www.teitimes.com

June 2024 • Volume 17 • No 4 • Published monthly • ISSN 1757-7365

THE ENERGY INDUSTRY TIMES is published by Man in Black Media • www.mibmedia.com • Editor-in-Chief: Junior Isles • For all enquiries email: enquiries@teitimes.com

Floating in the wind

It starts with distribution

Seven key considerations for

developers looking to build oating

offshore wind farm projects.

Page 12

Distribution is often missing in the energy

transition debate. Eurelectric’s ‘Grids for

Speed’ report offers a roadmap to a fast,

fair transition to clean energy. Page 13

News In Brief

Updated EU package will

accelerate renewables

roll-out

The EU has introduced a new pack-

age to support renewables’ roll-out

– exactly two years after it launched

the REPowerEU package.

Page 2

US generation shifts from

coal to renewables and gas

US electricity generation is shifting

from coal to renewables with sup-

porting gas red plants, data from

the Energy Information Adminis-

tration (EIA) has revealed.

Page 4

Australia says gas

“essential” as renewables

continue to rise

Australia, one of the world’s largest

exporters of natural gas, says that it

will continue to exploit this fossil

fuel in the coming decades, despite

having committed to achieving car-

bon neutrality by 2050.

Page 5

Lenders ready to support

rapidly expanding energy

storage projects

Lender condence in utility-scale

battery energy storage systems

(BESS) is increasing, according to

a new report from global energy

storage company Pacic Green.

Page 8

Decarbonisation Series

Virtual Power Plants will be a key

technology for the energy

transition in the EU in the coming

years, and the rapid growth of

electric vehicles will aid their

development through technologies

such as Vehicle-to-Grid. This

offers operators and investors a

great number of investment

opportunities. Page 14

Technology Focus: Drawing

a line in the sand

A “new era” in battery storage is

being hailed with a collaboration on

the development of a sand battery

designed to boost the protability

of wind and solar.

Page 15

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A recent report by Wood Mackenzie has outlined how the US energy sector’s low carbon

drive will be impacted if former President Donald Trump regains ofce. Junior Isles

US to overhaul transmission planning as electric grid strains

THE ENERGY INDUSTRY

TIMES

Final Word

Focusing on grids will

help us connect the dots,

says Junior Isles.

Page 16

A victory for former President Donald

Trump in the November 2024 US

election, combined with long-stand-

ing issues around the US relationship

with China and US government de-

cits, could signicantly alter the path

of US energy policy and usher in a

delayed transition scenario, according

to a new Horizons report from Wood

Mackenzie.

The US Infrastructure Investment

and Jobs Act (IIJA) of 2021 and the

Ination Reduction Act (IRA) of 2022

catapulted the US to global leadership

in decarbonisation but this could all

change if President Joe Biden’s Dem-

ocratic party loses to the Trump-led

Republicans in what looks set to be a

closely fought contest.

While investments in technologies

that support the energy transition and

low carbon technology may deceler-

ate, the opposite effect might take

place for fossil fuels, which could see

expanded investment and push out

peak fossil fuel demand, according to

the report, ‘Hitting the brakes: how

the energy transition could decelerate

in the US’.

“This election cycle will really in-

uence the pace of energy investment,

both in the next ve years and through

2050. Investments in low carbon sup-

ply need to be made in the near term

to realise longer-dated decarbonisa-

tion targets. US carbon emissions

could grow, putting net zero out of

reach in our delayed transition sce-

nario,” according to David Brown,

Director of Wood Mackenzie’s Ener-

gy Transition Research.

“It is not likely that the IRA will be

fully repealed,” said Brown. “How-

ever, a second Trump presidency

would likely issue executive orders

that would abandon the 2035 net zero

target for the power sector, establish

softer emissions goals from the EPA,

and issue tax credit regulations that

could favour blue hydrogen.”

Brown added that the scal environ-

ment may prove challenging as well,

as US government spending could be

limited to address the country’s debt

burden – the US Congressional Bud-

get Ofce expects the US debt-to-

GDP ratio to reach 109 per cent by

2030 and hit 155 per cent by 2050.

Wood Mackenzie’s base case proj-

ects about $7.7 trillion in investment

for the US energy sector over 2023-

50. However, in the delayed transition

scenario in the US, less policy support

for things such as low-carbon energy

and infrastructure improvements de-

creases investment for the US energy

sector by $ 1 trillion compared to the

base case.

Total capital investment for the US

includes upstream oil and gas, power

generation, power grid and EV infra-

structure, hydrogen and CCUS. Some

$11.8 trillion dollars in capital invest-

ment in US energy is required on a

cumulative basis from 2023-2050 to

reach Wood Mackenzie’s net zero sce-

nario. Investment is 55 per cent lower

in its delayed transition scenario.

According to the report, where

policy support for low-carbon energy

is cut back, CCUS and low-carbon

hydrogen would face a slower invest-

ment pathway. Total US natural gas

demand would rise to be 6 billion

cubic feet per day (bcfd) higher than

the base case by 2030 – a jump of

some 6 per cent.

“It is important to note that peak fos-

sil fuel demand does occur – it is just

around 10 years later than the 2030

prediction in our base case,” said

Brown. With a peak still on the hori-

zon, companies will need to continue

diversifying into low carbon technol-

ogies to build a business model that is

Continued on Page 2

The US Federal Energy Regulatory

Commission (FERC) adopted com-

prehensive new rules to reform the

country’s build-out of long-distance

power lines, as rising electricity de-

mand poses a threat to domestic grid

reliability.

Last month FERC voted 2-1 in a

partisan split to require operators to

come up with plans for long-term

transmission construction and cost

allocation. The move represents the

largest overhaul of transmission sys-

tem rules since 2011.

The decision was cheered by clean

power groups but blasted by a con-

servative commissioner who said it

was driven by “special interests” and

exceeds the commission’s authority.

FERC’s nal rule – intended to

prompt utilities and grid operators

across the country into more for-

ward-looking, comprehensive and

cost-effective planning of large elec-

tric transmission lines and better ac-

count for the broad benets those

wires provide – was nearly three

years in the making. In the end it

passed on a 2-1 vote, with the com-

mission’s two Democratic appoin-

tees voting yes and the lone Republi-

can opposed.

FERC Chairman Willie Phillips

said an ageing grid, increasing se-

vere weather, demand growth from

new manufacturing, data centres and

increasing electrication as well as a

changing power generation mix all

threaten reliability at a time when

construction of the high voltage

transmission lines that help get pow-

er to where it’s needed has slumped

to a record low.

The rule requires power transmis-

sion operators to conduct transmis-

sion planning at least every ve

years, looking out along a 20-year

horizon using “best available data to

develop well-informed projections”

of needs, according to a FERC staff

presentation.

“This rule cannot come fast enough.

There is an urgent need to act to en-

sure the reliability and the affordabil-

ity of our grid,” Phillips said. “We

simply will not be able to address

these converging challenges and

continue to supply the reliable, abun-

dant and affordable power the Amer-

ican people depend on without taking

a clear-eyed, long-term, forward-

looking approach to transmission

planning.”

But Commissioner Mark Christie,

a conservative former Virginia utility

commissioner, vehemently dissented

to the rule, calling it “a pretext to en-

act a sweeping policy agenda that

Congress never passed” and one that

will “facilitate a massive transfer of

wealth from consumers to for-prot

special interests.”

Trump victory

could slow US

energy transition

Former President Donald Trump

could take the US down a different

energy path

THE ENERGY INDUSTRY TIMES - JUNE 2024

The EU last month introduced a new

package to support renewables’ roll-

out – exactly two years after it launched

the REPowerEU package, the bloc’s

effort to wean itself off Russian gas.

The European Commission adopted

a series of new and updated recom-

mendations and guidance documents

in an effort to improve and streamline

permitting procedures and auctions for

renewables. These documents will

help to implement the EU framework

for renewable energy by improving the

conditions for a rapid deployment of

renewable energy. By boosting de-

mand for clean technologies made in

Europe, this initiative will also help

reinforce industrial competitiveness,

increase the resilience of the energy

system, and deliver on the European

Green Deal.

Commenting on the new initiative,

Kadri Simson, EU Commissioner for

Energy, said: “Increased predictabil-

ity and faster permitting are key to

sending the right investment signals

across the renewable energy value

chain. Today’s guidance from the

Commission will help member states

to accelerate the deployment of re-

newables. As we approach two years

since the adoption of the REPowerEU

Plan, it is important to give this extra

boost to home-grown clean energy

sources, to allow us to replace even

more Russian fossil fuels.”

In the updated Recommendation on

speeding up permit-granting proce-

dures and its accompanying guidance,

the Commission highlights ways to

improve planning and permitting pro-

cedures for renewable energy and

related infrastructure projects in the

EU. The updated permitting guidance

provides examples of good practice

on faster and simpler permit-granting

procedures, highlights the importance

of digitalisation and community par-

ticipation, human resources and

skills; and outlines how to best handle

site selection procedures and network

connections.

The Commission has also adopted a

further guidance document on desig-

nating renewables acceleration areas.

Under the revised Renewable Energy

Directive, these are locations where

the deployment of renewable energy

projects is not expected to have sig-

nicant environmental impacts and

the necessary procedures are there-

fore fast-tracked to ensure quick de-

ployment of specic technologies.

Key elements for selecting such areas

are the availability of digital tools for

planning and mapping, and data on

the renewable energy capacity and on

the potential environmental impact. In

its guidance, the Commission also

highlights the role of proper stake-

holder engagement and public consul-

tation to facilitate a successful desig-

nation of such acceleration areas.

Auctions play a key role in the roll-

out of renewable energy and, when

well designed, can be supportive of the

steady and sustainable growth of the

EU economy. By outlining standard

elements for the design of auctions for

renewable energy, the Commission’s

recommendation and guidance will

make these procedures more harmon-

ised and efcient, in line with the Net-

Zero Industry Act.

The news was welcomed by the solar

and wind sectors. Walburga Hemets-

berger, CEO of SolarPower Europe

said: “In crisis, solar delivered for

Europe with record deployment, sup-

ported by the EU Solar Strategy, to

get the continent off Russian gas… It

is therefore good to see the Commis-

sion recommendation for prioritising

renewables and infrastructure in per-

mitting, while reinforcing citizens’

engagement.”

On auction design, the Commission

has claried that non-price criteria

should be technology-specic, pre-

qualication criteria should include

cyber and data security and responsible

business conduct, and that other crite-

ria such as “innovation” should be used

as award criteria. It also says supply

chain resilience criteria should be ap-

plied as soon as possible to strengthen

Europe’s clean tech manufacturing.

WindEurope CEO Giles Dickson

commented: “Europe’s moving away

from wind auctions based solely on

price. Good. Non-price award criteria

reward those projects that bring the

biggest value to consumers and soci-

ety. And tighter pre-qualication crite-

ria help raise the bar on what sort of

turbines get built.”

resilient through the energy transi-

tion. Each sector, from transport to

power and emerging technologies,

will be affected by a nuanced set of

drivers.”

With less nancial support from

the Department of Energy Loan

Program Ofce, fewer grid im-

provements, and continued trade

tension with China, the delayed

transition scenario for the US proj-

ects that wind and solar and energy

storage capacity would be about

500 GW by 2050, 25 per cent

lower than the base case.

Coal would remain in the mix for

longer. In the delayed energy tran-

sition scenario, the pace of electri-

cation would ease in the near

term. However, industrial, residen-

tial, electrolytic hydrogen and EV

usage would still combine to in-

crease power demand by 2000

TWh, a 45 per cent jump from 2030

to 2050. With less policy support

for renewables and continued load

growth, there would be no way out

of using coal, says the report. As a

result, by 2040, coal generation

capacity would be four times high-

er than the base case, with 104 GW

on the system.

The report also notes that the lack

of federal demand-side targets, re-

ductions in federal funding and

cost ination would challenge the

investment case for low-carbon

hydrogen. Eligibility for tax credits

under the IRA could be adjusted to

tilt incentives towards blue hydro-

gen. Near-term growth shifts to

export markets in Europe and Asia;

Wood Mackenzie’s delayed transi-

tion scenario would still foresee a

two million tonne export market

emerging by 2050.

A look at state-level policies

shows that momentum for low-

carbon investment can be indepen-

dent of federal policy. Since 2020,

California’s utility-scale battery

capacity has expanded eight-fold

to 8.4 GW. By the end of the year,

Wood Mackenzie expects battery

capacity to reach 11.7 GW.

State-level renewable portfolio

standards and voluntary renewable

energy targets supported wind and

solar capacity expansions of over

13 per cent a year on average be-

tween 2016 and 2020, during the

last Trump administration. Califor-

nia’s Low Carbon Fuel Standard

(LCFS) will help underpin invest-

ments in low-carbon hydrogen, di-

rect air capture (DAC) and bioen-

ergy across the country.

“A slower transition scenario for

emerging technologies does not

mean the story is over,” said Brown.

“The emerging technology sector in

the US will need to reassess costs,

project sizes, and subsidy reliance.

This should be approached through

a position of condence. The US

has a track record of innovation –

the US went from a net LNG im-

porter to the world’s largest LNG

exporter over the last decade.”

Continued from Page 1

Booming investment in the manufac-

turing of clean energy technologies,

especially solar PV and batteries, is

becoming a powerful economic driver

globally, creating new industrial and

employment opportunities, according

to a new report from the International

Energy Agency.

In a rst-of-its-kind analysis, ‘Ad-

vancing Clean Technology Manufac-

turing’ nds that global investment in

the manufacturing of ve key clean

energy technologies – solar PV, wind,

batteries, electrolysers and heat pumps

– rose to $200 billion in 2023, an in-

crease of more than 70 per cent from

2022 that accounted for around 4 per

cent of global GDP growth.

Spending on solar PV manufactur-

ing more than doubled last year, while

investment in battery manufacturing

rose by around 60 per cent. As a result,

solar PV module manufacturing ca-

pacity today is already in line with

what is needed in 2030 based on the

IEA’s net zero emissions scenario. For

battery cells, if announced projects are

included, manufacturing capacity is

90 per cent of the way towards meet-

ing net zero demand at the end of this

decade.

The report nds that many projects

in the pipeline will be operational soon.

Around 40 per cent of investments in

clean energy manufacturing in 2023

were in facilities that are due to come

online in 2024. For batteries, this share

rises to 70 per cent.

“Record output from solar PV and

battery plants is propelling clean en-

ergy transitions – and the strong invest-

ment pipeline in new facilities and

factory expansions is set to add further

momentum in the years ahead,” said

IEA Executive Director Fatih Birol.

“While greater investment is still need-

ed for some technologies – and clean

energy manufacturing could be spread

more widely around the globe – the

direction of travel is clear. Policy mak-

ers have a huge opportunity to design

industrial strategies with clean energy

transitions at their core.”

Clean energy manufacturing is still

dominated by a few regions. China,

for example, is currently home to

more than 80 per cent of global solar

PV module manufacturing capacity,

said the IEA.

However, the report nds that the

manufacturing of battery cells could

become less geographically concen-

trated by the end of this decade; if

all announced projects are realised,

Europe and the United States could

each reach around 15 per cent of

global installed capacity by 2030.

New data and analysis based on

plant-level assessments of more than

750 facilities indicate that China re-

mains the lowest-cost producer of all

clean energy technologies. Battery,

wind and solar PV manufacturing fa-

cilities are typically 20 per cent to 30

per cent more expensive to build in

India than in China, and 70 per cent

to 130 per cent more in the US and

Europe.

The report – produced in response

to a request from G7 leaders in 2023

– provides guidance for policy makers

as they prepare industrial strategies

with a strong focus on clean energy

manufacturing.

The G7 countries have agreed to stop

coal use by 2035 in energy systems

where emissions are not captured.

Energy and climate ministers pledged

to phase out unabated coal power “dur-

ing the rst half of 2030s” after two

days of meetings in Turin, Italy, at the

end of April. Alternatively, they aim to

adhere to a timeline consistent with

limiting global temperature rise to

1.5°C, in line with countries’ net zero

pathways.

In addition to the coal phase-out, the

ministers outlined a series of other

initiatives aimed at promoting renew-

able energy, reducing emissions and

enhancing energy security. These in-

clude encouraging the growth of re-

newables, collaborating on fusion

energy research, and reducing meth-

ane emissions.

Andrew Bowie, the UK minister for

nuclear and renewables, described the

agreement reached at this week’s G7

ministers meeting in Turin as “his-

toric” in an interview with CNBC.

“We do have an agreement to phase

out coal in the rst half of the 2030s,”

he said.

Sources said the nal agreement,

however, could include leeway in the

planned timeline to include the option

of a date “consistent with keeping a

limit of 1.5°C temperature rise [above

pre-industrial levels] within reach, in

line with countries’ net zero path-

ways”. This would help countries

heavily reliant on coal, such as Japan.

The global installed generating ca-

pacity of coal red power stations

grew by 2 per cent last year driven

mainly by new plants in energy-hungry

China, while there was a slowing in

the pace of closures of plants in the

EU countries and the US.

The war in Ukraine may have caused

disruptions, but these will be insig-

nicant in the grand scheme of the

energy transition, according to Ernst &

Young’s (EY) global energy lead.

“For most onlookers, the coal red

power phase-out in Europe appears to

be progressing seamlessly. Assuming

the current trend, by 2030, half of its

coal red power plants will have shut,

standing briey as hulking concrete

remnants of a bygone era, before being

demolished and forgotten,” it said in a

statement.

Climate activists said the phase-out

deal did not go fast or far enough to

address the global warming effect of

fossil fuel consumption. All the G7

industrialised nations apart from Ja-

pan had already committed to phasing

out coal power domestically, they

noted.

Countries that wished to demonstrate

the ambition needed to limit warming

to not more than 1.5°C, a key threshold

in the 2015 Paris climate agreement,

should take a tougher stance, said Jane

Ellis, Head of Climate Policy at the

Berlin-based Climate Analytics.

The non-governmental organisation

had called for the G7 to set an earlier

2030 phase-out date for power genera-

tion by coal, and a 2035 deadline for

gas red supplies.

G7 members were responsible for

more than a fth of global emissions

in 2021, it said, but none were on track

to meet their 2030 emission reduction

targets.

Headline News

G7 agrees to stop coal use by 2035

Updated EU package will

accelerate renewables roll-out

Brown: A Trump presidency

would likely abandon the 2035

net zero target

On the second anniversary of REPowerEU, the European Commission has launched a

new package to speed up the deployment of renewables as it looks to eliminate its use of

Russian gas. Junior Isles

Clean energy investment drives economic growth, says IEA

THE ENERGY INDUSTRY TIMES - JUNE 2024

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THE ENERGY INDUSTRY TIMES - JUNE 2024

Australian strategy relies on natural gas

until 2050 and beyond

US DOE faces challenges moving

hydrogen production forward

Gary Lakes

Australia is one of the world’s biggest

producers of natural gas and other

natural resources. Its gas exports are

among the largest in the world and it

supplies major Asian consumers. In

recent years the gas industry in Austra-

lia has been through a debate with the

government over domestic supply ob-

ligations and prices for the local mar-

ket. The new strategy looks to provide

security for the economy and keep the

industry strong, yet continue to take

steps to comply with global carbon

emissions reductions.

The Future Gas Strategy (FGS) will

support the continued exploration for

natural gas in Australia along with in-

creased production. According to the

strategy drawn up by the government

of Prime Minister Anthony Albanese,

Australia will maintain a gas policy

based on Australia’s “commitment to

being a reliable trading partner,” the

FGS states.

This means that the gas industry will

continue to produce and export

enough gas to fulll its LNG contracts

with big importers like China, Japan

and Korea for as long as those markets

want LNG.

Natural gas exports in the form of

LNG provides Australia with some 14

per cent of its export revenue. Gas also

covers 27 per cent of the country’s do-

mestic energy consumption.

The strategy outlines a pathway for

natural gas to support the transition to

a sustainable and low-emission energy

future while ensuring energy security

and affordability for the country.

The Albanese government said the

policy will support domestic supply

and assist with the transition to net

zero. For their part, environmentalists

in Australia argue that gas is not a

transition fuel, but a key contributor

to global warming. Furthermore, they

argue that the new strategy will open

new gas basins that will do more dam-

age to the country’s land, water and

communities.

Australia’s gas industry has been at

odds with the government over steps

to regulate it – mostly in reference to

measures designed to assure a safe and

affordable supply to domestic custom-

ers, and policies designed to restrict

carbon emissions. But while the gov-

ernment has made efforts to move the

country towards a net zero future, the

gas industry continues without great

encumbrances.

At the launch of the FGS, Minister

for Resources Madeline King said

decisions on gas supply and produc-

tion will be based on the best possible

information.

“The strategy makes it clear that gas

will remain an important source of

energy through to 2050 and beyond,

and its uses will change as we improve

industrial energy efciency, rm

renewables, and reduce emissions,”

King said.

“But it is clear we will need continued

exploration, investment and develop-

ment in the sector to support the path

to net zero for Australia and for our

export partners, and to avoid a shortfall

in gas supplies,” the minister said, add-

ing: “The strategy makes it clear that

we can’t rely on past investments to

get us through the next decades, as

existing elds deplete. That will mean

a continued commitment to explora-

tion, and an openness to the kinds of

foreign investment that have helped

build the industry into the powerhouse

it is today.”

Implementing the FGS will not be

easy for Australia, and it faces a num-

ber of challenges. Emissions reduc-

tion will require balancing production

and consumption while minimising

the release of greenhouse gases. Large

investments will be needed to upgrade

the infrastructure for cleaner gas

production and distribution. Securing

the money needed for such invest-

ments in a timely manner will be cru-

cial. Failure to get the timing right as

the energy shift gathers momentum

could risk Australia’s efforts to transi-

tion to cleaner and cheaper energy.

Meeting the goals for carbon reduc-

tions must be done in a way that does

not disrupt energy supply or make

energy unaffordable.

On top of it all, the government will

have to keep everyone happy during

the process, perhaps the biggest chal-

lenge of all. The industry can expect to

react to measures that they will see as

disruptive to their process or incurring

new costs or as trade obstacles. The

public will have their set of environ-

mental concerns, may oppose changes

in their long-held pattern of doing

things, worry over the impact that cer-

tain measures may have on public

health, and what it will cost them as

taxpayers.

Gary Lakes

Getting the price of producing and us-

ing hydrogen down to a cost that in-

dustry and consumers can tolerate is a

big part of making the energy transition

work. The Department of Energy

(DOE) has set a target price of $1/kg

by 2031 and an interim price target of

$2/kg by 2026. These targets include

the cost of production, delivery and the

dispensation of hydrogen for practical

long-term use, but beginning as soon

as possible.

The Hydrogen and Fuel Cell Tech-

nologies Ofce Multi-Year Program

Plan (MYPP) – available on the DOE

website – is aligned with the priorities

of the US National Clean Hydrogen

Strategy and Roadmap that was re-

leased by the Biden-Harris administra-

tion in June 2023.

The roadmap lays out a strategic

framework to achieve large-scale pro-

duction and utilisation of hydrogen

with scenarios for 2030, 2040 and

2050, and emphasises collaboration

between government agencies, indus-

try, academia and others who hold a

stake in transforming the energy indus-

try. The roadmap lays out concrete

targets and sets market-driven metrics

to measure success.

The MYPP follows a report delivered

earlier this year to the DOE by the Na-

tional Petroleum Council (NPC) stat-

ing that the development of hydrogen

was not moving fast enough to meet

the targets set by the Biden-Harris ad-

ministration. While the government is

providing billions of dollars in funding

for the establishment of at least four

hydrogen hubs across the US, shifting

the country to a hydrogen economy

will take some doing.

The MYPP outlines research and de-

velopment priorities set by the admin-

istration. Renewable hydrogen pro-

duction and storage, technology for

trucking applications – a huge issue in

American commerce and vital to ad-

dress for energy transformation and

emissions reduction – and decreasing

the cost of electrolyser systems are

among the challenges where action is

important.

The MYPP identies the challenges

that must be overcome to realise the

full potential of clean hydrogen and

fuel cells and explains how HFTO’s

research, development, and demon-

stration (RD&D) activities will help

to overcome those challenges in the

near-, mid-, and longer-term.

Besides reducing hydrogen produc-

tion costs by 2026 and 2031, other

targets include reducing the cost of the

electrolyser systems to $250/kW (low-

temperature electrolysers) and $500/

kW (high-temperature electrolysers)

by 2026, getting the price of dispensed

hydrogen cost for heavy-duty vehicles

to $7/kg by 2028, and reduce fuel cell

cost for heavy-duty transportation to

$80/kW by 2030.

Presently, hydrogen produced by

electrolysis – the separation of water

into hydrogen and oxygen using elec-

tricity generated by renewable energy

(green hydrogen) – costs around $5/

kg, and when delivery and fuelling sta-

tion costs are factored in, this could

amount to around $12/kg.

When natural gas is used in the pro-

duction of hydrogen (grey hydrogen)

the cost is around $1.50/kg. Energy

companies are looking to use carbon

capture, utility and storage (CCUS) to

produce ‘clean’ hydrogen, which they

argue will address the requirements

of transitioning to carbon-free fuels.

But carbon capture has yet to be shown

effective on a scale that would speed

the widespread use of hydrogen. Fur-

thermore, the carbon capture industry

requires signicant investment in car-

bon capture infrastructure that could

ultimately prove redundant.

For hydrogen to be at the place in

2050 that the administration currently

envisages it, a number of challenges

are going to need to be addressed – and

not just cost. According to the MYPP,

not only must the cost of technologies

for producing, moving, storing, fuel

cells and electrolysers come down,

existing markets and the creation of

new markets needs attention.

“Without substantial cost reductions,

many of the opportunities for hydrogen

will not be realised. The efciency,

durability, and reliability of hydrogen

and fuel cell systems also need to be

improved to achieve parity with in-

cumbent technologies,” the MYPP

report said.

De-risking and scaling up technolo-

gies across the value chain are also a

part of the quest.

“To reduce investment risk, new hy-

drogen and fuel cell technologies need

to be demonstrated and validated in

real-world conditions,” the report said,

adding: “And to enable scale-up of

proven technologies, more-robust do-

mestic supply chains and improve-

ments in manufacturing (both to reduce

cost and enable scale) will be needed.”

Convincing the public that the move

to hydrogen energy holds the promise

of new jobs and opportunities is in

itself a challenge, but the transition is

one that will denitely need people to

carry out. MYPP cites barriers to

large-scale adoption as one of the

challenges a hydrogen economy fac-

es. Overcoming those barriers will

require large-scale adoption across

multiple sectors of the overall econo-

my. And it is safe to assume that all

industries will need to adapt to the new

applications of hydrogen energy,

which once it comes into widespread

use can be expected to lead to many

innovations.

A number of crosscutting areas will

need improvement, the MYPP says.

These areas include safety, which

will require enhanced safety practic-

es, improved sensors, and the dis-

semination of knowledge. Techni-

cally sound codes and standards will

need to be adopted, as well as im-

proved and streamlined permitting

processes, along with a well-trained

workforce for the entire technology

life cycle, from research through

manufacturing to installation, repair

and decommissioning.

Hydrogen

Gas

The government of Australia has recently released a policy strategy that says the country will make use of natural

gas well beyond 2050, the target year for most of the world to be operating at net zero status.

The US Department of Energy is continuing to pursue its hydrogen development programme through the Hydrogen

and Fuel Cell Technologies Ofce, which has recently released its Multi-Year Program Plan (MYPP).

THE ENERGY INDUSTRY TIMES - JUNE 2024

Fuel Watch

ndings from these assessments in-

form and enhance the design of wind

farm structures.

n Unlock the power of partnerships.

The operational success of Hywind

Tampen, currently the largest oating

wind farm with 11 turbines and an 88

MW capacity, sets the stage for even

more ambitious projects beyond 2030.

While standardisation of parts and

designs, as well as supply chain up-

scaling will play a signicant role,

innovation remains a key driver for

expanding capacity and achieving

scale.

Future oating wind farms, pro-

jected to be as much as 20 times

larger, will demand even greater cost

efciency – and innovation, as well

as collaborative efforts and shared

objectives, will be pivotal in making

this a realistic prospect. Opportuni-

ties abound, including academic

studies, joint industry initiatives,

sponsorships, and technology trials

alongside established benchmarks.

Clients, counterparts, and col-

leagues all play a vital role in igniting

and accelerating innovation. Collabo-

rating early with advisors fosters ex-

ploration and propels the exciting fu-

ture of oating wind energy.

n Use exible data acquisition that

can adapt and operate in deep waters.

Over 20 countries are venturing into

commissioning oating offshore wind

farms, and while most sites will be

located in waters 60-250 m deep, some

proposed sites are already approach-

ing 1500 m. A thorough early analysis

of site conditions is therefore essential

for designing reliable and cost-effec-

tive oating assets that will perform

as expected for decades.

As the industry evolves to embrace

oating wind, iterative data processes

and multi-disciplinary expertise will

be required to create detailed ground

models. Where possible, we should

be incorporating models and data

from existing offshore infrastructure

to optimise site characterisation – but

building data acquisition methods

that can operate in deep waters will be

essential.

n Design operations and maintenance

requirements from the outset. For

oating wind projects to pose a serious

viable alternative to xed locations,

the long-term operations and mainte-

nance requirements must be consid-

ered and factored into projects from

the very outset.

It is estimated that the cost of oper-

ating and maintaining oating wind

farms could be three to ve times

more than traditional xed-bottom

sites. This is inuenced by the fact

that operators must contend with

more turbulent and unpredictable

conditions further out at sea – mean-

ing structures will be continually

shifting, turbines may need to be

eployment of wind farms in

deeper waters – where winds

are stronger and more consis-

tent – will go a long way to meeting

the targets governments around the

world have set for clean energy gen-

eration. Floating wind farms can sig-

nicantly contribute to the global ef-

fort of transitioning away from fossil

fuels and help limit global average

temperature rises to below 2°C, a key

goal of the Paris Agreement.

The oating wind sector is still in

relative infancy compared to xed-

bottom, with engineering solutions

and supply chains still being devel-

oped. The remote location of oating

sites, as well as the harsh offshore

weather conditions they need to en-

dure, provide challenges for both de-

velopment as well as operations and

maintenance. Thankfully, advances in

technology, investment and a grow-

ing desire to succeed are already

helping to make signicant gains.

When developing an offshore wind

farm, there are seven key things that

can mitigate potential challenges.

n Use technology to balance stability,

complexity and cost. Engineers are

actively exploring various oating

designs, each accompanied by a dedi-

cated mooring system. These moor-

ings ensure stability for the oating

platforms, alongside tailored anchor

solutions which are essential to opti-

mise holding capacity in the light of

the specic ground conditions and

expected load patterns at the installa-

tion site.

Floating foundations occupy a sig-

nicantly larger surface area than

their xed-bottom counterparts.

Consequently, acquiring compre-

hensive geo-data becomes more de-

manding. To compare the feasibility

of multiple oater and anchor com-

binations, developers must gather

extensive geophysical and geotech-

nical datasets to obtain a clear under-

standing of seabed conditions. De-

pending upon the scale and resolution

of data needed for engineering de-

sign, survey scopes can become sig-

nicantly larger compared to mono-

pile wind farms.

Advancements in data interpreta-

tion can help to rene data need and

enable design choices. Ground mod-

elling is rapidly becoming a main-

stream component of layout design,

and techniques such as seismic inver-

sion allow engineers to predict soil

properties without location specic

geotechnical data. It must be high-

lighted that site specic data is still

needed to verify assumptions and

mitigate ground risk, but by integrat-

ing data acquisition and interpretation

methods, we can harness new tech-

nologies while maintaining exibility

in evaluating anchoring options and

patterns.

n Enhance oating wind farm founda-

tions with strategic soil sampling. To

realise the sector’s aspirations and

demand for oating wind capacity, it

is estimated that approximately 3400

oating platforms and 10 000 anchors

will be deployed annually during the

2030s. Achieving this scale necessi-

tates swift and precise engineering

methods that can adapt to diverse soil

conditions.

Anchors face unique hurdles, such

as cyclical forces, intricate load dy-

namics, and the trenching impact of

mooring lines. These factors must be

factored into anchor designs to pre-

serve holding capacity throughout the

operational life of a oating wind

farm.

A thorough understanding of the

soil context for each anchor is es-

sential, achievable through methodi-

cal laboratory testing of high-quality

representative soil samples. Strategic

investments in soil sample collection

and analysis can help favourably in-

uence the levelised cost of energy

(LCOE) for oating wind farm

projects, allowing developers to un-

derstand seabed conditions and de-

sign components without expensive

over engineering.

The collection and analysis of high-

calibre soil samples is pivotal for the

development of oating wind farms.

Optimising anchor designs is not only

about meeting installation demands

but also about ensuring enduring

holding capacity, all while reducing

cost and risk.

n Undertake a proactive geo-hazard

assessment. Floating wind sites are

subject to a different spectrum of geo-

hazards to their xed-bottom counter-

parts, necessitating more intricate site

characterisation. Early comprehen-

sion of geological conditions and po-

tential geo-hazards is vital to mitigate

risks, ensuring the planned develop-

ment and enduring performance of the

wind farm.

The initial step in geo-hazard iden-

tication is a comprehensive desktop

study, leveraging dependable data to

evaluate a broad array of factors. The

insights from a desktop study can

then inform the extent of site investi-

gation campaigns needed, allowing

project objectives and deadlines to be

achieved in line with development

expenditure budget.

Techniques for in-situ geo-data col-

lection for geo-hazard assessments

share commonalities with routine site

investigations, including CPTs and

boreholes. Dispatched samples un-

dergo examination at specialised core

logging facilities to trace the sedi-

ment’s history and composition.

Specialists model geological

events to evaluate the relevance and

frequency of risks in relation to the

offshore wind farm’s lifespan. The

towed back into port for maintenance,

additional technology and training

will be needed to ensure worker

safety, and delays caused by weather

are more likely.

n Implement remote monitoring to

reduce costs. Developers will need as-

surance that the benets of oating

wind will not be overshadowed by

high operations and maintenance

costs, and leveraging techniques such

as remote monitoring will go a long

way towards reducing operational

costs. When wind turbines are further

offshore, remote monitoring will help

asset managers to receive early warn-

ing of any concerns, and minimising

costly in-person site visits in the pro-

cess. With this technology, an operator

could detect problems such as instabil-

ity, fatigue or corrosion, by remotely

monitoring turbines using a set of

specialised sensors permanently in-

stalled onto assets – reducing the need

for personnel to travel to the site so

often. Likewise, rapid growth in re-

mote and autonomous inspection ca-

pabilities now allow vessels and ve-

hicles to inspect sites – both above and

below the waterline - whilst operators

and observers remain onshore. This

could be critical in reducing exposure

hours, improving safety and increas-

ing operational uptime.

For developers currently planning

oating sites, whatever their design,

now is the moment to think about how

they can leverage automated and

digitalised data delivery to provide

early warnings of wear or failure, and

improve asset performance.

The development of oating wind

farms represents a signicant ad-

vancement in renewable energy

technology, offering a promising

solution to harness offshore wind

power in deep waters.

The key to successful deployment

lies in addressing the unique chal-

lenges of oating structures, such as

stability, geo-spatial data acquisition,

and anchor design. Strategic soil

characterisation, proactive geo-haz-

ard assessments, and innovative

partnerships are crucial for optimis-

ing design and ensuring the longevity

of these assets. As the industry moves

to larger and more complex oating

wind farms, exible data acquisition

and remote monitoring will play vital

roles in reducing operational costs

and enhancing performance.

By addressing these seven consider-

ations from the outset, developers can

pave the way for oating wind farms

to become a viable and sustainable

alternative to traditional xed-bottom

wind farms, contributing signicantly

to the global effort to combat climate

change.

Brian Bell is Global Director of Off-

shore Wind at Fugro.

THE ENERGY INDUSTRY TIMES - JUNE 2024

Energy Outlook

With the ability to

be installed further

offshore in water

depths beyond

the limits of xed-

bottom structures,

oating wind farms

are emerging as the

next generation of

renewable energy

sources. Fugro’s

Brian Bell says

there are seven key

considerations for

developers looking to

build projects.

Key considerations for the

development of oating

wind farms

Bell: The key to successful

deployment lies in addressing

the unique challenges of

oating structures

hen we talk about the ener-

gy transition, the distribu-

tion grid is often the forgot-

ten giant of the conversation. The

political discussion often gravitates

towards generation technologies.

And when grids are mentioned, it’s

often transmission. Yet, as the inter-

twined mega shifts of the green tran-

sition – decarbonisation, decentrali-

sation and digitalisation – unfold, it’s

time we give distribution grids the

spotlight they deserve. Eurelectric’s

new study ‘Grids for Speed (GfS)’

study seeks to do just that.

Europe’s grids were originally

planned for a heavily centralised fos-

sil-fuel based energy system where

the electricity ow was a one-way

street from power plant to customer.

Today this picture is more complex.

The power system is decarbonising

at record speed. Renewable capacity

should make up 42.5 per cent of nal

energy use by 2030 and the share of

direct electrication is expected to

double from now until 2040. In the

coming years, about 70 per cent of

new renewable generation and elec-

tricity storage will be connected at

distribution level with renewable ca-

pacity growing nearly six-fold be-

tween 2020 and 2050. This repre-

sents a massive increase in

variability on the distribution grid.

In parallel, growing electrication

of heating, transport and industry

translates in a much higher electricity

demand than before, both in terms of

growing capacity and new connec-

tions. Electric vehicle (EV) chargers

alone will require more than 15 000

new connections a day.

Adding to this technically challeng-

ing transformation, comes an alarm-

ing increase in cyber threats and ex-

treme weather events. The numbers

in our study speak volumes: a six-

fold rise in cyber-attacks and a stag-

gering 13-fold increase in damage

from extreme weather events. These

numbers underscore the urgency of

the situation.

Today there is a disconnect be-

tween the politically agreed pace of

the energy transition and the incre-

mental investment growth of distri-

bution grids. It’s vital that we close

this gap swiftly and effectively.

As shown in our study, an annual

investment of €67 billion is neces-

sary from 2025 and 2050 across EU

countries and Norway. This nancial

commitment is pivotal to realising

the ambitious vision of the EU Green

Deal as well as our energy security

needs.

Despite the high price tag, this in-

vestment cost pales in comparison to

the cost of fossil fuel imports reach-

ing €451 billion in 2023. Moreover,

this commitment equates to a mere

0.4 per cent of the EU27 GDP or a

modest €150 per capita annually.

While the investment challenge is

serious, several emerging grid strate-

gies could lower costs by up to 18

per cent – to €55 billion per year – if

properly implemented. Among them,

anticipatory investments reign su-

preme. Planning and investing ahead

in a strategic way will allow grid op-

erators to not only tackle the chal-

lenges of today’s grid constraints, but

also to shorten connection queues

and reduce curtailment of renewable

production. Enabling this anticipato-

ry framework is possible only if na-

tional regulators get on board, allow-

ing grid operators to invest in a

forward-looking manner with ade-

quate remuneration schemes.

Other strategies revolve around as-

set performance excellence and grid-

friendly exibility mechanisms. This

means leveraging technologies that

monitor grid assets’ health, as well as

strategically renewing and replacing

components to maximise perfor-

mance. Grid-friendly exibility can

also help defer the need for rein-

forcement by optimising network

management efciency and reducing

grid congestions when demand

reaches its peak.

These strategies can only be en-

abled by a digitalised system. Digi-

talising the entire grid environment

would improve efciency, raise grid

capacity and partially defer the need

for grid reinforcement. Our new

study ‘Wired for Tomorrow’ shows

that digitalisation can signicantly

improve efciency when building,

operating and maintaining the elec-

tricity grid, and that the role of regu-

lation is once again key to guide in-

vestments where they are most

needed.

Neglecting this investment need

carries signicant consequences. De-

laying grid enhancement not only

hampers the speed of the energy

transition, but also imperils energy

security and the societal benets of

decarbonisation.

Without action, 74 per cent of key

decarbonisation technologies will not

materialise – resulting in missed con-

nections for 190 million heat pumps,

120 million EV chargers, 1220 GW

of distributed renewables, and 240

TWh of industrial electrication –

our ‘Grids for Speed’ study conrms.

Worse yet, inaction could lead to an

additional 1800 – 2060 Mt CO

emissions by 2050 – meaning miss-

ing net zero by 37 per cent.

So how do we get the grid up to

speed? In ‘Grids for Speed’, we

highlight three key actions: planning

and investing in a strategic way, es-

tablishing a robust regulatory frame-

work and streamlining supply chain

integration for scalability.

Today, our regulatory framework

falls short of a much-needed for-

ward-looking change of mindset. As

15 European countries gear up to re-

assess remuneration frameworks by

2026, the current regulation should

be urgently reformed. This includes

dismantling national blockers and

empowering distribution system op-

erators (DSOs) to invest in anticipat-

ed capacity needs, simplifying pro-

cesses to enable quick decisions and

providing additional nancial sup-

port, in the form of non-tariff fund-

ing instruments, that provide an at-

tractive risk-reward prole while

keeping high standards of regulatory

oversight.

Achieving net zero also hinges on

scalable supply chains for grids.

Even with sufcient investment, un-

resolved bottlenecks in the supply

chain can jeopardise timely deploy-

ment. By 2050, doubling transform-

ers from 4.5 to 9 million and increas-

ing conductors from 10 to 16.8 million

km will be imperative. Yet, a copper

shortage could become a bottleneck

for getting our grids up to speed. To

succeed, immediate action is vital

across material sourcing, manufactur-

ing, procurement, and permitting.

Aligning our infrastructure and

supply chains with our vision on

grids for speed is a race against time.

It is also closely tied to having a

skilled workforce capable of translat-

ing investment into tangible infra-

structure. To tackle these hurdles

head-on, we have to supercharge

supply chain efciency. From en-

hancing material supplies to stream-

lining permitting, to creating training

initiatives and education certicates,

each step is pivotal. But none of this

progress will be possible without ef-

fective collaboration among industry,

European policymakers and national

regulators.

If we succeed, society stands to un-

dergo a transformative shift. En-

hanced grid speed promises ampli-

ed benets, including a resilient

electricity supply, new green jobs, a

decarbonised system and lower ener-

gy bills in the long-term. Distribution

prices are expected to remain stable

until 2050, despite increased con-

sumption, as the rate of electrica-

tion will enable investments to be

spread across more customers and

amortisation of assets will be spread

across decades.

Delivering on the EU’s net zero

and REPowerEU targets demands a

harmonious convergence of regula-

tions, collaboration, investment, tal-

ent and supply chain optimisation.

‘Grids for Speed’ serves as a road-

map for policymakers, industry play-

ers and investors, to guide them to-

wards a fair and swift transition to

clean energy. By embracing the in-

vestment needs and fast-tracking reg-

ulatory strategies outlined in our re-

port, we are condent in the potential

to turn a clean and renewable future

from possibility into reality.

Let’s not languish any longer: the

time to act is now.

Kristian Ruby is Secretary General

at Eurelectric.

Distribution is often

missing in the energy

transition discussion,

resulting in a

disconnect between

the politically agreed

pace of the transition

and the incremental

investment growth

of distribution grids.

Eurelectric’s

Kristian Ruby says

it is vital that we close

this gap swiftly and

effectively. Its ‘Grids

for Speed’ report

serves as a roadmap

to guide policymakers,

industry players and

investors towards a

fair and swift transition

to clean energy.

Accelerating the clean energy

revolution begins with distribution

THE ENERGY INDUSTRY TIMES - JUNE 2024

Industry Perspective

Ruby says the distribution grid is often “the forgotten giant”

Renewable energy capacity in

the EU

recent years, an increasing number of

companies around the world have

been developing bi-directional or ve-

hicle-to-grid (V2G) technologies.

This allows EVs to act as small, on-

site power plants, sending unused

battery power back to the electricity

grid when needed, becoming a key

component of VPPs. This helps bal-

ance the power grid and ensures a

steady supply of energy, especially

when renewables are present in the

system. AI-led technological break-

throughs will optimise the input and

output of EV batteries and ensure

their life cycle is not overly impacted.

This is known as Vehicle Grid Inte-

gration (VGI).

In the past few years, many V2G

start-ups have been established. Over

140 were identied as V2G solutions

providers to watch in 2023 by StarUs

Insights, a database focused on start-

ups and technologies. In Portugal,

Pocityf, was set up in 2019, focusing

on energy management and smart

urban mobility, aiming to integrate

V2G with solar power. In the US,

EnergyHub, a distributed energy

management systems and software

provider, partnered with Toyota, a

major Japanese auto manufacturer, to

provide V2G services to Toyota and

Lexus cars initially in Maryland. In

the UK, renewable energy supplier

Octopus Energy launched a V2G tar-

iff for customers in February 2024. It

offers EV owners free charging if

they sell the power stored in their ve-

hicles back to Octopus Energy during

peak hours. The company plans to

expand this offering to other markets,

including France, Japan, and New

Zealand.

EV ownership has grown exponen-

tially in the EU during the past few

years and is expected to continue

posting strong growth. The European

Environment Agency provided de-

tailed gures from 2010 through

2022. The number of battery EVs and

he EU will be adding tens of

gigawatts of solar and wind ca-

pacity annually through 2030.

This will strain Transmission System

Operators (TSOs). The expansion will

bring the renewable energy capacity

to about 1070-1200 GW by 2030, up

from just under 400 GW in 2022. The

EU aims for renewables to account for

at least 42.5 per cent of nal energy

consumption by 2030, up from less

than 23 per cent in 2022. The tripling

of solar power and doubling of wind

energy in such a short period will fur-

ther stress the already stretched grid

infrastructure in several EU countries.

Eleven of 26 grids are not sufciently

accounting for renewables targets in

their plans, according to independent

energy think-tank Ember. The EU es-

timates that over €580 billion ($630

billion) will be invested in grid im-

provements, with a large portion

dedicated to digital solutions.

Virtual Power Plants (VPPs) are a

digital solution that can assist TSOs.

These systems combine three ele-

ments: distributed energy resources

like solar panels, batteries in EVs, and

others, utilising software-based tech-

nologies to manage and dispatch this

combined energy effectively. They

rely on information and communica-

tion technologies together with the

Internet of Things. By leveraging

VPPs, TSOs can achieve a more ef-

cient power grid, balancing the inte-

gration of intermittent renewables

and stabilising the overall grid for

better reliability. Additional advan-

tages include providing a continuous

power supply, being available quickly

or even immediately, remote control-

lability, affordability, and cost savings

for end users.

VPPs can connect millions of energy

assets across various locations, allow-

ing them to work together. Increased

computing power leads to more ef-

cient coordination, enabling assets

ranging from home air conditioning

systems to large industrial machines

to operate in unison. VPPs can handle

billions of data points in near-real

time, including weather data, con-

sumer information, electricity market

data, and other sources. All this infor-

mation feeds into the VPP system,

which constantly measures the overall

power system, forecasts energy de-

mand, and assesses available supply.

According to Origin Energy, an Aus-

tralian utility, AI makes this whole

process faster and more efcient.

For VPPs to be effective, recording

consumer energy consumption data

through smart meters is essential. The

EU is making progress but needs to

accelerate its push to add smart me-

ters, as current adoption is below

ideal levels. The EU27+3 (Norway,

Switzerland, UK) should see a pene-

tration rate of almost 80 per cent by

2028, equal to 326 million meters,

compared to just 56 per cent at the end

of 2022, notes Berg Insights, a con-

sultancy. The cost to install smart

meters averages €180-200 ($195 –

$217) per meter while saving €270

($293) per metering point in billing

and achieving an average energy sav-

ing of 2-10 per cent, according to a

study by the EU Directorate-General

for Energy in March 2020. It is worth

noting that smart meter installation is

a rolling process, as their life cycle is

between 10 and 20 years.

The interaction between VPPs,

EVs, and AI offers signicant long-

term potential for operators and in-

vestors. The quality of batteries for

EVs is rapidly improving, providing

users with longer ranges for the same

number of kilowatt-hours used. Ad-

ditionally, the cost of batteries for

EVs, as well as for other forms of

storage, has been progressively fall-

ing and many forecast it will continue

to decline.

Currently, electricity for EVs is

unidirectional, owing from the grid

to the vehicle via a charging point. In

plug-in EVs rose to almost two mil-

lion from less than 600 during this

period. Battery EVs alone increased

to 1.13 million. The share of electric

car registrations was 21.6 per cent,

including 12.2 per cent for battery

EVs, in 2022. Just ve years earlier,

in 2018, it was less than 2 per cent in

total, including just 1 per cent for

battery EVs. Preliminary estimates

indicate that in 2023, battery EVs

reached a 15 per cent market share.

There are already a large number of

companies developing VPPs, and

more are likely to join the sector. The

German electric utility company Next

Kraftwerke GmbH is present in six

EU countries and is regarded as one

of the major operators of large-scale

VPPs. It had a networked capacity of

about 13.5 GW as at the end of 2023.

It involves almost 17 000 small pro-

ducers, and energy storage facilities,

as well as commercial and industrial

consumers.

Another of the many participants in

the VPP market is the German energy

producer Sonnen GmbH, owned by

Shell since 2019. The home energy

storage systems for private house-

holds and small businesses (over 125

000 thousand batteries installed), op-

erates in 11 countries across three

continents, Asia, Europe, and North

America. In Europe, Sonen’s VPP

capacity is 250 MWh, which it hopes

to grow to 1000 MWh.

A third example is Enel X, the en-

ergy supply and management services

arm of Italian utility Enel with 65

million customers and 90 GW in in-

stalled capacity. It has been highly

active in the VPP space all over the

world. For example, it won a contract

with the Australian Energy Market

Operator to supply 120 MW of exible

demand capacity in October 2023. Of

note a number of European energy

technologies manufacturers are also

involved in VPP sector, they include

ABB, Bosch, Schneider Electric, and

Siemens.

The growth trend of VPPs in the EU

and beyond is expected to accelerate

sharply over the next few years. Sev-

eral research rms project the market

to expand from less than $2 billion to

between $10 and $24 billion, with a

compound annual growth rate ex-

ceeding 20 per cent. Spherical Insights

& Consulting estimates the global

VPP market will grow to $13.7 billion

by 2032 from $1.8 billion. Inkwood

Research provides a more conserva-

tive estimate of $9.5 billion, while

Fortune Business Insights forecasts a

substantial increase to $24 billion.

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 through publication and on the

“Asia Climate Finance Podcast.”

Note: This commentary is based on a

section of Joseph’s forthcoming book

“Empowering Clean Energy’s Succes-

sion: How Policy and Finance Are

Changing Business for the Climate”

THE ENERGY INDUSTRY TIMES - JUNE 2024

Decarbonisation Series

Virtual Power Plants

(VPPs) will be a key

technology for the

energy transition

in the EU in the

coming years, and

the rapid growth of

electric vehicles will

aid the development

of VPPs through

technologies such as

Vehicle-to-Grid (V2G)

digital solutions. This

offers operators and

investors a great

number of investment

opportunities, writes

Joseph Jacobelli.

VPPs, AI, and EVs: a boost to the

EU energy transition

New registrations of electric cars, EU-27

Notes: columns 3,4 and 6 calculated by the author, column 7 recalculated by the author.

Source: European Environment Agency, 24 October 2023 https://www.eea.europa.eu/en/analysis/indicators/new-registrations-of-electric-

vehicles?activeAccordion=309c5ef9-de09-4759-bc02-802370dfa366.

ate last year, Finnish start-up

company Polar Night Energy

(PNE) teamed up with Ilmatar,

a Nordic energy company and inde-

pendent power producer (IPP), to

start what is being dubbed as a “new

era” in clean energy production.

Their collaboration focuses on ad-

dressing critical challenges in wind

and solar power generation, with the

goal of enhancing protability and

grid stability.

In December 2023 PNE embarked

on a two-year programme to develop

and commercialise the electricity

production capabilities of a novel

sand battery that converts excess re-

newable energy into heat, then back

into electricity.

Ilmatar, one of the leading IPPs in

the Nordics, will participate in the

development and will be among the

rst to be offered the state-of-the-art

large-scale power-to-heat-to-power

(P2H2P) systems. Ilmatar will pro-

vide PNE with commercial piloting

opportunities on their wind farms

when the technology reaches an ad-

vanced stage. This will mark a sig-

nicant step toward the practical de-

ployment of this innovative solution.

“The renewable energy production

business has nally reached the vol-

ume level where we can focus more

on the cost-efcient, large-scale and

exible energy storage,” said Il-

matar’s New Business Development

Manager Katja Koponen.

A well-known challenge of weath-

er-dependent energy production is

that electricity market prices are of-

ten low when production is at its

peak. By developing new high-ca-

pacity energy storage solutions, the

two companies say they are building

a exible and decentralised energy

system of the future while also creat-

ing new business opportunities and

addressing bottlenecks in electricity

transmission.

“Installing energy storage behind

the meter at a wind farm makes

controlling electricity output to the

national grid easier. Similar ad-

vancements will follow with solar

power as its grid presence grows.

These large-scale storage solutions

are crucial in our long-term strategy

for cleaner energy,” said Markku

Ylönen, CTO of Polar Night Ener-

gy. “Ilmatar’s exclusive focus on

wind and solar, without any history

of combustion-based production,

aligns with our vision.”

PNE was founded in 2018 but the

roots of the company’s sand battery

go back further. The company’s

founders Tommi Eronen and Markku

Ylönen met while studying at Tam-

pere University of Technology in

Finland and had their rst discus-

sions on the technology in 2013.

After plenty of Comsol Multiphys-

ics models and rst technology vali-

dation at Kuhmalahti, Kangasala, in

2017 they decided to focus on solid

material thermal energy storage and

PNE was born a year later.

Commenting on their motivation,

Ylönen said: “We are trying to miti-

gate climate change as it is one of the

biggest challenges of our time. To

mitigate climate change, we need so-

lutions for storing energy generated

from weather-dependent renewable

sources such as solar and wind. Also,

the trend of declining electricity

prices, increasing volatility, and the

need for energy storage all played a

part in starting the company.”

He added: “It was clear that in-

creasing renewable energy produc-

tion won’t be enough to decarbonise

the heating sector without high-ca-

pacity storage.”

PNE’s patented high-temperature

large-scale heat storage technology

is at the heart of its system. It uses

sand, or sand-like material, as the

storage medium, which leads to safe

operation and a natural balance in

the storage cycle. Additionally, sand

is a cheap and abundant material,

which can be heated up to 1000°C

and even higher.

Inside the sand is a heat transfer

system that enables effective energy

transportation to and from the stor-

age. Proper insulation between the

storage and environment ensures

long storing period, from hours to

months, with minimal heat losses.

PNE says its battery enables the

upscaling of solar or wind energy up

to 100 per cent of a facility’s heating

and electricity demand. The size and

usage of the heat storage affects its

efciency but the shorter the storage

period, the less heat is lost between

charging and discharging.

Resistive heating of sand is essen-

tially 100 per cent efcient, but the

efciency is lowered by heat loss

through the boundaries of the sys-

tem. However, there are several

ways PNE tackles this problem.

Ville Kivioja, PNE’s Lead Scien-

tist, explained: “Since sand is a solid

material heat is transferred inside the

storage only by conduction. As the

heat conductivity of sand is low, the

outer parts of the storage act effec-

tively as insulators for the core and

thus there is always a considerably

steep radial temperature prole in-

side the storage.

“Simply put, unlike for water-

based storage systems that have con-

stant temperature everywhere, the

outer layers of a sand-based heat

storage have temperatures much be-

low the average temperature of the

system and the heat does not ow ef-

fectively from core to the outer lay-

ers and nally to the ambient space.”

Although sand has self-insulating

properties, PNE uses conventional

insulation at the boundaries of the

system. A heat transfer pipe system

inside the sand allows the boundar-

ies to be prioritised when discharg-

ing the storage and prioritises the

core when charging.

“This means that even if some of

the heat is about to be conducted to

the outer layers, we can make use a

good proportion of it instead of it

getting lost. For the heat charged to

the core of the system, it takes a very

long time to reach the boundaries,”

said Kivioja.

The size of the storage therefore

affects the efciency, since a small-

er system has more surface area

compared to its volume than a big-

ger one, and the heat loss is essen-

tially proportional to the surface

area.

“Simply put, the core of the storage

can hold the heat for a very long

time without it getting lost, and the

core is bigger for bigger storage,”

said Kivioja. PNE’s models show

that large 1 GWh systems will have

an efciency of 95 per cent.

The systems are designed based on

simulations using COMSOL Multi-

physics software, using 3-D transient

heat transport models with real-life

input and output data.

The desired storage period com-

pletely depends on the application

and the needs of the customer, and

can vary from one day to several

months.

PNE says the physical size of its

storage systems can range from tens

to thousands of cubic metres. It is

possible to locate the storage under-

ground, therefore requiring minimal

space, which is crucial at, for exam-

ple, construction sites.

PNE is currently focusing on two

products. At the moment it can offer

a heat storage system with 2 MW

heating power with a capacity of 300

MWh or 10 MW heating power with

a capacity of 1000 MWh. However,

the heat storage system is scalable

for many different purposes and

there are plans to expand the product

range in the future.

Compared to other forms of stor-

age, PNE says the design of the sand

battery is simple, robust, and cus-

tomisable, leading to high efciency

and low cost per unit of energy ca-

pacity. This, it says, makes it suitable

for a number of potential applica-

tions since 36 per cent of all industri-

al process heat is in the temperature

range of 60-400 °C. This is the cur-

rent range of PNE’s thermal energy

storage. Relevant industry sectors in-

clude food and beverage, chemicals,

paper and pulp, textiles, and space

and district heating.

The rst commercial sand-based

thermal energy storage was for Vata-

jankoski, an energy utility based in

Western Finland. This system pro-

vides heat for Vatajankoski’s district

heating network in Kankaanpää, Fin-

land. The sand battery has 100 kW

heating power and 8 MWh capacity.

Full-scale utilisation of the storage

commenced in 2022.

A larger 1 MW sand battery in Por-

nainen will be fully operational next

spring. This is a signicant step in

scaling up the sand battery technolo-

gy, as it will also act as a primary

production plant for Loviisan

Lämpö’s district heating network.

PNE also has a 3 MWh running

test pilot in Hiedanranta, Tampere,

which is connected to a local district

heating grid to provide heat for a

couple of buildings. The pilot en-

ables testing, validation and optimi-

sation of the heat storage solution.

Here, electricity is partly supplied by

a 100 m

solar panel array with the

rest coming from the grid.

In the latest collaboration, PNE

and Ilmatar are committed to explor-

ing the most effective methods for

integrating PNE’s sand battery into

Ilmatar’s wind and solar installations

in order to drive the transformation

of the renewable energy landscape.

Since the sand battery will be

charged using electricity, charging

during hours where cheap and clean

electricity is available is crucial.

PNE has therefore developed algo-

rithms that optimise the charging

pattern. Using these algorithms, the

thermal energy storage can effective-

ly utilise the cheapest hours of the

electricity markets or any excess re-

newable energy production.

For Ilmatar, a sand battery could

potentially deliver extra prot by al-

lowing it to access the ancillary ser-

vice markets, whose purpose is to

balance the electric grid. Moreover,

it can offer valuable exibility to the

electricity network.

The collaboration is a major mile-

stone for development of the tech-

nology and the company. Ylönen

concluded: “After a successful seed

round, we are now growing our sales

and R&D teams to better cater to our

customers’ needs and advancing our

capabilities in converting stored heat

back to electricity.

“We are in a very good position to

realise our vision of decarbonising

energy production and establishing

Polar Night Energy as the leading

global provider of large-scale ther-

mal energy storage solutions.”

A “new era” in

battery storage is

being hailed with the

development of a

sand battery system

designed to boost the

protability of wind

and solar. TEI Times

explains.

Drawing a line in the sand

THE ENERGY INDUSTRY TIMES - JUNE 2024

Technology Focus

Polar Night Energy’s sand

battery is a large-scale high

temperature thermal energy

storage that uses sand or sand-

like materials to store energy in

sand as heat. Illustrations by Simo

Heikkinen.

https://www.simoheikkinen.

THE ENERGY INDUSTRY TIMES - JUNE 2024

Final Word

he city of Athens – the venue

for this year’s Eurelectric Pow-

er Summit – was a splendid

backdrop to discuss the key challeng-

es facing Europe’s power sector and

the implementation strategies that are

urgently needed.

With European elections about to

take place shortly and Hungary set to

take over the rotating presidency of

the Council of the European Union

from July, it was perfect timing for

Atilla Steiner, Hungary’s State Secre-

tary for Energy and Climate Policy

within the Ministry for Energy, to set

out what he sees as the main areas for

action.

Steiner rst noted that Hungary was

taking over the presidency at a very

important time. “It will be the last in-

stitutional cycle before 2030,” he said.

“And we will have the privilege of

setting the tone for the next institu-

tional cycle.”

Steiner shared his thoughts on the

priorities he would like to put on the

agenda during what will be Hungary’s

second presidency semester. During

its rst presidency, back in 2011, the

motto was “stronger Europe”. Since

then, the continent has endured sev-

eral crises – from nancial and im-

migration crises to war between

Russia and Ukraine, and a crippling

energy crisis.

According to Steiner, Hungary

would like to “provide a platform” for

all stakeholders to forge a much

deeper collaboration in difcult times.

For the energy sector he said a key goal

will be to reduce the gap between

policy and implementation.

“We have many ambitious goals and

good strategies but we are lagging

behind on the implementation. The

key is how we can move everybody to

implement our strategic directions.

One of the key priorities of the Hungar-

ian presidency will be the competitive-

ness of Europe… we’ve talked a lot

about sustainability and 2040/2050

targets but I think the competitiveness

of Europe now and in the coming years

has been a little bit forgotten.

“Energy is one of the key pillars of

competitiveness… Europe is a re-

source-poor continent, without much

fossil fuel, but we do have renewables.

But we need more debate on how we

master it, so I think the Energy Coun-

cil sessions will play a crucial role in

the next semester when we talk about

competitiveness.”

The plan, he says, is to organise an

informal Energy Council session in

July and a formal session in December,

with “several conferences” in between

on energy topics.

Three main priorities are on the table

for energy. The rst will be much more

focus on implementation and how it

“can be translated into EU language”.

“Theoretically National energy and

climate plans will have been nalised

and submitted to the European Com-

mission by the start of the Hungarian

presidency, said Steiner. “So we will

have an overview of where we are

standing. Is there still a signicant gap

to reach 2030 [targets]? What actions

do we need to meet our goals? Is it

feasible to meet those goals? That

debate is still missing.”

It was clear from a recently launched

Eurelectric study that there is a need

to signicantly accelerate the pace of

the energy transition, which in large

part can be achieved through electri-

cation. Stiener noted that in Hungary,

electrication “has the largest poten-

tial” to drive the transition by replacing

gas with another energy carrier,

namely electricity.

According to Eurelectric’s ‘Grids for

Speed (GfS)’ report, in order to de-

liver on plans to go green, electricity

demand, which “has only seen modest

growth in the last three decades”,

needs to rapidly accelerate. Its gures

show electricity as a percentage of

nal energy demand must grow from

20 per cent in 2015 to 60 per cent in

2050.

Such a change, however, depends on

building grids that are up to the task

of underpinning a more electried

society. According to the GfS report,

failure to invest in distribution grid

modernisation in particular will stall

much-needed connections of tech-

nologies, such as renewables, heat

pumps and electric vehicles (EVs). For

example, EVs in the EU will grow

from 8 million today to 69 million by

2030, says Eurelectric. Meanwhile

distributed renewable capacity will

grow six-fold from 2020 to 2050, with

about 70 per cent of future renewables

and storage being connected to the

distribution grid.

The report, produced with the sup-

port of EY, is informed by data from

distribution system operators (DSOs)

serving more than 60 per cent of Eu-

ropean energy users. It also includes

National Energy and Climate Plans

(NECPs), network development plans

(NDP) and proprietary EY data. The

report is modelled by EY and Impe-

rial College London (ICL) through to

2050, using ICL’s representative grid

modelling methodology.

Introducing the report at the summit,

Eurelectric’s Secretary General Kris-

tian Ruby said: “We need to double

investment in distribution grids com-

pared to the last four years.” The

numbers show that €67 billion invest-

ment annually is needed to 2050, up

from €36 billion per year in 2023, to

deliver a distribution grid that will

enable the energy transition.

That money will be used to reinforce

grids to handle increasing demand;

renew ageing grids; install smart me-

ters and to make grids smarter through

automation and digitalisation.

It seems like a tall order, but as Ruby

said: “€67 billion. These gures seem

daunting but we should not panic;

after all they are a sum of what 27

countries need to do together. And it’s

not a crazy amount when compared to

the €451 billion paid for fossil fuel

imports, or other sector investments

[such as road and rail].

“And another bit of good news is, the

€67 billion can be reduced if we do

things right.” Eurelectric calculations

show this can be slashed by 18 per cent

to €55 billion by “doubling down” on

cooperation between regulators, au-

thorities and companies to invest today

in the long term future of Europe.

Ruby also noted that the promise of

new technologies such as smart

transformers, grid exibility solu-

tions, dynamic line rating, digital

twins, etc., will also contribute to

getting costs down.

“We have refrained form quantifying

the amount we can save from these

technologies because what we want to

do is work with you [the industry] as

a community to identify those tech-

nologies that can help bring down the

bill further,” said Ruby.

In another collaborative report with

Accenture called ‘Wired for tomor-

row’, Eurelectric offered six key in-

sights on DSO digitalisation – one

being balancing build-out and exibil-

ity.

Dr Sabine Erlinghagen, CEO Sie-

mens Grid Software, Siemens Smart

Infrastructure, pointed to the impor-

tance of exibility management in this

respect. “… It’s all about taking action

on exibility management,” she said.

Speaking on the sidelines of the con-

ference, she added: “You could bring

down the €67 billion cost if you made

the grid smarter. If, for example, ex-

ibility management was used, you

could avoid some of the capital invest-

ment and build-out because the grids

are used in a smarter way.”

Dr Erlinghagen noted that the low-

voltage grid is the least managed part

of the grid. “It’s like a blind spot in the

grid. Not only do you need to shed

light on that blind spot, i.e., understand

and know what’s happening in the

low-voltage grid, understand how

loaded your assets are and plan accord-

ingly. And then you need to act on it.

Because we are talking about millions

of devices and the very distributed

nature of the LV grid, it’s a task that is

humanly impossible to do.”

At the Summit, the company

launched its latest Gridscale X offer-

ing, LV Management. With additional

insights and transparency over what is

happening on the low-voltage grid,

operators can use the software as a

‘co-pilot’, helping them to deal with

the increasing complexity and chal-

lenges related to low voltage grids.

In many ways it is like help with

connecting the dots. Certainly there

are numerous points to link if the EU

is to navigate the disconnects that are

currently hampering its energy transi-

tion. Doing it in a smart way is not

only cheaper but is essential.

Staying on the grid

Junior Isles

Cartoon: jemsoar.com