www.teitimes.com

September 2022 • Volume 15 • No 7 • 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

Collaboration is key to unlocking clean

energy innovation Page 12

Special Technology

Supplement

Working with startups

Rapid grid evolution is crucial

to carbon neutrality.

News In Brief

No clear sign of extreme

prices abating

With gas prices continuing to climb

and low nuclear and hydropower

output, there is no sign that

electricity prices will fall any time

soon.

Page 2

Offshore wind opens for

business in Colombia

Colombia has launched its rst

offshore wind leasing round and is

scheduled to award rst permits in

the second half of 2023.

Page 4

Australia looks offshore,

as government passes new

climate legislation

Australia’s government is taking

the next steps in creating a new

renewable energy industry following

its decision to pass the country’s rst

climate change legislation in more

than a decade.

Page 5

UK urged to speed up

hydrogen infrastructure

plans

The UK government has been urged

to accelerate its plan for hydrogen

storage business models, soon after

it published a Hydrogen Sector

Development Action Plan.

Page 7

Russia-Ukraine fallout

impacts German companies

The ongoing war in Ukraine is

continuing to weigh heavy on

German companies that had ties

with Russia prior to its invasion of

its neighbour.

Page 9

New long-duration storage

technology is key to energy

security

Lithium-ion technology is currently

used for most energy storage

applications but as demand for

batteries grows, challenges to

adequate and reliable supply of this

technology are emerging.

Page 14

Power grids regain missing

inertia

Power grids are becoming more

decentralised while the penetration

of renewable resources is increasing.

These two factors are causing a

steady decrease in the level of

inertia essential to maintain stable

operation. Synchronous condensers

can restore this missing inertia in a

number of applications.

Page 15

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The US has passed a bill into law that will drive clean energy and help it meet its climate

change commitments but some experts caution that there are potential challenges.

Junior isles

Energy companies’ prots under re as energy crisis deepens

THE ENERGY INDUSTRY

TIMES

Final Word

There’s a glow at the

end of the tunnel,

says Junior Isles.

Page 16

The landmark Ination Reduction Act,

recently passed into law in the US will

pump a record $369 billion into clean

energy but experts caution that the

move to drive the country’s green en-

ergy transition will face obstacles.

Jos Shaver, Chief Investment Of-

cer at Electron Capital Partners, a re-

newables-focused asset manager said

the new law was “absolutely game

changing”, but warned: “It’s an ener-

gy transition, not an energy switch.

It’s not going to happen overnight and

there’s going to be a lot of bumps in

the road.”

The climate, tax and spending law

signed by President Joe Biden has the

potential to trigger a massive upsurge

of new renewable power that would,

according to the government, allow

the country to slash greenhouse gas

emissions by 40 per cent from 2005

levels by the end of the decade. This

would see it inch closer to its commit-

ment to cut emissions by 50-52 per

cent by 2030 under the Paris climate

accord.

Public investment in climate must be

paired with private investment to meet

ambition needed for Paris. The bill

therefore provides $27 billion in sup-

port for green banks in the US, which

will provide low-cost capital to accel-

erate private investment in climate

projects.

Heather Zichal, Chief Executive of

the American Clean Power Associa-

tion hailed the climate bill as a

“generational opportunity for clean

energy” after years of uncertainty and

delay. “This is the vote heard around

the world. It puts America on a path to

creating 550 000 new clean energy

jobs while reducing economy-wide

emissions 40 per cent by 2030.”

Tax credits to spur investment in and

production of renewable power form

the centrepiece of the new bill. Such

tax credits for wind and solar develop-

ments have been used for a number of

years to help drive renewable projects

but they have been short-term. This

has made planning difcult and devel-

opers have often struggled to attract

nancing.

The new bill reinstates and expands

production and investment tax cred-

its for wind, solar and energy storage

but with a 10-year time timeframe,

which allows long-term planning.

The 10-year credits will also feature

a “transferability” mechanism that

allows the credits to be bought and

sold, thereby expanding options for

nancing projects.

In anticipation of the bill passing,

Hanwha Solutions said it is

considering expanding investment in

its US photovoltaic plant construc-

tion plan, which was announced in

May this year.

Some project developers, however,

have expressed concern over the bill’s

goal of also promoting a home-grown

green industry.

Continued on Page 2

Energy companies have come under

re as prots soar while businesses and

households struggle under the burden

of record high energy prices.

Last month Saudi Arabia’s state-

owned energy corporation, Saudi Ar-

amco, highlighted the huge earnings

made by gas and oil-rich nations dur-

ing the energy crisis after making rev-

enues of $48.4 billion in the third

quarter, up 90 per cent from $25.5

billion a year earlier.

Saudi Aramco is just the latest in a

long line of oil giants to announce

bumper prots this year. Exxon-

Mobil’s prot, for example, came to

$17.6 billion in the second quarter,

excluding special items. The compa-

ny nearly doubled what it made in its

very protable rst quarter as oil and

gas prices started to soar driven by

Russia’s invasion of Ukraine.

Tradingplatforms’ Edith Reads

commented: “It is clear that the ener-

gy crisis is beneting the oil-rich na-

tions and those companies involved in

extracting and selling fossil fuels. The

high prices may be a cause for con-

cern for consumers, but for now, it

seems that the energy producers are

reaping the rewards.”

Record oil and gas prices have also

contributed to a bumper year for oil

giant bp, with half-year underlying

prots almost tripling from $5.4 bil-

lion in 2021 to $14.6 billion in 2022.

The company plans to boost dividend

payments by 10 per cent and will also

initiate a new share buyback pro-

gramme, totalling $3.5 billion.

In response to bp reporting huge

prots while household energy bills

soar, Doug Parr, Chief Scientist for

Greenpeace UK, said: “While house-

holds are being plunged into poverty

with knock-on-impacts for the whole

economy, fossil fuel companies are

laughing all the way to the bank. The

government is failing the UK and the

climate in its hour of need.

“Government must bring in a proper

windfall tax on these monster prots

and stop giving companies massive

tax breaks on destructive new fossil

fuel investments.”

Following the UK’s windfall tax

already imposed on oil and gas com-

panies, Britain’s electricity genera-

tors are facing pressure from minis-

ters to invest their “extraordinary

prots” in new green energy proj-

ects, rather than paying out the wind-

fall to shareholders.

Although many UK energy suppliers

have gone bust since the energy crisis,

some electricity generators have made

huge prots from surging electricity

prices that have risen in line with the

soaring cost of gas. Both Shell and

Centrica smashed earning results, with

Shell’s prot reaching a record of

$11.5 billion in the second quarter.

Pressure is now likely to increase on

generators with the announcement

that the UK will again raise its energy

price cap for households by 80 per

cent from October. This will see the

average household energy bill jump to

over £3500. The price cap was raised

by 54 per cent in April pushing the

average bill to just over £1900. Ex-

perts are predicting a further increase

in January, which could see average

annual bills reach in the region £5000,

with another increase likely in April.

Earlier last month UK Chancellor

Nadhim Zahawi and Business Energy

and Industry Secretary Kwasi Kwart-

eng met generators including Centri-

ca, Drax and RWE to discuss the en-

ergy crisis, including the sharp jump

in household bills.

US landmark clean

energy bill will face

obstacles

The American Clean Power Association’s

Heather Zichal hailed the climate bill as a

“generational opportunity”

THE ENERGY INDUSTRY TIMES - SEPTEMBER 2022

Junior Isles

European power prices hit new highs

last month and show no signs of abat-

ing as natural gas extended gains, says

independent energy research consul-

tancy Rystad Energy AS.

According to the company, next-year

electricity rates in Germany advanced

as much as 3.7 per cent to €477.50/

MWh ($487/MWh) on the European

Energy Exchange AG. This was almost

six times as much as this time last year,

with the price doubling in the past two

months alone.

Commenting on the latest numbers

Rystad Energy analyst Fabian Ronnin-

gen said: “There’s no clear sign of the

extreme price rally abating soon. The

continent’s low nuclear, hydropower

and coal capacities aren’t enough to

help ease that pressure.”

The market price is being driven by

concerns over whether Europe’s tight

gas supplies will be able to generate

enough electricity this winter. France’s

nuclear capacity is extremely low,

denting the possibility of power ex-

ports in the months ahead.

According to the forecast, European

electricity prices are expected to peak

during the winter of 2022-2023.

Day-ahead prices in Germany and the

UK also set records last month, an in-

dicator of high demand for cooling,

with heat waves and drought on the

continent straining infrastructure in the

short-term.

According to the International En-

ergy Agency (IEA), wholesale power

prices in the rst half of 2022 were

three to more than four times as high

as the average in the rst half of 2016

to 2021, primarily due to gas prices

climbing to more than ve times the

value of the reference period.

The IEA price index, representing the

moving average of weighted prices in

the main electricity markets for four

quarters, reached almost 300 points in

the second quarter of 2022, indicating

three times higher average wholesale

prices than in the reporting period of

2016, and 60 per cent higher prices than

over the same quarter of 2021. The IEA

also forecasts that European electricity

prices are expected to peak during the

coming winter.

With energy driving ination across

Europe, the deepening energy crunch

is threatening to plunge the region into

a recession.

In the UK, it was recently announced

that the household energy price cap

will increase by 80 per cent at the start

of October on the back of rising

wholesale costs. The wholesale price

of UK electricity for that month has

jumped about sevenfold in the past

year to roughly £591/MWh ($713/

MWh) on the Intercontinental Ex-

change AG.

In March the US Department of

Commerce agreed to investigate al-

leged circumvention of anti-dump-

ing and countervailing duties by

solar manufacturers in Southeast

Asia. The move has proven to be

damaging to the US solar sector as

it essentially froze the import of PV

cells and modules to the country.

The potential for retroactive tar-

iffs along with supply chain snags

drove down solar installations in

the last quarter to their lowest

level since the start of the corona-

virus pandemic, according to en-

ergy and commodities consultancy

Wood Mackenzie.

Speaking to the Financial Times,

Tom Buttgenbach, Chief Executive

at 8Minute Solar, one of the biggest

utility-scale developers, comment-

ed: “I need to know what my supply

chain looks like in four to ve

years.”

Meanwhile, offshore wind power

developers are anxiously eyeing a

separate piece of legislation that

would require them to use only

American vessels and crews when

installing turbines. Pedro Azagra,

Chief Executive of Avangrid,

which owns utilities and is one of

the biggest US wind developers,

said: “It’s something that is not

realistic. You do not have them and

it will take some time to build them,

some time to train the crews.”

The IRA makes hundreds of mil-

lions of US dollars available to gov-

ernmental bodies to optimise and

accelerate the processes behind

bringing projects onto the grid. It

calls for comprehensive permitting

reform legislation to be passed be-

fore the end of the scal year, to

unlock domestic energy and trans-

mission projects, which will lower

costs for consumers and help the US

meet its long-term emissions goals.

This includes offshore wind de-

velopment and transmission proj-

ects related to this energy infrastruc-

ture, including interconnections.

The Act puts $100 million on dis-

posal for the Secretary of Energy

until September 30, 2031 to carry

out activities related to the develop-

ment of interregional electricity

transmission and transmission of

electricity generated by offshore

wind.

Notably, the bill seeks to kick-start

hydrogen by also offering tax cred-

its for hydrogen production proj-

ects, with the of tax credit for proj-

ects based on the amount of carbon

equivalent emissions for each kilo-

gramme produced, starting at a ba-

sic rate of $0.60/kg of hydrogen

produced.

This scale means that clean hydro-

gen producers can receive tax cred-

its of up to $3/kg. Experts say the

measures will make the US one of

the lowest cost hydrogen producers

in the world.

Continued from Page 1

Renewable energy sources, which ac-

count for the bulk of annual invest-

ments in power generation, are set to

provide the majority of Europe’s

power by the end of the decade despite

global supply chain challenges.

According to a recent report by S&P

Global Ratings Renewables are fore-

cast to increase to 60 per cent of pow-

er generation in Europe by 2030, and

could approach 40 per cent in the US

and China, according to S&P Global

Commodity Insights (Platts).

BloombergNEF recently calculated

that global investment in renewable

energy totalled $226 billion in the rst

half of 2022, setting a new record for

the rst six months of a year. It said the

uptick in investment reects an accel-

eration in demand for clean energy

supplies to tackle the ongoing global

energy and climate crises.

Its Renewable Energy Investment

Tracker 2H 2022 report says invest-

ment in new large- and small-scale

solar projects rose to a record-breaking

$120 billion, up 33 per cent from the

rst half of 2021. Wind project nanc-

ing was up 16 per cent from 1H 2021,

at $84 billion.

“Both sectors have been challenged

recently by rising input costs for key

materials such as steel and polysilicon,

as well as supply chain disruptions and

rising nancing costs,” it said. “Yet,

today’s gures indicate that investor

appetite is stronger than ever, in part

due to the very high energy prices cur-

rently being seen in many markets

around the world.”

As well as seeing booming project

investments, the rst half also saw an

all-time record for venture capital and

private equity investments into renew-

ables and energy storage, with $9.6

billion raised – up 63 per cent on the

previous year.

Albert Cheung, Head of Analysis at

BloombergNEF, said: “Policy makers

are increasingly recognising that renew-

able energy is the key to unlocking en-

ergy security goals and reducing depen-

dence on volatile energy commodities.

Despite the headwinds presented by

ongoing cost ination and supply chain

challenges, demand for clean energy

sources has never been higher, and we

expect that the global energy crisis will

continue to act as an accelerant for the

clean energy transition.”

Global cumulative energy storage de-

ployments are expected to reach 500

GW by 2031 but demand in Europe

lags behind China and the US despite

the region’s need for exible power

solutions.

According to Wood Mackenzie’s

‘Global Energy Storage Outlook’ Eu-

rope’s demand lags behind as its grid-

scale market struggles to stabilise,

with only 159 GWh forecasted for the

region by 2031, compared to 422

GWh for China and 600 GWh for the

US.

Commenting on the forecasts, Dan

Shreve, Global Head of Energy Stor-

age at Wood Mackenzie, said:

“Growth has stalled in Europe as

regulatory barriers fail to improve

storage project economics. In addi-

tion, limited access to power markets

and a lack of revenue stacking oppor-

tunities, combined with a lack of ca-

pacity market auctions, has lowered

investment for grid-scale storage as-

sets in Europe.”

Despite this, Germany’s energy stor-

age market continues to grow and is

set to become the third biggest energy

storage market by 2030, following the

US and China. With 32 GWh fore-

casted for the country, 61 per cent from

the residential segment.

The European Commission’s RE-

PowerEU plan, launched as a means

of the EU weaning itself off Russian

fossil fuels, will boost the EU energy

storage market further as it pushes for

a higher share of renewable supply in

EU Member States. Europe has al-

ready seen a 12 GWh increase since

the plan was launched in May 2022,

which set out a 600 GW target for the

solar PV market and pledged to ease

permitting processes for both storage

and PV systems.

“While REPowerEU does not set out

a specic target for energy storage,

higher renewable supply targets will

drive demand for exible power solu-

tions, including energy storage as-

sets,” Shreve said.

The report was followed shortly af-

ter by an announcement by the Euro-

pean Commission that it wants to

boost output of its own raw materials

needed for green energy. The plans,

still at an early stage, would lower

regulatory barriers to mining and pro-

duction of critical materials such as

lithium, cobalt and graphite, needed

for batteries, wind farms, solar panels

and electric vehicles.

“Demand is increasing dramatically

due to the digital and green transition

of our society [but] we are too often

almost entirely dependent on imports,

while the geopolitics of supply chains

are increasingly unstable,” said the

EU’s internal market Commissioner

Thierry Breton.

Europe produces less than 1 per cent

of the world’s lithium ion cells com-

pared with China’s 66 per cent, ac-

cording to a report issued by JRC last

year. Mining lithium, however, has

challenges as demonstrated by Portu-

gal’s efforts to unearth large reserves.

A potential cornerstone of Europe’s

green energy transition, the Barroso

mine in northeastern Portugal was

expected to start producing lithium for

electric vehicle batteries in 2020. But

the mine’s owner, Savannah Resourc-

es, has been forced to push the start

date back several times due to delays

in environmental approval. In July

Portugal’s regulator added a phase to

the process, causing Savannah to reset

its rst production date again to 2026.

Meanwhile, demand continues to

grow. The EU target is for renewables

to produce 32 per cent of the bloc’s

energy by 2030, potentially increas-

ing to 45 per cent.

Dries Acke, Policy Director at So-

larPower Europe, said the industry

body expected EU installations of

photovoltaic cells to reach an all-time

high of 34 GW this year, up from 28

GW in 2021. But he said supply of

raw and processed materials would

determine the availability of solar

products.

Headline News

Renewable energy sector dees supply chain

challenges

EU needs energy storage but market lags behind

US and China

No clear sign of extreme

prices abating soon

Buttgenbach called for

long-term policy certainty

With gas prices continuing to climb and low nuclear and hydropower output in Europe, there

is no sign that electricity prices will fall any time soon.

THE ENERGY INDUSTRY TIMES - SEPTEMBER 2022

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THE ENERGY INDUSTRY TIMES - SEPTEMBER 2022

Asia News

Japan has announced plans to return

to nuclear power in a move to halt

soaring energy costs and secure pow-

er supply. Late last month Prime min-

ister Fumio Kishida threw his support

behind accelerating the restart of reac-

tors which have been closed since the

Fukushima Daiichi nuclear plant di-

saster in 2011, and signalled the con-

struction of new plants.

“As a result of Russia’s invasion of

Ukraine, the global energy situation

has drastically changed,” Kishida said.

“Whatever happens globally, we need

to prepare every possible measure in

advance to minimise the impact on

people’s lives,” adding that the govern-

ment would aim to come up with con-

crete plans for the nuclear sector by

year-end.

The plan to research the construction

of new nuclear reactors, which experts

say could be safer than those using

existing technologies, marks a U-turn

in government policy since the Fuku-

shima crisis.

Earlier in August, new Minister of

Economy, Trade and Industry, Yasu-

toshi Nishimura, had said he had no

intention or plan to allow power com-

panies to build new nuclear power

plants or replace existing ones. Never-

theless, Kishida had expressed hope

that his new industry minister would

nd a way to secure stable energy sup-

plies at reasonable prices.

Japan had already announced the

restart of some nuclear plants after

Tokyo came close to suffering a pow-

er blackout this year. With the accel-

eration, it will aim to bring back 17 out

of a total 33 operable reactors by sum-

mer next year and also to extend the

life of existing plants.

Asia is becoming the focus of oil and

gas majors looking for clean energy

opportunities.

Last month a unit of US oil super-

major Chevron Corporation said it

plans to explore hydrogen, carbon

capture and other more environmen-

tally friendly energy operations in

Central Asia with a local partner.

Chevron Munaigas and KazMunay-

Gas (KMG) said they would evaluate

the potential for carbon capture, utili-

sation, and storage as well as hydrogen

production and methane management.

The news came as French energy gi-

ant TotalEnergies and Eneos received

clearance to form a joint venture (JV)

for developing 2 GW of business-to-

business solar projects in Asia over the

next ve years.

The deal to create the TotalEnergies

ENEOS Renewables Distributed

Generation Asia JV was rst an-

nounced in April this year.

TotalEnergies Renewables Distrib-

uted Generation Asia Head, Gavin

Adda, said: “Together with our partner,

we will mobilise our know-how and

expertise for more projects in the com-

ing months which puts us rmly on

track to achieve the goal of 2 GW

within the next ve years.”

TotalEnergies also said it plans to

produce and commercialise green hy-

drogen across India and beyond with

its purchase of a 25 per cent stake in

Adani New Industries Ltd. (ANIL)

from its parent, Adani Enterprises Ltd.

Japan accelerates nuclear to

secure energy supply

Oil majors target Asian clean

energy opportunities

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Australia’s recently elected govern-

ment is taking the next steps in creat-

ing a new renewable energy industry

following its decision to pass the

country’s rst climate change legisla-

tion in more than a decade.

In early August the Albanese gov-

ernment announced six proposed re-

gions for offshore wind development.

It also began consultation on one of

the regions – an area in the Bass Strait

off Gippsland.

The government has invited the pub-

lic to comment on the notice for the

proposed Gippsland zone, with sub-

missions to be received by October 7,

2022 in order to be considered.

The other regions for offshore wind

energy projects include: the Pacic

Ocean region off the Hunter in New

South Wales (NSW); the Pacic

Ocean region off the Illawarra in

NSW; the Southern Ocean region off

Portland in Victoria; the Bass Strait

region off Northern Tasmania; and the

Indian Ocean region off Perth/Bun-

bury, WA.

The Department of Climate Change,

Energy, the Environment and Water

will facilitate the consultation process

in the proposed regions.

Unlocking the offshore wind indus-

try is seen as “an exciting new chapter

for Australia”. Climate Change and

Energy Minister Chris Bowen has

been ghting to unlock Australia’s

offshore wind capacity for years.

He said many other countries have

been successfully harvesting offshore

wind energy for years, and “now is the

time for Australia to start the journey

to rmly establish this reliable and

signicant form of renewable energy”.

“We have some of the best wind re-

sources in the world,” said Bowen.

“The world’s climate emergency is

Australia’s regional jobs opportunity

and offshore wind is just one example.

Australia’s stance on tackling cli-

mate change has been a political

touchpaper for some time but in early

August the House of Representatives

passed a new climate bill that is ex-

pected to become law. The main part

of the previous bill – an emissions

trading scheme, introduced by the Gil-

lard government with the support of

Greens and independents – was re-

pealed by the Coalition under Tony

Abbott in 2014.

The new bill sets two national green-

house gas emissions targets: a 43 per

cent cut below 2005 levels by 2030,

and a reduction to “net zero” by 2050.

The bill emphasises that the 2030

target is a oor not a ceiling, which

means it is the minimum cut that can

happen but there is nothing to legally

prevent deeper cuts. The legislation

requires several government agencies

to consider the targets – that is, factor

in climate change – when making in-

vestment decisions.

The legislation strengthens the role

of the Climate Change Authority, a

decade-old agency responsible for

giving policy advice. The authority

was cut back and largely ignored un-

der the previous Coalition but will

now be expected to give annual advice

on progress towards meeting Austra-

lia’s climate targets and to advise

later this parliamentary term on a new

target for 2035.

The government will have to release

the advice and publicly explain why

if it does not follow it.

The climate change minister is re-

quired to give an annual statement to

parliament on progress towards the

targets. Bowen has likened it to the

annual Closing the Gap statement.

The new legislation, however, does

not include a mechanism or funding

to cut emissions from electricity, in-

dustry, transport, agriculture or other

parts of the economy.

There are still several details to be

eshed out and the bill still has to clear

the Senate when parliament next sits

in September, but this is now seen as

a formality.

n Copenhagen Energy has led a pro-

posal with the Federal Department of

Water and the Environment for initial

review of a 3 GW offshore wind farm

off the coast of the state of Western

Australia.

Australia looks offshore, as

government passes new climate

legislation

n Six offshore wind zones proposed n New climate legislation sets tougher emissions targets

THE ENERGY INDUSTRY TIMES - SEPTEMBER 2022

Asia News

China’s worst heat wave since records

began 60 years ago has caused drought

in the parts of the country, forcing a

switch from hydropower to coal in an

effort to keep the lights on.

Extreme temperature, which has

lasted more than two months, and a lack

of rain have starved dams of water in

Sichuan Province forcing authorities

there and in the neighbouring munici-

pality of Chongqing to ask companies

to temporarily shut factories.

In an effort to secure electricity sup-

plies, Vice-Premier, Han Zheng said

Beijing would provide support for the

coal sector.

“[We need to] guarantee safe elec-

tricity supply for the people… and

key sectors,” he said during a visit to

the State Grid Corporation of China.

The government will “enhance poli-

cy support [and] take multiple mea-

sures to help coal plants ease actual

difculties”.

David Fishman, an analyst who cov-

ers Chinese energy at The Lantau

Group, told the Financial Times that

the province would inevitably turn to

coal, which has become more expen-

sive due to high demand. Government

support could include a price cap, he

added.

“[Provinces where] coal capacity [is]

deployed to support hydropower in the

dry season will be looking to maximise

usage of their coal capacity as hydro

production drops,” said Fishman. “Un-

der these conditions, there’s no choice

but to run the coal plants at maximum

capacity.”

Although necessary, the move will

slow China’s effort to combat climate

change. Nevertheless, the country’s

clean energy sector will continue to see

expansion this year, according to ex-

perts. The clean energy sector will con-

tinue fast expansion in the second half,

said Su Xinyi, an analyst with China

Electric Power Planning & Engineer-

ing Institute.

China’s installed capacity of wind

and solar PV added 12.94 GW and

30.88 GW, accounting for 18.7 per cent

and 44.7 per cent of total new capacity,

respectively, in the rst half of 2022,

according to data from the National

Energy Administration.

China’s newly installed capacity of

wind and solar PV for the entire year

is expected to exceed 100 GW, while

the consumption of power produced by

the two energy sources is estimated to

reach over 12.2 per cent of total power

consumption, Su said.

The Malaysian government will stop

building coal power plants starting in

2040, and shift its focus toward clean

and renewable energy, according to

Mustapa Mohamed, the minister in

charge of economy in the Prime Min-

ister’s department.

Speaking at a question and answer

session of the Malaysian Parliament’s

second meeting, Mustapa said the on-

going global energy crisis will acceler-

ate the transition to cleaner energy,

adding that Malaysia will improve its

renewable energy capacity to fulll the

set targets.

A number of renewable energy sourc-

es identied for development include

hydroelectricity, solar energy, biogas

and biomass, he said, noting that bat-

tery energy storage technology will

also be introduced to ensure quality and

guaranteed power supply.

The government will also expand the

use of hydrogen, and develop technol-

ogy related to carbon capture and stor-

age, he went on.

According to Mustapa, the Econom-

ic Planning Unit is nalising a nation-

al energy policy, which is in line with

Malaysia’s commitment to Sustain-

able Development Goal 7 (SDG7) of

the UN to ensure access to affordable,

reliable, sustainable and modern en-

ergy for all. The policy is expected to

be released this year.

State-owned utility Tenaga Nasional

Bhd (TNB) via its New Energy Divi-

sion (NED) is focused on exploring

new markets to grow its renewable

energy (RE) portfolio in Southeast

Asia, as well as Europe.

TNB President and CEO Datuk Ba-

harin Din said its NED aims to in-

crease participation in solar, offshore

and onshore wind to potentially cap-

ture 14 GW of RE capacity by 2050.

TNB Renewables Sdn Bhd will focus

on Southeast Asia – exploring new

markets that include Thailand, the Phil-

ippines, Vietnam, Taiwan, South Ko-

rea and Australia.

In a separate development TNB also

said it plans to begin the process next

year for a potential listing of its power

generation business. In what would be

the country’s largest initial public of-

fering (IPO) in a decade, TNB Power

Generation Sdn Bhd, known as TNB

Genco, could be valued at about $4

billion.

Sources close to the matter told Re-

uters Proceeds from the offering will

be used to grow TNB Genco’s renew-

able energy portfolio.

The clean energy market is estimat-

ed to be worth MYR65-80 billion

($14.54-17.9 billion) in Malaysia by

2050, and Tenaga aims to have TNB

Genco take MYR40 billion of it.

Cost of renewables

rise but still gains on

fossil fuelled power

Malaysia speeds up shift

to clean energy

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An enhanced, resilient, electricity network is the key to delivering the massive amounts of renewables planned

around the world. Hitachi Energy’s Niklas Persson discusses the key power grid technologies and project

development strategies that are urgently needed to accelerate the transition to a carbon-neutral energy system.

Junior Isles

same concept to connect the Nordic

and British power markets. Commis-

sioned in October last year, the 1400

MW capacity NSL (North Sea Link),

720 km interconnector, built for

Statnett and National Grid, is the

longest subsea link in the world. It is

also the rst interconnection between

the UK and Norway.

The link will help evacuate power

from the UK when, for instance,

wind power generation is high there

and electricity demand low, thereby

conserving water in Norway’s hydro-

power reservoirs. When demand is

high in the UK and wind power gen-

eration is low, low-carbon energy can

ow from Norway, helping to secure

the UK’s electricity supply. The link

will also facilitate power trading and

electricity price arbitrage between

the countries.

“The EU has a clear vision that in-

terconnection is the key to make use

of the new energy system,” noted

Persson, adding that HVDC is mov-

ing from what used to be a technol-

ogy for very specic applications to

one that will be the basis of a future

meshed DC grid.

“Our rst HVDC technology,

HVDC Classic, was seen as a very

niche solution used for point-to-

point bulk power transmission to

load centres over very long distances,

because it has lower losses and a

much smaller footprint [than AC

link that will transmit up to 2 GW of

wind power from the north to the

industrial south, or alternatively solar

power from the south to the north

when needed.

At the same time, the EU has made

great strides in expanding its inter-

connected electricity system. Pers-

son cited examples such as the Nord-

Link interconnector linking the

power grids of Norway and Ger-

many. Commissioned in 2020, it

enables the integration and exchange

of wind, solar and hydro power be-

tween the two countries. NordLink

was not only the world’s longest

voltage source converter (VSC) cable

connector at 623 km, but was also

Europe’s longest HVDC power grid

interconnection, and the rst inter-

connection to link the Norwegian

and German power grids.

Hitachi Energy’s delivery included

the design, engineering, supply and

commissioning of two 1400 MW

±525 kV converter stations, using

Hitachi Energy’s VSC technology,

known as HVDC Light

. The project

is signicant since it is the world’s

rst HVDC Light

bipole installa-

tion to perform at 525 kV and 1400

MW, nearly doubling the power

transmission capacity compared

with earlier systems, while improv-

ing overall reliability and availability

in the grid.

Hitachi Energy has since used the

Wilster HVDC converter station. SuedLink DC4 will transmit electricity between Wilster in the

north and Bergrheinfeld in the south

Persson says the industry is “coming together and pushing the

transition” forward

Rapid grid evolution is

crucial to carbon neutrality

Special Technology Supplement

ince setting global ambitions for

climate change through the Paris

Agreement in 2015, many would

argue that the speed and level of

action needed to combat global

warming has been insufcient. But in

the last couple of years, there has been

a real feeling that the pace of change

is gathering momentum. The EU has

been at the vanguard of accelerating

that change with its European Green

Deal, which encompasses the ‘Fit for

55’ proposals, as well as the more

recent REPowerEU plan aimed at

reducing dependence on Russian

fossil fuels.

Much of those plans are under-

pinned by a massive rollout of wind

– offshore wind in particular – and

solar, as well as energy efciency

and green hydrogen. But the key fa-

cilitator will be the power grid and

how it will evolve to enable the en-

ergy transition.

Niklas Persson is Managing Direc-

tor of Hitachi Energy’s Grid Integra-

tion business. Having worked in the

sector for the best part of 25 years,

he has no doubt that the grid is central

to accelerating the energy transition.

“Until fairly recently, the pace of

change has not been what we hoped

for and expected. But now we see the

industry is coming together and

pushing the transition forward – even

if political decisions are lagging in

some areas such as a regulatory

framework for a future offshore grid,

for example.” he said. “Certainly,

in the last two or three years, inde-

pendent of the Ukraine situation,

there has been increased awareness

and momentum. This was clear

at COP26.

“As a technology leader, we are

seeing much more demand from

customers looking at how to manage

the network through digitalisation,

greater efciency, more sustainable

and even more innovative technolo-

gies and solutions. They have to

manage a network that is much more

complex in terms of both consump-

tion and generation. On the genera-

tion side, new capacity is being

added but without inertia when that

capacity is wind or solar.”

He noted that in the past, grids have

been “very rigid and stable”, existing

as islands within each country, un-

connected to neighbouring countries,

or sometimes as regions within a

country. With the inux of renew-

ables, however, grid operators now

have to mitigate load ows through

enhanced grid performance, and in

many areas start to use power elec-

tronics that provide more dynamic

solutions for a more complex grid.

Just last month, Hitachi Energy

secured the contract for SuedLink

DC4 in Germany, a ±525 kV HVDC

THE ENERGY INDUSTRY TIMES - SEPTEMBER 2022

link completes the rst multi-termi-

nal HVDC system in Europe.

The Shetland interconnector will

connect to the existing 320 kV/1200

MW Caithness-Moray Link to form

a three-terminal HVDC network.

Caithness-Moray is a subsea link

connecting the electricity grid on ei-

ther side of the Moray Firth in

Northern Scotland. This link has two

land-based 320 kV HVDC Light

converter stations, one rated 1200

MW at Blackhillock in Moray and

another rated 800 MW at Spittal in

Caithness.

Persson noted: “This is a signicant

step in showing you can connect

several converters instead of just

having point-to-point. This could be

developed into a multi-purpose con-

nector scheme, where the energy

systems of one, two, three, or four

countries are connected. This would

form a ring and suddenly you have a

DC grid.”

From a technology aspect, Persson

says there is no issue in implement-

ing DC grids, noting that the key

component – the HVDC breaker –

has been type-tested. He says Hitachi

Energy has also engineered a control

function that can handle inputs from

various OEM systems.

“This has all been proven as part of

a European programme,” he said. “It

has not been proven at a large scale

yet, so some project development is

still needed. But we are very con-

dent that technically, it is not a big

issue.”

The main challenge, says Persson,

is the regulatory framework. “If, for

example, you look at this cluster be-

tween the Netherlands and the UK,

where there are three wind farms, if

the wind is blowing who will get

what energy and why? And at what

price? And if all the wind farms are

generating, will the price be zero

because there is an over-capacity?

The regulatory framework is not yet

in place.”

It is a challenge, however, that will

no doubt be overcome as transmis-

sion system operators (TSOs) start to

collaborate and set up pilot projects

such as the energy island being built

off the coast of Denmark, which is

being designed to transmit wind

power to various countries, as well

as hydrogen produced by electrolys-

ers powered by wind.

“Denmark will build it and then

make the energy available to maybe

Germany, Norway, the UK, etc., since

they won’t use all the energy them-

selves. This is how I see it. So we will

go from radial interconnectors, to

multi-purpose interconnectors, and

Special Technology Supplement

THE ENERGY INDUSTRY TIMES - SEPTEMBER 2022

Kriegers Flak Combined Grid

Solution in Denmark. The

multi-purpose connection

demonstrates how new

HVDC hybrid solutions can

optimise power grids

transmission]. This made it suitable

for transporting power over thou-

sands of kilometres in countries like

China, India and Brazil. We later

developed HVDC Light

based on

VSC [Voltage Sourced Converter]

technology to transmit power under-

ground and underwater, as well as

over long distances. We now have

more than 25 years of development of

HVDC Light

, and stepwise devel-

opment has seen the transmission

levels go from 80 kV and about 50

MW, to 640 kV and 3 GW, with the

proven capabilities for managing fre-

quency uctuations, voltage dips, and

transients. But now there is a need for

multi-purpose and multi-terminal

connections.”

He used Kriegers Flak Combined

Grid Solution (KF CGS) as an ex-

ample of what he describes as “a

kind of rst multi-purpose” connec-

tion that demonstrates how new

HVDC hybrid solutions can optimise

power grids and make new and

larger applications of offshore wind

possible to further support EU targets

for achieving climate neutrality

by 2050.

Commissioned in 2019, the HVDC

system helps secure the energy sup-

ply in both countries and supports

cross-border energy trading while

reliably integrating the Baltic 1,

Baltic 2 and Kriegers Flak offshore

wind farms.

The innovative hybrid HVDC

Light

system digital master control-

ler manages the complex task of

controlling the entire KF CGS. By

adjusting power ows in real-time,

the system integrates and supports

the wind farms and the two asyn-

chronous AC power grids in Den-

mark and Germany, ensuring sus-

tainable and reliable energy to

consumers.

The 410 MW/150 kV converter

station is located in Bentwisch,

northern Germany where it connects

the Kriegers Flak offshore grid, part

of the Danish electricity network,

to the German network. The eco-

nomic back-to-back set-up minimis-

es the environmental footprint of the

installation.

More recently, in 2020 Hitachi

Energy won an order from Scottish

and Southern Networks Transmis-

sion (SSEN) for the Shetland link,

which is seen as signicant for the

industry. The link will allow SSEN

to efciently combine wind and

hydro power to meet user needs

while also increasing the reliability

and capacity of the power grids in

Scotland and on Shetland. Accord-

ing to Hitachi Energy, the 600 MW

Erstmyra converter station in Norway: the NordLink

interconnector links the power grids of Norway and Germany

then eventually it will be a grid,” said

Persson. “This type of scheme will

harvest all the energy that is the vi-

sion for Europe’s offshore wind

sector. Many have learned that for

this to happen, you need a DC grid

structure.”

While Persson believes this will

happen, he acknowledges that it will

take some time. “Permitting and -

nancing, etc., has to be in place, but

10 years is a short time in this indus-

try. Multi-terminal is already here

and we are starting to see multi-pur-

pose projects such as in Denmark but

you are looking at about 10+ years

before we really see the DC grid.”

Other countries outside of Europe

are also embracing HVDC technol-

ogy to help integrate renewables. In

December last year Hitachi Energy

secured a contract for what it says is

the world’s most powerful ‘power

from shore’ solution. Here, Hitachi

Energy will supply the enabling

technology – its HVDC Light

con-

verter stations and MACH digital

control platform – to connect two

large offshore oil and gas production

hubs to the mainland grid for the Abu

Dhabi Oil Company (ADNOC). The

project will reduce CO

emissions

from ADNOC’s production opera-

tions by up to 30 per cent by replac-

ing gas turbines at the hubs with

electricity generated onshore by

emission-free solar and nuclear

power.

The contract follows an earlier

contract in October last year that will

see Hitachi Energy lead a consortium

that will deliver the rst HVDC link

between the Middle East and Africa.

The link will allow Saudi Arabia and

Egypt to exchange up to 3 GW of

electricity – much of which is ex-

pected to be generated from renew-

able energy sources in the future.

More recently, in Mumbai, India, a

contract was awarded to Hitachi

Energy for what is called a “city

centre in-feed application” where an

HVDC Light

transmission system

will help bring 1000 MW of power

into the city.

“In mega cities like Mumbai, it’s

not easy to build new stations to get

power into the city. With this project

we are able to connect solar power

from outside Mumbai, with a very

small footprint inside the city. This is

the rst of its kind,” said Persson.

The massive worldwide deploy-

ment of renewables, however, comes

at a price in terms of grid stability,

since wind and solar are intermittent

and cause uctuations in terms of

voltage and frequency.

As the grid is forced to accommo-

date more distributed energy sources

and loads such as electric vehicles

(EVs), this also creates transients

and uctuations. According to Pers-

son this means that the grid will in-

creasingly need to be based on power

electronics and digitalisation.

“In the future, you will not only see

HVDC links and STATCOM devices

here and there; there will be power

electronics solutions in wind genera-

tion, with digitalisation for manag-

ing the load ows and stability,

which vary according to how the

wind is blowing or the sun is shining.

This will be the grid of the future.”

Power quality will also be an issue

in AC grids since there is less short-

circuit capability due to a lack of the

system inertia that comes from con-

ventional power plants.

Persson explained: “One of the

concerns we have is that there is a lot

of focus on wind generation, HVDC

and meshed grids, which is good, but

then you need to receive all of this

energy and transmit it to the load

centres. This means you also need to

invest in the AC grid. And this is

where many countries have been

taken by surprise on the needed in-

vestments to get an efcient grid in

place, in time.”

He says, there is therefore a grow-

ing need for what is known as ‘grid

forming’ capability, where the con-

trol function in a STATCOM is used

to rapidly control swings in the grid.

Like synchronous machine technolo-

gies, this enables the provision of

grid services such as inertia and grid

strength in the fastest timeframes.

An HVDC platform at the Dogger Bank wind farm. HVDC systems support cross-border energy

trading while reliably integrating offshore wind farms. (Photo courtesy of Aibel)

THE ENERGY INDUSTRY TIMES - SEPTEMBER 2022

Special Technology Supplement

In January this year,

Hitachi Energy achieved the

rst-step target set out in

its Sustainability 2030 plan

way, you would build and assemble

the grid connection on-site. Our

concept is modularised, contain-

erised, pre-tested from a functional-

ity perspective in a controlled envi-

ronment and sent to the site, ready for

energisation. This allows us to reduce

both equipment size and commis-

sioning time.”

One recent example of the efcacy

of Grid-eXpand

is a 170 kV contai-

nerised gas-insulated (GIS) grid

connection for a combined sh farm

and 312 MW solar photovoltaic

power plant in South East Asia.

Owned by Sunny Rich Group, the

site uses solar power and advanced

technologies to farm sh sustainably.

According to Hitachi Energy, com-

pared to a conventional GIS grid

connection, the Grid-eXpand

solu-

tion has a 25 per cent smaller foot-

print, was delivered and energised 15

per cent faster, and reduced the cost

of civil works by 50 per cent.

Such developments are essential in

order for grid infrastructure to facili-

tate the energy transition. But tech-

nology will also have to be combined

with a more coordinated approach to

grid design and development, all

underpinned by the right regulatory

framework.

The UK is a good example of how

the grid of the future could be de-

signed and developed. In July the

National Grid ESO published its

Pathway to 2030 Holistic Network

Design (HND) to accelerate the con-

nection of 23 GW of wind to help

deliver the government’s ambition

for 50 GW of connected offshore

wind by 2030. The HND, which will

call for £54 billion ($65 billion) in-

vestment, is seen as a rst step to-

wards more centralised, strategic

network planning.

At the same time, regulation will

have to keep up with technology, if

the world is to realise the smart, re-

silient grids of the future that also

allow consumers to play their part in

the energy transition. Persson noted

that Hitachi Energy has the digital

technologies to provide smart grid

solutions but stresses that there is

still much to do for the industry and

government as a whole.

He said: “You can have houses

with solar panels, for example,

where households can buy and sell

energy, etc. I believe this will hap-

pen. But if a transmission system

operator has to respond to an issue, it

needs to know when and how energy

is available. There would need to be

a commercial agreement between

the TSO or DSO [distribution system

operator] and every household to

ensure energy is available when it’s

needed. There is still a lot of work to

be done from the regulatory and

policy perspective for this to happen,

so it will be quite a long time before

houses are really participating in

stabilising the grid.”

Such commercial and regulatory

issues, which include standardisa-

tion and grid compliance, calls for

collaboration in the market, Persson

says.

“There is ongoing collaboration

between TSOs, DSOs, politicians,

OEMs, etc., to understand how we

can standardise and do this as a com-

munity,” he said, adding that there

will also need to be collaboration

in how projects are executed, as the

sector continues to inch closer to

its vision.

“This market is very interesting

and there is a huge demand. I really

see movement from the TSOs, DSOs

and the industry. Project developers

including oil giants like BP, Equinor

and Shell are investing, so money is

available,” said Persson. “But you

still have to look at the industry’s

capacity to respond to this demand.”

He believes the need to meet this

massive demand requires a shift

away from the traditional turnkey

EPC approach, where OEMs also

take on the civil work for a project.

“At Hitachi Energy we believe

each partner should do what it is

good at. So we work with our cus-

tomers to dene who should deliver

what in order to speed up the whole

process. We deliver what is in our

DNA, i.e. the technology – manu-

facturing, system engineering and

project execution. For project exe-

cution, we form partnerships and

get customers to be more involved

in dening the scope.”

Hitachi Energy is keen to lead the

transition by example. “Industry

and technology providers really

want to support the momentum.

This manifests itself in our Sustain-

ability 2030 strategic plan, where

we have committed to achieving

carbon neutrality in our own opera-

tions and only using fossil-free

electricity,” said Persson.

In January this year, the company

announced that it had achieved the

rst-step target set out in its Sus-

tainability 2030 plan – the use of

100 per cent fossil-free electricity in

its own operations.

Work in helping its customers re-

duce carbon emissions is also pro-

gressing well. Hitachi Energy has

launched the rst SF

-free high-

voltage products, under the name

EconiQ

, which will make a “sig-

nicant contribution” to its custom-

ers’ sustainability journey.

Persson summarised: “With proj-

ects all over the world – in Europe,

the Middle East, Asia and the US, I

really feel there is momentum in the

market to make this [energy transi-

tion] happen.

“Our vision 2030 is to signi-

cantly contribute to the green energy

transition. And we will be doing

that by being more sustainable our-

selves, providing technology solu-

tions and continuing to invest in

innovation and people, as well as

innovating together with customers

and partners. Given our global

footprint, we believe we are well

positioned to do this.”

The Grid-eXpand

range of modular and prefabricated grid connection solutions will make it

faster, simpler and more efcient to expand renewables power grid capacity

Though grid-forming control con-

cepts are not new to the industry,

they have received renewed attention

with the proliferation of inverter-

based resources such as wind and

solar in recent years. While the in-

dustry has made tremendous prog-

ress in the space and many vendors

are offering and have installed grid-

forming inverters, there is a lot more

work to be done around the develop-

ment of the technology, applications,

and the impact on operations and

transmission planning.

“A network with a high degree of

power electronics interfacing renew-

able generation will face problems

with low inertia. This requires a new

type of solution for stabilisation,”

said Persson. “We have SVC Light

which is an enhanced STATCOM

with built-in super-capacitors, that

has active power capability for syn-

thetic inertia, and fast frequency

regulation to support the grid in

terms of stability. This is the technol-

ogy of the future and we are now

offering this technology.”

He also said there is a need to de-

ploy more standard network solu-

tions on the AC side (the onshore

network) to upgrade old substations,

etc. Accordingly, the company has

introduced its Grid-eXpand

range

of modular and prefabricated grid

connection solutions that make it

faster, simpler and more efcient to

expand power grid capacity.

Grid-eXpand

comprises a com-

prehensive range of air-insulated and

gas-insulated grid connections that

cover the most frequently used grid

voltages worldwide. Grid-eXpand

solutions are engineered, assembled

and factory-tested by Hitachi Energy

before delivery, ready for speedy and

easy energisation on-site while re-

ducing site-based construction risks.

The modules are available in con-

tainers, on skids or trailers for perma-

nent or mobile deployment, in kits for

gas-insulated solutions, and with

complete power collection and grid

connection packages for offshore

wind farms and solar parks. Site in-

stallation is up to 40 per cent faster,

the footprint up to 60 per cent smaller

and civil work up to 70 per cent lower

in costs than for conventionally built

grid connections, which require ex-

tensive construction work and equip-

ment assembly on-site.

Crucially for many of its custom-

ers, Hitachi Energy says the solutions

can be tailored to meet specic needs

and grid code requirements.

“It’s an important innovation,” ex-

plained Persson. “In the traditional

hitachienergy.com

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thinking – helping both startups and

traditional companies realise the value

in learning from each other. It’s about

having a broader perspective and

thinking outside of your everyday

bubbles to really champion change.

By providing mentorship and a co-

innovation opportunity for mature

startups, the accelerator programme

is part of AWS’s efforts to help ad-

dress the innovation gap. Lyft, Stripe,

Slack, Klarna, Grab, Netix, Airbnb

and DoorDash are among the suc-

cessful companies who have built

their businesses on AWS, and then

gone on to help dene their industries.

Similarly, the aspiration is to em-

power the clean energy technology

startups of today so that they can

shape the evolution of the wider en-

ergy sector. In much the same way

that technologies such as quantum

computing and articial intelligence

that were previously only accessible

to academics and researchers, but are

now household terms, clean energy

technology development is now

within reach for almost anyone with a

passion for making energy cleaner,

more affordable and crucially, more

accessible. Cloud computing has

played a key role in this, owing in part

to its impact on speeding up experi-

mentation and democratising machine

learning. Just like the unicorn startups

before them, the AWS Clean Energy

Accelerator is helping the innovators

of today dene the clean energy in-

dustry of the future.

The startups from AWS’s inaugural

accelerator are already making an

impact in their respective elds. No-

tably, e-Zinc, which is advancing

long-duration battery storage by

storing electrical energy within zinc

metal, creating hundreds of hours of

energy capacity. Another startup,

Persefoni, is furthering intelligent

carbon footprint management and

sustainability reporting with their

dedicated reporting platform. The

second cohort of selected startups,

announced in May 2022, are well on

he greatest promise of startups

has conventionally been the

promise of innovation – the

capacity to invent and reinvent, chip-

ping away the status quo incremen-

tally or sometimes through sheer

disruption. However, there is a reali-

sation amongst the more traditional

energy players today that innovation

is only part of the equation and that

even greater collaboration with start-

ups may hold the key to bridging the

emission reductions gap to meet

global net zero 2050 targets.

According to the International En-

ergy Agency (IEA), to meet 2050

ambitions, a 40-50 per cent reduction

in carbon emissions will need to come

from technologies not yet commer-

cially deployed, especially in sectors

where emissions are particularly

challenging to reduce, such as ship-

ping, aviation, chemicals and heavy

industry. With the energy transition

advancing, the new landscape emerg-

ing is one where energy systems of

the future will be more decentralised,

more complex, and rely on greater

interactions with partners in the sys-

tem. Fresh thinking is a key output of

clean energy partnerships, in addition

to a freer ow of data.

Energy players are starting to look

to startups more than ever as one way

to overcome this challenge, realising

that co-innovation and collaboration

will be key. An example of this shift

in behaviour towards the impact of

clean energy startups is the signicant

increase in investment over the last

year alone. In Europe, more early and

mid-stage venture capital funding

owed to clean energy startups in the

rst half of 2021 than in 2019 and

2020 combined. Public spending also

ramped up, with markets for clean

technology innovation receiving a

global boost, triggered by t for 2050

ambitions, COP26 commitments, and

climate agenda of the US Ination

Reduction Act.

The digital tness of these startups

has also been a sought after core ca-

pability for energy companies. Most

clean energy startups are cloud-native

from inception, understanding the

benets from a cost perspective but

also how the cloud helps achieve

scalability, speed, agility, security and

automation. Fostering innovation

with startups that have digital hard-

wired into their DNA provides an

opportunity for bigger energy compa-

nies to make greater strides forward,

faster. As the landscape shifts, a new

ecosystem develops and an explosion

of data continues, the ability to re-

spond to this and be digitally smart is

more important than ever.

There is also a realisation of the

economic value these partnerships

can bring. It’s estimated that success-

ful partnerships in the pursuit of net

zero could create a market for clean

energy technologies worth over $1

trillion a year by 2050 with the devel-

opment of hydrogen electrolysers and

fuelling, wind turbines, solar panels,

long duration energy storage, carbon

tracking tech, and advanced materi-

als. Exposure to innovating startups

in these spaces is crucial to competi-

tively participating in this market.

Some startups already making an

impact include Ionomr and E-zinc

(Canada), Ethosgen, Persefoni, Utility

Global, Power to Hydrogen, Shifted

Energy, Urban Electric Power, Cem-

vita Factory, Uprise and WindESCO

(USA), SmartPulse (Turkey), Flexid-

ao, Barbara ioT and Rated Power

(Spain),SmartHelio (Switzerland),

Hybrid Greentech (Denmark) Sunai

(Chile), SwitchDin and UPowr (Aus-

tralia), and Hydro Wind Energy

(UAE), to name a few.

Advancing clean energy will also

require re-skilling along two dimen-

sions: what needs to be learned; and

who is learning. There is a skills gap

to sustain the rate of growth and in-

novation by 2030 and beyond – par-

ticularly when it comes to digital and

their way to leveraging the AWS

Clean Energy Accelerator for greater

collaboration and industry-shaping

innovation.

The competitiveness of startups is

also a draw. This is not just down to

how they manage to creatively ad-

dress key industry topics and chal-

lenges, it’s also embedded in how

these young rms subvert traditional

organisational structures. Tackling a

problem with a willingness to experi-

ment and taking risks lies at the core

of innovation.

One example is Octopus Energy, a

‘digital-rst company’ that provides

millions of households in the UK with

clean, green energy. Octopus Energy

uses the breadth and depth of AWS

services, including data storage, to

build insights on its customer service

platform, Kraken. These insights are

helping the organisation to understand

energy consumption rates across the

business, down to individual house-

holds. To do this, Octopus Energy

trains neural networks on billions of

rows of smart meter data, looking at

energy consumption at different times

of the day. These insights can then be

used to predict energy use across

Octopus Energy’s network and in-

form when it buys energy from the

wholesale market.

Achieving net zero carbon goals is

simply not a journey that can be taken

alone. This journey will require work-

ing effectively with innovators from

outside bigger organisations to bring

both an unbiased perspective and

fresh ideas.

Another output of collaboration is

building strategic organisational ca-

pabilities. While mentoring and sup-

porting startups to scale their com-

mercial models, bigger organisations’

partnership with startups will require

working effectively with innovators

from within to bring the startups’ new

skills into the organisation. It’s crucial

to understand startups’ procurement

frameworks and their pace of work,

and to learn from them along the way.

No matter the framework, gaining

competitive advantage in this new era

of energy is unquestionably going to

be a tall order for organisations.

Strategically partnering with startups,

supporting their growth while learn-

ing how to work with them and from

them, will continue to be a promising

way of gaining access to, and expedit-

ing, the game-changing clean energy

solutions the world needs to achieve

net zero emissions.

Hassane Kassouf is Head of Innova-

tion Programs at AWS Energy.

THE ENERGY INDUSTRY TIMES - SEPTEMBER 2022

Industry Perspective

Strategic collaboration and co-innovation between energy companies and emerging startups is key to the energy

sector’s future and achieving net zero goals. AWS Energy’s Hassane Kassouf explains why.

Startup support is key to

unlocking clean energy

innovation

Kassouf: there is also a

realisation of the economic

value these partnerships can

bring

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Power

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Meet our Summit Speakers

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CEO,

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Chief Technologist Carbon

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Managing Director,

Quezon Power (Philippines),

Limited Co.

Dato' Indera Ir.

Baharin Bin Din

President and Chief

Executive Oﬃcer,

TNB Malaysia

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Head of Research, Innovation

& Knowledge Management,

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Coal Business Unit President

and COO,

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2022

2.29x104 TWh. Meanwhile, deployed

energy storage in 2020 was 17 GWh

– or 0.074 per cent of energy con-

sumption – of which just 10 GWh, or

0.043 per cent, was for grid-level en-

ergy storage.

To meet the needs of a decarbonised

energy system, the LDES Council

and McKinsey have estimated that

the world’s electricity grids must

deploy between 85-140 TWh of long-

duration energy storage by 2040.

This is key to realising energy inde-

pendence. In 2021, the EU depended

on Russia for 40 per cent of its gas, 45

per cent of its coal and 25 per cent of

its oil. Simply replacing this supply

with fossil fuels from different coun-

tries will prove challenging, expen-

sive, will not mitigate nancial expo-

sure to global fossil energy markets,

and will require the continued burning

of fossil fuels despite the global cli-

mate emergency.

In March, Ursula von der Leyen, the

European Commission President

said: “We must become independent

from Russian oil, coal and gas... we

need to act now to mitigate the impact

of rising energy prices, diversify our

gas supply for next winter and accel-

erate the clean energy transition.”

The situation has since become

he transition to clean energy,

driven by the need to combat

climate change, has taken on a

renewed urgency in recent months

following the Russian invasion of

Ukraine and recognition, both in Eu-

rope and worldwide, that reliance on

supply chains dominated by chal-

lenging geopolitical partners carries

signicant economic and energy se-

curity risk.

A wholesale and rapid shift to re-

newable energy is complicated by the

need for energy storage to balance the

intermittent nature of wind and solar

generation. While some energy stor-

age already exists, current storage

deployment is just 2.9 per cent of that

which the world will require by 2030

to achieve existing clean energy and

decarbonisation targets.

Further exacerbating this challenge

are ongoing supply chain disruptions,

which are affecting many industries

and the lithium-ion battery industry in

particular. Lithium-ion technology is

currently used for most energy stor-

age applications – from mobile

phones to electric vehicles to grid-

scale storage – but as demand for

batteries grows, challenges to ade-

quate and reliable supply of this

technology are emerging.

But the technology brings potential

supply chain woes. Lithium-ion bat-

teries are dependent on materials such

as cobalt, nickel and lithium; supply

chains for these minerals run through

several challenging regions and are

dominated by China or Russia. Just as

Russia strategically locked the EU

into energy dependence for fossil fu-

els, China is a major supplier of

nickel, controlling most of the market

for processing and rening cobalt,

lithium and other critical battery

minerals. This raises concerns that a

political or security crisis could cause

China to cut off access to mineral

supplies as happened in 2010, when

China embargoed the export of rare

earth elements to Japan because of

tensions in the Senkaku islands.

Setting aside the energy security

risks, there are practical limitations to

meeting current demand for grid-

scale energy storage with lithium-ion

technology alone. An International

Energy Agency (IEA) report predicts

over 300 million EVs will be on the

road in 2050, compared to 10 million

in 2021, which will put a huge strain

on lithium-ion battery production.

Growing demand for EVs has already

started driving up costs; Tesla and

VW recently lowered delivery expec-

tations due in part to strains on battery

supply.

Given the world’s parallel ambi-

tions of electrifying transportation

and reaching grid net-zero, lithium-

ion batteries should be reserved for

EVs and applications where the posi-

tive attributes of that technology are

required.

Fortunately, innovative energy stor-

age solutions are now commercially

available that avoid the challenges

associated with the lithium-ion sup-

ply chain and provide the opportunity

to build a sustainable, resilient energy

grid. New iron-ow long-duration

energy storage (LDES) technologies

employ earth-abundant materials

such as iron, salt and water and offer

an alternative for grid-scale LDES

applications and an opportunity to

achieve needed climate and clean

energy goals.

Iron ow battery technology is ide-

ally suited to supporting the energy

grid, providing storage in durations

ranging from 4-12 hours. In addition

to energy storage, iron ow batteries

are capable of providing key ancillary

grid services such as frequency re-

sponse and voltage regulation, which

enables them to deliver clean energy

24/7 and support a stable, resilient

energy grid.

If we are to reach the clean energy

target of 66 per cent of total primary

energy supply (TPES) by 2050, suf-

cient long-duration energy storage

must be in place to balance intermit-

tent solar and wind and ensure grid

stability.

Currently, renewable intermittency

is balanced by fossil fuel generation,

often natural gas or in some cases,

diesel. As countries work to limit the

increase in global temperature to

1.5°C by 2050, it will be necessary to

retire gas peaker plants and diesel

backups and instead rely on long-du-

ration energy storage to balance en-

ergy supply with demand and provide

reliable, low-cost clean energy.

According to the IEA, world elec-

tricity consumption in 2021 was

more challenging, with Russia cutting

gas deliveries to Germany by 80 per

cent, forcing the government to re-

verse the planned shut-down of coal

generation. More recently, von der

Leyen acknowledged this dilemma:

“We have to make sure that we use

this crisis to move forward and not to

have a backsliding on the dirty fossil

fuels… It’s a ne line and it’s not de-

termined whether we are going to

take the right turn.”

The turn that is needed is towards an

energy system that relies on renew-

able energy and incorporates energy

storage systems that enable the use of

clean energy 24/7, creating a locally

powered, resilient and reliable grid.

While supply chain issues and elec-

tricity grids predominantly powered

by fossil fuels remain formidable ob-

stacles to the clean energy transition,

the availability of new long-duration

energy storage technologies, and iron

ow batteries specically, means that

a grid powered 100 per cent by re-

newable energy sources can become a

reality. A reality that can rely on earth-

abundant, non-conict materials and

one that we urgently need.

Alan Greenshields is Director of Eu-

rope ESS Inc.

THE ENERGY INDUSTRY TIMES - SEPTEMBER 2022

Energy Outlook

Lithium-ion technology is currently used for most energy storage applications but as demand for batteries grows,

challenges to adequate and reliable supply of this technology are emerging. New iron-ow long-duration energy

storage technologies employing earth-abundant materials offer an alternative. ESS’s Alan Greenshields explains.

New long-duration storage

technology is key to energy

security

Greenshields: new long-

duration iron ow batteries

can make a grid powered 100

per cent by renewable energy

sources become a reality

Flow batteries explained

Flow batteries, like the iron-ow battery, store energy in tanks of

liquid electrolytes – chemically active solutions that are pumped

through the battery’s electrochemical cell to charge and discharge

electrons via a process called a redox reaction. The ow battery’s

storage capacity is increased by simply increasing the size of its

storage tank.

Inside the ow battery’s electrochemical cells, two electrolytes

are separated by a membrane. One electrolyte ows past a

positive electrode as it is pumped through the cell, and the other

electrolyte ows past a negative electrode. ESS’s iron-ow battery

uses the same electrolyte on both the negative and positive sides

– iron salts dissolved in water – eliminating cross-contamination

and degradation.

As the electrolytes ow through the cell, chemical reactions

take place on both sides of the membrane. When an electric

current is charging the battery, the electrolyte at the battery’s

negative electrode gains electrons, and dissolved iron salts are

deposited onto the electrode’s surface as solid iron.

When the battery discharges, the process is reversed: the

electrolyte loses electrons at its negative electrode, the plated iron

returns to its dissolved form, and the chemical energy in the elec-

trolyte is converted back to electricity. At the positive electrode,

the opposite process occurs: the electrolyte loses electrons and

“rusts” to a brownish uid while the battery is charging, and this

process reverses during discharge.

In a conventional lithium-ion battery the cell and electrolyte are

contained inside a single package and cannot change. But with

a ow battery, keeping the electrolyte in an external tank means

that the energy-storing part is separate from the power-producing

part. This decoupling of energy and power enables a utility to add

more energy storage without adding more electrochemical battery

cells.

pinning inertia, otherwise

known as kinetic reserve, is

vital for power grids. It helps

to resist sudden changes, such as

when a generator trips ofine, so

that the grid frequency remains

within tightly controlled limits. Its

role can be compared to the way a

car’s shock absorbers smooth out a

sudden bump in the road to keep it

safely on course.

Historically, power grids have re-

lied on the inertia inherent in large,

centralised generation plant to keep

them in balance. However, as large

fossil-fuel plants are decommis-

sioned in favour of renewable ener-

gy, usually wind and solar power,

there is an ongoing, dramatic reduc-

tion in the amount of spinning iner-

tia available within the grid.

The loss of inertia presents a chal-

lenge for many types of public utili-

ty and private grids, including large

networks serving urban areas, is-

land networks and microgrids that

power remote mining facilities.

That is prompting operators to seek

ways to restore their reserves of in-

ertia. Many are nding the answer

in the well-proven technology of

synchronous condensers (SCs).

These are large rotating machines

that can restore physical inertia to

grids to deliver instantaneous sup-

port. This ensures that stable opera-

tion can be maintained, irrespective

of the upstream network voltage or

frequency.

SCs appear similar to large motor

and generators in design. The dif-

ference is that they are not motors

since they do not drive anything.

Equally they are not generators as

they have no prime movers. The

historic application for SCs was to

produce reactive power to balance

out highly inductive loads on the

grid, like electric motors.

Fifty years or more ago, SCs

would have been found in almost

every power grid. But since then,

their reactive power role has been

replaced by power electronics

equipment. There is now new inter-

est in the capability of SCs to mim-

ic the operation of large generating

plant by providing an alternative

source of spinning inertia.

SCs are able to both supply and

absorb reactive power, delivering

voltage support and dynamic regu-

lation. This makes them a very cost-

effective and reliable way to main-

tain power quality. A critical added

advantage is that they also provide

the fault current essential for the

strengthening of a weak grid. This

makes SCs a key enabler for the in-

troduction of more renewables

within a grid.

Normally, SCs are based on small

or medium sized modules that can

be strategically sited for optimal re-

sults. SC systems are tailored for

specic locations, according to net-

work studies. This enables the cre-

ation of pre-designed SC packages

that are easy to transport, install,

commission and integrate for a

decentralised solution to increase

grid strength and stability.

A typical size for the new genera-

tion of SCs is in ratings up to 80

MVAr of reactive power and 3-15

kV system voltage. When higher

outputs are required then several

modules can be linked together.

This approach offers better redun-

dancy and availability compared to

deploying one large unit.

Some operators ask if it is possi-

ble to convert an old, unused gener-

ator they have into an SC? Techni-

cally, this is entirely possible and

there are a number of these projects

operating successfully. However,

this may not always be the optimal

solution. The reason is that the ex-

isting equipment will, by denition,

be old technology and its actual

condition unknown. Before starting

a project, it is advisable to have the

condition of the generator assessed

thoroughly, such as by ABB’s Life-

time Expectancy Analysis Program

(LEAP) service. In any case, mod-

ern SCs are smaller and simpler, en-

abling them to be installed in any

location. They also come with the

benets of modern control and

communication technology.

The Faroe Islands in the North At-

lantic will rely on SCs to reach an

ambitious 100 per cent renewable

energy target by 2030. They want to

become the world’s greenest group

of islands and power utility, SEV,

intends to use green electricity from

hydropower, solar, wind, and poten-

tially tidal streams. The initiative

also holds economic benets for the

Faroes since they will no longer be

dependent on expensive fossil-fuel

imports.

A signicant challenge for SEV is

that switching off its current diesel-

fuelled generating plant could im-

pact the stability of the grid. Any

grid instability could affect the sh

processing and aquaculture indus-

tries that are a major contributor to

the Faroese GDP. Furthermore,

there are no power cables connect-

ing the Faroe Islands to neighbour-

ing countries, so external grid sup-

port is not available.

ABB is working with SEV to de-

liver SCs to keep the grid in bal-

ance. The rst installation is at the 6

MW Porkeri Wind Farm on Suðu-

roy, the southernmost, electrically

isolated island of the archipelago.

This unit is currently undergoing

trial operations and is scheduled to

be fully up and running in 2022. To-

gether with battery energy storage,

the SC could enable 100 per cent of

the island’s demand to be met with

wind energy at times with good

wind conditions.

SEV has placed an order for a

similar unit at Sund, close to Tór-

shavn, the Faroese capital on the is-

land of Streymoy. The unit is sched-

uled to be online in 2023.

ABB is currently delivering a con-

tract for Europe’s largest renewable

energy producer, Statkraft, to de-

sign, manufacture and install two

high-inertia SC systems for the

Lister Drive Greener Grid project in

Liverpool, England. The innovative

project will play a key role in stabi-

lising the local grid to handle more

wind and solar power. This will

help National Grid meet its target of

operating a zero-carbon electricity

system by 2025.

This project is ABB’s rst any-

where in the world to feature a

high-inertia SC conguration. This

couples a 67 MVAr SC with a

40-tonne ywheel that increases the

instantaneously available inertia by

3.5 times. The advantage of com-

bining a mid-size SC with a y-

wheel is that it multiplies the inertia

several times, while the losses will

be much lower compared to install-

ing the whole inertia as SC. This is

also a cost-effective way of using

up to two mid-sized SCs coupled

together with the benets of a high

level of redundancy, increased iner-

tia and greater controllability.

Decentralised solutions will be vi-

tal to help the networks of the fu-

ture maintain grid stability and re-

silience. SCs are a well-proven

solution that can be deployed to

strengthen weak networks in remote

areas. They offer a number of ad-

vantages such as inertia support for

frequency stability, fault level con-

tribution and voltage regulation.

These are all functions that can be

demanding to provide using power

electronic systems on their own.

The need for SCs is set to grow

signicantly as grid operators seek

new approaches to address their

network quality issues and ensure

reliability and continuity of supply.

It is possible that over the next de-

cade several hundreds of SCs might

be deployed worldwide, either as

stand-alone solutions or in combi-

nation with static power electronic

devices.

To gauge the potential for SCs, the

two Statkraft units in Liverpool will

provide a total of more than 900

MWs (megawatt-seconds) inertia.

For comparison, the UK has a cur-

rent total of around 220 GWs (giga-

watt-seconds). That means Lister

Drive will provide about 0.5 per

cent of the UK’s total inertia. That

contribution might seem relatively

small. But it is certain that the tradi-

tional source of inertia from large

generating plant will diminish, and

SCs will be needed to ll the gap.

It is anticipated that the same pat-

tern will be repeated globally. This is

because existing SC installations are

already playing a vital role in rein-

forcing networks in Australia, Cana-

da and Scotland, where they support

a wide variety of applications from

solar power farms to remote mining

operations.

The worldwide drive for decarbon-

isation will continue to gather mo-

mentum. That means synchronous

condensers will become an increas-

ingly important technology for main-

taining grid stability.

Kristina Carlquist is General Man-

ager, Synchronous Condensers, ABB.

Power grids are evolving to become more decentralised while the penetration of renewable resources is increasing.

These two factors are causing a steady decrease in the level of inertia essential to maintain stable operation. ABB’s

Kristina Carlquist explains how synchronous condensers can restore inertia in applications as diverse as urban

networks and remote islands.

Power grids regain missing inertia

with synchronous condensers

THE ENERGY INDUSTRY TIMES - SEPTEMBER 2022

Technology Focus

The Faroe Islands in the

North Atlantic will rely on SCs

to reach an ambitious 100

per cent renewable energy

target by 2030 (inset: ABB

synchronous condensers)

THE ENERGY INDUSTRY TIMES - SEPTEMBER 2022

Final Word

inding reasons to remain posi-

tive among the deluge of de-

pressing headlines about the

global energy crisis is not easy. Yet

news of the US passing the Ination

Reduction Act (IRA) into law and Ger-

many signing a deal on energy with

Canada, offers some light at the end

of what looks like a long, dark, tunnel.

Since autumn last year, the world

has been dogged by rising gas prices

sent into overdrive by Russia’s inva-

sion of Ukraine.

Tracking gas prices, electricity

prices have also been spiralling. Ac-

cording to the International Energy

Agency’s (IEA) Electricity Market

Report, the price index for major

global electricity wholesale markets

reached levels that were twice the

rst-half average of the 2016-2021

period. In Europe, during the rst half

of 2022, average natural gas prices

were four times as high as in the same

period in 2021, resulting in wholesale

electricity prices more than tripling

in many markets. And the outlook

continues to worsen, especially for

those countries highly dependent on

Russian gas.

At the time of writing, Gazprom was

planning maintenance on a gas tur-

bine at the Portovaya compressor

station from August 31-September 2,

which would halt gas ows along the

Nord Stream 1 pipeline linking Rus-

sia and Germany across the Baltic

Sea. Before the Ukraine War, Ger-

many imported over half of its gas

from Russia, and most of it came

through Nord Stream 1.

Berlin accused Moscow of using the

turbine as a pretext to restrict gas

ows and said it is using energy as a

political weapon in an attempt to

weaken the European Union’s resolve

over sanctions.

News of the pipeline’s closure,

which was operating at just 20 per cent

capacity, sent already high energy

prices soaring and prompted countries

across Europe to roll-out emergency

energy-saving plans. August saw the

EU put its emergency gas plan into

force with member states being asked

to reduce their gas use and work toward

lling gas storage ahead of winter.

With most industry experts and

analysts predicting that gas prices

will remain high and volatile through-

out 2023, citizens and businesses

will, unfortunately, have to get used

to high prices. At the same time,

governments will have to hope these

short-term emergency plans, com-

bined with various means of state

support, are sufcient to see us

through to better days.

And better days will come. Late last

month German Chancellor Olaf

Scholz and Canada’s Prime Minister

Justin Trudeau signed what they called

a “joint declaration of intent” that calls

on the two countries to invest in hy-

drogen, establish a “transatlantic

Canada-Germany supply corridor”

and start exporting hydrogen by 2025.

Commenting on what he called a

historic moment, Trudeau said: “We

must look to resources like hydrogen

which can and will be clean and re-

newable. We can be the reliable

supplier of clean energy a net zero

world needs.”

Scholz said the wind conditions on

the German coast could not match

those found in Newfoundland and

Labrador, where wind turbines will be

sited for hydrogen production. He said

hydrogen will play a major role in

Germany’s future energy supply, es-

pecially in industries that are hard to

decarbonise, noting that Germany

“expects a need of 90 to 110 TWh of

hydrogen in 2030”.

The ‘Hydrogen Alliance’ will build

on Canada’s Hydrogen Strategy and

mark a step toward Canada’s objec-

tive of becoming a top global sup-

plier of clean hydrogen. Natural Re-

sources Canada said in a statement:

“This Declaration sends a clear signal

to the private sector and to sub-na-

tional leaders in both countries that

Canada and Germany are committed

to a policy and regulatory environ-

ment that will facilitate and encour-

age investment in the hydrogen value

chain in both countries.”

It follows the signing in March last

year of an energy Memorandum of

Understanding to provide a general

framework for the two countries to

cooperate in the energy sector, using

synergies between existing bilateral

and multilateral dialogues on energy

and climate issues.

The hydrogen alliance was the sec-

ond major global development an-

nounced last month aimed at reducing

energy prices and volatility in the

longer term, while tackling the ever-

growing climate crisis.

Also in August the US, Canada’s

main energy trading partner, moved to

support its edgling hydrogen market

with the passage of the IRA. The Act

provides for $369 billion in energy

security and climate change invest-

ments and notably provides tax credits

for hydrogen production.

Håkon Volldal, CEO of Norwegian

pure-play hydrogen technology com-

pany, Nel ASA, said the IRA “com-

pletely transforms” the outlook for

green hydrogen in the USA. “We can

say that the USA is going to be one of

the cheapest places in the world to

produce clean hydrogen,” he said.

The much-anticipated passing of the

bill through the House of Representa-

tives follows signicant progress in

the North American market for Nel,

which in July secured its biggest

electrolyser order. The 200 MW stack,

worth €45 million ($46 million) and

potentially twice that amount with

additional hardware, will go live in

2024.

“What makes this record order par-

ticularly special is that it represents a

change in market dynamics. The

customer has secured power supply

over 20 years, and end-product de-

mand over the same time period.

Similar long-term prospects will only

inspire further investment in green

hydrogen and related infrastructure,”

Volldal said.

The US hydrogen initiative is seen

by some as a game-changer, being

more exible than the plan set out by

the EU. Under the EU’s Delegated

Acts, by 2026 the bloc will only be

permissible to use electricity from

new wind and solar plants to generate

green hydrogen.

The US rules are more exible, using

a scale to determine the level of tax

credit for hydrogen projects based on

the amount of carbon equivalent emis-

sions for each kilogramme produced,

starting at a basic rate of $0.60/kg.

This scale means that green hydro-

gen producers can receive tax credits

of up to $3/kg. Experts say the mea-

sures will kick-start the US nascent

green hydrogen industry by making it

one of the lowest cost producers in the

world. Last month the cost of produc-

ing hydrogen on the US Gulf coast was

$6.55/kg, according to S&P Global

Commodity Insights.

The bill will also make green hy-

drogen more competitive with grey

hydrogen, the most common form of

hydrogen production. This process

involves natural gas via steam meth-

ane reformation, without capturing

the emissions. S&P says the cost re-

duction makes the cheapest clean

hydrogen production “immediately

cost-competitive”.

Environmentalist will no doubt

spell-out the dangers of subsidising

non-green hydrogen production but

the US’ approach will spur the global

market and make the country less of a

hostage to LNG price volatility.

Europe’s decision to drive green

hydrogen only is admirable from the

climate perspective. With the extreme

weather being experienced, many

would argue it is the right one. Some,

however, point out that the bloc could

be in danger of losing out to invest-

ments that could instead head to the

US.

Fortescue Future Industries, a global

green energy company committed to

producing green hydrogen, struck a

non-binding agreement in March to

provide Germany with enough green

hydrogen to replace about a third of

its gas imports from Russia, or 5 mil-

lion tonnes a year by 2030.

Speaking to the Financial Times

Mark Hutchinson, the company’s re-

cently appointed head, said Europe

will struggle to meet its ambitious

targets for green hydrogen and reduce

its dependence on Russian gas unless

it can match the lead of the US. He

said: “The US has changed the game.

They have created an industry out of

nowhere.” Hutchinson warned that if

Brussels was serious about replacing

Russian gas it would need to improve

its incentives. “Otherwise, what’s

going to happen? All the green capital

is going to be owing into the US and

you’re just going to miss out,” he said.

No doubt as markets develop there

will be leaders and laggards and it will

not be a case of sitting back and enjoy-

ing the ride – for anyone. But we can

take some comfort in knowing that the

hydrogen train is gathering speed as

we enter the tunnel. Its arrival time

may be uncertain but the important

thing is, we are all on it and heading

in the same direction.

We are now entering the

tunnel

Junior Isles

Cartoon: jemsoar.com