations, Uni-
per Kraftwerke GmbH, said: “The
HE has the potential to be a game-
changer for us... we have been main-
taining and upgrading our gas eet
to operate better in the market. We
had been operating Eneld as a mid-
merit plant, running for 3000-4000
hour per year. Last year we had in
the region of around 150 starts,
which is normal in the UK market.
Increasing the efciency will allow
us to operate for much more hours.”
Uniper is seen as an ideal partner
to launch the product. It has an in-
stalled base of 4.2 GW of GE units
across Europe and has another three
GT26 units in the UK – one more at
Eneld and two at Grain power sta-
tion – which are potential candidates
for rollout of this technology. Nota-
bly, it has also been co-developing
products with GE since 2012, which
makes it comfortable about hosting
the rst unit.
“It is not the rst time we have
tested new technology working with
GE,” said Lopez. “We have strong
engineering capabilities that enable
us to understand the technical risks
when implementing validation units,
we have done in the past.’
While some tests have already
been performed on GE’s test rig in
Germany on components such as the
combustor, the validation of the en-
tire unit will be at Unipers Eneld
site. Installation is expected during a
scheduled outage in June 2020 and
the validation will run for about four
months after re-start of the unit. Re-
sults are expected in 2021.
Following what is expected to be
successful validation, GE is antici-
pating wider rollout to other exist-
ing units.
Rechsteiner said: “We’ve had a lot
of interest from customers in many
countries. After the UK, the next
one will be in Italy. Elsewhere in
Europe, there’s also Germany and
Spain. There is also interest from
Singapore, Malaysia and even Ja-
pan. We will not make any other
commitments until we have had the
results from Eneld but we are ne-
gotiating with customers already.’
With regards to the future of the
GT26 and any further potential up-
grades, he concluded: “For the next
couple of years, this is it because
this is really a huge step forward in
the development of this machine.”
GT26 gets a HE upgrade
The GT26 HE upgrade at a
glance
THE ENERGY INDUSTRY TIMES - MAY 2019
16
Final Word
E
xtinction Rebellion (XR) pro-
testers are a nuisance – not only
do they disrupt daily commut-
ers, they are also a drain on valuable
police resources. Yet they serve a use-
ful purpose. Their demonstrations
have probably done more to put cli-
mate change back in the spotlight than
cyclone Idai, which devastated Mo-
zambique, Malawi and Zimbabwe.
Even cyclone Kenneth, which again
battered Mozambique just weeks later,
did little to intensify the climate
change debate.
There is no doubt that extreme
weather events are a growing concern
and that carbon emissions are, accord-
ing to scientists, reaching a tipping
point that could see irreversible cli-
mate change.
In its recently published Issues
Monitor, the World Energy Council
cited resilience to extreme weather
risks as one of the main challenges
keeping energy executives awake at
night.
Weather risks are obvious in coun-
tries such as Cameroon where extreme
droughts could affect hydropower
generation. The World Energy Coun-
cil’s survey did in fact reveal that en-
ergy leaders in Cameroon are worried
that in the future climate change could
worsen the intensity and frequency of
droughts in the region.
The report also noted that climate
change is causing increasingly irregu-
lar rainfall, rising temperatures, and
desertication in Niger, a country that
is already highly vulnerable to natural
hazards, particularly droughts, oods,
and landslides.
And the concern is not just in devel-
oping countries. In 2018, natural di-
sasters such as heavy rains, typhoons
and earthquakes caused enormous
damage in Japan, and uncertainty
about large-scale accidents caused by
future large-scale earthquakes and
volcanic eruptions is still high. Ac-
cording to the Monitor, there is grow-
ing awareness that extreme weather
caused by climate change may further
increase the damage caused by heavy
rains and typhoons.
The Council stated that with one
degree Celsius of warming so far, “the
Earth has seen a crescendo of extreme
weather”, including heatwaves,
droughts, oods and deadly storm
surges made worse by rising seas.
Importantly, it also states that the
chance of capping global warming at
“well below” two degrees Celsius are
becoming less likely.
“Even taking into account voluntary
national pledges to slash carbon emis-
sions caused by burning fossil fuels,
the planet is currently on track to warm
by an unliveable 3°C to 4°C by cen-
tury’s end,” it states. “This makes it all
the more important, not to regard
Paris as the end of the discussion, but
as the starting point for an ambitious
global climate protection framework
for the future.”
In late March the International En-
ergy Agency (IEA) released its second
‘Global Energy and CO
2
Status Re-
port’. It made bleak reading. Accord-
ing to the study global energy-related
CO
2
emissions rose by 1.7 per cent in
2018, hitting a historic high of 33.1 Gt.
It was the highest rate of growth since
2013, and 70 per cent higher than the
average increase since 2010.
This was in spite of rapid growth in
wind and solar generation, which grew
at double-digit pace with solar alone
increasing by 31 per cent.
In its latest assessment of global
energy consumption and energy-relat-
ed CO
2
emissions for 2018, the IEA
found that energy demand worldwide
grew by 2.3 per cent last year, nearly
twice the average rate of growth since
2010 and the fastest this decade. This
demand, however, was largely met by
fossil fuels. For the second year run-
ning fossil fuels met nearly 70 per cent
of demand growth.
Coal use in power alone surpassed
10 Gt CO
2
, mostly in Asia. China,
India, and the United States accounted
for 85 per cent of the net increase in
emissions, while emissions declined
for Germany, Japan, Mexico, France
and the United Kingdom.
Coal red power plants were the
single largest contributor to the growth
in emissions, accounting for 30 per
cent of global CO
2
emissions. For the
rst time, the IEA assessed the impact
of fossil fuel use on global temperature
increases. It found that CO
2
emitted
from coal combustion was responsible
for over 0.3°C of the 1°C increase in
global average annual surface tem-
peratures above pre-industrial levels.
This makes coal the single largest
source of global temperature increase.
The global average annual concentra-
tion of CO
2
in the atmosphere aver-
aged 407.4 ppm in 2018, up 2.4 ppm
since 2017. This is a major increase
from pre-industrial levels, which
ranged between 180 and 280 ppm.
Commenting on the ndings, Dr
Fatih Birol, the IEAs Executive Direc-
tor, said: “Despite major growth in
renewables, global emissions are still
rising, demonstrating once again that
more urgent action is needed on all
fronts – developing all clean energy
solutions, curbing emissions, improv-
ing efciency, and spurring invest-
ments and innovation, including car-
bon capture, utilisation and storage.”
The impact of coal red generation
is clear and the technology is there to
address the issue. Renewables have
come a long way but it would appear
that they cannot be integrated fast
enough to bend the emissions curve at
the necessary speed. With renewables
subsidies being steadily phased out,
perhaps it is now time for governments
to look at how to incentivise or fund
the retrotting of carbon capture on
existing coal red plants.
But this is still only half the story.
National energy and climate plans
need to address how to get more re-
newables into heating and transport.
In the EU, this is essential for the de-
carbonisation of energy – three quar-
ters of total energy consumed is in
these two sectors. Certainly, decarbon-
ising heat and transport, as well as
industry, will be much more challeng-
ing than it has been for the electricity
sector.
Unfortunately, although their mo-
tives are honourable it is likely that
most XR protesters are unaware of the
difculty of achieving what they are
asking.
In London, XR insists that it will
continue its disruptive protests until
the UK government agrees to meet and
discuss its demands – a key one being
that the UK must reduce carbon emis-
sions to zero by 2025. Putting the
power industry aside, retting every
household with some form of heat
pump or electric boiler, as well as
having a charging infrastructure in
place for 100 per electric vehicles,
would be nigh on impossible. Then
there is the tremendous cost to the
already hard-pressed working-class
household.
XR protesters in London are also
perhaps unaware that the UK is a world
leader in terms of how much it has cut
CO
2
emissions. The IEA report shows
that in 2018 its emissions declined for
a sixth consecutive year, hitting some
of the lowest levels recorded since
1888 and 39 per cent below 1990
levels. This is predominantly due to
the switch from coal to renewables –
electricity generation from renew-
ables saw a record year, accounting
for 35 per cent of generation. At the
same time the share of coal fell to 5
per cent, a record low.
Indeed emissions across Europe fell
by 1.3 per cent, or 50 Mt, largely
driven by a drop of 4.5 per cent in
Germany, as both oil and coal combus-
tion fell sharply. The drop in coal
consumption was concentrated in the
power sector, where generation from
renewables reached a record high of
37 per cent of the electricity mix.
Unfortunately, the same cannot be
said of India, China and the US. While
per capita emissions in India remain
low at only 40 per cent of the global
average, in 2018 CO
2
emissions in the
country rose 4.8 per cent from the
previous year – a faster rate than any
other major energy-consuming nation.
In China, emissions grew by 2.5 per
cent, or 230 Mt, to 9.5 Gt, while in the
US the emission reductions seen in
2017 were reversed, with an increase
of 3.1 cent.
On this basis, the efforts of London’s
XR protestors are perhaps mis-direct-
ed and the authorities might consider
another approach to the disruptions
they cause. Rather than arresting
protestors, only to see them return the
next day, it would be far more effective
for everyone to y them to India,
China or the US where they are
needed most. And plant a few trees to
offset the carbon footprint of the ight.
A rebellious climate
Junior Isles
Cartoon: jemsoar.com