www.teitimes.com
June 2019 • Volume 12 • No 4 • 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
Going global Leading the charge
The falling cost of energy from
offshore wind farms is driving its
global development.
Page 13
Solar-plus-storage prices are predicted
to decline considerably over the next
ve years, according to a new report.
Page 14
News In Brief
Vision 2020+ could see
Siemens exit power sector
Siemens is looking to exit the
power sector and increasingly focus
on digital industries and smart
infrastructure in the face of falling
demand for power plant equipment.
Page 2
Brayton Point set for key
role in offshore wind
A former coal red power plant site
in Massachusetts is set to become a
central focus of the USA’s growing
offshore wind energy sector.
Page 4
India may fall short of wind
target
Although solar installations continue
apace, plans for new wind capacity
may fall short of 2022 government
targets.
Page 6
German onshore wind in
“deep trouble”
The collapse in growth in
Germany’s onshore wind energy
sector will have serious implications
for German and EU clean energy
targets.
Page 7
Subsidy-free environment
challenges renewables
Renewable energy developers
are facing new challenges as the
industry enters a new phase of
subsidy-free growth around the
world, according to consultants EY.
Page 8
Engie and EDPR team up on
offshore wind
Competition in the global offshore
wind energy sector is set to rise
following plans by Engie and EDP
Renewables to create a new joint
venture.
Page 9
Technology: Gearing up for
hydrogen
Work is under way at the Groningen
power plant to convert one of
its units to run on 100 per cent
hydrogen.
Page 15
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The ndings of the World Energy Investment 2019 report signal a growing mismatch between current
trends and the paths to meeting the Paris Agreement and other sustainable development goals.
Junior Isles
Iran nuclear programme again in focus as US tensions escalate
THE ENERGY INDUSTRY
TIMES
Final Word
The stars are aligning for
acceleration,
says Junior Isles.
Page 16
The ‘World Energy Investment 2019’,
recently published by the International
Energy Agency, claims that the level-
ling off of investment in renewables
and energy efciency represents a seri-
ous threat to efforts to meet the targets
set out in the Paris climate change
agreement and United Nations Sus-
tainable Development Goals (SDG).
Following three years of decline,
global energy investment totalled
more than $1.8 trillion in 2018, a level
similar to 2017. Still, even as invest-
ments stabilised, approvals for new
conventional oil and gas projects fell
short of what would be needed to meet
continued robust growth in global
energy demand, said the report. At the
same time, there are few signs of the
substantial reallocation of capital to-
wards energy efciency and cleaner
supply sources that is needed to bring
investments in line with the Paris
Agreement and other sustainable de-
velopment goals.
Launching the report, Mike Wal-
dron, Head of the IEA’s investment
team, explained: “A lot of this de-
crease in renewables investment was
due to a stable picture for net addi-
tions, as well as falling costs. A lot of
it is attributed to China but renewables
investment in the rest of the world ac-
tually increased in 2018.”
Last year, however, was the rst
time since 2001 that growth in renew-
able power capacity failed to increase
year on year. New net capacity from
solar PV, wind, hydro, bioenergy, and
other renewable power sources in-
creased by 177 GW in 2018, the same
as the previous year. This, says the
IEA, is only around 60 per cent of the
net additions needed each year to meet
long-term climate goals.
According to the IEA’s Sustainable
Development Scenario (SDS), spend-
ing on renewable power needs to
double by 2030 as the world should be
installing over 300 GW annually on
average in the 2018-2030 period, if it
intends to reach the goals of the Paris
Agreement. The IEA warned that the
carbon dioxide (CO
2
) emissions pro-
duced by the energy sector increased
by 1.7 per cent to 33 Gt, despite a 7 per
ent growth in the electricity produc-
tion from renewables.
“Energy investments now face un-
precedented uncertainties, with shifts
in markets, policies and technolo-
gies,” said Dr Fatih Birol, the IEA’s
Executive Director. “But the bottom
line is that the world is not investing
enough in traditional elements of sup-
ply to maintain today’s consumption
Continued on Page 2
The administration of US President
Donald Trump is renewing three key
waivers that allow European allies,
China and Russia to cooperate with
Iran on civil nuclear programmes.
The projects include reactor rede-
signs to prevent the creation of pluto-
nium and infrastructure projects that
will help ensure that some facilities
are not used for uranium enrichment.
“Iran must stop all proliferation-
sensitive activities, including uranium
enrichment, and we will not accept
actions that support the continuation
of such enrichment,” the US State
Department said in a statement.
The administration will renew the
waivers for Iran’s Fordow, Bushehr
and Arak nuclear facilities for 90
days, with the potential for them to
be renewed. This is instead of the
180 days the original waivers were
for. The waivers, which were due for
renewal May 5, allow countries to
help Iran convert its nuclear facilities
to non-military purposes in line with
a 2015 nuclear accord.
Fordow, which was originally an
underground uranium enrichment fa-
cility, is being converted into a nucle-
ar physics and technology centre un-
der the terms of the accord.
Arak is the site of an unnished
heavy water reactor Iran was building
before the deal. Iran destroyed the
heart of the reactor as part of the deal,
and now China and the United King-
dom are overseeing work on a re-
placement reactor for non-weapons
grade plutonium.
Bushehr is a civil nuclear reactor
that is fuelled by Russia, which has
been ensuring the spent fuel does not
pose a proliferation risk.
The waivers for civil nuclear coop-
eration were rst granted in Novem-
ber when the administration re-im-
posed all the sanctions that had been
lifted under the Obama-era Iran nu-
clear deal.
The US introduced the measures as
a continuation of previous policies
aimed at curbing Iran’s ability to re-
vive its nuclear weapons programme.
Two other waivers, one that allowed
Iran to ship surplus heavy water to
Oman and another that allowed Rus-
sia to process Iranian uranium, will be
revoked.
Among the policies are an oversight
of the country’s civil nuclear pro-
gramme, which the department said
would constrain Iran’s ability to short-
en its “breakout time” in terms of get-
ting a nuclear weapon.
The department introduced further
restrictions on Iran including sanc-
tions on the transfer of enriched ura-
nium out of Iran in exchange for
natural uranium and warned that any
assistance to expand Iran’s Bushehr
nuclear power plant beyond the ex-
isting reactor unit could be subject to
sanctions.
US nuclear sanctions will remain in
place to help maintain the nuclear
status quo in Iran until a comprehen-
sive deal resolving Iran’s prolifera-
tion threats is in place to replace the
2015 agreement that has been reject-
ed by President Trump.
Trump pulled the US out of the ear-
lier agreement amid criticism that the
accord was hampered by limited in-
ternational inspection requirements
while allowing the nation to resume
past nuclear weapons work in 10 to 15
years.
On May 9, Iran responded saying it
is pulling out of “some commitments”
made under the nuclear deal, and will
resume higher enrichment of uranium
in 60 days unless a new agreement
can be reached.
President Hassan Rouhani said:
“We are ready to negotiate, within the
boundaries of JCPOA,” referring to
the Joint Comprehensive Plan of Ac-
tion nuclear deal. “It is not us who has
left the negotiation table.”
Paris and sustainable
development goals
under threat, says
IEA
Dr Birol: energy investments now face
unprecedented uncertainties
THE ENERGY INDUSTRY TIMES - JUNE 2019
2
Siemens is looking to exit the power
sector and increasingly focus on digital
industries and smart infrastructure in
the face of falling demand for power
plant equipment.
Under its Vision 2020+ strategy the
German industrial giant plans to spin-
off its struggling gas and power unit,
then sell its majority stake in a public
listing scheduled for September 2020.
It will then concentrate on higher-
margin businesses, such as connecting
industries to the internet.
The division to be carved out com-
prises its oil and gas, conventional
power generation, power transmission
and related services businesses.
Siemens’ Gas and Power (GP) unit is
to be “given complete independence
and entrepreneurial freedom through a
carve-out and a subsequent public list-
ing”, Siemens said in a statement.
Joe Kaeser, Siemens’ Chief Execu-
tive, said he believed the conglomerate
structure should be a thing of the past.
He told investors that the answer no
longer lay in being big, otherwise “the
whole world today would be full of
dinosaurs”.
He added: “They’ve [the dinosaurs]
been the biggest. But something must
have been wrong with them because,
obviously, they don’t exist. What was
wrong with them was not their size, but
the lack of adapting to different condi-
tions that history provided for them.”
The company said the restructuring
would see it cut 10 400 jobs, but it ex-
pected to create 20 500 more through
growth through 2023, leading to a net
increase of 10 000.
With 44 000 employees, the gas and
power unit booked sales worth €12.4
billion in 2018 – the same as 2014.
Prots over that period, however,
plummeted from €2.2 billion to €377
million as the industry struggled with
gas turbine overcapacity due to the
global shift from fossil fuels to renew-
able energy.
Chief Operating Ofcer for the divi-
sion Tim Holt said the industry had
capacity to build 400 gas turbines a
year, but global orders were fewer
than 80. This led to prices being de-
pressed, impacting all the big gas
turbine manufacturers. GE Power has
dragged down GE’s bottom line re-
sults over the past two years and led
to major layoffs and changes in the
executive ranks.
Though Siemens still operates eight
divisions, the “new” Siemens will
place its focus on just two areas –
Smart Infrastructure, which connects
infrastructure to the internet, and
Digital Industries, which enhances
manufacturing with digital tools.
These two sectors have been set new
prot margin targets of 10-15 per cent
and 17-23 per cent.
Siemens will still hold large stakes in
four “strategic” companies – Siemens
Gamesa Renewable Energy (SGRE),
medical technology unit Healthineers,
the transport technology arm Mobility
and the traditional energy Gas and
Power unit. But these groups will oper-
ate independently.
The decision to divest entirely will
be left to Kaeser’s successor after his
contract expires in 2021.
Lisa Davis, Chief Executive of Sie-
mens’ gas and power division, told
investors that the new spin-off will be
able to market itself as a €30 billion
business volume company capable of
delivering any sort of electricity need,
because of its controlling stake in
SGRE.
In its latest results posting, SGRE
reported that revenue increased by 6
per cent year-on-year in the rst half
of FY 2019, to €4651 million and by 7
per cent in the second quarter, to €2389
million, supported by strong perfor-
mance in Offshore and Service. On the
back of the results, SGRE became the
rst wind turbine manufacturer to at-
tain an investment grade rating.
patterns, nor is it investing enough
in cleaner energy technologies to
change course. Whichever way you
look, we are storing up risks for the
future.”
“The world cannot afford to press
‘pause’ on the expansion of renew-
ables and governments need to act
quickly to correct this situation and
enable a faster ow of new proj-
ects,” said Dr Birol.
To meet sustainability goals, in-
vestment in energy efciency,
which has stalled over the last two
years, would need to accelerate.
The IEA also said that even though
decisions to invest in coal red
power plants declined to their low-
est level this century and retire-
ments rose, the global coal power
eet continued to expand, particu-
larly in developing Asian countries.
Waldron said: “The continuing
investments in coal plants, which
have a long lifecycle, appear to be
aimed at lling a growing gap be-
tween soaring demand for power
and a levelling off of expected gen-
eration from low-carbon invest-
ments (renewables and nuclear).
“Without carbon capture technol-
ogy or incentives for earlier retire-
ments, coal power and the high CO
2
emissions it produces could remain
part of the global energy system for
many years to come.”
He said that by 2030 under the
SDS, most if not all coal red plant
would have to be equipped with
capture. “We’re within a matter of
single digit years in which such in-
vestment decisions would need to
turn,” he noted.
Summing up the ndings from
WEI 2019, Tim Gould, who heads
the Energy Supply and Investment
Outlooks division at the IEA, noted
that investment is “well short” of
what is required to meet the UN’s
SDG.
“The share of low carbon invest-
ment – renewables, nuclear, efcien-
cy, batteries, carbon capture utilisa-
tion and storage – has been stuck at
around one third of the total [energy
investment] for the last few years. We
would need to see that share going up
to around two thirds over the next
decade in order to put us on the trajec-
tory consistent with the Sustainable
Development Goals.”
In a separate report issued shortly
after WEI 2019, the IEA stated that
despite signicant progress in re-
cent years, the world is falling short
of meeting the global energy targets
set in the SDG for 2030. The organ-
isation’s ‘Tracking SDG7: The En-
ergy Progress Report’ says that
ensuring affordable, reliable, sus-
tainable and modern energy for all
by 2030 remains possible but will
require more sustained efforts.
The report also shows that great
efforts have been made to deploy
renewable energy technology for
electricity generation and to im-
prove energy efciency across the
world. Nonetheless, access to clean
cooking solutions and the use of
renewable energy in heat generation
and transport are still lagging far
behind the goals.
See page 11 for WEI 2019 data.
Continued from Page 1
Experts believe the UK can achieve its
recently announced target for net zero
carbon emissions by 2050. The ques-
tion is at what cost?
At the end of April, the Committee
on Climate Change (CCC) issued a
report advocating that there was a
sound scientic, technological and le-
gal case for the adoption of a new,
legal net-zero emissions target by
2050 at the very latest.
While many welcomed the report,
there is a big question mark as to what
it will cost.
Michael Wheeler, Executive Direc-
tor, UK Energy, Ramboll, said:
“Achieving a net zero target is possible,
but the cost of doing so is still uncertain
– with many technologies still in de-
velopment, we aren’t able to provide
cost certainty for many potential solu-
tions to all our energy usage problems.
There is also some uncertainty as to
what will be the size of the energy mar-
ket as we become more energy efcient
and what may be the impact of chang-
es in other sectors.”
He also noted that achieving net zero
will be heavily inuenced by whether
new nuclear will be economically vi-
able. “If it is not included in the mix,
then the source of rm reliable energy
will need to come from energy storage
methods to counter the intermittent
energy supply associated with renew-
able technologies, such as solar or
wind power.
“The present alternatives to nuclear
and energy storage for achieving zero
emission ‘rm’ capacity include bio-
mass red projects and gas red
CCGT incorporating carbon capture
and storage (CCS), however these do
not currently receive government
subsidy (in today’s energy market all
forms of rm capacity power genera-
tion and storage need some form of
subsidy to be viable).”
Just ahead of the CCC report, a select
committee of MPs said the UK cannot
“credibly” reduce greenhouse gas
emissions to net zero without the
widespread use of carbon capture but
government support for the edgling
industry has been “turbulent”.
The UK has yet to develop a com-
mercial-scale project. Government
subsidy auctions, in 2007 and 2012, to
develop projects were later cancelled
amid concerns over costs.
The government maintains it aims to
have “the option to deploy CCUS at
scale during the 2030s, subject to costs
coming down sufciently”. However,
the business, energy and industrial
strategy select committee report said
this did not indicate a commitment
commensurate “with the importance of
this technology”.
In 2012, it was estimated that pro-
posed power plants with carbon cap-
ture schemes would require govern-
ment subsidy contracts with a “strike
price” of £170/MWh. More recent
projections have reduced to £80-90/
MWh, although this is still more ex-
pensive than offshore wind.
The CCC report says the UK will
need 75 GW of operating offshore
wind capacity to reach net-zero green-
house gas emissions target by 2050.
Matthew Wright, MD at Ørsted UK,
commented: “75 GW of offshore wind
by 2050 is denitely achievable. The
cost of offshore wind has already re-
duced to the point where it is compa-
rable with conventional generation,
and it’s continuing to fall.”
In a Legal Update on its recommenda-
tions on cyber security in the energy
sector, the EU Commission has said
that companies should not rely on a
“one-size-ts-all” approach for the
security of their products. They should
instead split the overall systems into
logical zones and apply appropriate
measures to each of them.
This Legal Update gives a refresher
on the EU cyber security framework
for the energy sector and provides a
summary of the EU Commission Rec-
ommendations, including next steps
that energy network operators should
consider.
In April the EU institutions (i.e., the
European Parliament, the Council and
the EU Commission) reached an agree-
ment on the Cyber security Act. The act
creates EU cyber security certication
schemes for information communica-
tions technology (ICT) products; ser-
vices (involved in transmitting, stor-
ing, retrieving or processing
information via network and informa-
tion systems); and processes (activities
performed to design, develop, deliver
and maintain ICT products and ser-
vices). The new framework is designed
to give companies operating in the
energy sector an opportunity to certify
their products, services or processes.
The EU Commission also proposed
sector specic legislation under the
‘Clean Energy for All Europeans’
package, which has cyber security
aspects. The new ‘Regulation on Risk
Preparedness of the Electricity Sec-
tor’ requires EU member states to
develop national risk preparedness
plans that take into account cyber
security and guarantee the stability of
their systems against potential threats.
Member states are expected to take
steps to follow the EU Commission
Recommendations when developing
national cyber security frameworks
(e.g., through strategies, laws, or
regulations). Within the next 12
months and every two years thereaf-
ter, EU member states are required
to communicate to the EU Commis-
sion details about the state of the
implementation.
The war on cyber attacks received a
recent boost with the announcement
of a new partnership between Siemens
and Chronicle, an Alphabet company,
to protect the energy industry’s critical
infrastructure.
Through a unied approach that
will leverage Chronicle’s Backstory
platform and Siemens’ strength in in-
dustrial cyber security, the combined
offering is claimed to give energy com-
panies “unparalleled visibility” across
information technology (IT) and op-
erational technology (OT) to provide
operational insights and condentially
act on threats.
The partnership will help companies
securely and cost-effectively leverage
the cloud to store and categorise data,
while applying analytics, articial in-
telligence, and machine learning to OT
systems that can identify patterns,
anomalies, and cyber threats. Chroni-
cle’s Backstory, a global security te-
lemetry platform for investigation and
threat hunting, will be the backbone of
Siemens’ managed service for indus-
trial cyber monitoring, included in
both hybrid and cloud environments.
Headline News
UK can achieve net zero ambitions but at what cost?
EU says one size does not t all on
cyber security
Vision 2020+ could see
Siemens exit power sector
The struggling market for large gas turbines, which has already caused a massive shakeup
at GE, has now prompted Siemens to take steps to spin-off its gas and power division.
Junior Isles
Gould: investment is “well
short of requirements
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THE ENERGY INDUSTRY TIMES - JUNE 2019
9
Companies News
Siân Crampsie
Competition in the global offshore
wind energy sector is set to rise follow-
ing plans by Engie and EDP Renew-
ables (EDPR) to create a new joint
venture.
The two companies have signed an
agreement to create a 50-50 partnership
targeting the xed and oating founda-
tion offshore wind markets globally.
The new entity will be the exclusive
investment vehicle for both Engie and
EDPR in the offshore wind sector and
will bring together the two companies’
expertise in project development, they
said in a statement.
The move is a sign of the need for
large renewable energy developers to
join forces in order to compete with
existing large players such as Orsted
and ensure they have the nancial
might and technical expertise to tackle
large and complex projects in emerging
markets in the USA and Asia.
“The offshore wind sector is set to
grow very signicantly by 2030,” said
Isabelle Kocher, Engie CEO. “The
creation of this JV will enable us to
seize market opportunities while in-
creasing our competitiveness on one
of our key growth drivers, renewables.
This agreement is also fully aligned
with Engie’s zero-carbon transition
strategy.”
Under the terms of the agreement,
EDP and Engie will combine their off-
shore wind assets and project pipeline
in the newly-created venture, starting
with a total of 1.5 GW under construc-
tion and 4.0 GW under development,
with the target of reaching 5 to 7 GW
of projects in operation or construction
and 5 to 10 GW under advanced devel-
opment by 2025.
The company will become a global
top-5 player in the eld, and will be up
and running by the end of 2019, Engie
and EDPR said.
In a statement, the two companies
said that the joint venture will primar-
ily target markets in Europe, the Unit-
ed States and selected geographies in
Asia. Projects will be self-nanced,
they added.
EDPR and Engie said that a joint
venture would allow them to create “an
entity with greater scale and a fully
dedicated team, with global business
development reach and strong power
purchase agreement… capabilities”.
The venture will also enable them to
grow their asset base rapidly and to
operate “more efciently” as a stable
partnership.
The alliance follows the two rms’
cooperation as consortium partners in
the Dieppe Le Treport and Yeu Noir-
moutier xed offshore wind projects
in France and Moray East and Moray
West in the UK. EDPR and Engie are
also partners in two oating offshore
wind projects in France and Portugal,
as well as in the Dunkerque offshore
wind tender currently ongoing in
France.
Antonio Mexia, EDP CEO said:
“This agreement for wind offshore
represents an important step in EDP's
renewables strategy. We are condent
that this partnership will reinforce our
distinctive position in renewables al-
lowing us to accelerate our path in
offshore wind, one of the key growth
markets in the next decade.”
n Vattenfall and GE have created an
alliance to develop GE’s new 12 MW
Haliade-X offshore wind turbine. De-
velopment and production of the new
turbine will take place largely in
France. Vattenfall says it has already
conducted an in-depth technical due
diligence of the platform, which will
feature a 220 m rotor and a 107 m
blade.
RWE is preparing for its integration
with the renewable energy arm of
E.On later this year.
The German energy giant has secured
a €5 billion credit agreement with a
group of international banks and says
that the plan to merge with E.On’s re-
newable energy activities is on track.
The company earlier announced that
it had abandoned plans to build a new
lignite power station at its existing
Niederaussem site in North-Rhine
Westphalia, Germany. “New coal-
red power stations no longer have a
place in our future-oriented strategy,”
said Rolf Martin Schmitz, CEO of
RWE.
Under the agreement reached in
March 2018, E.On is to take over
RWE’s 76.79 per cent stake in innogy,
while RWE is to obtain all of E.On’s
major renewable energy activities and
innogy’s renewable energy business,
as well as a 16.67 per cent minority
stake in E.On.
Following the completion of the
transaction, which is expected in the
second half of 2019, RWE will operate
approximately 8 GW of renewable
energy assets, including offshore and
onshore wind as well as hydro and
photovoltaics.
RWE said that the new credit line
would be provided by 27 internation-
al banks, and was signicantly over-
subscribed.
Once the merger deal closes, RWE
will be the world’s second-largest off-
shore wind operator with a top ve
position among all renewable energy
producers.
“We’re on schedule in implementing
our transaction with E.On. The prepa-
ration of the integration of the renew-
ables business is also making good
progress: The ‘new RWE’ is in sight,”
Dr. Markus Krebber, CFO of RWE,
said.
RWE had planned to build 1.1 GW
of lignite red capacity at Nieder-
aussem to replace the existing coal
red units at the site, which have a
combined capacity of 1.2 GW.
A German government-appointed
expert panel recently agreed that coal
burning should end by 2038.
UK utility SSE is continuing with plans
to ofoad its retail arm after a deal to
merge it with Npower’s retail arm
failed in 2018.
The company has announced plans
to spin-off the business unit by mid-
2020, either by listing it as a stand-
alone company, or through “alterna-
tive ownership”.
Last year SSE announced plans to
merge its retail business with that of
Npower, another of the UK’s ‘Big Six’
energy retailers, but the deal fell apart
when the companies failed to reach a
deal to provide nancial support to the
new company.
SSE has now created a separate board
for the retail unit, which lost 550 000
customers in the year to March 31 and
which, like other retailers in the UK, is
facing the competitive pressures of a
crowded market.
It has also announced a round of job
cuts to help it meet efciency targets.
“Like a number of suppliers, we are
facing challenges due to competition
increasing, the introduction of the en-
ergy price cap and higher operating
costs,” said Tony Keeling, SSE Chief
Operating Ofcer and co-head of retail.
“To run a sustainable business, we
need to become more efcient and en-
sure we have the right number of em-
ployees in the right locations to best
serve our customers.”
Last month SSE booked a large fall
in annual adjusted prot after earnings
fell at both its retail and wholesale op-
erations. Pre-tax prot for the year
through March rose to £1.37 billion,
up from £864.4 million on-year, as the
company beneted from the proceeds
of asset sales.
Adjusted pre-tax prot, however, fell
38 per cent to £725.7 million.
Energy companies continued to dem-
onstrate their desire to work with dis-
ruptive start-up companies last month
with the announcement that innogy
Innovation Hub has become an inves-
tor in Munich-based energy IoT com-
pany GreenCom Networks AG.
The investment follows a successful
capitalisation round at the end of last
year, when GreenCom attracted fund-
ing from UK utility Centrica. The in-
vestment from innogy Innovation Hub
is for an undisclosed amount. innogy
SE is a German energy company that
supplies energy to around 22 million
customers across Europe.
The two companies rst connected
through the Free Electrons energy ac-
celerator programme, founded in
2017, which provides opportunities for
later stage energy start-ups to gain ac-
cess to utility customers.
Using its Energy Information Bro-
kerage Platform (EIBP), GreenCom
integrates distributed assets like solar
PV, battery storage, electric vehicles
and heat pumps from various manu-
facturers. Based on EIBP, GreenCom
enables white-label end customers
services like energy communities and
energy at rates.
EIBP also offers optimisation and
visualisation of energy ows in homes
to utilities and manufacturers of ener-
gy-relevant devices.
The investment follows a deal be-
tween the two companies in April that
saw GreenCom acquire shine, an en-
ergy management services start-up
founded by the innogy Innovation
Hub. GreenCom will integrate shine’s
end-customer base and services into its
energy IoT platform.
Jan Roschek, SVP Business Devel-
opment & Strategic Partners at Green-
Com, said: “In terms of their customer
engagement models and sales and
marketing initiatives, utilities don’t
have the well established processes to
scale up technology solutions projects
and get them to market. shine has es-
tablished these processes. This will
help the utilities we are working with
to get these [solutions] to market.”
shine already utilises GreenCom’s
EIBP and the deal will allow Green-
Com to expand the services it offers
on top of its EIBP platform. Green-
Com says it plans to demonstrate dis-
ruptive services for residential cus-
tomers that go beyond today’s at-rate
or energy community offerings in the
market.
Christian Feißt, CEO of GreenCom
Networks, said: “The acquisition of
shine is perfect for us to demonstrate
how disruptive energy management
services will be offered to retail cus-
tomers through digital technology…
the deal with shine allows us to truly
demonstrate what the retail energy
business will look like.”
Utilities invest in
disruptive energy
management services
RWE prepares
for E.On
integration
SSE continues spin-off plans despite Npower setback
Engie and EDPR hope to challenge offshore giants such as Ørsted with a new joint venture.
Engie and EDPR team up for
show of force in offshore wind
Feißt: looking to demonstrate energy
management services
Recent investment in GreenCom Networks further demonstrates that energy
companies are recognising the value of bringing disruptive technology and new
services to their businesses. Junior Isles
market will grow to a cumulative 942
GW/2857GWh by 2040, attracting
$620 billion in investment over the
next 22 years. Its ‘Long-Term Energy
Storage Outlook’ published in No-
vember shows the capital cost of a
utility-scale lithium-ion battery stor-
age system sliding another 52 per cent
between 2018 and 2030, on top of the
steep declines seen earlier this decade.
In a more recent report, released by
GlobalData at the beginning of May,
the global battery energy storage
market is forecast to grow by 7 per
cent to reach $13.13 billion by 2023.
Its latest report: ‘Battery Energy
Storage Market, Update 2019 –
Global Market Size, Competitive
Landscape and Key Country Analysis
to 2023’, reveals that the fall in tech-
nology prices and increasing pace of
development in the power market are
the primary driving factors for the
battery energy storage market.
It says APAC will continue to be the
largest market reaching $6.05 billion
in 2023, as countries increase invest-
ments in grid infrastructure to im-
prove the market structure and attract
foreign investment. Asia-Pacic ac-
counted for 45 per cent of the global
market installed capacity in 2018 and
is expected to maintain its top posi-
tion in the forecast period 2019-2023.
With the number of grid-connected
renewable electricity generation
plants increasing rapidly, countries
such as China, India, Japan, South
Korea, and the Philippines will focus
on frequency regulation to normalise
the variation in power generation
from renewables, the report said.
Bhavana Sri, a power analyst at
GlobalData, said: “With countries
aggressively promoting the moderni-
sation of grids, and developing their
capability to handle the demands of
the present and future, batteries are
being deployed to support smart
grids, integrate renewables, create
responsive electricity markets, pro-
vide ancillary services, and enhance
both system resilience and energy
self-sufciency.
“Market conditions are improving
and more companies are moving into
decentralised generation, leading to
an increase in the onsite deployment
of renewables and batteries; as with
micro or mini girds. Supportive poli-
cies and high electricity charges are
also nudging the market towards re-
newables and/or storage plus renew-
ables at the end-consumer level. As
the power sector evolves to accom-
modate new technologies and adapt
to varying market trends, energy
storage will play a central role in the
transition and transformation of the
power sector.”
Nevertheless, storage is still in its
infancy. The market will need to
fairly compensate the value storage
provides in order for storage paired
renewables to take-off. Business
models still need to be rened accord-
ing to market design and future policy
options. The Wood Mackenzie report
also noted that safety and re hazards
need to be looked at carefully and
concludes that once these challenges
are addressed, solar-plus-storage will
be “a great asset” for the power grid.
A
s might be expected for a part
of the world that receives good
levels of sunshine all year
round, it is not surprising that solar
photovoltaics (PV) represents one of
the fastest growing renewable energy
sources in the Asia-Pacic region.
According to Wood Mackenzie
Power and Renewables’ global solar
PV market outlook update, the Asia-
Pacic region is set to install 55 per
cent of all the world’s new solar PV
in the next ve years. Cumulative
capacity in Asia-Pacic, including
Australia, will increase by 60 per
cent, from 222 GW in 2017 to 578
GW in 2023. China, India and Japan
together will account for 78 per cent
of this capacity increase.
Yet such rapid growth of a variable
energy source sometimes results in
curtailment, due to over production
of electricity that cannot be fed into
the grid. This has in turn led to a
growing demand for battery storage.
The cost of storage, however, is often
cited as one of the obstacles that
needs to be overcome to enable solar
to really take centre stage in the future
energy mix. But it is a scenario that is
set to change before too long.
In May, Wood Mackenzie published
a report, that projects solar-plus-
storage prices, or levelised cost of
electricity (LCOE), for both utility-
scale and distributed commercial and
industrial (C&I) segments are to de-
cline considerably over the next ve
years.
The report reveals some interesting
ndings based on LCOE for a 4-hour
lithium-ion solar-plus-storage. Re-
search Analyst for Asia Pacic,
Rishab Shrestha, commented: “If you
look at the production prole of solar
energy, you have a production peak at
around 12 noon or 1 pm. And if the
system demand typically has a morn-
ing peak and even larger evening peak
demand, then four hours is usually
enough to store excess solar energy. If
you increase the [storage] period to
more than four hours, the cost can
increase quite a bit so that’s why we
usually see four hours or less.”
The study predicts that such a utility-
scale solar-plus-storage system will
command a cost premium between 48
per cent and 123 per cent over solar-
only LCOE in 2019. On the distrib-
uted C&I solar-plus-storage front, the
storage premium over solar LCOE is
between 56 per cent and 204 per cent
this year.
The reason for such a wide LCOE
range, says Wood Mackenzie, is be-
cause “there are some mature markets
where solar cost is extremely com-
petitive while others are not and some
in-between”. This is due to a mix of
labour, land, environment, civil costs,
weighted average cost of capital, and
procurement methods, tenders vs
feed-in tariffs (FIT), etc. Also, some
markets have very well established
supply chains with the availability of
storage manufacturing.
Shrestha commented: “We covered
several APAC markets that are at
various stages of solar maturity.
Some have storage manufacturing,
while some do not. India for example,
has a very competitive solar price
compared to Japan, which has a very
high solar price.” The cost premium
over solar-only in a market such as
India would therefore be higher than
in Japan.
LCOE depends on a range of factors
such as capex, including balance-of-
system cost, module cost, inverter
cost, battery cost etc. In addition,
there is the cost of nancing, which
can be impacted by the type of busi-
ness model.
Whether solar-plus-storage can be
competitive largely depends on sev-
eral market factors. For example, it
could make economic sense in replac-
ing expensive peaking units.
Subsidy mechanisms such as green
certicates and feed-in tariffs can also
make the difference. Shrestha said:
“If you look at India, where there
might be procurement from a central
government specically for solar-
storage projects, there are projects
that can make economic sense.”
If Wood Mackenzie’s forecasts are
proved correct, many more projects
will become increasingly nancially
viable.
The report predicts that the cost
premium for unsubsidised utility-
scale LCOE for a 4-hour lithium-ion
solar-plus-storage will reduce to be-
tween 39 per cent and 121 per cent in
2023. On the distributed C&I solar-
plus-storage front, the premium over
solar LCOE over solar-only will nar-
row to between 47 per cent and 167
per cent in 2023.
“In general, we expect the average
solar-plus-storage LCOE in Asia Pa-
cic to decrease 23 per cent from
$133/MWh this year to $101/MWh in
2023,” said Shrestha. “By then, solar-
plus-storage costs would already be
competitive against gas peakers in all
the National Electricity Market
(NEM) states of Australia. The coun-
try’s utility-scale solar-plus-storage
LCOE will hover at about 23 per cent
above average wholesale electricity
price.”
He added: “Based on gas prices, in
Victoria the LCOE [of solar-storage]
is just about where the peaking plants
are at the moment. By 2023, LCOE
will be able to undercut all of the
states.”
According to Wood Mackenzie,
only Thailand is expected to have a
utility-scale solar-plus-storage LCOE
below the average wholesale electric-
ity price by 2023. “While the country
does not have a wholesale electricity
market, industrial power price taken
as a proxy is higher compared to
other wholesale markets and hence
shows competitive solar-plus-storage
economics,” it stated.
Unsubsidised C&I solar-plus-stor-
age is expected to be competitive in
Australia, India and the Philippines
by 2023.
“The residential market also poses a
great opportunity for solar-plus-stor-
age,” said senior analyst Dr. Le Xu.
“In 2018 with the help of government
subsidies, Australia’s New South
Wales saw a 76 per cent savings on
annual electric bills through solar-
plus-storage installations.”
Another attractive residential solar-
plus-storage market is Japan. FITs for
600 MW of solar projects are poised
to expire this year. As power prices
are set to increase, storage retrots
provide an opportunity for home
consumers to avoid high residential
prices.
Indeed, Wood Mackenzie notes that
in general, capex subsidies and addi-
tional remuneration through different
forms of renewables certicates will
be crucial for projects to go-ahead.
Certainly there is evidence that nan-
cial support can stimulate markets.
“If you look at South Korea, that is
a good example, where they have
Renewable Energy Certicates to try
to drive solar-plus-storage,” said
Shrestha. “With these certicates you
will be compensated at ve times
their value during the peak hours.
This is driving demand.”
As installations increase, along with
technology improvements, this will
drive down the cost of battery storage
and drive further investment.
According to BloombergNEF
(BNEF), the global energy storage
THE ENERGY INDUSTRY TIMES - JUNE 2019
Energy Outlook
14
A recently published
report by Wood
Mackenzie predicts
solar-plus-storage
prices for both utility-
scale and distributed
commercial &
industrial segments
will decline
considerably over the
next ve years.
TEI Times reports.
Leading the
storage charge
Global cumulative storage deployments to 2040. Source BNEF
THE ENERGY INDUSTRY TIMES - JUNE 2019
16
Final Word
I
f nothing else, the mix of speakers,
delegates and tone of presenta-
tions at this year’s Eurelectric
Power Summit in Florence, Italy,
again illustrated how fast the electric-
ity sector is changing, and how far it
has already come.
Perhaps the best summary of the
progress that has been made was
presented by Michael Liebreich,
Chairman and CEO of Liebreich As-
sociates, and Founder and Senior
Contributor to Bloomberg New En-
ergy Finance.
The rst slide he showed was one he
presented in 2015, which showed that
global investment in renewable capa-
city and energy efciency had reached
an all-time high of $413 billion,
growing from just $95 billion in 2004.
Although investment fell to $384
billion in 2018, new capacity has
continued to increase, hitting 179 GW
last year.
“What we see is that the investment
value has stalled at around $354 bil-
lion a year but the volume of instal-
lations has continued to increase…
we’re seeing one dollar in every six
invested in energy going into clean
resources. The reason why volume
goes up while investment stalls, is
because of the experience curve.”
A snapshot of world records for
clean energy prices globally showed
that solar PV and onshore wind deals
were signed in 2017 Mexico at $1.97
¢/kWh and 1.77 ¢/kWh, respectively.
In Germany, meanwhile, in 2016
Dong/EnBW submitted a bid of 4.9
¢/kWh for an offshore wind project
to be built in 2024.
“The cheapest source of electrical
power that you can add to the grid,
country after country now, is renew-
able, is clean, is zero carbon,” said
Liebreich.
His gures showed that there have
been almost ve doublings of variable
wind power in the generation mix
since 2004 and almost nine doublings
in the share of solar over the same
period. This means there is an increas-
ing amount of variable power coming
on to grids around the world.
At the same time coal, which has
been the stalwart of baseload power
for decades, continues to fall off the
grid. And while, gas red generation
is growing incrementally, it is not
enough to replace coal. Like most
industry observers, Liebreich believes
that gas has an important role to play
going forward but increasingly for
exibility only, i.e. to compensate for
uctuating generation from wind and
solar. “The future is one of variable,
very cheap renewable energy,” he said.
In markets around the world, this has
often resulted in more electricity
production than is needed at points in
time and oftentimes curtailment of
wind power, in particular. But while
some see this as a problem, Liebreich
merely notes that over-generation is
“a feature of these systems”. The
question, he says, is what do you do
with excess renewable electricity that
carries zero carbon cost?
Although the cheapest way to store
power is through heat, e.g. with a hot
water tank, most of the current focus
is on batteries – whether via stationary
storage, passenger electric vehicles
(EVs), commercial EVs or electric
buses. Global growth for batteries in
all sectors, including consumer elec-
tronics, has indeed skyrocketed over
the last four years. Liebreich showed
that global demand has grown from
less than 100 GWh in 2015 to around
250 GWh in 2019 and will hit 2000
GWh in 2030.
“The good news is there will be lots
of batteries and that will help you a
lot,” he told delegates during his pre-
sentation, “the bad news, or not so
good news, is that overwhelmingly
they are going to be in vehicles. Sta-
tionary storage will be the minority.”
The growth in batteries for vehicles
is being driven by an EV market that
is growing so rapidly, that BNEF ex-
pects that more than half of all new car
sales in 2040 will be electric, compared
with a couple of per cent today.
The move towards the electrica-
tion of transport, and indeed other
sectors such as industry and build-
ings, is where things get interesting
for the power sector. In its ‘Decar-
bonisation Pathways 2018’,
Eurelectric concludes that a major
shift to electricity in transport, build-
ings and industry is needed to meet
the goals set by the Paris Agreement.
It notes that for the EU to reach full
decarbonisation by 2050, electricity
needs to cover at least 60 per cent of
nal energy consumption.
Commenting on developments over
the last six or seven months and look-
ing forward, speaking on the sidelines
of the conference, Serge Colle,
Global Power & Utilities Advisory
Leader at EY, said: “In a world of full
electrication, electricity production
has to double. So the rst thing we see
is that it is becoming more and more
of a reality that we will see more
electrication and deeper electrica-
tion. But it’s also about accelerating
the speed of electrication… the
danger is we need to go faster.”
He added: “The second big topic for
me is the DSOs (Distribution System
Operators). They can be proud of
what they’ve achieved so far but…
they will have to accelerate their ef-
forts to digitalise, not only the net-
works but also their businesses. Many
are still counting on the resilience of
their systems. There are a lot of good
plans but they still lack an integrated
plan to digitise the networks and the
business.”
Ahead of a planned information
session at the conference, Paul de Wit,
Senior Advisor of Regulatory Affairs
at Alliander and Chair of the Working
Group ‘Institutional Framework’,
talked about the evolution of the
DSOs since the Third Energy Pack-
age ten years ago, and the central role
of DSOs. In order to reect this
central role at EU level, the recently
adopted Clean Energy Package cre-
ated a new European Association for
DSOs, currently called the ‘EU DSO
Entity’, which will be set up by DSOs
in early 2021.
He said: “The DSO Entity is a new
body for the DSOs to work together
on network codes, cyber security,
digitalisation, exibility and collabo-
ration [with Transmission System
Operators] on things like data manage-
ment and network planning. For ex-
ample, in the Third Energy Package it
was mainly the TSOs that wrote the
network codes… but it put us in the
situation that we were only one of
many stakeholders in the whole pro-
cess. This was not a comfortable situ-
ation for us because we had the same
responsibility with regards to keeping
the lights on and system security, etc.
We therefore lobbied for the concept
of the DSO as mutual market facilita-
tor and emphasise that we have a big
role to play in market facilitation.”
The role of the DSOs will become
much more important in light of the
energy transition, and having a single
association speaking with one voice
for 2400 DSOs is an important step.
Dr Erik Landeck, Managing Direc-
tor Stromnetz Berlin GmbH and Vice
Chair of Eurelectric Distribution and
Market Facilitation Committee, said:
“Now we have the possibility to form
a voice for all DSOs. Some steps have
already been set – statutes have to be
developed within one year; after that
there will be consultations with the
Commission and we will then be
tasked with bringing the entity into
existence. So right now we are in the
rst phase of drafting the statutes and
nancing rules.”
Along with the progress being made
by DSOs and the digitalisation of
networks, investment in renewables
and the electrication of transport and
industries will be the hot topics to
watch in the coming 12 months leading
up to the next Eureletric Power Sum-
mit in Dublin, Ireland, next year.
Colle summed up his views on
what’s to come, saying: “It’s going to
be exciting to see how different indus-
tries continue to converge on our
business. Reading the tea leaves, I see
that the stars are lining up for accel-
eration. I am seeing a lot of things
happening whereby there is a strong
force of alignment that could poten-
tially push for a more aggressive
scenario than we have in the Paris
agreement.”
Reading the tea leaves
Junior Isles
Cartoon: jemsoar.com
