www.teitimes.com

July/August 2020 • Volume 13 • 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

Creating smarter

synergies

Demanding a

response

TEI Times catches up with Claudio Facchin,

CEO at the newly formed Hitachi ABB

Power Grids. Page 14

Changing conditions have

shown that now is the time for

demand response. Page 15

News In Brief

EU banks on energy

integration and hydrogen

The recently announced EU

strategies for energy system

integration and hydrogen will pave

the way towards a more efcient and

interconnected energy sector.

Page 2

USA set for energy storage

boom

The Electricity Reliability Council

of Texas (ERCOT) says it is

anticipating a growth in energy

storage systems at the expense of

gas red power plants.

Page 4

Australia backs low carbon

technologies

Australia’s new proposal to tackle

climate change will focus on the

use of low carbon technologies,

including hydrogen and batteries.

Page 2

Germany raises offshore

wind target but fears remain

Wind industry groups have

welcomed the security offered by

the recent amendment of Germany’s

long-term target for offshore wind

but there are concerns over the

feasibility of reaching those targets.

Page 6

The carbon clock is ticking

Time is running out for accelerating

cuts in carbon emissions.

Page 12

We need monumental green

investment

Designing green stimulus packages

is hard and complicated and requires

a monumental effort from many

parties.

Page 13

Staying safe during

lockdown

The Covid-19 lockdowns has seen

an increase in cyber attacks – a

scenario for which organisations are

unprepared.

Page 16

Technology Focus: From

coal to biomass

A project to convert the Konin

lignite power plant to burn biomass,

shows a straightforward route to

cutting carbon emissions in Poland.

Page 17

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There is growing support for investing in a low carbon, sustainable economy as a way of

addressing both the global economic crisis and climate change. Junior Isles

Biden sees green in US revival

THE ENERGY INDUSTRY

TIMES

Final Word

Hydrogen no longer

gets a bad rap,

says Junior Isles.

Page 18

A growing number of governments are

placing sustainability and the transi-

tion towards a green energy sector at

the heart of their economic recovery

plans.

In July, 40 ministers from the world’s

biggest energy consumers – including

China, US, EU and India – represent-

ing more than 80 per cent of the world

economy gathered at the International

Energy Agency’s (IEA) Clean Energy

Transitions Summit to discuss how to

bring about a sustainable and resilient

recovery from the Covid-19 crisis and

achieve a denitive peak in global car-

bon emissions.

The meeting was the culmination of

a series of key IEA activities in recent

months and followed just weeks after

a Special Report on Sustainable Re-

covery presented in June by the Paris-

based agency.

In an analysis carried out in coop-

eration with the International Mone-

tary Fund, the report shows that the

set of policy actions and targeted

investments over the 2021-2023 pe-

riod can achieve a range of signi-

cant outcomes.

IEA Executive Director Dr Fatih

Birol said: “Policymakers are having

to make hugely consequential deci-

sions in a very short space of time as

they draw up stimulus packages. Our

Sustainable Recovery Plan provides

them with rigorous analysis and clear

advice on how to tackle today’s major

economic, energy and climate chal-

lenges at the same time. The plan is

not intended to tell governments what

they must do. It seeks to show them

what they can do.”

Governments, as well as a group of

investors representing more than $12

trillion in assets, welcomed the rec-

ommendations in the IEA report. Dan

Jorgensen, Denmark’s Climate Minis-

ter, said: “This report clearly shows

that economic recovery and job cre-

ation go hand-in-hand with the green

energy transition. The IEA’s ‘Sustain-

able Recovery Plan’ shows us the way

forward.”

Last year, the global energy industry

employed around 40 million people

but 3 million of those jobs have been

lost or are at risk due to the Covid-19

pandemic.

The IEA says its proposal would

boost global economic growth by an

average of 1.1 percentage points a

year and save or create roughly 9 mil-

lion jobs a year. The largest portion of

the new jobs created would be in ret-

rotting buildings to improve energy

efciency, and in the electricity sector,

particularly in grids and renewables.

The plan would also reduce annual

global energy-related greenhouse gas

emissions by a total of 4.5 billion

tonnes by the end of 2023.

Achieving these results would re-

quire global investment of about $1

trillion annually over the next three

years. This sum represents about 0.7

per cent of today’s global GDP and

includes both public spending and pri-

vate nance that would be mobilised

by government policies.

Recent IEA analysis shows that

global energy investment is set for an

unprecedented plunge of 20 per cent,

or almost $400 billion in 2020, raising

serious concerns for energy security

and clean energy transitions. Power

sector spending is on course to de-

crease by 10 per cent in 2020, accord-

ing to the IEA’s World Energy Invest-

ment 2020 report (see page 10).

The European Commission has put

climate programmes at the heart of its

massive economic recovery effort. As

member states begin to shape their re-

covery plans, several have already

announced stimulus packages that in-

clude green measures.

In December, the European Com-

mission led by new President Ursula

von der Leyen launched the European

Green Deal in a bid to make the EU

climate-neutral by 2050. This plan

quickly faced the added challenge of

Continued on Page 2

US Democratic presidential nominee

Joe Biden is putting clean energy at

the heart of a $2 trillion plan to revive

the US economy and stop all climate-

damaging emissions from US power

plants by 2035. Under his plan the US

would also rejoin the Paris climate ac-

cord and reduce emissions to net zero

by 2050.

Biden said his clean energy plan

would create “millions of good-pay-

ing jobs” in sectors from construction

to electric-vehicle manufacturing and

the decommissioning of abandoned

oil and gas wells.

In what was his rst detailed policy

statement on energy, Biden highlight-

ed the clear difference in energy poli-

cy between him and President Donald

Trump. “When Donald Trump thinks

about climate change, the only word

he can think of is hoax,” said Biden.

“When I think about climate change,

the word I think of is jobs.”

US environmental group Sierra

Club said the former Vice President’s

plan “stands in stark contrast to the ac-

tions by Donald Trump, who has re-

peatedly denigrated the clean energy

industry, which had employed 3.4

million people before the pandemic”.

Biden’s proposal does not go as far

as some measures in the Green New

Deal, the sweeping proposal from

progressives in Congress that calls for

achieving net-zero greenhouse gas

emissions across the economy by

2030. It does, however, go further

than the House Democrats’ proposal,

which sets a 2040 deadline for stop-

ping fossil fuel power production.

The American Wind Energy Associ-

ation (AWEA) lauded Biden’s cam-

paign. Tom Kiernan, CEO of AWEA

said: “As our country strives to recover

from the global pandemic, racial injus-

tices, and economic recession, this is

the right moment to grow the invest-

ments and good-paying American jobs

associated with renewable energy de-

velopment, including the signicant

economic benets, lower cost electric-

ity bills, and diverse community sup-

port that wind energy brings to rural

parts of the country.

“The American wind industry is

prepared to rapidly grow its 120

000-person workforce to help our

country achieve a 100 per cent car-

bon-free electric grid by 2035, lead-

ing the way as other sectors of the

economy begin to rely more and more

on clean, affordable electricity to

power businesses and communities.”

The Trump campaign said Biden’s

“radical” clean energy proposals

made clear that “union jobs related to

oil, natural gas, fracking and energy

infrastructure will be on the chopping

block”.

Mike Kelly, a Republican congress-

man from Pennsylvania, where the

economy relies heavily on the oil and

gas sector, accused Biden of planning

to kill more than 600 000 jobs that are

supported by fracking in the state.

Energy transition

is key to global

recovery

Jorgensen: economic recovery and job creation go

hand-in-hand with the green energy transition

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THE ENERGY INDUSTRY TIMES - JULY/AUGUST 2020

Asia News

Syed Ali

The Australian government’s new pro-

posal to tackle climate change will

focus on the use of low carbon tech-

nologies including hydrogen and bat-

teries. It hopes to turn the latest pro-

posal, put forward at the end of May,

into formal policy in September.

The new plan is based on scaling up

hydrogen production, driving down

energy storage costs to back up wind

and solar power, and electrifying in-

dustrial processes.

The so-called Technology Roadmap

is designed to help Australia meet its

Paris Climate Accord commitment to

cut carbon emissions by between 26

per cent and 28 per cent from 2005

levels by 2030.

“At its core, this is about technology

not taxes. It means reducing emissions,

not reducing jobs and the economy,”

Energy and Emissions Reduction Min-

ister Angus Taylor said in a statement.

The proposal essentially supports a

trend that is already gaining momen-

tum. Notably, the roadmap states that

the development of a hydrogen indus-

try in Australia would create 7600 jobs

by 2050, an area that is witnessing

signicant activity.

In mid-July the Australian Hydrogen

Council and the Clean Energy Council

(CEC) signed a Memorandum of Un-

derstanding (MoU) to jointly explore

the potential for hydrogen-based en-

ergy projects in the country. Also in

July, the Territory Government re-

leased the Northern Territory’s rst

ever Renewable Hydrogen Strategy.

“There is growing momentum for

the development of large-scale, clean

hydrogen, given Australia’s riches of

wind and sun – particularly for the

export market,” said CEC’s Chief

Executive Kane Thornton. He cited

estimates by the Australian Renewable

Energy Agency (ARENA) showing

that hydrogen exports from the country

could reach A$1.7 billion ($1.19 bil-

lion) per year by 2030, provided that

the right conditions are in place.

In recent months Commonwealth

and State Governments have an-

nounced a number of funding and

policy developments dedicated to “en-

ergising” Australia’s position in the

global hydrogen economy. Notably,

the Clean Energy Finance Corpora-

tion’s (CEFC) $300 million Advanc-

ing Hydrogen Fund launched in May

is one of the largest commitments made

to the hydrogen sector by any govern-

ment in the world. The fund is aimed

at building investor condence in the

Australian hydrogen industry.

Investors have already launched or

announced plans for several hydrogen

schemes. ARENA says it has received

proposals for renewable hydrogen

projects worth over A$3 billion in its

rst funding round for large-scale proj-

ects in the country.

In June a newly formed Australian

renewable energy company called

Austrom Hydrogen unveiled ambi-

tious plans for what it says could be a

massive 3.6 GW solar hydrogen proj-

ect near the Port of Gladstone in central

Queensland.

Other projects include the 15 GW

Asian Renewable Energy Hub and the

10 GW Sun Cable project. Siemens is

also proposing a 5 GW green hydrogen

project in Western Australia, and BP is

considering a 1.5 GW solar and wind

hydrogen plant in the same area.

The growing use of wind and solar

has also seen battery storage touted as

a key technology in the roadmap.

A recent study by consultancy group

Wood Mackenzie showed energy stor-

age capacity in Australia is expected to

increase by 1.2 GWh this year, bring-

ing the country’s total to 2.7 GWh.

In late June Transgrid, the operator

of the electricity transmission network

in the Australian state of New South

Wales agreed a grid connection for a

720 MW solar farm coupled with up

to 400 MWh of battery storage.

In South Australia, meanwhile, regu-

lators authorised an expansion of the

capacity of the 100 MW/129 MWh

Tesla battery at the 315 MW Hornsdale

wind farm operated by French renew-

able energy company Neoen.

n Queensland Parliament has intro-

duced the ‘Forest Wind Development

Bill 2020’ to advance planning of the

1200 MW onshore wind farm. The For-

est Wind farm has the potential to be-

come the largest onshore wind farm in

the Southern Hemisphere.

Australia backs low carbon

technologies

Australia is looking to low carbon technologies, including hydrogen and batteries, in the ght against climate change.

n Government plans 12 GW of

offshore wind by 2030

n Nuclear plants to be scrapped

South Korea is turning to offshore wind

as the government moves to reduce its

dependence on coal and calls for a halt

to new nuclear plant.

In mid-July President Moon Jae-in

pledged to expand the country’s off-

shore wind power capacity 100-fold

by 2030 as a key engine for the nation’s

transition to renewable energy and

environmentally-friendly growth.

Under the plan, the government

aims to expand offshore wind capac-

ity to 12 GW by 2030 from the current

124 MW. According to the Ministry

of Trade, Industry and Energy, it will

complete the construction of offshore

wind farms with a combined capacity

of 2.4 GW by 2028.

Moon said: “The government’s goal

is clear and is to become one of the

world’s top ve offshore wind energy

powerhouses by 2030, taking advan-

tage of our geographical advantage of

being surrounded by water on three

sides.”

Moon projected the offshore wind

energy industry would create up to ten

times more quality jobs than other elec-

tricity generation sectors, and create

new demand for the shipbuilding, steel

and construction industries.

The ministry says it will rst carry

out studies by building offshore wind

power facilities with a combined

capacity of 400 MW before beginning

full-edged construction in 2023.

The news came as Norwegian oil

giant Equinor announced plans to

build the world’s largest offshore

oating wind farm. Construction of

the 800 MW Firey project is sched-

uled to start in 2023 for possible start

of electricity production in 2026.

A week before announcing its off-

shore wind plan, South Korea unveiled

its Green New Deal, which will see

investment of Won73.4 trillion ($61.2

billion) to transform the nation’s fossil

fuel-reliant economy as a way of re-

covering from the economic downturn

caused by the coronavirus crisis.

He promised to introduce “post-

coal” policy in line with his campaign

promise to abandon coal power to ease

air pollution.

Moon also vowed to scrap all plans

to build new nuclear reactors. “I will

scrap all preparations to build new re-

actors currently under way and will not

extend the lifespan of current reac-

tors,” he said. “South Korea is not safe

from the risk of earthquake, and a

nuclear accident caused by a quake can

have such a devastating impact.”

South Korea currently operates 25

nuclear reactors, which generate

about 30 per cent of the country’s

power supply.

Investors in Vietnam’s solar power

plants are concerned that transmission

grid issues will prevent them from

meeting a year-end deadline after

which tariffs might be reduced.

Twenty-ve plants are currently be-

ing built and investors are rushing to

nish them to secure the feed-in tariff

of 7.09 ¢/kWh for 20 years. Investors

fear tariffs will be reduced further in

the new year following an earlier cut

from 9.35 cents in June last year.

Energy company Hado Group is

building a 50 MW solar farm in the

central province of Ninh Thuan, and

was scheduled to become operational

in July. However, Nguyen Huu Vinh,

Deputy Chairman of the group’s en-

ergy development board, said at a re-

cent meeting that since a transmission

line would not be completed by Sep-

tember, the operation date of the plant

might be delayed.

The second phase of the 104 MW Sao

Mai Solar Power Plant in southern An

Giang Province, the rst solar farm

there, faces a similar problem.

Eleven solar farms began operating

in July, bringing the total number in

the country to 110 with a total capac-

ity of 5482 MW, or 9.5 per cent of

Vietnam’s electricity supply. So far 35

have qualied for the 7.09 cents tariff.

National utility Vietnam Electricity

(EVN) said it has been making efforts

to enable more solar power plants to

connect to the national grid. The Na-

tional Load Dispatch Center (NLDC)

said it has been upgrading transmission

lines in Ninh Thuan and Binh Thuan

provinces to accommodate new re-

newables projects.

The country’s power grid has strug-

gled to keep up with the proliferation

of renewables coming online. Al-

though progress has been made, major

infrastructure updates are required to

ensure the grid is ready for the wave

of new projects.

In late June Vietnam gave the go-

ahead to build 7 GW of new wind en-

ergy plants. The move comes as fears

mount that Vietnam could face severe

power shortages from 2023.

Amid such concerns, the country re-

leased a new energy strategy earlier this

year that strongly promoted wind and

solar energy, with ambitions to source

up to 20 per cent of the country’s elec-

tricity from renewables by 2030.

Japan’s promise to cut support for coal

power in the developing world is be-

ing hailed as a turning point in the

country’s climate change policy.

A new policy announced in July will

curtail an important source of ofcial

nance for coal power stations in

southeast Asia and help spur a re-

gional shift towards cleaner energy.

Shinjiro Koizumi told the Financial

Times: “[Until now] Japan’s attitude

was that if we can sell, then we should.

That is completely changed. In prin-

ciple, there will be no support.”

Under the new policy, Japan will

only support exports of the most ef-

cient ultra-supercritical plants, and

only when the buying country has a

decarbonisation strategy in place.

The announcement followed news

that Japan will close most of its aging

coal red plants, about 100 units by

2030, as it shifts towards more renew-

ables. Japan currently relies on coal

for about a third of its energy needs.

Offshore wind will form the bulk of

replacement capacity, with plans to

add 1 GW each year over the coming

decade, eventually reaching a com-

bined 30 GW by 2040.

S. Korea bets

on offshore

wind

Transmission issues threaten

Vietnam solar sector

Japan turns its back on coal

emissions by up to 65 per cent.

Gas red power plants emit just

350g of carbon per kWh compared to

more than 500g for coal in modern

plants. As the cleanest fossil fuel, gas

has a unique ability to deliver deep

and rapid emissions reductions across

many sectors. This will help make a

real and vital difference in the imme-

diate term when it comes to making

the strides, we all want to see on de-

carbonisation.

The benet of this approach is that

it can be carried out quickly while

making the most of the existing en-

ergy infrastructure. Lignite and hard

coal red power plants, reneries,

large chemical plants and steelworks

can, with the right remodeling, be re-

purposed to support generation from

gas. In this way, these reliable assets

can have their life extended, while

also playing a vital role in the energy

transition.

Gas’ most important role, though,

will be to act as a vital emissions-re-

ducing tool today while transforma-

tive technologies like synthetic fuels

are developed and scaled up. Decar-

bonising gas to produce blue hydro-

gen in addition to displacing fossil

fuels with green hydrogen produced

by renewables-powered electrolysis

equipment – otherwise known as

power-to-gas (P2G) – should be at the

centre of the energy sector’s innova-

tion efforts.

Hydrogen from natural gas and P2G

would make it possible to avoid 90

per cent of the greenhouse gases emit-

ted by conventional fuels. Both blue

and green hydrogen can be used in

fuel cells to power various forms of

transportation and – thanks to fuel

cells only emitting water – make them

dramatically climate friendlier.

When combined with captured

, hydrogen can produce climate-

neutral chemicals and fuels like

synthetic diesel and synthetic aircraft

fuel. Introducing the use of climate-

friendly gas, therefore, will be a

major step towards energy system

transformation.

But no company can change things

alone. The transformation the world

needs can only come from a collec-

tive effort, with various stakeholders

working as one, pooling expertise and

breaking out of sector silos. This

means as an industry we can take

important decisions together and nd

solutions that meet the world’s grow-

ing energy needs while safeguarding

the planet for future generations.

For instance, scaling up processes

like P2G and synthetic fuel develop-

ment will require coordinated action

from the energy sector, industry,

transport, policymakers, govern-

ments and NGOs – as well as trillions

of euros of investment. The situation

demands policy and regulatory

e are living through uncer-

tain times. Across Europe

and the rest of the world, the

pandemic continues to hold back nor-

mal life and we are now set the test of

trying to kickstart economonies again.

However, as we deal with Covid-19

and work together towards a more

positive future, we must continue to

focus on evolving the energy industry

to reduce carbon emissions.

The current crisis has highlighted

just how interconnected we are and

how the solutions to our biggest chal-

lenges demand a connected effort.

Health systems, businesses, the travel

industry, governments and their citi-

zens will all need to work together to

coordinate an effective response.

The energy industry is no exception.

Energy generators are doing all they

can to ensure safe conditions for

power station workers so that they

can keep the lights on for all of us.

Our sector’s work and the people that

carry it out are more important than

ever – after all, the energy system is a

vital public utility that everyone relies

on.

At the same time, it is vital that we

do not allow this crisis to halt the

progress we have already made to-

wards decarbonisation but accelerate

it even further. The wave of climate

awareness over the past couple of

years was needed and it has pushed

decarbonisation to the top of the po-

litical and societal agendas – with

potential to unify sentiment across

Europe.

Over the past few years, the energy

sector has reduced CO

emissions

faster than the transportation, steel,

chemical or cement industries. This is

a great achievement but limiting the

rise in global temperatures to well

below 2°C is an urgent priority and

we need to nd ways to make quicker

inroads to reduce carbon emission

levels.

So far, governments’ main response

to this challenge has been to subsidise

green energy sources, like wind and

solar, and penalise grey ones. Renew-

ables now provide about 19 per cent

of Europe’s energy, 14 per cent of

North America’s and 14 per cent of

China’s. These percentages are ex-

pected to keep growing steadily, but

given its intermittency, having renew-

ables provide 100 per cent of these

markets’ energy is not possible.

But despite these achievements,

global carbon emissions keep rising

and show no sign of abating. This is

partly because energy demand contin-

ues to rise – as much as 23 per cent

ahead of 2040 – and much of this de-

mand, particularly in Asia, is being

met with coal. In the current Covid-19

crisis, it is indeed true we have seen

an unprecedented drop in global en-

ergy demand. This is one of the fac-

tors behind the UK going without

coal red power generation for the

longest period since the Industrial

Revolution in April. However, this is

only a temporary dip and demand will

quickly resume its escalating trend-

line after lockdowns lift across Europe

and the rest of the world.

It’s also true that many growing

business sectors – transport and

chemicals, for example – still rely

predominantly on fossil fuels and do

not have any viable alternatives at

present. As these sectors grow, so will

their carbon emissions, with transport

alone project to grow 434 per cent

ahead by 2040.

The addition of wind and solar

farms steadily increases the supply of

clean electricity in the energy mix,

but the global energy demand and the

fossil fuel reliance of many growing

economic sectors are making humans’

climate impact progressively worse,

not better. The reality is that the in-

creasing role of renewables in the

energy mix will never be big enough

on its own to counteract these two

prevailing factors. As a planet, we are

repeatedly taking one step forward

and two steps back.

In the face of ever-increasing energy

demand, producing more energy

while achieving the meaningful emis-

sion reductions that the world needs

will require pragmatism and a will-

ingness to promote evolution.

Moving from coal red generation

to gas is the fastest way to decarbonise

the energy industry, while at the same

time rapidly reducing emissions in

heavy industry, space heating and

transport. Converting these and other

sectors to clean burning natural gas is

the quickest and most cost-effective

option for Europe to reduce its carbon

THE ENERGY INDUSTRY TIMES - JULY/AUGUST 2020

Industry Perspective

Time is running out for accelerating cuts in carbon emissions. Ambitious action is needed from the energy sector and

governments in Germany, the UK and elsewhere to create a hydrogen economy, says Andreas Schierenbeck

The carbon clock is

ticking

changes with real vision.

At their outset, the likes of blue and

green hydrogen will not be economi-

cally competitive compared to other

more polluting fuels, and renewables

can’t do it alone. Let’s not fool our-

selves here. Solar and wind will never

cover 100 per cent of our energy

needs in a stable manner. In reality, it

will barely exceed 60 per cent. The

net-zero emissions energy mix of the

future will be based on renewables

and hydrogen, in addition to hydro

and nuclear. And there will also still

be a place for fossil fuels.

To achieve this more environmen-

tally friendly energy sector, we need

to see more ambitious plans from

governments in Germany, the UK and

elsewhere on the creation of a hydro-

gen economy.

Beyond top-down policy changes,

companies serving different aspects

of the energy industry should look for

synergies between their businesses

and ways they can collaborate to ca-

talyse decarbonisation. This was the

approach behind the cooperation

agreement Uniper signed with Sie-

mens Energy, which commits both

companies to decarbonising coal red

power plants – as part of Uniper’s

mission to close or convert its coal

red power plants in Europe by 2025

– while also looking to the future and

investing in green hydrogen projects.

Energy companies can also have a

huge role to play in helping other in-

dustries lower their emissions, by

identifying companies that need CO

for their production processes and

partnering to develop carbon recy-

cling businesses. Carbon recycling

involves transforming CO

into a

valuable green resource. It could

permanently bind large amounts of

in building materials and other

products, preventing it from entering

the earth’s atmosphere. In this way,

we could create a global carbon recy-

cling industry – much like we already

have for plastic, glass and other waste.

For a long time, the energy sector

has simply been seen as perpetuating

climate change, but in recent years

tangible steps and innovations with

real promise are being developed on

the road to successful decarbonisa-

tion. We cannot let the current situa-

tion with Covid-19 temper the posi-

tive pace of change that we have seen

or for those within the industry to re-

trench and focus on maintaining

business continuity. We must continue

to look to the future and nd ways that

we work together to make signicant

and growing reductions to carbon

emissions.

Andreas Schierenbeck is CEO of Uni-

per SE, an international energy com-

pany headquartered in Düsseldorf,

Germany.

Schierenbeck: scaling up

processes like P2G and

synthetic fuel development will

require coordinated action

istributed and digitalised en-

ergy will power the world.

The sooner we get there, the

better for the environment, societies

and economies. The technologies to

create this new energy world exist,

though the speed at which we adopt

and scale them depends largely on

government regulation and how

post-Covid-19 stimulus packages are

designed.

Stimulus spending that ignores the

climate crisis is short-sighted and

will hinder future growth. But de-

signing green stimulus plans is hard

and complicated. We can’t just copy

past efforts, such as after the Great

Recession of 2007-09, which largely

disregarded long-term climate goals.

The economic boom that followed

that crisis led to emissions of un-

precedented levels. However, the ex-

tra time and effort it takes to develop

plans with longevity will ultimately

increase the monetary and environ-

mental return on investment for

years to come and make industries

more resilient to future crises.

Any stimulus packages must con-

sider the environmental impact of

the industries they support. They

should focus public investments and

investment programmes on energy

efciency, green electricity, demand-

side exibility and climate-friendly

mobility.

It’s understandable that govern-

ments are struggling to gure out

how to best support essential indus-

tries such as aviation and manufac-

turing, which are large polluters and

rely heavily on fossil fuels. Simply

not supporting them, as some groups

are demanding, is neither economi-

cally viable nor socially tenable.

However, considering schemes

such as the German Abwrackprämie

of 2009 that paid consumers to scrap

their cars and buy new, supposedly

cleaner ones, is also not the way for-

ward. That scheme simply ignored

emissions produced during manufac-

turing. It’s promising to see that the

German post-Covid-19 stimulus pro-

gramme includes €2.5 billion sup-

port for electric vehicle (EV) tech-

nology and charging infrastructure

and that it has not adopted the Ab-

wrackprämie again.

I hope that most governments will

not support industries so that they

can simply return to pre-pandemic

levels and that any assistance will be

tied to enforceable commitments to

reshape and modernise operations.

Any stimulus plan, however ambi-

tious in its green efforts, will only be

fully effective if regulation keeps up.

The German stimulus programme is

a promising start. It now needs to

follow up with rapid legislative and

regulatory changes. Enthusiasm to

invest in photovoltaic technologies

was curbed by the 52 GW cap that

was in place in Germany until June

this year. It seems that everyone,

from politics to industry, wanted to

see it lifted. But despite repeated

promises, no denite legislation was

passed until time nearly ran out.

Likewise, regulation regarding the

distance between onshore wind and

residential areas, plus offshore wind

restrictions, was making it unneces-

sarily hard for renewables. These

last-minute changes need to be re-

placed by a much quicker and for-

ward-looking legislative process in

the future.

To drive the energy transition for-

ward, regulations and incentive

schemes, such as exible grid usage

fees, need to be introduced to allow

an efcient load management of the

grid, enable the use of demand-side

response capabilities and avoid the

unnecessary and costly expansion of

the electricity distribution system. As

EVs will play an important role for

load management and grid stabilisa-

tion, regulation needs to keep up

with the progress of vehicle-to-grid

technologies.

Europe and individual states need

comprehensive green energy bills.

Instead of amending the Renewable

Energy Sources Act, that reects

past conditions and has become out

of touch with progress, Germany

should establish future-oriented

laws. These need to reect current

energy market developments, where

participation and the strong commu-

nity aspects of green energy are

promising both economically and

environmentally.

Broadly, this means that subsidies

should be replaced by incentives for

sustainable business models. More

specically, we need a clear regula-

tory framework around renewable

generation and self-consumption, en-

suring the economical remuneration

of exported surplus for instance. We

need incentives for small-scale exi-

bility aggregation, mandatory mar-

ket-wide regular settlement and an

acceleration of digitalisation in all

European countries.

At the same time, the European

Green Deal must not be pared back.

Doing so would send contradictory

signals to business and investors and

make them question their plans, even

though the direction in which the en-

ergy world is moving is clear.

Worldwide lockdowns have led to

what is likely to become the largest

drop in energy demand in history ac-

cording to the International Energy

Agency. The only winner will be re-

newable energy sources (RES).

Compounded by the ongoing shift to-

wards RES, this is leading to fossil

fuel consumption becoming consid-

erably less protable at the same time

as becoming less and less acceptable.

The drop in energy demand has

also accentuated that current grid

management systems are outdated.

In the rst quarter of 2020, renew-

able energy generation hit records

globally. In Germany, over 50 per

cent of electricity came from RES.

Average energy prices in April were

about 50 per cent cheaper compared

with the same month last year. The

large amount of negative pricing at

the European Energy Exchange this

year shows the grid management

system’s rigid nature, lack of exi-

bility and inability to manage vary-

ing loads and demand.

Even with current technology, Ger-

man solar and wind power could

provide 1200 TWh of electricity an-

nually, nearly double the current an-

nual demand of 600-650 TWh. So

far, less than a third of the potential

of RES is being used. Distributed

energy resources (DER) unlock this

potential.

The one-directional interactions of

centralised power plants with house-

holds are being replaced by a large

number of multi-directional interac-

tions between many market partici-

pants. Grid management has become

an entirely new ball game, with in-

teresting new possibilities such as

demand-side response technology. In

the rst quarter of 2020, over 167

000 new EVs were registered in Eu-

rope according to the European Au-

tomobile Manufacturers’ Associa-

tion. Using them for energy storage

and grid regulation via vehicle-to-

grid technology on a large scale is

within close reach.

The millions of DER, prosumer

communities and meter readings as

often as every second are leading to

a large increase in data that needs to

be processed efciently and securely.

Legacy systems are struggling to

handle this data-driven energy mar-

ket. Managing DER is a challenge.

But it’s a challenge we not only

know how to handle, but are turning

into an opportunity by creating prof-

itable new business models on the

one side and convenient, affordable

and enjoyable energy products for

consumers on the other.

In the future, energy won’t be a

cumbersome, non-transparent ne-

cessity but a lifestyle choice made

with customer interest and engage-

ment. With the right regulations in

place, small-scale energy producers

will be able to supply themselves

and maximise investment by feeding

surplus energy back to the grid when

it’s needed. Consumers will get un-

derstandable and lower energy bills.

Mobility will be fully decarbonised.

To harness the full potential of

RES and manage DER protably,

we need scalable, modular cloud-

based solutions that can operate in

multi-national contexts and adapt to

the diversity of use cases that are

now emerging. Such solutions need

to be able to integrate smoothly with

both existing and new, ever-evolving

systems. This requires a high degree

of digital prowess.

The current pandemic shows that

while all physical interactions are

impacted, the digital space is resil-

ient. The lesson for the energy indus-

try should be clear: digitalisation and

automation make us robust and cri-

sis-proof. Digitalising processes

across all market participants will al-

low us to harness the full potential of

DER and demand-side response,

plus be a key differentiator on the

export market. The recent establish-

ment of the balancing platform

Equigy by three of Europe’s largest

grid operators – TenneT, Swissgrid

and Terna – shows that grid opera-

tors have understood the need to

manage small-scale exibilities to

balance the grid.

The technology to digitalise energy

exists, all that remains to do is to im-

plement it on a large scale. If we ap-

plied some of the thinking, focus and

investment that took man to the

moon in the space of just one de-

cade, it could transform the energy

sector quickly.

Governments need to not just make

green promises but enable regula-

tions accordingly, and investors and

banks need to apply ethical, environ-

mental standards to their investment

decisions, as businesses demand re-

assurance and need encouragement

and pressure. At the end of April, an

association of 68 German companies

from various sectors, including ener-

gy suppliers EnBW, E.On, Innogy

and Vattenfall, called upon Angela

Merkel to ensure that climate policy

is embedded in German stimulus

plans. This was echoed in requests

from highly energy-intensive indus-

tries such as steel, cement, metal and

chemistry that have until recently

opposed environmental measures.

Protecting the climate, investing in

future-proof technologies and driv-

ing digitalisation are urgently neces-

sary and protable. Let’s not squan-

der that potential, or our talents and

skills, because it’s a bit more dif-

cult to do so than not. Let’s galvan-

ise our strengths and change the

course of our destiny. It’s still possi-

ble, but it requires a monumental ef-

fort from many parties. Humankind

is able to do this, as it has proven

during past crises and throughout de-

cisive moments in history.

Christian Chudoba is Founder &

CEO at Berlin-based Lumenaza,

which develops software to connect

producers and consumers of green

distributed energy.

Protecting the

climate, investing

in future-proof

technologies and

driving digitalisation

are urgently

necessary and

protable. Yet

designing green

stimulus plans is

hard and complicated

and requires a

monumental effort

from many parties

Christian Chudoba

Why we need a monumental

green investment now

THE ENERGY INDUSTRY TIMES - JULY/AUGUST 2020

Industry Perspective

Chudoba: We can’t just copy

past efforts, such as after the

Great Recession of 2007-09,

which largely disregarded

long-term climate goals

long term strategy.

“Hitachi has invested in its multi-

billion dollar business on the digital

side for many years and this compe-

tence and know-how, together with

the hardware and software for the OT

[operational technology] side. It’s a

unique opportunity for us to join

forces and provide additional value to

all the key stakeholders.”

Facchin sees the tie-up as wholly

complementary. “Utilities have the

lion’s share of our revenues but we

also serve industry, transport and in-

frastructure, which is about a third of

what we do from a Power Grids

standpoint.

“When you look at Hitachi, they

also have energy and utilities but are

less relevant, so we complement each

other, but they are much more relevant

than Power Grids in smart cities,

buildings, IT, mobility and rail. So

these are areas where we will be able

to leverage their strength and technol-

ogy. And these are the segments that

we had identied, even before the

deal, as high growth. So although we

were well-positioned before, we are

even better positioned now going

forward.”

And going forward the strategy of

Hitachi ABB Power Grids will be

partly a continuation of the 2025

Strategy that ABB put in place in

2017. “The new company will con-

tinue with the strategy we put in place

to address the energy transition. What

will change when we are with Hitachi,

is the opportunity to create growth

and synergies.”

According Facchin, there are cost

synergies mainly on “the back end”.

Carving out the Power Grids busi-

ness from the ABB Group will not

only allow market synergies but also

customer segment and technology

synergies.

“The most obvious synergies will

come from combining our expertise

on the energy side and OT side with

their expertise in the IT and digital

space,” he said. “To tap into these

synergies, we will have to invest

mainly in the front end.”

Beyond this, Facchin does not an-

ticipate much of a footprint change in

terms of manufacturing and engineer-

ing centres, as there is almost no

overlap. “We are a $10 billion busi-

ness in the T&D space; Hitachi’s

business in that area is a fraction of

that and that is in Japan, where we are

not relevant.”

This gives the joint venture (JV) the

opportunity to leverage its platform

and grow in the Japanese market,

while at the same time leveraging the

n accordance with an agreement

signed in December 2018, Hitachi

Ltd and ABB Ltd recently an-

nounced the completion of all the re-

quired procedures as planned, despite

the challenges of the global pandemic.

Just weeks after completing the

deal, Claudio Facchin, formerly

President of ABB’s Power Grids busi-

ness and now CEO of the new com-

pany Hitachi ABB Power Grids,

spared some time to outline how the

new venture will benet both compa-

nies and the industry.

According to Facchin, Hitachi’s ac-

quisition of the majority of ‘Power

Grids’ is in some ways the culmina-

tion of a strategy that ABB Power

Grids rst embarked on in 2015 (with

the HVDC joint venture in Japan) –

although he points out that it is more

“the start of the journey than the end”.

Around ve years ago, ABB began

an internal reorganisation to form

Power Grids by pooling together dif-

ferent parts of the business to create a

stronger portfolio and team in order to

address the needs of the energy sector

in terms of transmission and distribu-

tion and the increasing drive towards

electrication.

Facchin noted that the move would

address what the company could see

was a “tremendous ongoing transfor-

mation” occurring in the market. This

transformation, which has been ac-

celerating in recent years, continues

to see a growing amount of distributed

energy resources such as intermittent

renewables on the grid.

This, says Facchin, was creating

challenges for utilities trying to inte-

grate and manage all of these new

energy sources, while at the same

time dealing with changing consumer

behaviour and patterns in consump-

tion brought about by, e.g. prosumers.

The changing markets also meant

utilities were having to transform

business models and adjust invest-

ment. At the same time, decarbonisa-

tion efforts were beginning to drive

the electrication of vehicles and

buildings, adding new complexities.

“The transformation that we were

seeing was coming at a much faster

pace than we had seen, and it was on

a global scale. While in the past we

saw regional or local trends in differ-

ent parts of the world, this transfor-

mation is global. It is at different

stages of maturity from market to

market but all the markets are more or

less on the same curve – everyone is

seeing the same trends and all are

seeing the need for more investment

in transmission and distribution and

digitalisation.”

In addition to reorganising its team

and resources to address the changing

market, ABB Power Grids also em-

barked on an internal transformation

programme to adjust its portfolio to

meet its customers’ needs as well as

their future needs. This meant invest-

ing in more digital technology and

products to address power quality, as

well as investing in grid edge technol-

ogy to allow distributed energy

sources to be delivered efciently and

reliably.

However, ABB saw the need to take

this transformation to the next stage.

Facchin noted: “A few years ago,

we also communicated that we would

be looking for partners to help us go

through this transformation. And fast

forward to 2018, we announced the

intention to create the joint venture

with Hitachi.”

On December 17, 2018, Hitachi

signed an agreement with ABB to

acquire 80.1 per cent of ABB’s

Power Grids business for $6.85 bil-

lion, with an option to acquire the

remaining 19.9 per cent. The deal

closed on July 1st.

Following the closing of the deal,

Facchin said: “Hitachi saw the op-

portunity of translating their long

term strategy – of which the energy

transition is the centrepiece – to make

sure they would be a major player

from a global perspective. It was their

opportunity to acquire the global

leader in that space.”

The deal was also a chance for Hita-

chi to invest more in technology that

would support more electrication,”

said Facchin.

Due to its size, the deal – which

values ABB’s Power Grids business

at $11 billion and covers factories and

engineering centres, etc., in 90 coun-

tries – took 18 months to complete.

“We had to create a programme to

carve out all of that. We set up a

standalone unit to take the corporate

functions and corporate resources

(that used to be commonly shared

within the ABB Group) under Power

Grids from January until closing of

the deal, which we managed to do on

time despite the current challenges.

“The deal makes sense for the whole

energy space and us because it gives

ABB the opportunity to focus on the

industrial side – to support and create

value for the industrial customers

through digitalisation to improve

productivity. We can then take the

energy part of the portfolio and work

together with Hitachi. With the acqui-

sition of the Power Grids business,

Hitachi create, inorganically, the en-

ergy platform and implement their

THE ENERGY INDUSTRY TIMES - JULY/AUGUST 2020

Executive Interview

Following the recent completion of the deal between ABB and Hitachi to form Hitachi ABB Power Grids, TEI Times

caught up with Claudio Facchin, CEO of the new entity, to discuss what the joint venture means to both companies

and the market. Junior Isles

Creating smarter

synergies

cost of access to that market as well as

the technology that Hitachi has out-

side of Japan.

Facchin explained: “The single

most evident opportunity for us to

create synergies with Hitachi is by

putting in the digital scale that they

have.

“They have the Lumada horizontal

digital platform that we will be able to

leverage. It will add forecasting and

predicting capabilities, with machine

learning to further improve our own

energy management and distribution

management systems that we already

have depaloyed.”

ABB Power Grids’ Strategic Plan

2025 focuses on investment that

drives technology for a sustainable

energy transition, so grids can be

“stronger, smarter and greener”. This

means investing in bulk transmission

of large scale renewables, e.g. HVDC

for offshore wind, as well as in tech-

nology to address power quality

caused by intermittent energy sources,

e.g. static variable compensators

(SVC) and exible AC transmission

systems that are needed to stabilise

the grid.

There will also be more investment

in distribution systems such as mi-

crogrids and grid edge technology,

including battery storage, along with

all the control systems and software

required to manage demand response

and increase the reliability and resil-

ience of those distributed systems.

In line with the whole digitalisation

trend, ABB Power Grids has been

putting intelligence into its power

transformers so they can communi-

cate and thereby optimise opex and

capex in the planning and execution

phase, as well as in operation and

maintenance.

It is too early say how the strategy

of the joint venture will change be-

yond 2025. While there might be

updates, Facchin concludes that the

direction of travel will likely be in

line with both companies’ existing

strategies.

“Hitachi communicates its strategy

every two years, with the next update

planned for 2021. This gives us time

to prepare and learn from each other.

We have already triggered a number

of initiatives and will therefore come

with an updated plan next year that

also reects the opportunities pre-

sented by the synergies.

“But broadly, I would expect the

pillars of the 2025 Strategy to still be

there and I’m sure we will be stron-

ger when we join forces in investing

in some of these technologies with

Hitachi.”

Facchin: it is more “the start of

the journey than the end”

THE ENERGY INDUSTRY TIMES - JULY/AUGUST 2020

Energy

Outlook

Changing conditions

have shown that

now is the time for

demand response,

and the Covid-19

recovery is the

perfect opportunity to

push things forward.

Simon Bushell

s well as causing immeasur-

able suffering and disrup-

tion, the Covid-19 pandemic

has offered glimpses into how cer-

tain aspects of life will look in the

future. One particularly interesting

area is how our electricity systems

operate, from generation through to

consumption.

During lockdown, according to the

International Energy Agency, Euro-

pean countries including France,

Germany and Italy saw record highs

in the contribution of solar PV and

wind sources as a share of the elec-

tricity mix, at a time when demand

was much lower than usual. As a re-

sult, our formerly steady and stable

systems have faced stresses never

seen before.

However, as lockdown restrictions

continue to be eased and businesses

look to give economies a much-

needed kick-start by reopening, it is

anticipated that electricity demand

will soon rise back up to pre-pan-

demic levels.

This expected surge in demand

shouldn’t mean that we default back

to how things used to be, just be-

cause it’s the easiest and quickest

thing to do. In fact, the Covid-19 re-

covery is the perfect opportunity to

push the energy transition forward

and see countries introduce exible,

carbon-free electricity systems, with

demand response at the core.

Taking a closer look at how Cov-

id-19 impacted electricity consump-

tion, at the height of the pandemic

demand was down approximately 15

per cent across Europe as businesses

closed down ofces and industries

shut factories. At the same time, a

very sunny yet windy spring season

saw supplies of solar and wind ener-

gy ourish. These conditions meant

that there were high amounts of re-

newable energy available at a time

when demand was much lower than

usual, with electricity prices regularly

dropping below zero as a result.

Once considered a rare event, av-

erage day-ahead prices for the

whole day in Germany settled at

negative values six times in the rst

half of this year, compared to only

twice in the same period of 2019.

Meanwhile in the UK, electricity

prices were negative for 66 hours in

April alone. Consumers on exible,

real-time tariffs were actively en-

couraged to use electricity at these

times, as in the current system it is

easier and more economical for grid

operators to pay customers to use

electricity as opposed to turning

generators off when there is too

much power in the system.

This high uctuation resulted in

increased volatility – the day-to-day

percentage difference in the price of

the commodity – in the electricity

market. High levels of volatility re-

ect extraordinary characteristics of

supply and demand and overall mar-

ket uncertainty. Volatility impacts all

consumers, but especially commer-

cial and industrial users who tend to

be hit by price changes harder than

residential electricity customers who

see less price variation because their

bills reect monthly average prices.

Seeing high levels of available re-

newable energy is not a new phe-

nomenon. In fact, renewables have

been becoming a bigger part of the

energy mix for a long time. The

share of renewables in global elec-

tricity generation rose approximately

2 per cent in the rst quarter of this

year to nearly 28 per cent, compared

to the same time in 2019 . Specical-

ly in the UK, renewables supplied

over 40 per cent of the country’s

electricity during Q1 of 2020, over-

taking fossil fuels, which saw a 25

per cent reduction in generation in

the same period compared to 2019

levels.

Both solar and wind energy con-

tinue to grow at an exponential rate.

In Europe, power production from

wind and solar sources surpassed

coal for the rst time last year. This

year, solar PV is anticipated to be the

fastest growing of all renewables,

with wind energy expected to in-

crease the most in absolute genera-

tion terms.

Traditional fossil-fuel powered

generators are also being phased out

at a quicker rate than ever before,

meaning more renewables will be re-

quired to meet electricity demand.

Germany is one country leading the

way in this respect, while momen-

tum is growing in Eastern European

countries such as Poland, which

have spotted the potential leverage in

phasing out fossil fuels to be eligible

for green support schemes. Another

factor is the electrication shift

across various transportation indus-

tries, which will further increase

electricity demand.

The continued growth of solar and

wind energy, which are two of the

less controllable forms of renewable

energy, is just one of the reasons

why we need demand response now

more than ever. Back in 2018, the

European demand response market

was forecast to grow from £0.68 bil-

lion to £2.6 billion by 2025, accord-

ing to the IEA’s Global Energy Re-

view 2020 and a separate Frost and

Sullivan report. This signicant

growth was expected to be driven by

utilities and aggregators investing in

innovative technologies and tools to

reduce power generation costs and

solve grid failures and outages.

Scandinavia is an interesting re-

gion to analyse when it comes to im-

plementing demand response, as it

has its own electricity system that is

not synchronised with the rest of

continental Europe. Because the

Scandinavian grid is smaller, it is

more vulnerable to frequency, pro-

duction capacity and production mix

changes, so it has a greater need for

new markets.

An example of this is the recent

opening of the fast frequency re-

serves (FFR) market by transmission

system operators (TSOs) in the Nor-

dics to handle low inertia situations.

Operating conditions with low iner-

tia have become more frequent in

Nordic power systems, with the iner-

tia being so low at times that the pre-

vious reserve products were unable

to handle signicant disturbances in

electricity generation quickly.

The launch of the FFR market in

the Nordics shows that the region is

already at the forefront of imple-

menting innovative grid solutions,

enabling more renewables to enter

the market and helping drive the en-

ergy transition.

Here at Sympower, we are working

with Vattenfall to help increase the

amount of exibility in Sweden’s re-

serves markets. This collaboration

includes controlling approximately

60 MW worth of assets of the coun-

try’s FFR, 85 per cent of the total

market, for two customers of Vatten-

fall. The benets of this FFR market

are three-fold. Not only does it en-

able more renewables to enter the

market and help drive the energy

transition, but it also unlocks new

revenue streams for companies who

take part.

For demand response to be suc-

cessfully integrated into electricity

systems, adoption of EU Directive

2019/944 on common rules for the

internal market for electricity and

Regulation 2019/943 on the internal

market for electricity needs to accel-

erate, quickly. These state that EU

members must permit and encourage

participation of demand response

through aggregation, plus allow nal

customers to participate alongside

producers in a non-discriminatory

manner across all electricity markets.

It also states that consumers should

be free to buy and trade electricity

services independently from their

electricity supply contractors.

smarten, the European business

association for digital and decentral-

ised energy solutions, has identied

several ways to encourage the adop-

tion of the directives. Firstly, effective

incentive structures need to be set

for distribution system operators

(DSOs) that are in line with the new

and revised directives. DSOs should

also be able to purchase exibility

services from the market and not

own and operate the resources pro-

viding the services themselves.

According to smarten, exibility

markets at both local and system-

level need to be open and accessible

to decentralised exibility resources,

while products should be tailored to-

wards a system-needs perspective,

rather than the specic capacities of

traditional providers. Finally, the

procurement of exibility services

must be transparent and non-dis-

criminatory. Both DSOs and TSOs

should provide information to the

market regarding congestion man-

agement needs. At the same time,

mutual deals between system opera-

tors and exibility providers should

be limited to situations where mar-

ket-based procurement isn’t possible.

Another important aspect of the EU

directives previously mentioned is the

important role independent aggrega-

tors will play if we are to increase

exibility participation and ensure a

successful energy transition. Member

states must ensure that regulatory

frameworks contain the necessary

mechanisms for market participants

engaged in aggregation – including

independent aggregators – to enter

electricity markets without needing

consent from other players. The Euro-

pean Commission has also stated how

important independent aggregators

are as they enable healthy market

competition, allowing electricity con-

sumers to pick their preferred energy

company of choice.

However, traditional energy com-

panies are attempting to use their po-

sition, brand recognition and existing

relationships to stop independent ag-

gregators entering the market as they

feel threatened and want to protect

their traditional business models.

That is not to say that they don’t see

the potential and benets of aggrega-

tion, both for their customers and

product portfolio. They just know

that keeping the status quo maintains

their business position.

We need to encourage more inde-

pendent aggregators to enter the

market to help shape our electricity

systems of the future. Giving con-

sumers more choice when it comes

to energy providers is vitally impor-

tant as it not only leads to attractive

pricing structures and tariffs, but in-

creased innovation on the market as

companies look to grow their cus-

tomer portfolios.

We have been given a glimpse

into the future of our electricity sys-

tems. Now is the time to make the

future our present by implementing

demand response globally and ac-

celerate the shift from fossil fuel

generation to a world powered by

renewables.

Simon Bushell is Founder and CEO

of Sympower.

Demanding a response

Bushell: The expected surge

in demand shouldn’t mean

that we default back to how

things used to be

THE ENERGY INDUSTRY TIMES - JULY/AUGUST 2020

Final Word

hydrogen economy has been

talked about for many years

but has largely remained just

that – talk. But with global develop-

ments over the last couple of months,

perhaps it is now time to believe that

hydrogen is more than just hype.

Hydrogen is explicitly mentioned a

number of times by the European

Commission in its recovery plans and

is set to feature prominently in sev-

eral of the various schemes.

Most notably, in July the EU for-

mally adopted its Hydrogen Strategy,

alongside its Strategy for Energy

System Integration. The EU recog-

nises that in an integrated energy

system, hydrogen can support the

decarbonisation of industry, transport,

power generation and buildings across

Europe.

Hydrogen Europe welcomed the

news, noting that “the fact that the

European Commission has decided to

present a dedicated communication on

a hydrogen strategy is testament to the

commitment for a systemic change out

of fossil into electricity and hydrogen

in order to achieve the EU’s 2030 and

2050 climate targets”.

The Hydrogen Strategy addresses

how to transform this potential into

reality, through investments, regula-

tion, market creation and research and

innovation. It is therefore an important

part of the European Commission’s

Recovery Plan for Europe to counter

the crisis caused by Covid-19 and to

restart the economy.

The EU Recovery Plan, which is all

part of the European Green Deal pol-

icy, consists of two instruments, which

add up to this rst response: the Next

Generation EU fund and a revised EU

budget, worth a total €750 billion and

€1100 billion, respectively.

Next Generation EU is the Euro-

pean Recovery Instrument. It will be

exceptional and temporary, and ad-

dresses the most urgent challenges of

the recovery.

The €750 billion in funding, to be

raised on nancial markets, will con-

sist of grants and loans, which will be

channelled through EU programmes.

The funds are designed to have an

immediate impact. Between this year

and 2024, the Commission will help

nance the installation of several hy-

drogen production facilities. During

this period it will support the installa-

tion of at least 6 GW of renewable

hydrogen electrolysers in the EU, and

the production of up to one million

tonnes of renewable hydrogen.

Looking beyond this, the Commis-

sion stresses that from 2025 to 2030,

“hydrogen needs to become an intrin-

sic part” of its integrated energy sys-

tem, with at least 40 GW of renewable

hydrogen electrolysers and the pro-

duction of up to 10 million tonnes of

renewable hydrogen in the EU.

To help deliver on its strategy, the

Commission launched the European

Clean Hydrogen Alliance (ECH2A)

with industry leaders, civil society,

national and regional ministers and the

European Investment Bank. The Alli-

ance will build up an investment

pipeline for scaled-up production and

will support demand for clean hydro-

gen in the EU.

Certainly Europe is already proving

to be a hotbed for hydrogen and we

are already seeing a surge in projects

that will see signicant scaling.

In May Siemens Energy, together

with Engie Solutions and Centrax

jointly announced they will implement

what will be the world’s very rst in-

dustrial-scale power-to-X-to-power

demonstrator with an advanced hy-

drogen turbine. The purpose of this

project is to prove that hydrogen can

be produced and stored from renew-

able electricity and then added, up to

100 per cent, to the natural gas cur-

rently used in combined heat and

power plants. Known as HYFLEX-

POWER, the project is being funded

under the European Commission’s

Horizon 2020 Framework Program

for Research and Innovation. The

plant will be operational in 2023.

During a recent webinar, Corporate

Strategy Manager, Siemens Energy’s

Nakul Prasad, said: “Siemens will be

providing the electrolyser and burn the

hydrogen in an SGT400 gas turbine…

the unit will also generate 20 MW of

heat and will be able to re any blend

of natural gas and hydrogen.”

Clearly the coming decade will be

big for the hydrogen sector. Announc-

ing the EU’s Hydrogen Strategy, Frans

Timmermans, Executive Vice Presi-

dent for the Green Deal, noted. “We

want to stay ahead because the rest of

the world is quickly catching up,” and

referred to a new energy facility

planned for Saudi Arabia. “They are

talking about gigawatts , not mega-

watts in terms of production.”

In July Saudi Arabia revealed plans

for the world’s largest green hydrogen

plant in NEOM. This will be a key part

of the Kingdom’s Vision 2030 plan to

diversify the economy. The NEOM

project will use about 4 GW of renew-

able power from solar, wind, and

storage to produce 650 tons per day of

carbon-free hydrogen. Using Haldor

Topsøe technology, the hydrogen will

be converted into 3500 tons per day

– or 1.2 million tons per year – of green

ammonia. Air Products will be the

exclusive off-taker of the green am-

monia produced at the NEOM site and

intends to transport it around the world

to be converted back into carbon-free

hydrogen at local hydrogen refuelling

stations.

With hydrogen production currently

dominated by fossil fuel-based pro-

cesses and situated throughout North

America, East Asia, and Europe, key

markets in these regions are likely to

maintain their prominence even as the

industry expands.

In a recent press commentary Fitch

Solutions Country Risk & Industry

Research, said it expects the global

demand for hydrogen to keep growing

over the coming decade, supported by

strengthening future use cases for the

gas.

It said the demand for hydrogen

across the globe has seen a steady rise

over the past 40 years and doubling to

the current value of 10 EJ of global

energy demand, equivalent to 2778

TWh, of which the majority is used for

industrial feedstock purposes. Almost

all hydrogen use is dominated by in-

dustrial applications, with over 79 per

cent consumed by petrochemical re-

ning and ammonia production in

2015, alongside methanol and steel as

other key consumers.

However, with the uses for hydrogen

being explored for a variety of new

markets and its ability to decarbonise

industries, the size of the market is set

to grow strongly.

“In 2017, the global hydrogen mar-

ket was valued at $129 billion, though

we forecast this gure to reach $183

billion by 2023 and anticipate its

value to keep climbing over the de-

cade, as these expanded use cases are

developed,” said the research rm.

At the same time, all-important work

on infrastructure for transporting the

gas is making headway. In May Ger-

many’s gas transmission grid operator

umbrella organisation FNB Gas pre-

sented the so-called H2 Startnetz for

the establishment of a grid that could

start transporting green hydrogen by

2030. And in July, on the occasion of

the launch of the ECH2A, Marco Al-

verà, CEO of SNAM, Italy’s biggest

energy infrastructure operator, said:

“The blending of hydrogen into gas

networks has already begun. Without

a doubt, we need hydrogen-ready

backbones. We are making it happen.”

Speaking during a recent webinar on

e-mobility, Daniel Mes, a Cabinet

Member of Frans Timmermans’ Green

Deal team called hydrogen the “rock

star” of energy system integration.

While it is easy to get carried away

with the unprecedented buzz sur-

rounding hydrogen and the recent

European Commission announce-

ment, some remain philosophical.

Björn Ullbro, Vice President for

Europe and Africa at Wärtsilä Energy

Business, commented: “It’s hard to say

now if hydrogen will be a silver bullet,

history tells us that the energy transi-

tion will most likely result in a mo-

saic of technologies, fuels, etc. That

said, we welcome with open arms the

opportunity hydrogen presents to ac-

celerate the sustainable energy transi-

tion, and to exponentially increase

Europe’s share of renewable electric-

ity this decade to address the climate

emergency.”

Michael Liebrech, Founder of

Bloomberg New Energy Finance and

now Founder and CEO of Liebreich

Associates was less enthusiastic about

hydrogen, at least with regards to

transport. He felt that from an ef-

ciency point of view, battery powered

electric vehicles are the way to go.

During the panel debate in the Eurelec-

tric webinar, he said: “Hydrogen is not

the rock star; hydrogen is the mirage

of the oasis: always over the horizon.

It doesn’t actually solve any problem

today... any vehicle that doesn’t drive

more than 300 miles regularly, just

electrify the damn thing.”

Chuck D of legendary US rap group

Public Enemy immortalised the line

“Don’t believe the hype”. It seems that

when it comes to talk of hydrogen, a

few are still hearing a little more rap

than rock.

Rap star or rock star?

Junior Isles

Cartoon: jemsoar.com