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April 2024 • Volume 17 • No 2 • 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

Turn up the heat Carbon commitment

An EU ‘Heat Pump Action Plan’ is

essential to get the technology

and Europe’s energy transition

back on track. Page 13

Can a carbon market help China

curb its emissions, as the country

works towards carbon neutrality?

Page 14

News In Brief

European coal-to-gas fuel

switching set to continue

The fall in European wholesale gas

prices to levels seen before the

Ukraine war and greater use of re-

newable energy is encouraging

more electricity utilities to switch

from coal to gas.

Page 2

EPA backtracks on plans to

cut power plant emissions

The US Environmental Protection

Agency (EPA) has unexpectedly

decided to exclude existing gas

plants from new rules over carbon

dioxide emissions.

Page 4

Renewable costs in Asia

Pacic hit all-time low

The levelised cost of electricity

(LCOE) generated from renewable

sources is declining signicantly in

the Asia Pacic region and reached

an all-time low in 2023, according

to Wood Mackenzie’s analysis of

LCOE for the region.

Page 5

Wind industry anticipates

growth in offshore sector

after EU acts

A recent compromise between the

EU’s Council and Parliament on the

Net Zero Energy Act means the

EU’s wind energy target for 2030

of 393 GW “is within reach”, ac-

cording to WindEurope forecasts.

Page 7

Decarbonisation Series

China’s electricity sector is the larg-

est in the world, and the most pol-

luting. The country is aiming for

peak carbon emissions by 2030 and

carbon neutrality by 2060 but it is

a complex and difcult task that

raises many questions. Page 14

Technology Focus: Brescia

steel factory pioneers

decarbonisation technology

A steel production plant in Brescia,

Italy, is a good example of how the

sector can play its part in cutting

global carbon emissions.

Page 15

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According to a recent UN report, global temperatures reached an all-time high last year,

despite the rapid rise in clean energy sources. Junior Isles

Finance is key to meeting COP28 renewables targets

THE ENERGY INDUSTRY

TIMES

Final Word

Fossil red generation is

not running out of gas…

yet, says Junior Isles.

Page 16

Global temperature records were

smashed in 2023, despite a rise in clean

energy limiting the rise of carbon di-

oxide emissions.

In yet another warning that global

temperature rises were reaching dan-

gerous limits, last month the UN’s

World Meteorological Organization

(WMO) sounded a “red alert” on cli-

mate change.

Using data from member countries

and partner agencies, the WMO report

conrmed that 2023 was the hottest

year on record. The average global

surface temperature was 1.45°C

above pre-industrial levels, it con-

cluded, with a margin of uncertainty

of 0.12°C.

The world was “so close – albeit on

a temporary basis at the moment” to

breaching the 1.5°C lower limit of the

Paris Agreement, said WMO Secre-

tary-general Celeste Saulo, that

“the WMO community is sounding

the red alert to the world”.

The 1.5°C threshold refers to the

measure of long-term average tem-

peratures reached over more than a

decade, with the world presently on a

trajectory for as much as 2.9°C by

2030, according to UN scientists.

The warning came despite a report

from the International Energy Agency

that said long-term energy-related

emissions were in “a structural slow-

down” thanks to the growth of clean

energy sources such as wind turbines

and solar panels. Overall, emissions

growth over the past ve years would

have been about three times higher

without the development of cleaner

energy technologies, the IEA said.

Emissions increased by 410 million

tonnes, or 1.1 per cent, in 2023 – com-

pared with a rise of 490 million tonnes

the year before – taking them to a re-

cord level of 37.4 billion tonnes. An

exceptional shortfall in hydropower

due to extreme droughts – in China,

the United States and several other

economies – resulted in over 40 per

cent of the rise in emissions in 2023,

as countries turned largely to fossil

fuel alternatives to plug the gap. Had

it not been for the unusually low hy-

dropower output, global CO

emis-

sions from electricity generation

would have declined last year, making

the overall rise in energy-related emis-

sions signicantly smaller.

The new ndings come from the

IEA’s annual update on global energy-

related CO

emissions – and the inau-

gural edition of a new series, the

‘Clean Energy Market Monitor’,

which provides timely tracking of

Continued on Page 2

The International Renewable Energy

Agency (Irena) released a new report

on the sidelines of the Berlin Energy

Transition Dialogue last month de-

scribing the actions needed if the

world is to meet targets set at the re-

cent COP28 climate conference in

December and the level of nance

needed.

Irena President Francesco La Cam-

era said renewables are the only en-

ergy sources that can be deployed

with the speed and scale to achieve

the ambitious targets set at the Dubai

climate conference.

“We need to deploy around 1.1 TW

of renewable energy capacity per

year by 2030. Every technology that

provides a reduction in CO

emis-

sions is good, but technology neu-

trality may not be the solution, as

only renewables ensure the neces-

sary speed and scale to achieve the

proposed targets,” said La Camera,

in reference to the slow pace at which

nuclear energy is currently driving

the global energy transition.

According to the ofcial docu-

ments, 123 national governments

and supranational blocs, including

the European Union, have signed up

to triple the world’s installed renew-

able energy generation capacity to at

least 11 TW by 2030. The signatories

also vowed to double the global aver-

age annual rate of energy efciency

improvements, from 2 per cent to 4

per cent, until the end of 2030.

In the ‘Tracking COP28 Outcomes’

report, Irena said that annual invest-

ments in renewable power generation

must surge from $570 billion in 2023

to $1550 billion on average between

2024 and 2030.

The Berlin meeting also saw the

Global Renewables Alliance launch

the ‘Time 4 Action’ campaign, calling

for action to mobilise $10 trillion in

public/private investments and estab-

lish policy frameworks paving the

way to reach 11 TW of renewables by

the end of this decade.

“There is no energy transition with-

out action,” said Bruce Douglas, CEO

of the Global Renewables Alliance.

“World leaders have committed to the

tripling goal and now it’s time to de-

liver. This means taking urgent action

on nance, permits, supply chains and

grids.”

The alliance said scaling renewables

by three times globally now means

taking collective action.

Yet appetite for collective action

seems to be waning. Speaking at a

recent two-day ministerial meeting

in Copenhagen, Simon Stiell Execu-

tive Secretary of the United Nations

Framework Convention on Climate

Change (UNFCC), said its climate

change arm faces “severe nancial

challenges” that could leave the or-

ganiser of the annual global COP

summit struggling to help govern-

ments tackle global warming.

The UNFCCC, which oversees the

co-ordination of global efforts on cli-

mate issues, said its budget was less

than half funded. It said it needs €74

million over 2024 and 2025 for its so-

called core budget, which is funded

by national government contributions

and was agreed at last year’s COP28

summit.

Heat records

smashed despite clean

energy limiting rise in

global emissions

Saulo: the WMO “is

sounding the red

alert” to the world

THE ENERGY INDUSTRY TIMES - APRIL 2024

Junior Isles

The fall in European wholesale gas

prices to levels seen before the

Ukraine war, and greater use of renew-

able energy is encouraging more elec-

tricity utilities to switch from coal to

gas, pushing coal further out of the

power mix.

European gas prices sky-rocketed in

2022 and early 2023 in the wake of

Russia’s invasion of Ukraine, prompt-

ing many utilities to switch back to

relatively cheaper but more polluting

coal, even as the region tries to phase

it out to meet climate targets.

While EU carbon permit prices have

receded from record highs of over €100

in early 2023, they would need to fall

further to €47/tonne or lower for even

high-efciency coal plants to be able

to replace low-efciency gas plants in

the rst quarter of 2024, said Veyt

analyst Marcus Ferdinand. Bench-

mark EU carbon prices currently trade

at around €61/tonne.

Although gas prices have plummeted

since their highs in 2022, coal has not

seen the same large drop.

Fabian Skarboe Roenningen, Vice

President of renewables and power at

consultancy Rystad Energy, said:

“There has been quite a lot of coal-to-

gas switching in recent months. We

saw clear evidence of a large shift in

coal-to-gas switching in 2023, which

has continued into 2024.”

Roenningen said he expected more

coal-to-gas switching this year in coun-

tries that have both coal and gas capac-

ity, such as Germany, Poland and the

Netherlands, as well as nations with a

lot of coal production, but also trans-

mission capacity to import gas, such

as the Czech Republic, Greece, Roma-

nia and Bulgaria.

Gas red power generation in Poland

was up 32 per cent year-on-year in the

rst two months of 2024, while hard

coal and lignite use fell 15 per cent and

10 per cent, respectively, over that pe-

riod, according to estimates by Forum

Energii.

In Germany, the operating margins

of both coal and gas red power plants

are deeply negative, leaving them op-

erating mostly in peak hours when

prices are higher, ICIS analyst Stefan

Konstantinov said.

Meanwhile, a new report by Wood

Mackenzie claimed that gas prices in

Europe could fall as low as $6.70 per

million British thermal units (mmbtu)

in the summer as the mild winter will

see gas storage levels remain above

55 per cent.

The report, ‘Europe gas and power

markets short-term outlook Q1 2024’,

states that the mild European winter,

the second in succession, means that

European storage levels will reach 89

per cent by the end of July 2024, putting

further pressure on prices. It noted,

however, that European prices are set

to increase in 2025.

In separate research, the World Bank

(WB) said gas can play a vital role in

the efforts to reduce carbon emissions

in Europe and Central Asia. The WB

report said gas can contribute by re-

placing coal, reducing wasteful energy

use, mitigating lifecycle greenhouse

gas emissions, and integrating with

carbon capture, utilisation, and stor-

age, especially in power generation and

blue hydrogen production.

It said gas will persist in being utilised

for balancing purposes in power, and

as a feedstock in the industry well into

2060 and beyond – even in the midst

of a transition towards achieving net

zero emissions.

clean energy deployment for a se-

lect group of technologies and out-

lines the implications for global

energy markets more broadly.

“The clean energy transition has

undergone a series of stress tests in

the last ve years – and it has dem-

onstrated its resilience,” said IEA

Executive Director Fatih Birol. “A

pandemic, an energy crisis and geo-

political instability all had the po-

tential to derail efforts to build

cleaner and more secure energy

systems. Instead, we’ve seen the

opposite in many economies. The

clean energy transition is continu-

ing apace and reining in emissions

– even with global energy demand

growing more strongly in 2023 than

in 2022. The commitments made by

nearly 200 countries at COP28 in

Dubai in December show what the

world needs to do to put emissions

on a downward trajectory.

“Most importantly, we need far

greater efforts to enable emerging

and developing economies to ramp

up clean energy investment.”

The WMO report also said that

the rise in clean energy sources of-

fered a “glimmer of hope” after

renewable power capacity addi-

tions rose by 510 GW in 2023, al-

most 50 per cent from the previous

year.

Although impressive, the Interna-

tional Renewable Energy Agency

(Irena) recently cautioned that a

target set at the UN’s COP28 climate

summit to triple renewable power

capacity by 2030 would only be pos-

sible with a “major global course

correction”.

An average of almost 1100 GW

of renewables capacity must be in-

stalled annually by 2030 to meet the

target – more than double the record

set in 2023, Irena said.

In late February a report by Wood

Mackenzie said the European

Union would not meet its climate

targets until well into the 2060s, as

focus shifts to energy security and

economic stability.

On its current trajectory, the EU’s

emissions are expected to fall short

of its net zero pledges at 684 million

tonnes per annum (Mtpa) by 2050,

despite unity between members to

meet the EU 2050 net zero target,

which falls under the European

Green Deal.

Under its net zero 2050 scenario,

the ‘EU27: Energy Transition Out-

look’ nds that to meet global net

zero goals, the EU would need to

reach net zero by 2048 in order to

offset other regions that will still be

emitting throughout the following

decade.

“The EU remains a leader in the

energy transition with ambitious,

legally binding targets, but a turbu-

lent start to the decade has thrown

up several obstacles, shifting focus

to energy security and economic

stability, while pushing net zero

targets lower on the agenda,” said

Lindsey Entwistle, senior research

analyst at Wood Mackenzie, and

lead author of the report.

Continued from Page 1

The International Energy Agency

(IEA) has reported a signicant surge

in global wind capacity additions in

2023, jumping nearly 60 per cent and

surpassing the previous record set in

2020.

Onshore wind projects spearheaded

the growth, constituting over 85 per

cent of the global wind expansion.

China emerged as the frontrunner,

contributing to more than 60 per cent

of the global wind expansion, nearly

doubling its additions compared to

2022.

The EU experienced a modest in-

crease of less than 10 per cent in wind

additions, primarily due to a slow-

down in onshore wind deployment.

Developers in Europe faced various

challenges, including escalating

equipment costs, ination, and supply

chain bottlenecks, dampening their

enthusiasm to participate in competi-

tive auctions.

In contrast, the US witnessed a de-

cline of over a quarter in wind additions

in 2023 compared to the previous year,

attributed mainly to uncertainty sur-

rounding the extension of tax credits

prior to the adoption of the Ination

Reduction Act (IRA). However, wind

capacity additions are anticipated to

rebound signicantly in the coming

years, driven by the long-term policy

clarity provided by the IRA.

Wind energy was on the agenda as a

strategic global industry at a meeting

of G20 Finance Ministers in São Pau-

lo, Brazil at the end of February. Com-

menting just ahead of the meeting, the

Global Wind Energy Council said: “A

sustainable future powered by wind is

within reach, but it will need to see

trillions of dollars rerouted away from

fossil fuels, towards to large-scale re-

newable energy projects in the Global

South. This means getting the cost of

capital of these projects down.

“G20 Finance Ministers, multilateral

development banks and central bank

governors must deploy targeted donor

nance to the Global South to de-risk

wind and renewable energy projects

and mobilise huge volumes of private

capital to ensure the emerging econo-

mies in the Global South are not left

behind.”

It said that of the $1.3 trillion de-

ployed in 2022, around 85 per cent of

global renewable energy investment

benetted less than 50 per cent of the

world’s population and Sub-Saharan

Africa received less than 1 per cent of

the global total in the past two years.

Outdated and inadequate power grids

are one of the most signicant stum-

bling blocks for the energy transition,

according to recent research by Rys-

tad Energy.

The Norwegian research and busi-

ness intelligence rm estimated that

$3.1 trillion is required for such infra-

structure before 2030 to hold global

warming to 1.8°C, with global grid

investments predicted to reach $374

billion this year alone.

Notably, Rystad Energy took 1.8°C

as a reference point instead of the

1.5°C ceiling indicated in the 2015

Paris Agreement, pointing out that the

goal “seems to have been too ambi-

tious, and global efforts in the mean-

time to eliminate net greenhouse gas

emissions were insufcient”.

It warned that an additional 18 mil-

lion km of power grid network would

be needed to keep pace with the elec-

trication underway across cities and

counties, including new renewable

energy capacity and the rapid adoption

of electric vehicles.

The International Energy Agency

earlier estimated the length at 166.4

million km for 2050, but for the 1.5°C

objective.

Speaking to the FT on the sidelines

of a ministerial meeting last month,

Eamon Ryan, Ireland’s Climate and

Energy Minister said: “There’s no

transition without transmission. You

know it’s kind of cliché but it’s true.”

Electricity consumption in the EU

is expected to increase roughly 60 per

cent between now and 2030, accord-

ing to European Commission gures,

driven by the bloc’s decarbonisation

targets.

But with permitting and construction

taking anywhere between ve and 15

years – more than twice as long as re-

newables construction – grids are far

from ready.

In an ‘Action Plan for Grids’ pub-

lished in November, the European

Commission pointed to a number of

issues that need to be addressed: faster

permitting timelines, strengthening

supply chains for components such as

cables and nding €584 billion in in-

vestments to pay for it.

Europe is fast-tracking the develop-

ment of international offshore trans-

mission hubs that will create a clearer

wind deployment outlook, if funding

can be found.

The Commission recently identied

12 offshore grid projects as ‘Projects

of Common Interest’ (PCIs). The cat-

egorisation will allow them to bid for

EU funding this year and gain faster

permit approvals. The Commission

wants to double cross-border power

capacity in the EU by 2030, adding 87

GW of onshore and offshore lines in

just seven years.

Finding the investments required for

offshore wind grids will be a huge

task. ENTSOE-E estimates invest-

ments of around €400 billion ($434.0

billion) are required to “optimally

integrate” offshore renewable energy

facilities by 2050, according to its Ten

Year Network Development Plan

(TYNDP). This is based on 383 GW

of capacity in EU 27 countries plus

15 GW in Norway and 97 GW in the

UK. Huge amounts of investments are

also needed for onshore grids.

Private and public funding will be

required for PCI projects and one of

the main challenges will be accurately

allocating the cost and benets be-

tween the affected stakeholders, since

benets can be unevenly spread, a

spokesperson for Elia Group, the Bel-

gian transmission operator, said.

Rising costs could also be a problem

given the limited number of funding

options for these types of infrastructure

projects, the spokesperson said.

Headline News

Green targets will not be met without grid investment

European coal-to-gas fuel

switching set to continue as

gas prices plummet

Entwistle says a turbulent start

to the decade has “thrown up

several obstacles”

n Gas prices have plummeted but coal has not seen same large drop

n Gas red power generation up 32 per cent in Poland

China leads global wind surge

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TIMES

www.teitimes.com

March 2015 • Volume 8 • No 1 • 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

How smart is

Europe?

Making a case for

storage

Smart meters are being rolled

out across Europe but what’s in

it for consumers and utilities?

Page 13

Utilities can take advantage of

storage now – it’s just a case of

nding the right economic model.

Page 14

News In Brief

European Parliament

compromises on ETS reform

The European Parliament has

backed the introduction of a Market

Stability Reserve to boost carbon

prices.

Page 2

EPA’s Clean Power Plan no

threat to reliability

Concerns that the US

Environmental Protection Agency’s

Clean Power Plan is a threat to the

US electric system security are

largely overstated, according to two

recent independent reports.

Page 4

Australia favours solar over

wind

Government plans to reduce

renewable support are a big threat

to wind but large-scale solar

projects still look promising.

Page 6

Shale gas progress falters in

Europe

The prospects for the widespread

development of a shale gas

industry in Europe have faltered in

spite of attempts by industry and

some governments to kick-start

exploration.

Page 7

Vattenfall restructures

Vattenfall is to implement a new

organisational structure and

executive management team as

part of wider plans to review its

strategy and address current market

challenges.

Page 9

Fuel Watch: BP Energy

Outlook 2035

Demand for natural gas over the

next 20 years will rise fastest

among fossil fuels, mainly driven

by growing consumption in non-

OECD countries.

Page 11

Technology: Lünen could

answer several utility

problems

The energy landscape has changed

dramatically in recent years

with many of Europe’s energy

companies being squeezed from

all angles. A technology to be

demonstrated at a pilot project in

Lünen, Germany, could potentially

answer their problems.

Page 15

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The EU’s new ‘Energy Union’ strategy could improve EU energy independence while meeting

long term climate goals in a cost-effective manner. Junior Isles

Plenty to do despite early wrap-up at Geneva climate talks

THE ENERGY INDUSTRY

TIMES

Final Word

CCS takes a count but this

ght isn’t over, says Junior Isles

Page 16

The energy industry and politicians

have largely welcomed the European

Commission’s recently published

‘Energy Union’ strategy.

The Energy Union has been drawn

up to set a new direction and a clear

long-term vision for European energy

and climate policy. It is seen as a fun-

damental step towards the completion

of a single energy market and reform-

ing how Europe produces, transports

and consumes energy.

Three key documents were pub-

lished by the Commission in late

February:

n A Framework Strategy for a Resil-

ient Energy Union with a Forward-

Looking Climate Change Policy that

sets out, in ve interrelated policy di-

mensions, the goals of an energy union

– and the detailed steps the Juncker

Commission will take to achieve it.

Among other things it includes new

legislation to redesign and overhaul the

electricity market, ensuring more

transparency in gas contracts; substan-

tially developing regional cooperation

as an important step towards an inte-

grated market, with a stronger regu-

lated framework; new legislation to

ensure the supply for electricity and

gas; increased EU funding for energy

efciency or a new renewables energy

package.

n An Interconnection Communica-

tion, setting out the measures needed

to achieve the target of 10 per cent

electricity interconnection by 2020,

which is the minimum necessary for

the electricity to ow and be traded

between Member States. It shows

which Member States currently meet

the target and which projects are neces-

sary to close the gap by 2020.

n A Road to Paris Communication,

setting out a vision for a global climate

agreement in Paris in December. The

vision is for a transparent, dynamic and

legally binding global agreement with

fair and ambitious commitments from

all parties. The Communication also

translates the decisions taken at the

European Summit in October 2014

into the EU’s proposed emissions re-

duction target (the so-called Intended

Nationally Determined Contribution,

or INDC) for the new agreement.

The documents were published

against a backdrop that shows the high

Continued on Page 2

Climate change negotiators made

good progress at a recent climate

change conference in Geneva, con-

cluding talks two days ahead of sched-

ule. However, much of the hard work

still lies ahead.

The six-day conference ended last

month with an agreement on a formal

draft negotiating text for the crucial

COP21 summit in Paris in December.

It was the rst formal climate meeting

since the summit in Lima, Peru, in

December 2014.

The 86-page document builds on the

Lima negotiations and covers issues

ranging from climate change mitiga-

tion, adaptation, nance, technology

and capacity-building.

Christiana Figueres, Executive Sec-

retary of the United Nations Frame-

work Convention on Climate Change

(UNFCCC), said: “We now have a

formal negotiating text, which con-

tains the views and concerns of all

countries. The Lima Draft has now

been transformed into the negotiating

text and enjoys the full ownership of

all countries.”

Tasneem Essop, WWF’s head of

delegation to the UNFCCC noted,

however, that while the chairpersons

at the Geneva conference “deserve

credit for their approach at the session

and getting a party-owned draft text

agreed, tackling the difcult issues” is

yet to begin.

She said: “Our perception is that

traditional fault lines have not yet

been breached. Negotiators face a

tremendous task to reach agreement

on the contentious issues and come

up with an ambitious, fair science-

based deal in the two or three negoti-

ating sessions left before meeting in

Paris.”

She said that the rst test of political

will and inuence inside the negotiat-

ing process will come in the period

from March to June when countries an-

nounce their plans to reduce emissions

and, it is hoped, provide nancial re-

sources for the post-2020 period.

In a show of political will, leaders

from the UK’s three main parties last

month took the rare step of signing a

cross-party pledge to combat climate

change whatever the result of the May

general election.

The next step for climate negotiators

is to reach consensus on the content of

the new climate deal. Formal negotia-

tions on the text will continue in Bonn,

Germany in June.

Some of the key issues that are yet

to be agreed include how govern-

ments can scale up pre-2020 actions,

the application of the convention

principles related to differentiation;

securing the scale of nance required

in both the pre-2020 and post-2020

periods and ensuring that a new glob-

al climate regime provides security

for those most vulnerable to climate

impacts.

To avoid the most dangerous im-

pacts of climate change, countries

have already agreed that the global

temperature rise should stay below

2°C (3.6°F), compared to pre-indus-

trial times. However, many want the

Paris deal to state more specically

what that actually means in terms of

emissions cuts.

Some say the Paris agreement

should incorporate the UN climate

science panel’s nding that to have a

two-thirds chance of staying below

2°C the world must cut emissions by

40-70 per cent by 2050. Others want

to go further, calling for net zero emis-

sions by mid-century.

Figueres said it is already clear the

combined pledges will not match

what scientists say is required to avoid

dangerous warming, meaning deeper

cuts have to occur in the future.

“What Paris does is to chart the

course toward that long-term destina-

tion,” she told reporters in a webcast

brieng.

n Industrial countries taking part in

the 1997 Kyoto Protocol on climate

change reduced their total greenhouse

emissions by around 23 per cent from

the 1990 base year at the end of their

rst commitment period to 2012, far

beyond the 5 per cent target, according

to the UNFCCC.

EU moves to

address

energy

trilemma

Šefčovič: the Energy

Union is “the most ambitious

European energy project since

the Coal and Steel Community”

THE ENERGY INDUSTRY TIMES - APRIL 2024

Europe News

Janet Wood

A recent compromise between the

EU’s Council and Parliament on the

Net Zero Energy Act means the EU’s

wind energy target for 2030 of 393 GW

“is within reach”, according to Wind-

Europe forecasts. The group said the

EU will install an average of 29 GW

per year between 2024 and 2030.

WindEurope said investments in

wind energy in Europe more than

doubled in 2023 compared to 2022,

with inationary pressures easing,

greater certainty in electricity markets

and improved tariff indexation by

governments. But the group warned

that further expansion relies on speed-

ing up expansion of Europe’s onshore

and offshore electricity grids.

“The number one bottleneck now is

the grid. We need better top-down

planning, innovation in nancing new

grids and better use of the existing

grid,” said Pierre Tardieu, Chief Pol-

icy Ofcer of WindEurope.

Support included the EU Commis-

sion’s Wind Power Package in late

2023, which included 15 actions to

strengthen the industry. WindEurope

said until 2030 two-thirds of new in-

stallations will be onshore, but by 2030

offshore wind installations will be rap-

idly increasing to draw level with new

onshore installations.

Key to the growth is network expan-

sion, as announced in the UK and by

Germany’s Federal Network Agency

in a network development plan for ve

major power lines, plus 35 additional

projects in the North and Baltic Seas

to connect up to 70 GW of power from

offshore wind farms in the period to

2045.

The North Sea is currently the main

focus. Mārtiņš Čakste, Chairman of the

Board of Latvenergo said projects in

the Baltic Sea were being put on hold

due to ination, bank nancing and

logistical bottlenecks.

He said: “Almost everybody moved

to the North Sea, where there is much

higher electricity consumption, more

serious companies. Denmark’s Ørsted,

RWE and a few other players decided

to leave the Baltic market for a while.”

But he said Latvenergo will partici-

pate in an upcoming auction because

offshore wind will be competitive

again in the Baltic in future.

However, projects that connect

across the North Sea may be affected

by concerns over the EU’s Carbon Bor-

der Adjustment Mechanism (CBAM),

which takes effect in 2026. Analysis by

consultants AFRY warned that the

CBAM risked driving up the price of

electricity traded between the UK and

the EU and reducing transfers of green

electricity. Rebecca Sedler, Managing

Director of National Grid Interconnec-

tors, said the carbon tax could “sig-

nicantly reduce” exports of British

electricity to the EU, which would be

“self-defeating”.

The Dutch Ministry of Economic Af-

fairs and Climate, through Netherlands

Enterprise Agency, has initiated an

offshore wind tender for permits for 2

GW lots in the IJmuiden Ver wind farm

zone in the North Sea. A third 2 GW

plot is due to follow shortly.

The IJmuiden Ver area is 62 km off

the west coast and grid operator Ten-

neT is due to erect three offshore sub-

stations linking to the onshore net-

work. The tender was described as

“aggressive” by REGlobal.

Meanwhile, Dutch company Solar-

Duck recently announced the start of

work on a oating offshore solar farm

to be integrated into RWE’s 800 MW

OranjeWind wind farm, 53 km off-

shore. The experimental project, led by

the Nautical Sunrise consortium, has a

budget of €8.4 million, with €6.8 mil-

lion provided by the Horizon Europe

programme.

Onshore, members of the Dutch par-

liament recently voted in favour of a

motion calling on the government to

look into building “at least” four new

large nuclear power stations. The target

would double plans for two nuclear

stations set in motion by the outgoing

cabinet, which agreed at the end of

2022 to build two plants next to the

existing nuclear station in Borssele,

Zeeland, to start up in 2035.

The new proposal calls on climate

minister Rob Jetten to “work out a sce-

nario which provides for a greater share

of nuclear power” in the Netherlands.

Iberdrola has signed an agreement with

IB Vogt for the construction of Italy’s

largest solar farm, the 245 MW PV

project in Sicily, to which a further 60

MW could be added. Iberdrola is also

due to start construction this half-year

on smaller solar farms Limes 10 (18

MW) and Limes 15 (36 MW) respec-

tively, and three other permitted proj-

ects are planned for the second half of

the year.

“This is a further step in Iberdrola’s

growth in Italy,” said Valerio Faccen-

da, Country Manager of Iberdrola Re-

newables in Italy.

The projects come as the European

Commission has come under pressure

to support Europe’s solar power in-

dustry, after eight European solar sup-

ply chain companies have either led

for bankruptcy, paused production,

warned of factory closures or restruc-

tured debts, according to SolarPower

Europe.

It noted that Switzerland’s Meyer

Burger Technology has seen its shares

lose nearly 90 per cent of their value

in the past year. The company recently

announced plans to close a module

production site in Germany, while it

raised new funding. Solar lobby groups

have warned that domestic companies

cannot compete with cheap imports

from China, which can be produced

for half the cost of European-manufac-

tured panels.

However if the EU restricts or plac-

es minimum tariffs on Chinese im-

ports it is likely to raise protests from

installers.

Britain, Ireland and Italy are the most

attractive markets for investors in bat-

tery power storage, energy consul-

tancy Aurora Energy said recently.

The company forecasts a seven-fold

increase in European battery power

storage capacity by 2030.

The UK-based consultancy also

named Spain, Germany and Greece as

promising markets, citing its ‘Market

Attractiveness Report’, which covers

24 European countries.

Ryan Alexander, research lead, Eu-

ropean power markets, said battery

storage was “moving from being a

niche part in the energy system to ac-

tually one of the fundamental ele-

ments of it”.

The comment came as 655 MW of

battery capacity won contracts in Brit-

ain’s year-ahead Capacity Market auc-

tion, and the system operator Grid an-

nounced it will accelerate 10 GW of

battery storage projects.

Among battery projects in the GB

pipeline, the world’s largest battery

storage scheme recently had planning

permission granted for a site near Man-

chester, while E.On acquired one of

two 230 MWh/115 MW battery proj-

ects under construction at Uskmouth.

The boom has attracted new investors

such as Abu Dhabi Future Energy

Company PJSC (Masdar), which as

Masdar Arlington Energy has broken

ground at two battery sites as part of a

3 GWh pipeline of batteries in the UK.

Masdar’s Chief Executive, Mo-

hamed Jameel Al Ramahi, said: “To

achieve the global energy transition

agreed in the UAE Consensus, we

need to utilise world-changing renew-

able energy sources and technology,

including wind, solar and battery en-

ergy storage.”

Janet Wood

Great Britain’s new System Operator

has announced that investment of £60

billion is needed in the next decade to

expand the power grid.

The announcement came in a report,

‘Beyond 2030’, from a new govern-

ment-owned National Energy System

Operator (NESO), which from mid-

year will have responsibility for inte-

grated planning of gas and electricity

networks across GB.

The system operator said that the plan

would connect a further 21 GW of off-

shore wind in development off the

coast of Scotland to the grid “in an ef-

cient and coordinated way” and bring

the country’s total offshore wind ca-

pacity to a potential 86 GW.

RenewableUK’s Director of Future

Electricity Systems Barnaby Wharton

said: “Reinforcing and expanding our

electricity grid is long overdue.” He

added: “The measures set out in this

ambitious plan put offshore wind at

the heart of our future energy system,

enabling us to decarbonise our elec-

tricity network by 2035 and securing

our position as a global leader in this

key technology.”

Energy UK Chief Executive, Emma

Pinchbeck said: “The proposals set out

by the electricity system operator cap-

ture the necessary level of ambition to

get the UK on track for economic

growth, job creation, and a more cost-

efcient energy system which best uses

new technologies and demand from

today’s customers”.

A major focus of the Beyond 2030

proposals – which have still to be -

nalised after consultation with poten-

tially affected communities – is trans-

porting power from wind farms

offshore of Scotland to cities and in-

dustries south of the Scotland-Eng-

land border, where connection capac-

ity has been limited. The system

operator recommends expansion of

the offshore grid, a new north-to-

south onshore ‘electrical spine’ and

eventually several ‘bootstrap’ off-

shore links.

Meanwhile, the British government

has published proposals in its Review

of Electricity Market Arrangements

(REMA), intended to address “long-

standing inefciencies of the GB en-

ergy market design”.

In a major change the government

now plans to introduce a locational

aspect to the market arrangements,

which it hopes will also encourage

major power users to choose sites

closer to renewable generation, and

vice-versa. It rejected proposals for so-

called ‘nodal’ charging set at thousands

of grid intersections, instead deciding

to take forward plans for zone-based

charging.

The government also announced

changes to its decade-old Capacity

Mechanism to ensure it incentivises

development of large gas red stations,

with the ability to capture carbon emis-

sions. It was responding to fears that

there would be a supply shortage in the

next decade, although it said it expect-

ed the gas plants to be used for very

short periods.

GB sets out network

expansion to accommodate

more renewables

Netherlands initiates offshore wind

tender, as nuclear wins support

Iberdrola pushes ahead on Italian

solar as supply chain feels the

pressure

Britain tops European battery attractiveness list

n Supply chain pressures easing n New connections needed

n Market arrangements set to move to zonal

charging regime

n Capacity Market rules give easier route for new gas plant

Wind industry anticipates growth in

offshore sector after EU acts

for the ongoing expansion of the Ger-

man power grid.

NKT will design, manufacture and

install the high voltage power cable

systems with voltage levels of 110

kV, 380 kV AC and 525 kV DC.

The majority of the power cables

for the two projects will be manufac-

tured in Cologne, which is located

close to the installation sites.

Bechtel has announced that it has

awarded its rst procurement con-

tracts for construction of Poland’s rst

nuclear power plant. These rst con-

tracts will go to Polish suppliers.

The companies who have signed

agreements to partner with Bechtel

include: Energoprojekt Katowice to

provide services for codes and stan-

dards, and environmental permitting

strategy; Prochem to support permit-

ting documentation; and Summa

Linguae for translation services.

In partnership with Westinghouse

Electric Company, Bechtel will de-

liver three AP1000 reactors for Pol-

ish utility Polskie Elektrownie Jad-

rowe for its inaugural nuclear energy

project.

Toshiba Energy Systems and Solu-

tions has won an order from SEPCO3

Electric Power Construction for steam

turbines and generators to renovate

units 1-3 of the 45 MW Olkaria I geo-

thermal power plant in Kenya. The

equipment will be shipped to site by

December 2025.

Olkaria I is the oldest geothermal

power plant in Kenya and has been

in commercial operation by the Ke-

nya Electricity Generating Company

(KenGen) since 1981. Units 1-3

need renovation due to aging. The

renovation will increase the power

output of each unit from 15 MW to

21 MW.

Toshiba ESS and KenGen have

also signed an MOU to provide

O&M services for geothermal pow-

er plants for developing East Afri-

can countries outside Kenya.

A $114 million contract to supply

equipment for Saudi Arabia’s largest

under construction combined cycle

power plant project has been awarded

to Doosan Enerbility.

Under the terms of the contract,

Doosan Enerbility will supply two

650 MW steam turbines and genera-

tors for the Qassim 1 and Taiba 1

power plants, with a combined ca-

pacity of 3600 MW.

The agreement was reached with

China’s SEPCO3, responsible for the

EPC of the combined cycle power

plants in the Taiba and Qassim re-

gions in Saudi Arabia.

The two plants, located 200 km

north of Jeddah and 200 km north-

west of Riyadh, are expected to be

operational by 2027.

Ansaldo Energia has won a supply

contract from KBI Energy to deliver

two AE94.2 gas turbines, two gen-

erators, and associated auxiliary

equipment for the Almaty CHPP-3

gas red combined cycle power plant

in Kazakhstan.

Ansaldo Energia’s AE94.2 gas tur-

bines are designed to run on natural

gas mixed with up to 40 per cent

hydrogen.

as Rajasthan and Karnataka.

The orders will be executed

through GE T&D India. GE T&D

India will be responsible for pro-

viding the complete equipment

package, including design, engineer-

ing, manufacturing, testing, erec-

tion, and commissioning of the 765

kV class reactors at the designated

transmission substation sites. The re-

actors will be manufactured at GE

T&D India’s Vadodara plant and

are scheduled for delivery in the -

nancial year 2025-26.

Renewable energy company EN-

HOL has placed a 51 MW order with

Vestas for the Cascante wind park, to

be located in Navarra, Spain. The

contract includes the supply and in-

stallation of eight V162-6.2 MW

wind turbines delivered in 6.4 MW

power mode, as well as a 20-year Ac-

tive Output Maintenance (AOM)

5000 service agreement.

Turbine delivery is expected to

start in the fourth quarter of 2024,

while commissioning is planned for

the rst half of 2025.

In addition, Vestas has received an

order from Thyborøn-Harboøre

Vindmøllelaug for a V236-15.0

MW wind turbine to be installed di-

rectly on the waterfront in the Port

of Thyborøn in the northwestern

part of Denmark. The order com-

prises one V236-15.0 MW wind

turbine and includes supply, deliv-

ery, and commissioning of the unit.

The order also includes a 20-year

AOM4000 service agreement as

well as an agreement for Vestas to

perform test and verication activi-

ties on the turbine.

Wind turbine delivery is planned

to begin in the rst quarter of 2024

with commissioning scheduled for

completion in the second quarter of

2024.

Furthermore, Vestas has also won

a 65 MW project for V172-7.2 MW

turbines from Enova Power for a re-

powering project in Meppen, Lower

Saxony, Germany.

The order consists of nine V172-

7.2 MW wind turbines and includes

supply, delivery, and commission-

ing of the turbines. Upon comple-

tion, Vestas will service the turbines

under a 25-year Active Output Man-

agement 5000 (AOM 5000) service

agreement. Turbine delivery is ex-

pected to begin in the fourth quarter

of 2025 with commissioning sched-

uled for the rst quarter of 2026.

Mott MacDonald has signed an MOU

with Holtec Britain and Hyundai

E&C to further explore the delivery

of Holtec’s small modular reactor

(SMR) technology in the UK. The

agreement builds on the Clean En-

ergy Partnership signed between the

UK and Korean governments late last

year.

Mott MacDonald has been ap-

pointed as the delivery partner for

the Generic Design Assessment

(GDA) of Holtec Britain’s SMR-300

in the UK, having secured £30 mil-

lion of grant funding from the gov-

ernment’s Future Nuclear Enabling

Fund for this.

NKT has been awarded two onshore

power cable projects valued at €1.2

billion by the German TSO Amprion.

NKT will provide high-voltage AC

and DC onshore power cable systems

Hitachi Energy will supply Grid Unit-

ed with high voltage direct current

(HVDC) technology for transmission

projects to interconnect the eastern and

western regional power grids in the

USA. These projects will boost trans-

mission capacity across the USA.

Under a capacity reservation agree-

ment, Hitachi Energy will provide

HVDC technology to support the de-

velopment of multiple Grid United

HVDC interconnections. These in-

terconnections will help mitigate the

impact of extreme events and ac-

commodate the growing demand for

electricity. The two companies are

exploring potential projects to fur-

ther strengthen the US electric grid.

These projects will help overcome

one of the most persistent bottle-

necks in the energy transition in the

US by bridging the east-west divide.

They also will play an important role

in supporting the US government’s

commitment to accelerating the en-

ergy transition, and specic stated

priorities of the US Department of

Energy.

Equinor has successfully rebid into

New York’s fourth offshore wind so-

licitation (NY4). Vestas has a current

conditional order in place for the 810

MW Empire Wind 1 project, to which

it will supply its V236-15.0 MW off-

shore wind turbines.

The V236-15 MW prototype tur-

bine was installed in December 2022

and is currently undergoing the nal

verication campaign.

ABB and Green Hydrogen Interna-

tional (GHI) are collaborating on a

project to develop a major green hy-

drogen facility in south Texas, USA.

The power-to-X facility will use solar

and onshore wind energy to power a

2.2 GW electrolyser plant to produce

280 000 tons of green hydrogen per

year.

ABB will supply automation, elec-

trication and digital technology for

deployment at GHI’s Hydrogen City

project.

The project will involve under-

ground salt cavern storage. The

planned storage of up to 24 000

tons of green hydrogen will help

balance out the intermittency of the

renewable energy sources powering

the operation.

Construction is planned to start in

2026 with rst production expected

in 2030. Hydrogen City is being de-

signed as a phased project, with

plans to add additional trains of

production as the market for green

hydrogen develops.

Wärtsilä will supply the generating

equipment for an 18 MW expansion

to an existing power plant in New

Mexico, USA. The plant will operate

on natural gas fuel, and will replace

lost generating capacity following the

closure of a coal red power plant and

also provide exible dispatchable

power for the utility and their power

needs.

The two Wärtsilä 34SG gas fuelled

engines selected for this project are

also capable of operating on biogas,

synthetic methanol and hydrogen

blend. They require minimal water

consumption, which is an important

consideration in areas such as New

Mexico where high ambient temper-

atures can be expected and water is

scarce.

The equipment for the project is

expected to be delivered by January

2025.

GE Vernova’s Gas Power and Finan-

cial Services businesses have an-

nounced an order from Kindle En-

ergy for six of its LM2500XPRESS

power packages to deliver fast power

to Colorado’s United Power electric

cooperative as required.

The six units will be installed at

Mountain Peak Power plant, in

Keenesburg, Weld County, Colora-

do, USA. Once in operation, sched-

uled for 2025, the plant is expected

to deliver up to 162 MW to support

the ongoing energy transition in the

state.

In addition to the power generation

equipment, GE Vernova’s Financial

Services business provided co-devel-

opment funding to enable accelerat-

ed development and construction to

ensure the availability of the power

in alignment with United Power’s

capacity needs.

The plant will be powered by six

LM2500XPRESS power packages,

with the capability to start in as lit-

tle as ve minutes from cold. Each

LM2500XPRESS comprises of

LM2500 aeroderivative gas turbine,

a distributed control system and a

Dry Low Emissions combustion

system

NTPC has awarded an EPC contract

to Bharat Heavy Electricals Limited

(BHEL) for the 800 MW Singrauli

Supercritical Thermal Power Plant

stage III.

The plant will be set up adjacent to

the existing 2000 MW thermal pow-

er station at Singrauli in Sonebhadra

district of Uttar Pradesh.

Key equipment for the power plant

will be supplied by BHEL’s manu-

facturing units at Haridwar, Trichy,

Bengaluru, Hyderabad, Ranipet and

Bhopal.

Copenhagen Infrastructure Partners

(CIP) has signed a preferred supplier

agreement with LS Cable for the sup-

ply of offshore and onshore cables to

CIP’s third offshore wind project in

Taiwan, the 500 MW Feng Miao 1

project.

LS Cable will supply offshore ex-

port cables, inter-array cables and

onshore export cables from their Ko-

rean manufacturing facility to the

500 MW Feng Miao 1 offshore wind

project in Taiwan.

Feng Miao 1 project is owned by

CIP’s Flagship Fund V (CI V), and is

currently in the late development

stage, nalising design and procure-

ment in preparation for nancial

close.

GE Vernova’s Grid Solutions business

has been awarded orders from Power

Grid Corporation of India Limited

(PGCIL) for the supply of 765 kV

Shunt Reactors for various transmis-

sion system projects in India. These

projects are part of PGCIL’s efforts to

integrate renewable energy into the

national electricity grid and enhance

electricity transmission within the

country, particularly in regions such

Americas

Asia-Pacic

HVDC technology to

connect US grids

Equinor successfully

rebids in NY4 solicitation

ABB and Green Hydrogen

International team up

Wärtsilä gas engines to

expand New Mexico plant

GE Vernova supports

Colorado energy transition

EPC order for India

supercritical plant

LS Cable secures Feng

Miao 1 cable contract

Shunt reactors for India

transmission grid

International

Europe

THE ENERGY INDUSTRY TIMES - APRIL 2024

Tenders, Bids & Contracts

European wind turbine

orders for Vestas

Agreement for UK’s

SMR-300 programme

NKT wins power cable

projects in Germany

First contract awards for

Polish nuclear plant

Toshiba wins order for

Kenya geothermal plant

Equipment deal for Saudi

power plant

Ansaldo Energia wins GT

contract for Almaty 3

n 2022, Europe’s heat pump sec-

tor was riding a wave of support,

leading to all-time record sales.

Yet a mere year later, momentum

has slowed. The rst 2023 market

data shows that sales dropped 5 per

cent overall in 14 countries com-

pared to the previous year. What’s

more, the overall trend, quarter-by-

quarter was downwards. Now, manu-

facturers are having to cut jobs and

report a gloomy outlook for 2024.

What caused this change, and how

can it be addressed? After all, heat

pumps are recognised by the Europe-

an Union and its leaders as crucial

for decarbonisation, and have a cen-

tral spot in the EU’s Green Deal and

its climate and energy plans for 2030.

Certainly, 2022 was a signicant

year in many ways. In February,

Russia invaded Ukraine, sending gas

prices spiralling – which made elec-

tric heat pumps proportionately

cheaper. In response, the European

Commission launched a plan to re-

duce the EU’s energy imports. The

plan centred on increasing the num-

ber of installed heat pumps by 60

million in 2030.

The heat pump sector was then

identied as a key net zero industry

in the EU’s plans to boost domestic

clean tech, also in part triggered by

the global reaction to the war.

It was this combination of clear

support at EU level, alongside sky-

high gas prices and national support

measures to help consumers invest in

electric heat pumps that pushed sales

by 39 per cent to 3 million in 2022.

The total heat pumps installed – in

around 16 per cent of European

buildings – avoid carbon emissions

equivalent to those of Greece. And

that is domestic and commercial heat

pumps alone, with the huge potential

of large heat pumps in district heat-

ing and industry being increasingly

explored (see box).

In response, the heat pump sector

planned investments in factories,

production, R&D and training in a

range of European countries. These

investments are worth €7 billion to

2025 alone.

Yet even then, and despite the

bright picture and the commitment

of the sector, it was clear that the

ambitious EU targets would be a

challenge unless some crunch points

for the sector were addressed. These

included a shortage of installers,

and electricity price issues.

Accordingly we at the European

Heat Pump Association (EHPA),

along with the European Climate

Foundation – a Brussels-based

NGO – convened a group of just

over 20 associations, charities,

think-tanks and national representa-

tives, as well as ofcials from the

European Commission itself. The

aim was to work together to build a

report describing the barriers to a

faster roll-out of heat pumps, and

the ways to overcoming them.

At the kick-off meeting of this

group, the EU ofcials present an-

nounced the very positive news that

the Commission would work on a

‘Heat Pump Action Plan’ and the

EHPA’s report would be welcome as

key input.

We accordingly developed the re-

port, known as the Heat Pump Accel-

erator, and handed it over to EU En-

ergy Commissioner Kadri Simson in

June 2023. We continued to input

consistently and regularly to the

Commission as it developed the Heat

Pump Action Plan.

But as 2023 went on, there were

signs of a slowdown in the market

already. Gas prices fell while elec-

tricity bills remain under a heavy tax

burden in many countries. This de-

lays the return on investment for a

heat pump.

In many countries, like Germany

and the UK, the energy transition in

heating started to become a political

issue. As a result, ambitions were

lowered and end-users became un-

certain and less willing to switch to

new systems.

It was clearer than ever that the an-

nounced Heat Pump Action Plan

would be crucial to address some of

these issues. The EHPA consistently

emphasised to the European Com-

mission that it was key the Plan

showed high-level commitment to

the technology through stable poli-

cies and strong consistent measures.

We and our members were there-

fore surprised, if not dismayed, to be

informed by the European Commis-

sion, just before Christmas 2023,

that it would delay publication of

the Action Plan until after the EU

elections.

This is exactly the opposite of the

economic and ambitious political

framework needed to shape a strong

home market for a successful indus-

try. Along with over 60 CEOs and in-

dustry leaders we pointed this out in

a letter to European Commission

President Ursula von der Leyen. In

that letter – and in another letter

signed by 20 organisations – the

EHPA called for the Commission to

set it in motion immediately to put

Europe back on track for the energy

transition as well as for energy inde-

pendence and climate neutrality.

Postponing the Heat Pump Action

Plan makes it harder to ramp up the

heat pump roll-out, which is crucial

to achieve Europe’s energy and cli-

mate targets. It also undermines in-

vestments in industrial production

in Europe, affecting the over 160

000 direct existing and many more

future jobs in manufacturing and

installation.

In the US, the ambitious Ination

Reduction Act (IRA) provides conti-

nuity, legal stability, and generous -

nancial support for heat pumps. Post-

poning the EU plan risks jeopard-

ising Europe’s industrial leadership

on net zero technologies, just as the

US, Asia and other regions are also

ramping up their commitments on

clean and heat pump technologies.

If heat pumps are to get back on

track, delivering rapid and clear high-

level policy support in the form of an

EU Heat Pump Action Plan is essen-

tial. A strong heat pump market will

allow Europe to reap the benets: de-

carbonisation, job creation, a com-

petitive clean tech industry, energy

independence and lower energy bills.

Jozeen Vanbecelaere is Head of EU

Affairs at the European Heat Pump

Association.

Following rapid growth

in recent years,

Europe’s heat pump

market has cooled.

The European Heat

Pump Association’s

Jozeen Vanbecelaere

says an EU Heat

Pump Action Plan

is essential to get

the technology and

Europe’s energy

transition back on

track.

Getting heat pumps back on track

is crucial for EU decarbonisation

THE ENERGY INDUSTRY TIMES - APRIL 2024

Industry Perspective

Vanbecelaere: delivering rapid and clear high-level policy

support is essential. Photo credit: Michel Petillo

From pasta-making to pasteurisation

From pasta-making to the pasteurisation of milk, from a chemicals

plant to a furniture factory, heat pumps are helping decarbonise

industrial processes.

The potential is huge. Heat pumps are increasingly able to pro-

vide the high levels of heat needed in industry. Large heat pumps

today can reach temperatures of over 180°C, which is enough to

meet the heating demand of 37 per cent of industry. This matches

the needs of sectors where a lot of drying takes place (pulp and

paper, wood, fruits and vegetables) or applications like pasteuri-

sation, distillation, food production sectors, and sectors that need

both heating and cooling of products and processes in general.

What is more, they have high capacities – ranging from 100 kW

to 50 MW. This is many times more powerful than residential heat

pumps, whose capacities normally range from around 6 kW to

15 kW.

Electric heat pumps are clean and renewable – taking energy

from sources like the air, underground, or water. Especially in

industrial processes, the use of waste heat (for example, from a

refrigeration process) as their energy source is particularly ap-

propriate and efcient.

And they are highly efcient, providing three to ve times as

much heating or cooling as the small amount of power they

consume. So just like in residential settings, more heat pumps in

industry means less use of fossil fuels such as gas.

Already today, greenhouse gas emissions from industrial heat-

ing could be cut by 78 per cent if heat pumps were rolled out

everywhere possible. By 2050, they could be cut by a massive 99

per cent.

Heat pumps also provide exibility to the electricity grid, be-

cause they can be switched on and off depending on the power

price.

Annual sales of heat pumps in

EU-14

* These 14 countries made up

90 per cent of the European heat

pump market in 2023

million) had been transacted in the

Beijing Carbon Market. For the time

being, the volume remains small. It is

certain it will steadily rise in the com-

ing quarters as new projects from the

approved four methodologies are

registered.

Is the nation committed to cutting

emissions and to building its carbon

market? Since stating its ‘3060 Goal’

(hitting peak emissions by 2030 and

carbon neutrality by 2060), China has

shown its commitment to achieving

its objectives. The data may not nec-

essarily be linear, showing continued

improvement for all data points. The

nation faces massive challenges after

all. Nonetheless, it has made huge

strides in its energy shift, in its energy

efciency, and in its carbon markets.

It is building renewable energy gen-

eration capacity as fast as it can: it is

lowering the utilisation rates of its

coal red power plants, whose pro-

duction should peak before 2030; so-

lar and wind capacity reached 609.5

GW and 441.3 GW, up 55.2 and 20.7

per cent, respectively, in 2023; it has

tightened energy efciency regula-

tion since 2021, and plans to cut en-

ergy intensity to 13.5 per cent below

2020 levels by 2025.

On the carbon credits front, China is

fully committed to building vibrant

compliance and voluntary carbon

trading markets. Since its launch in

2021, the ETS continues to grow in

the amount of volume and value

traded. Experts, expect the ETS to

expand to more than 3500 companies

this year or in 2025 with the inclusion

of new energy intensive sectors. Me-

dia has quoted experts stating that the

Ministry of Ecology and Environ-

ment has asked seven sectors to start

the annual reporting and verication

of emissions. These include the build-

ing materials sector; chemicals; civil

aviation; iron and steel, non-ferrous

metals, such as aluminium; rening

and petrochemicals; and papermaking.

hina faces one of the greatest

energy transition challenges in

the world. Perhaps only India’s

challenge is bigger. This challenge is

especially acute for its electric power

sector. Since 1979, the astonishing

economic growth has been one of the

fastest in the world. To power this de-

velopment, it relied on the cheapest

and most abundantly available domes-

tic resource, thermal coal. Coal ac-

counted for almost four out of ve tons

of carbon dioxide emitted in 2021,

according to the International Energy

Agency (IEA).

The electric power sector has been

one of the biggest coal users. At its

peak, in 2007, about 81 per cent of

power output was from thermal coal

red power plants, as calculated from

data from the Energy Institute. The

amount has steadily fallen to about 61

per cent in 2022, down a considerable

20 percentage points.

There is no doubt China needs an

effective carbon market as one of the

tools to decarbonise its economy. So

how does the market work?

Some of the tools that nations may

use to cut greenhouse gases (GHGs)

include shifting to clean energy,

tightening energy efciency stan-

dards, and building carbon credits

schemes. China has been working

hard on all of these fronts.

For carbon credits mechanisms, au-

thorities began exploring and testing

options in 2012. For over a decade,

they sought to develop an optimal

scheme suitable for its complex en-

ergy markets. Market difculties in-

clude sharp regional differences in

demand patterns due to demographic,

economic, and meteorological condi-

tions, in energy infrastructure, and in

the supply resource, for example.

A national emissions trading

scheme (ETS) was formally launched

in July 2021. It included over 2000

large emitters in the electricity sec-

tor. They represent about 5 billion

tonnes of annual CO

emissions, ac-

cording to Reuters. Unlike other

compliance carbon markets, such as

the EU’s, allowances are based on

emissions intensity with one allow-

ance equal to one tonne of annual

emissions. Regulatory bodies

incentivise clean power generation

through a cap-and-trade programme

for power plants. Each plant receives

an annual emissions quota. Those

exceeding their limits purchase ad-

ditional allowances from cleaner

operating plants, creating a nancial

benet to cut emissions.

When this compliance market was

rst launched in 2021, the expectation

was that it would grow slowly, and

that tweaks would come along the

way. Some of the apparent stumbling

blocks included data integrity and ef-

fective legislation. The nation an-

nounced that its cabinet had passed

new carbon trading and data fraud

regulation in February 2024, which

will become effective from 1 May.

A new supervisory structure will

push market participants to create

data quality control plans, specify

products eligible for trading, trading

methods, and the distribution of quo-

tas, said the government. It will also

toughen the crackdown on fabricated

data. Volume-wise, in 2023, 212 mil-

lion tonnes of allowances were traded

with a total transaction value of about

Yuan14.44 billion ($2 billion). The

average market transaction price was

Yuan68.15/ton, up 23.2 per cent

compared with the average in 2022.

On a cumulative basis through Febru-

ary 2024, volume was 446.3 million

tons, and value was Yuan25.3 billion

($3.5 billion). By comparison, the

transaction value in 2023 of the

world’s most mature market, the EU

ETS, was around €770 billion ($840

billion).

A voluntary carbon market, involv-

ing China Certied Emission Reduc-

tion (CCER) credits, was started in

2015, but suspended in 2017. The

government blamed low transacted

volumes and the lack of standardised

carbon audits – the verication pro-

cess of the amount of GHGs produced.

Government decided to resume the

market’s operations in January 2024,

after a revamp. Notably, trading of the

CCER continued between 2015 and

2017 but at low levels while potential

participants continued to maintain

interest in the scheme restarting, ac-

cording to law rm King & Wood

Mallesons.

As of now, the methodologies ac-

cepted are for projects involving for-

estation, grid-connected offshore

wind power, mangrove cultivation,

and solar thermal power. Currently,

the CCER credits traded are for proj-

ects registered before 2017, as those

were never cancelled. In the rst

couple of weeks since the relaunch,

through 31 January, 16 600 tons in

carbon emission allowances for a

value of Yuan1.78 million ($0.25

So what does the future hold? China

is fully committed and has a record of

cutting emissions, though its record

shows a non-linear improvement. The

world can expect to see China adding

even more renewable energy capacity,

together with a declining role of coal

generation. Also, ever more stringent

energy efciency regulation, and a

signicant increase in transaction

volume of carbon credits under cen-

tralised trading can be projected.

Another two areas of development

are growth in carbon-related nancial

products and cross border trading. As

spot transactions progressively ma-

ture, ‘the demand for CCER-based

nancing and derivatives will gradu-

ally emerge. Market participants are

increasingly in need of nancing

tools to revitalise their carbon assets,

and of derivatives to complete neces-

sary risk management and hedging’,

states King & Wood Mallesons. There

was a small sample trade in August

2021, when an institution and an indi-

vidual from Hong Kong bought al-

most 10 000 tonnes worth of CCERs

from a solar power project in China.

There are many investors keen to

understand if China’s carbon credits

could be traded cross border. Admin-

istrative measures released by The

Ministry of Ecology and Environ-

ment and another agency in October

2023 indicate that the detailed regula-

tions for overseas trading and utilisa-

tion of CCERs will be independently

established, implying that potential

international trading of CCER rules

will be released. Another positive

bon credits market.

Joseph Jacobelli heads family ofce

Bougie Impact Capital. He has over

30 years’ experience in energy markets

as an investor, executive, and analyst.

He promotes climate nance aware-

ness as author and on the ‘Asia Cli-

mate Finance Podcast’.

THE ENERGY INDUSTRY TIMES - APRIL 2024

Decarbonisation Series

China’s electricity

sector is the largest

in the world, and the

most polluting. The

country aims for peak

carbon emissions

by 2030 and carbon

neutrality by 2060.

It is a complex

and difcult task

that raises many

questions. Can a

carbon market help

curb its emissions?

Is the country truly

committed and what

does the future hold?

Joseph Jacobelli

explores.

China: the world’s biggest carbon

market is set to surge

Carbon dioxide by energy source in 2021 in China.

Source: IEA, ‘China - Countries & Regions’ (IEA2023) <https://www.iea.org/

countries/china/emissions> accessed 20 March 2024

China thermal coal power as a percentage of total generation.

Source: The Energy Institute, Statistical Review of World Energy (72nd | 2023, The Energy Institute 2023) <https://

www.energyinst.org/statistical-review> accessed 4 September 2023

hen it comes to cutting car-

bon emissions from steel

production, Italy is argu-

ably already ahead of the game. The

majority (more than 85 per cent) of

its steel is produced from electric arc

furnaces using recycled scrap steel

as feedstock – a much less energy

and carbon intensive method than

blast furnace steel production.

But for one of the country’s major

steel producers, this is not enough.

The ORI Martin Group has complet-

ed the most recent phase of its ongo-

ing effort to reduce emissions while

improving energy efciency across

its plants. The company recently be-

gan operating a large scale heat

pump in Brescia in its latest move to

further improve the plant’s energy

efciency and reduce carbon emis-

sions by a further 5000 t/year.

Brescia, a historic city in the region

of Lombardy between Milan and Ve-

rona, has a long history in demon-

strating its commitment to sustain-

ability and energy efciency. In 1972

it began developing an integrated

system for energy production, dis-

trict heating (DH) and heat recovery

from industries. Over the years the

expansion of the DH network, the

introduction of cogeneration plants

and waste to-energy technology has

seen the city gain international rec-

ognition as a good example of circu-

larity and efciency.

More recently, recognising the

need to play its part in tackling cli-

mate change, in 2021 Brescia issued

the City Charter for Climate Neu-

trality. It has set a target of reducing

per capita CO

emissions by 50 per

cent by 2030 compared to 2010. The

target does not take into account

emissions from the private produc-

tion, or industrial sector.

Yet industry has a big part to play.

Over the last decade or so, ORI Mar-

tin has been accelerating its activities

in support of the city’s sustainable

development and climate-neutral

ambition.

“The steel industry is one of the

biggest industrial emitters of CO

emissions. It accounts for more than

7 per cent of the world’s CO

emis-

sions. We have to decarbonise to be

in line with the EU’s pledge to de-

crease emissions by at least 55 per

cent by 2030, compared to 1990 lev-

els… ,” said Carolina De Miranda,

Sustainability Manager, ORI Martin

S.p.A. “This year we started our de-

carbonisation strategy to reduce our

Scope 1 and Scope 2 emissions by

30 per cent by 2030, compared to

2018. And we would like to use up

to 25 per cent renewable energy in

our process.”

Commenting on the Brescia site

specically, she added: “We are lo-

cated next to a residential area,

which has always pushed us to work

on sustainability. So we started to

work on sustainability a long time

ago, especially for this location. ”

The Brescia site has been a key

focus for the company. In 2016 it

began working with Turboden, a

Mitsubishi Heavy Industries com-

pany, to see how the steel plant

could contribute to the city’s drive

to improve energy efciency. It in-

vested €12 million in a project

called ‘I-Recovery’ to convey the

large amount of heat contained in

the fumes of the electric arc furnace

into a system to avoid it being wast-

ed to the atmosphere.

The heat is recovered by a waste

heat recovery steam generator that

generates steam, which is then used

to feed the district heating network

in winter, or converted into electrici-

ty in the summer months through a

2.5 MW Turboden turbine using an

Organic Rankine Cycle (ORC). Both

the heat and electricity are supplied

to local energy company A2A to

serve its customers. The system has

an annual heat recovery capacity of

52 GWh and has reduced CO

emis-

sions by 10 000 t/year.

In its ongoing mission to cut car-

bon emissions and improve energy

efciency still further, ORI Martin

again turned to Turboden to recover

even more heat from the process. A

project known as ‘Heat Leap’ was

launched in 2020 as part of the ‘Life’

programme funded by the EU. Oper-

ation of this €6.5 million project

started earlier this year.

Roberto de Miranda, Board Mem-

ber, ORI Martin, said: “We use a lot

of water in the process for cooling.

Normally we use a cooling tower to

cool down the water used to cool the

electrical furnace. Now we can send

the water to a large heat pump (LHP)

to recover even more heat.”

Thanks to the installation of the

LHP, the heat from the furnace

cooling water can be upgraded and

then re-utilised instead of being

wasted, i.e. dissipated through cool-

ing towers.

For this project, Turboden designed

and installed an innovative LHP sys-

tem. With a Coefcient-of-Perfor-

mance (COP) of 8.2, it elevates the

waste heat (using electrical energy)

coming from the low-temperature

thermal waste heat of the steel plant,

from about 70°C up to as much as

120°C, to transfer it to the local dis-

trict heating network. Turboden’s

LHP has a thermal output of up to 7

MWth and is capable of adapting its

operation to specic process condi-

tions, thereby maximising energy re-

covery from the steel plant.

It will also be able to regulate the

heat transfer temperature according

to the specic needs of the district

heating network, up to a maximum

of 120°C. According to the compa-

ny, this is an important innovation

compared to the maximum tempera-

tures achievable by conventional

heat pump technology.

It was a complex project. The over-

all architecture of the installation

was carefully studied before pro-

ceeding to any real work on site.

Overall installation drawings were

done, as well as detailed engineering

and computer-assisted design, espe-

cially on the different interfaces be-

tween sub-systems. Firstly, the LHP

was connected to the existing waste

heat recovery (WHR) system and

designed in such a way that it can

accommodate variations of the heat

source temperature, thus providing

constant temperature to the WHR in-

stalled downstream.

The LHP was assembled on site,

accounting for local constraints and

nal ne-tuning of connecting pipes.

The LHP was then thermally insulat-

ed to avoid heat losses, as well as to

ensure safe access for authorised

maintenance staff.

The LHP was installed sufciently

close to the WHR system to mini-

mise temperature drops, and all con-

necting pipes were thermally insu-

lated. Assembly was carried out

on-site. In addition to mechanical

and hydraulic works, the LHP in-

stallation included electrical works.

The heat pump at the steel works

can be split into its main different

components: a low-pressure com-

pressor skid, where the inlet pressure

is between 4 and 7 bar; a high-pres-

sure compressor skid, where the out-

let pressure is between 7 and 10 bar;

a condenser; and an evaporator.

Roberto Bertanzi, Product Devel-

opment Coordinator at Turboden

said: “The water needed to cool the

furnace used to be wasted but thanks

to the heat pump, it can be now heat-

ed from about 70°C to around 100°C

for feeding into the district heating

system. It works in parallel with the

system that recovers heat from the

furnace fumes.” He added: “It’s

quite a exible system; we use soft-

ware to optimise heat production in

summer and winter. This is a pio-

neering project.”

Bertanzi noted the growing use of

heat pumps throughout various in-

dustries due to their ability to pro-

vide both heating and cooling as

well as the pressing need for decar-

bonisation. “They are, for example,

needed in the food industry and dair-

ies,” he said. “They are also well

suited for carbon capture processes,

which need both heating and cooling

for the chemical processes used to

remove CO

.”

He concluded: “The heat pump

helps support decarbonisation of

heat. So every time you are produc-

ing heat, you have to ask: ‘Can I re-

cover heat somewhere else by us-

ing a heat pump to reach my target

temperature?’ It’s not just about

saving money; it’s about saving the

environment.”

ORI Martin’s steel

production plant in

Brescia, Italy, is a

good example of how

the sector can play its

part in cutting global

carbon emissions.

Junior Isles recently

visited the facility to

take a look.

Brescia steel factory pioneers

decarbonisation technology

THE ENERGY INDUSTRY TIMES - APRIL 2024

Technology Focus

Maximising heat recovery at

the ORI Martin steelworks in

Brescia, Italy

Photo courtesy: ORI Martin

THE ENERGY INDUSTRY TIMES - APRIL 2024

Final Word

nvironmentalists and staunch

renewable energy supporters

were up in arms over the UK’s

recent decision to commit to more gas

red plant. But whatever your stance

– rightly or wrongly – gas will con-

tinue to play an important role in

global power markets for the foresee-

able future.

Last month Britain’s government

committed to supporting the building

of new gas power stations to “maintain

a safe and reliable energy source for

days when the weather forecast

doesn’t power up renewables”.

In a statement, the Energy Secretary

called it a “common-sense decision to

shore up the UK’s energy supply” as

the nation transitions to net zero. The

statement from the Department for

Energy Security and Net Zero said it

is the latest step in efforts to reach net

zero in a sustainable, pragmatic way

that “rids the UK of the need to rely

on foreign dictators like [Russian

President Vladimir] Putin”.

Energy Security Secretary, Claire

Coutinho, added: “There are no two

ways about it. Without gas backing up

renewables, we face the genuine

prospect of blackouts. Other countries

in recent years have been so threatened

by supply constraints that they have

been forced back to coal.

“There are no easy solutions in en-

ergy, only trade-offs. If countries are

forced to choose between clean energy

and keeping citizens safe and warm,

believe me they’ll choose to keep the

lights on.”

This may well be true but is new gas

plant really the best, or only way to

go?

Some analysts warned extra gas is

the wrong solution to the question of

how to meet increasing demand and

provide exibility, and said the UK’s

decision was a reection of failure in

other areas of energy security policy.

Juliet Phillips, UK energy pro-

gramme lead at think-tank E3G, said

the UK has been a clean power

leader, given its continued exponen-

tial growth in renewables. She said,

however, that the government’s “pol-

icy failures” and “missed opportuni-

ties” in offshore wind and grid con-

nections left it having to announce

new gas power.

Further, the government’s energy

security standpoint is, arguably,

misplaced.

Christophe Williams, CEO of Na-

ked Energy said: “It is a mistake to

believe that relying on fossil fuels will

lead to cheaper bills and energy se-

curity. The North Sea’s gas is running

out, and when it does we will be at

the mercy of foreign imports and the

price volatility that comes with it.

Considering that none of the CO

from this gas will be captured, it’s a

lose-lose for customers – their bills

and our emissions will go up.”

This was echoed by Greenpeace,

which said the plan would make the

country “more dependent on the very

fossil fuel that sent bills rocketing and

the planet’s temperature soaring”.

Notably, just a week after the UK’s

announcement, the UN’s World Me-

teorological Organization (WMO)

that afrmed that 2023 was the hottest

year on record. Its report said that re-

cords were broken “and in some cases

smashed” in 2023 for greenhouse gas

levels, ocean heat and acidication,

sea level rise, Antarctic sea ice cover

and glacier retreat.

And let us not forget the not so small

issue of: who will invest in these new

gas projects?

To date, investors have been wary

about nancing new UK fossil fuel

projects through the government’s

capacity market, a kind of reverse

auction that offers 15-year contracts

to build new energy projects. Inves-

tors typically invest in gas plants over

a 30-year time frame, which has made

the capacity market a risky prospect.

“What we have is a falling installed

capacity base set against rising de-

mand for electricity,” Tom Smout, a

senior associate at Aurora Energy told

the Guardian. “The reality is that the

government’s capacity market has

brought in only one new gas plant

because investors are wary about

putting money into a plant that

doesn’t do very much for very long

and then becomes a stranded asset.”

The Climate Change Committee

(CCC) has said that a “small amount”

of gas generation without carbon

capture is compatible with a decar-

bonised power system, but experts

argue that might only be two per cent

of the market (equivalent to only 15

hours of electricity a month).

Williams said: “As renewable en-

ergy takes more of the market share,

why would any private sector com-

pany invest in natural gas? Two per

cent of the market is far too small a

portion to encourage investment,

unless it comes with signicant state-

backed subsidies.”

He added: “It makes far more scal

sense to invest in modernising the

power grid, expand wind farms on our

shores and shred the red tape that is

slowing down the deployment of re-

newable technologies. At the end of

the day, this is the only way to boost

our energy security and achieve our

net zero targets – it’s really as simple

as that.”

It is hard to disagree. Battery storage

is ideal for covering the short-term

periods when wind and solar are un-

able to generate. Certainly there has

been no shortage of investors.

In a signicant statement of con-

dence, last month NatPower UK, part

of global energy transition developer

NatPower Group, announced that it

is going to drive a multi-billion in-

vestment to deliver the country’s

largest portfolio of battery storage,

totalling over 60 GWh. It said large-

scale solar and wind projects will

follow later this year to support the

UK’s effort to deliver 100 per cent

renewable power by 2035.

The company has a large-scale na-

tionwide battery storage roll-out

planned, with the rst three

‘GigaParks’ going for planning per-

mission in 2024 and 10 more in 2025.

According to recent analysis by

Aurora, Britain, Ireland and Italy are

the most attractive markets for inves-

tors in battery power storage, with

Spain, Germany and Greece also

“showing promising signs”. Fore-

casting a seven-fold increase in Eu-

ropean battery power storage capac-

ity by 2030, Aurora said this translates

into an investment opportunity of

over €30 billion, rising to almost €80

billion by 2050.

That said, the need to cover ex-

tended periods of days or months of

low renewables output must also be

considered. With hydrogen still some

way off, this is where many believe

gas red plants come in.

Commenting on the UK’s plan to

boost gas red generating capacity,

Dan Monzani, Managing Director

UK & Ireland at Aurora Energy Re-

search, said: “We need to double

down on rm low carbon technolo-

gies, like nuclear, carbon capture and

long-duration storage but we also

need to invest in maintaining reserve

gas capacity. In a net zero system in

2035, we will need to run gas 90 per

cent less often but we still need to

maintain two-thirds of the current gas

capacity to ensure our energy needs

are met at all times.”

Earlier this year in its ‘Gas Market

Report, Q1-2024’, the International

Energy Agency (IEA) said natural gas

markets are expected to see a return to

strong growth in 2024, primarily

driven by the industrial and power

sectors in fast-growing economies in

Asia and gas-rich countries in Africa

and the Middle East.

It cautioned, however, that the

continued expansion of renewables

and improving nuclear availability

are likely to temper requirements for

gas red power generation in mature

markets.

With an election due next year and

questions remaining around the at-

tractiveness of new gas red invest-

ment we will have to wait and see if

the UK follows through with its plan.

But perhaps with there still being a role

for backup plants in mature markets,

and an appetite for gas in many parts

of the world, any declarations of the

imminent demise of gas red genera-

tion are greatly exaggerated.

Fossil red generation is not

running out of gas... yet

Junior Isles

Cartoon: jemsoar.com