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January-February 2024 • Volume 16 • No 11 • 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

The need for

micro-management

Decarbonising

industry

Microgrid management systems are

key to greater electrication and the

energy transition. Page 12

Laying the foundations for

industrial decarbonisation is more

crucial than ever. Page 13

News In Brief

Power sector “very close” to

peak emissions

Analysis by Ember has revealed

that the world is close to a turning

point, where electricity sector

emissions stop increasing and start

declining.

Page 2

Energy ows set for reshape

in Argentina, Brazil and Chile

Solar power will be the fastest ex-

panding technology over the com-

ing decade in Argentina, Brazil and

Chile, according to new analysis

from Wood Mackenzie.

Page 4

Japan supports India’s clean

energy journey

The Japan International Coopera-

tion Agency has said it will work

with India, the world’s third highest

polluter, on a roadmap to cut carbon

emissions.

Page 6

First countries commit to

battery energy storage

consortium

A collaborative effort to secure as

much as 5 GW of battery energy

storage commitments by 2024 has

gathered up a rst raft of signatory

countries.

Page 8

Financing Renewables:

Renewable energy set to

soar as interest rates fall

The recent fall in interest rates

bodes well for the growth of the

renewable sector, which has been

expanding rapidly despite the

many hurdles.

Page 14

Technology Focus: OTEC

provides energy around the

clock

A project to be installed in the

African country of São Tomé and

Príncipe looks set to demonstrate

the benets of Ocean Thermal En-

ergy Conversion technology.

Page 15

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Clean energy sources are continuing to expand at record pace and will cover all new

electricity demand in the next three years, according to the International Energy Agency. But

faster uptake of all low-carbon sources is still required to meet climate targets. Junior Isles

Renewable energy has ‘real chance’ of achieving COP28

goal, says IEA

THE ENERGY INDUSTRY

TIMES

Final Word

Buy now pay later may

not be the best option,

says Junior Isles.

Page 16

All additional electricity demand in the

next three years is forecast to be cov-

ered by low-carbon technologies, ac-

cording to a new report from the Inter-

national Energy Agency (IEA).

Its ‘Electricity 2024’ report, the lat-

est edition of the Paris-based agency’s

annual analysis of electricity market

developments and policies, nds that

while global growth in electricity de-

mand eased slightly to 2.2 per cent in

2023 due to falling consumption in

advanced economies, it is projected to

accelerate to an average of 3.4 per cent

from 2024 through 2026.

Record-setting electricity genera-

tion from low-emissions sources –

comprising renewables, such as solar,

wind and hydro, as well as nuclear

power – are expected to account for

almost half of the world’s electricity

generation by 2026, up from a share of

just under 40 per cent in 2023.

Notably, renewables are set to make

up more than one-third of total elec-

tricity generation by early 2025, over-

taking coal.

Launching the report, its lead author,

IEA Electricity Analyst Eren Çam,

said: “This is the rst time that fossil

fuel generation falls below 60 per cent

since [the start of] IEA records dating

back ve decades. This is an impor-

tant milestone that we expect to see

over the next three years.”

The report nds that the increase in

electricity generation from renew-

ables and nuclear appears to be push-

ing the power sector’s emissions into

structural decline. Global emissions

from electricity generation are expect-

ed to decrease by 2.4 per cent in 2024,

followed by smaller declines of

around 0.5 per cent in 2025 and 2026.

The report notes that China is set to

account for about half of the decline in

global power sector emissions over

the next three years. The US will ac-

count for one quarter of the global

decrease followed by the EU, which

will account for about 20 per cent of

the fall in emissions. Power sector

emissions in places such as India and

Southeast Asia, however, continue to

climb, although these increases are

not sufcient to offset the overall

global decline.

“The power sector currently pro-

duces more CO

emissions than any

other in the world economy, so it’s

encouraging that the rapid growth of

renewables and a steady expansion of

nuclear power are together on course

to match all the increase in global

electricity demand over the next three

years,” said IEA Executive Director

Fatih Birol. “This is largely thanks to

the huge momentum behind renew-

ables, with ever cheaper solar leading

the way, and support from the impor-

tant comeback of nuclear power,

whose generation is set to reach a his-

toric high by 2025. While more prog-

ress is needed, and fast, these are very

promising trends.”

The report also nds that electricity

prices were generally lower in 2023

than in 2022. However, price trends

varied widely among regions, affect-

ing their economic competitiveness.

Wholesale electricity prices in Europe

declined by more than 50 per cent on

average in 2023 after having reached

Continued on Page 2

The world’s capacity to generate re-

newable electricity is expanding

faster than at any time in the last three

decades, giving it a real chance of

achieving the goal of tripling global

capacity by 2030 that governments set

at the COP28 climate change confer-

ence in December, the International

Energy Agency (IEA) says in a new

report.

Published in January, ‘Renewables

2023’, the latest edition of the IEA’s

annual market report on the sector,

says the amount of renewable energy

capacity added to energy systems

around the world grew by 50 per cent

in 2023, reaching almost 510 GW. So-

lar PV accounted for three-quarters of

additions worldwide.

The largest growth took place in

China, which commissioned as much

solar PV in 2023 as the entire world

did in 2022, while China’s wind pow-

er additions rose by 66 per cent year-

on-year. The increases in renewable

energy capacity in Europe, the United

States and Brazil also hit all-time

highs.

The latest analysis is the rst com-

prehensive assessment of global re-

newable energy deployment trends

since the conclusion of the COP28

conference in Dubai in December.

The report shows that under existing

policies and market conditions, glob-

al renewable power capacity is now

expected to grow to 7300 GW over

the 2023-28 period covered by the

forecast. Solar PV and wind account

for 95 per cent of the expansion, with

renewables overtaking coal to be-

come the largest source of global

electricity generation by early 2025.

But despite the unprecedented

growth over the past 12 months, the

world needs to go further to triple

capacity by 2030, which countries

agreed to do at COP28.

“The new IEA report shows that un-

der current policies and market condi-

tions, global renewable capacity is

already on course to increase by two-

and-a-half times by 2030. It’s not

enough yet to reach the COP28 goal

of tripling renewables, but we’re

moving closer – and governments

have the tools needed to close the

gap,” said IEA Executive Director

Fatih Birol.

Although world leaders at COP28

failed to agree on a phase-out of fossil

fuels, it was the rst time they had

reached a deal to transition away from

fossil fuels.

n COP28 saw the creation of a global

alliance of electricity companies

called Utilities for Net Zero Alliance

(UNEZA). The main goal of this part-

nership is to achieve a net zero future

by 2030 and to promote grids for re-

newable energy and clean energy de-

ployment. UNEZA is made up of 30

partners, including EDP, Iberdrola,

Enel, Engie and RWE, in addition to

the International Renewable Energy

Agency (IRENA).

Clean energy will

cover all new

electricity demand

over next three years

The IEA’s Fatih Birol says “these are very promising trends”

THE ENERGY INDUSTRY TIMES - JANUARY/FEBRUARY 2024

Junior Isles

Analysis by Ember has revealed that

the world is close to a turning point

where power sector emissions stop

increasing and start declining.

The UK-based energy and climate

think-tank says the world is “getting

very close” to a turning point where

the rapid growth of wind and solar

pushes the world into a new era of fall-

ing fossil generation.

According to analysis by Ember, 107

of 215 economies passed peak fossil

generation at least ve years ago, set-

ting the stage for a global peak and

subsequent decline in power sector

emissions.

Despite hopes for a decline in fossil

fuel emissions in the power sector this

year, adverse hydro conditions pre-

vented emissions from falling in the

rst half of 2023, according to Em-

ber’s mid-year analysis.

Global power sector emissions pla-

teaued in the rst half of 2023 as wind

and solar continued to grow. Power

sector emissions would have fallen by

2.9 per cent had global hydro genera-

tion been at the same level as last year.

“In our ‘Global Electricity Review

2023’, we showed that in 2022 the

growth in wind and solar generation

(+557 TWh) met 80 per cent of global

electricity demand growth (+694

TWh). This has already helped to sig-

nicantly slow the growth in power

emissions: without wind and solar

power, fossil fuel generation would

have been 20 per cent higher than it

was in 2022.

“We forecasted that with average

growth in electricity demand and clean

power, 2023 would see a small fall in

fossil generation (-47 TWh, -0.3 per

cent), with bigger falls in subsequent

years as wind and solar grow further.

That would have meant 2022 being the

year of peak emissions. However, is-

sues with hydro are now making that

look unlikely.”

In a separate report, independent

energy research and business intelli-

gence company, Rystad Energy, said

global coal red power generation was

expected to peak in 2023. It said coal’s

decline will begin in 2024 as solar and

wind grow in popularity. New electric-

ity supply from renewables will out-

strip power demand growth, leading to

coal’s displacement.

Europe and North America are sys-

tematically replacing coal generation

with cleaner sources like natural gas

and renewables, reducing coal power

capacity by more than 200 GW since

1990. Europe’s decline is mainly driv-

en by strict emissions policies, while

North America has primarily replaced

coal generation with gas power as

abundant regional production has

slashed prices.

Meanwhile, a recent report called for

an “urgent” end to subsidies for the

most polluting energy sources both by

the EU’s 27 member states – highlight-

ing gaps between the bloc’s own poli-

cies and its push to phase out fossil

fuels.

An independent adviser to the EU

recently said it must double annual

emissions cuts and move fast to pass

existing green plans into law if it is to

meet its climate targets. In January the

report by the European Scientic Ad-

visory Board on Climate Change

called on the bloc to implement previ-

ously announced plans to support

clean technologies and the develop-

ment of critical minerals, as well as

reforms to energy taxation.

Eyeing European parliamentary

elections in June, Ottmar Edenhofer, a

leading German climate economist

who chairs the European Scientic

Advisory Board on Climate Change,

warned: “We cannot afford to lean back

now.” The EU “needs to provide long-

term policy signals based on long-term

plans for the net zero transition”, the

report said.

Politicians will meet for the last time

in April ahead of elections, when right-

wing parties that want to slow the pace

of progress are expected to focus on

rhetoric about the social costs of

switching away from fossil fuels to

combat climate change.

record highs in 2022 following Rus-

sia’s invasion of Ukraine. Yet elec-

tricity prices in Europe last year

were still more than double pre-

Covid levels, while prices in the US

were about 15 per cent higher than

in 2019. Electricity demand in the

European Union declined for the

second consecutive year in 2023,

and it is not expected to return to

levels seen before the global energy

crisis until 2026 at the earliest.

In another report published at the

end of November, Capgemini said

that although renewable electricity

capacity additions are driving the

shift in electricity supply, the cur-

rent growth is far below what is

needed and must triple to meet 2050

targets.

A key observation from the 25th

edition of its annual ‘World Energy

Markets Observatory (WEMO)’,

created in partnership with Vaasa

ETT and Enerdata, is that renew-

able capacity needs to triple. While

$1.3 trillion of energy transition

investments in 2022 was a record

(signicantly outpacing spending

on fossil fuels), it needs to acceler-

ate to $5 trillion per annum to align

with a net zero emissions pathway.

In 2022, renewables capacity ad-

ditions set a record with an annual

addition of 340 GW and 2023

should be another record year. How-

ever, this growth is far below what

is needed to achieve net zero carbon

in 2050 as global renewable capac-

ity should grow by 2400 GW over

the 2022-2027 period (i.e. an an-

nual average growth of 480 GW).

Solar photovoltaic (PV) broke a

record for annual capacity additions

in 2022 and looked set for another

record year in 2023. Wind additions

decreased by 19 per cent globally,

with offshore wind development

encountering difculties in Europe

and the US.

Electricity consumption will have

to quadruple by 2050 to hit decar-

bonisation objectives, with over 75

per cent of it supplied by wind and

solar. Linked to this growing elec-

trication is the need to expand

electrical grids that will have to

become smarter with more station-

ary storage, sensors, and intelligent

exploitation of large masses of data.

Colette Lewiner, Energy and

Utilities Senior Advisor at Cap-

gemini, said: “Despite progress, the

world is not on the right climate

trajectory. Even though invest-

ments in renewable energy in 2022

reached an unprecedented high, an

acceleration of clean technologies

will be critical... What is needed to

make sure the ve big green energy

technologies – wind, solar, nuclear,

batteries and hydrogen – can meet

their 2050 targets is by no means a

small effort. The main obstacles are

linked to nancing and to the dif-

culty of adapting our economy

quickly.”

Continued from Page 1

The European Union’s bid to reduce

dependence on fossil fuels and stabilise

consumer prices, took a big step for-

ward in December as EU leaders

reached a provisional agreement to

reform the bloc’s electricity market.

A vote to rubber stamp the deal is

expected within the next two months,

just before Parliament adjourns to

start campaigning for the European

election in June.

The EU’s plans are aimed at making

the market less vulnerable to volatility

and were seen as a response to Russia’s

invasion of Ukraine, which helped

send energy prices spiralling for con-

sumers and businesses last year.

The EU Council said in a statement:

“The reform aims to make electricity

prices less dependent on volatile fos-

sil fuel prices, shield consumers from

price spikes, accelerate the deploy-

ment of renewable energies and

improve consumer protection.”

The Electricity Market Design aims

to enhance the roll-out of renewables

and increase the amount of energy

traded in long-term contracts to make

the price less dependent on fossil fuel

prices and variations on the wholesale

market.

The reform streamlines Power Pur-

chase Agreements (PPAs) and intro-

duces two-way Contracts-for-Differ-

ence (CFDs) for wind, solar,

geothermal, hydropower without res-

ervoir and nuclear energy. For the lat-

ter, Member States have exibility in

terms of redistributing revenues from

CFDs – with the provisions for CFDs

only kicking in after a transition period

of three years (after entry into force of

this legislation).

Daniel Fraile, Chief Policy Ofcer at

Hydrogen Europe, highlighted the sig-

nicance of the agreement. “This re-

form takes us one step closer to a net

zero system. The inclusion of exibil-

ity targets and the promotion of non-

fossil exibility support schemes in the

new market design are the right strate-

gic choice to accelerate the decarboni-

sation of the energy system,” he said.

Teresa Ribera, the Energy Minister

for Spain, which currently holds the

presidency of the Council of the EU,

said: “This deal is great news, as it will

help us reduce even more the EU’s

dependence on Russian gas and boost

fossil-free energy to cut greenhouse

gas emissions.”

In January, a Wood Mackenzie re-

port forecasted at global gas demand

for the coming year. The market senti-

ment for gas and liqueed natural gas

(LNG) will remain bearish into 2024

with European prices having fallen by

45 per cent to $10 per million British

thermal units (mmbtu) in the past three

months it said. The report ‘Global Gas

and LNG: 5 things to look out for in

2024’ states that high storage levels

coupled with a mild Northern Hemi-

sphere winter will see global prices

remain relatively weak this year amid

subdued global demand.

“[Wood Mackenzie] has been fore-

casting lower 2024 prices for much of

last year, especially compared to for-

ward curves, amid weak market fun-

damental expectations” said Massimo

Di Odoardo Vice President of Gas

Research at Wood Mackenzie. “Glob-

al LNG supply growth will remain

limited at 14 million tonnes (Mt), but

with Asian LNG demand still weak,

competition for LNG is unlikely to

heat up.”

Global funding and stronger policy

incentives are needed to scale clean

power, clean hydrogen and carbon cap-

ture around industrial clusters, accord-

ing to the ‘World Economic Forum

Net-Zero Industry Tracker 2023’.

The report calculates that transition-

ing to a more sustainable and carbon-

neutral future will require $13.5 trillion

in investments by 2050, particularly in

the production, energy and transport

sectors.

According to the report, the invest-

ment gure is derived from average

clean power generation costs of solar,

off-shore and on-shore wind, nuclear

and geothermal, electrolyser costs for

clean hydrogen and carbon transport,

as well as storage costs.

The Net-Zero Industry Tracker

2023, published in collaboration with

Accenture, takes stock of progress

towards net zero emissions for eight

industries – steel, cement, aluminium,

ammonia, excluding other chemicals,

oil and gas, aviation, shipping and

trucking – which depend on fossil

fuels for 90 per cent of their energy

demand and pose some of the most

technological and capital-intensive

decarbonisation challenges.

While the pathway to net zero in

these sectors will differ based on

unique sectoral and regional factors,

investments in clean power, clean hy-

drogen and infrastructure for carbon

capture, utilisation and storage

(CCUS) will be needed to accelerate

industrial decarbonisation across

most sectors.

“Decarbonising these industrial and

transport sectors, which emit 40 per

cent of global greenhouse gas emis-

sions today, is essential to achieving

net zero, especially as demand for in-

dustrial products and transport ser-

vices will continue to be strong,” said

Roberto Bocca, Head of Centre for

Energy and Materials, World Econom-

ic Forum. “Signicant infrastructure

investments are required, comple-

mented by policies and stronger incen-

tives so industries can switch to low-

emission technologies while ensuring

access to affordable and reliable re-

sources critical for economic growth.”

Headline News

Hard-to-abate industries need $13.5 trillion to

fast-track decarbonisation

Power sector “very close”

to peak emissions

Lewiner says acceleration

of clean technologies will

be “critical”

Global use of coal for power generation will start to decline by as early as this year, which

will in turn lead to a sustained fall in global emissions in the sector.

EU agrees provisional deal to

reform electricity market

THE ENERGY INDUSTRY TIMES - JANUARY/FEBRUARY 2024

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Americas News

Janet Wood

Financing has been completed for a

wind power and transmission line proj-

ect that will see a high voltage direct

current (HVDC) line built in south-

western USA. The project comes as a

joint industry project (JIP) is launched

to investigate the use of HVDC tech-

nology offshore.

Pattern Energy announced it had a

deal on $11 billion nancing that en-

compasses an array of nancial instru-

ments, including an integrated con-

struction loan, letter of credit facility,

term facilities, tax equity term loan

facility and a holding company loan

facility.

Its nalisation launched the construc-

tion of SunZia Transmission and Sun-

Zia Wind. SunZia Transmission is a 3

GW, 525 kV, 550 mile HVDC line,

linking central New Mexico to south-

central Arizona. It will transport

power generated by Pattern Energy’s

3.5 GW SunZia Wind facility, which

stretches across Torrance, Lincoln, and

San Miguel Counties in New Mexico.

Hunter Armistead, CEO of Pattern

Energy, said: “Our success in securing

nancing for the largest clean energy

infrastructure project in American

history sets a precedent for other ambi-

tious renewable initiatives crucial to

hastening our transition to a carbon-

free future.”

The project comes as consultant and

assurance provider DNV launched a

JIP with ten offshore wind and trans-

mission developers to identify changes

to electrical standards and standardisa-

tion needed to enable the connection

of HVDC transmission into the US

electricity grid.

The ten participants are Atlantic

Shores Offshore Wind, EDF Renew-

ables, Equinor, Invenergy, National

Grid Ventures, Ocean Winds, PPL

TransLink WindGrid, RWE, Shell and

TotalEnergies.

In early 2024, Phase one of the proj-

ect will be an inventory of key techni-

cal issues that stand in the way of the

use of HVDC transmission and priori-

tisation. DNV and the JIP participants

will use the ndings to raise awareness

of the barriers to the greater use of

HVDC transmission and the stake-

holder bodies who can help overcome

them. Through this effort DNV and the

JIP participants hope to reduce project

risks, accelerate deployment timelines,

and ensure that supply chain con-

straints are considered.

DNV’s recently published Energy

Transition North America report found

that the USA will not achieve its clean

energy goals without modernising its

power grid and forecast that more than

5900 miles of HVDC undersea trans-

mission cables are needed by mid-

century.

“To put it simply, there will be no

transition without transmission,” said

Richard S. Barnes, Region President,

Energy Systems North America at

DNV. “It doesn’t matter how much

clean power generation capacity is

online if there is no low-cost, reliable

way to get that energy to the grid.”

Chile is expanding development of its

extensive renewable energy resourc-

es. Solar power specialist Andes Solar

has announced a commercial agree-

ment with Portugal’s EDP Reno-

vaveis to co-develop three wind

energy projects with a combined

capacity of over 450 MW. The com-

panies plan to build the wind farms in

the Chilean regions of Nuble and Los

Rios. The projects are at different

stages of development and are expect-

ed to be in operation in between 2027

and 2030.

For Andes Solar, the alliance boosts

its development portfolio to more than

2 GW across Chile, while EDP Reno-

vaveis will expand its presence to new

regions, after arriving in the country in

2021.

Meanwhile, Chile’s huge Oasis de

Atacama project advanced when

Spanish renewables company Gren-

ergy Renovables signed an agreement

with China’s BYD Co Ltd to procure

1.1 GWh of batteries.

With a planned 4.1 GWh of batteries

and 1 GW of solar, Grenergy believes

Oasis de Atacama is the world’s largest

storage project. The rst phase is

slated for operation in 2024, and the

second in 2025, Grenergy said.

“The agreement with a leading com-

pany like BYD demonstrates our rm

commitment to energy storage and

represents a major step forward in

securing the supply needed to be able

to develop and build the battery proj-

ects we have recently announced,” said

Grenergy CEO David Ruiz de Andres.

Janet Wood

Solar power will be the fastest expand-

ing technology over the coming decade

in Argentina, Brazil and Chile, accord-

ing to new analysis from Wood Mack-

enzie, because of falling costs and the

rapid advances in batteries.

Wood Mackenzie’s ‘Southern Cone

Investment Horizon Outlook’ says

that, driven by advances in batteries

and lower costs, solar will outpace

wind growth rates. The total solar mar-

ket, comprising both distributed gen-

eration and utility-scale projects, is set

to grow by 48 GW, the report said,

while wind will add 31 GW of onshore

projects through 2033.

Total investment in new power gen-

eration will bring the total to around

400 GW in the three countries by 2033

and renewables will take the lion’s

share of investments in new power

supply, representing 81 per cent of

total capital expenditure. It highlight-

ed expansion in the non-regulated

market, and said in that context Brazil

stands out: it is due to add 46 GW of

non-regulated capacity in the upcom-

ing decade.

“Challenges to boost demand and

develop transmission capacity will be

the main obstacles to further power

market growth,” said Marina Azeve-

do, Senior Power Analyst for Wood

Mackenzie.

Grid congestion issues are being ad-

dressed in different ways.

In Argentina, the government incen-

tivises the private sector to invest in

new lines and infrastructure reinforce-

ment for guaranteed priority dispatch

for its power plants.

Brazil is increasing the frequency of

transmission auctions, and a boom in

infrastructure investments that will

come online by 2030 has already been

announced.

Finally, in addition to transmission,

Chile is advancing in regulation to spur

battery storage in an attempt to nd

faster solutions to deal with high levels

of curtailments that are creating eco-

nomic hurdles for renewable projects.

The report said that investment in gas

for power generation will decrease in

the region. Instead natural gas will be

used to increase industrial activity,

especially in Brazil and Bolivia.

Gas production will decline in Bo-

livia, while Argentina will account for

72 per cent of the forecast investment

in the gas market. Production in Brazil

will also increase.

The evolution in gas markets will

reshape the regional dynamics in the

next ten years, said Eduardo Sera-

phim, gas research analyst for Wood

Mackenzie. He explained: “The re-

gion will evolve from the current state

of Bolivia balancing Brazil and Ar-

gentina, and Argentina exporting

seasonally to Chile, to a state in 2033

where Argentina and Chile will be

integrated, Bolivia will be producing

only for its internal market and Brazil

will be supplied by domestic produc-

tion and by rm LNG offtake.”

Carbon removals and new nuclear are

both under investigation in Canada.

Deep Sky, a carbon removal project

developer, and Airhive, a UK-based

direct air capture (DAC) startup, have

partnered to deploy carbon removal

technology in Quebec, where Airhive

will deliver and install a modular DAC

unit for Deep Sky’s pilot facility in

2024.

Airhive’s technology combines a

uidisation process that makes static

solid particles behave as if uid with

carbon-absorbing rock minerals

reformed into small particles with

very high surface areas.

Damien Steel, Deep Sky’s CEO, said:

“We’re advancing the carbon removal

industry, one DAC unit at a time,”

while Rory Brown, Airhive CEO, said:

“At 1000 tonnes annual capacity, our

system will be one of the largest in-

stalled end-to-end DAC systems in the

world.”

Deep Sky’s facilities are located in

Quebec, a region with an abundance

of hydroelectric power and wind

power potential, as well as the geo-

logical makeup required for carbon

capture.

In Alberta, in contrast, power com-

panies are following Ontario in looking

at small modular nuclear reactors

(SMRs). Capital Power Corp. and On-

tario Power Generation (OPG) have

agreed to jointly undertake a two-year

feasibility study to assess their use.

OPG is already developing an SMR

at its Darlington site in Ontario. Ed-

monton-based Capital Power has

about 7.7 GW generating capacity at

30 facilities across North America.

US interest grows in HVDC connectors

Chile sees

agreements on wind

energy, solar and

storage

Energy ows set to be reshaped

in Argentina, Brazil and Chile

Canada looks at low-carbon generation and

carbon removal

Vineyard Wind exports its

rst power to the grid

Copenhagen Infrastructure Partners

and Avangrid have exported power

from Vineyard Wind to the New Eng-

land grid for the rst time. The project

expects to have ve turbines operating

at full capacity early in 2024.

“For the rst time we have power

owing to the American consumers

from a commercial-scale wind project,

which marks the dawn of a new era for

American renewables and the green

transition,” said Tim Evans, Partner at

CIP, and Head of North America.

Avangrid CEO Pedro Azagra said:

“We’ve arrived at a watershed mo-

ment for climate action in the US, and

a dawn for the American offshore

wind industry.”

The project will consist of 62 wind

turbines generating 806 MW. It began

offshore construction in late 2022,

achieved steel-in-the-water in June,

and saw the country’s rst offshore

substation completed in July.

Meanwhile, regulators in Louisiana

have approved operating agreements

allowing Vestas Wind Systems of Den-

mark and Japan’s Mitsubishi to de-

velop offshore wind projects in state

waters. The decision greenlights dif-

ferent property agreements with Mit-

subishi’s Diamond Offshore Wind and

Vestas’s Cajun Wind. “One agreement

offers more on the front-end, while the

other pays more over time. These being

the rst wind energy operating agree-

ments for the state, we were breaking

new trails in negotiating,” said Tom

Harris, Louisiana Department of

Natural Resources (DNR) secretary.

n Renewables set to lead power sector investments

n Gas ows to change as Argentina invests and

Bolivia declines

n Onshore link to connect New Mexico and Arizona over 500 miles

n Barriers assessed to deploy thousands of miles of links offshore

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with integration of intermittent re-

newable sources and battery storage.

The rise of these varied power

sources will require critical infra-

structure to operate efciently and

maintain operational exibility. They

see microgrid management systems

as key to enhancing energy resilience,

reliability, and sustainability, espe-

cially in critical infrastructure and

remote locations. Currently, mi-

crogrid management systems are

strategic; however, as sustainability

initiatives accelerate, they will be-

come an industrial requirement for

most industrial owner-operators.

As the goal of the microgrid man-

agement system is to centralise the

ow of electricity data, controls, and

forecasts, this in turn unlocks the fol-

lowing key use cases for both mi-

crogrid and self-managed grid opera-

tions, such as:

n Power reliability: EPCs can design

with power reliability in mind, en-

hancing the reliability of power sup-

ply and support local power network

‘islanding’ by balancing on-site pow-

er generation and storage. During

early conceptual design phases, the

EPCs can look at the trade-offs be-

tween capex (capital expenditures)

and opex (operating expenditures) to

determine if adding microgrids would

be feasible. By allowing facilities the

exibility to safely turn down facili-

ties, they can avoid the negative im-

pact of sudden blackouts.

n Net zero journey: By including the

microgrid energy management solu-

tion to an EPC’s project track record,

they can support their clients in meet-

ing their carbon neutrality objectives

by intelligently enabling incorpora-

tion of on-site renewable power gen-

eration and storage. Owner-operators

utilising traditional technologies may

use microgrids or deploy renewable

generation on-site to support their

transition toward electrifying equip-

ment such as renery pumps, com-

pressors, and other equipment to re-

duce carbon emissions.

n Financial performance: Another

key use is to improve the economic

outlook of an industrial facility by op-

timising power generation mix and

storage with load demands while cre-

ating new revenue streams through

active market participation. With

some degree of energy independence

from the power grid, companies can

generate revenue by selling power

back to the grid during peak loads

while also guaranteeing smooth op-

erations during power grid failures

through isolation from the grid.

n Decision support: Finally, EPCs

can support owner operators with risk

management through these industrial

microgrid management systems as

they can be instrumental in monitor-

ing the state of microgrid compo-

nents, controlling the operation of

lectrication is accelerating

across all economic sectors as

the world comes to grips with

increased demand for resources, en-

ergy, and sustainability while meeting

net zero targets. There is an industry-

wide drive towards increased exploi-

tation of renewables, shifting from

conventional hydrogen to green hy-

drogen, and electrication of units

such as crackers. However, these can-

not be adopted effectively without

advanced digital energy management

solutions to ensure these assets per-

form reliably, at lowest cost, and with

lowest carbon intensity. The existing

grid will need to quickly expand and

evolve to support new demand pat-

terns, address grid congestion, and

support emission management.

Companies are looking for a catego-

ry of digital solution, one we call a

microgrid management system. This

combines aspects of distributed ener-

gy resource management systems

(DERMS), aspects of and demand-

side utilities management.

Another key concern among indus-

try experts is the growing vulnerabil-

ity and complexity of an increasingly

dynamic and distributed grid of

power generation, storage and con-

sumption, especially as many re-

gional grid operators have been slow

to adopt digital technology. Mi-

crogrids and microgrid management

systems have emerged as key invest-

ment areas to ll the regional void

while meeting demand from large

power consumers, communities, and

localities.

Engineering, procurement and

construction (EPC) companies have

a major role to play in the uptake of

industrial energy management and

microgrid solutions. Owners do not

have the subject matter experts nor

strategic direction to manage, design

and implement these systems on

their own.

Additionally, the pace with which

the industry needs to adopt solutions

in this area provides a signicant op-

portunity for EPCs who build up both

the supply-side and demand-side en-

ergy management expertise, as well

as the ability to replace aging power

utilities with these more capable and

advanced technologies.

The emergence of microgrid man-

agement systems are being accelerat-

ed by the growing electrication of

energy as well as increases in carbon

taxes. Microgrid management sys-

tems are an important strategic ele-

ment for the industrial sector to ad-

dress the key issues of energy security,

operational efciency, and environ-

mental impacts.

The US Energy Information Ad-

ministration (EIA), anticipates that by

2050, the capacity for global electric-

power generation could see an in-

crease ranging from 50 per cent to

100 per cent, while electricity genera-

tion itself is expected to grow by ap-

proximately 30 per cent to 76 per

cent, almost all of that coming from

renewables.

To meet this growing regional mar-

ket demand for electric power with

high resiliency and reliability, it is

necessary to ramp up electricity re-

sources, particularly from renewable

origins. An estimated investment of

over $1.5 trillion a year in capacity,

grid improvements, low-carbon gen-

erating capacity, and transmission

and decentralised distribution will be

needed to enable suitable electrical

generation. In planning, energy com-

panies will need to consider the cur-

rent situation, that approximately 770

million people cannot access afford-

able electricity today, most of them in

sub-Saharan Africa (International

Energy Agency, 2022).

More organisations are decarbonis-

ing assets to achieve carbon abate-

ment pledges using electrical power.

However, there are challenges ahead.

Grids must be expanded and mod-

ernised to rapidly support distributed

(renewable) power, power storage

and cybersecurity resiliency. Ad-

vanced power distribution manage-

ment and distributed energy manage-

ment (DERMS) through digitalisation

is crucial to keep electric power sup-

ply reliable for all consumers and

works in favour of the trend toward

distributed and storage.

For critical industrial assets, mi-

crogrid management systems can

optimise and reduce the carbon

footprint of the asset owner, and en-

sure that vital assets do not suffer

sudden electric supply loss. This in-

creased reliability and resilience

cannot be overstated as downtime

due to power outages can result in

nancial losses. Additionally, these

management systems controls allow

for optimised energy management,

leading to signicant cost savings on

energy consumption.

The nancial impact, the increased

exibility of operations and sustain-

ability benets are signicant but as

cybersecurity becomes the next sig-

nicant issue, microgrids will also

play a key role by providing an extra

layer of protection that enhances se-

curity and protects critical infrastruc-

ture. Lastly, they also alleviate stress

from regional power providers as in-

dustrial users will be able to manage

their own power generation becoming

an additional source of buffering for

the regional grid.

EPCs are working with owner op-

erators to deliver these solutions.

With the rush of investments into new

innovations by joint-ventures, new

partnerships, start-ups, and private

equity rms there will be more inte-

gration needed to merge purchased

power and onsite cogeneration along

microgrid assets, and providing real-

time data and analytics to operators.

This enhances the situational aware-

ness of on-site grid operations

through real-time visualisation,

trending, alarms and controls to sup-

port strategic decision-making. This

information can then be used to opti-

mise maintenance schedules and pre-

vent unplanned outages by identify-

ing potential problems.

As with any technology, it is neces-

sary for owner-operators to ensure

that they work with EPCs capable of

designing these solutions from the

planning project phases. Planning is

fundamental to ensure process control

and guarantee performance during

operations.

Ultimately, microgrids are increas-

ingly available but they need to be

effectively combined with the right

digital solutions to make them effec-

tive within the energy sector. The

right digital solution is a cohesive,

intelligent scheme that encompasses

efciently designed microgrids inte-

grated with regional grids.

This approach promotes entrepre-

neurial investments in new power

generation strategies and connected

storage innovations. In addition to

battery storage, innovations such as

commercialisation of hydrogen fuel

cell storage can be integrated easily.

Added to this, scheduling solutions

can be used to improve microgrid

operations for long-term planning,

optimise the planning of microgrid

generation resources versus procure-

ment of energy from the grid, and

enhance maintenance strategies of

microgrid assets.

The rapid emergence of microgrids

marks a signicant development in

the energy sector. By offering a ex-

ible, efcient, and resilient approach

to energy management, microgrids

are poised to play a critical role in

meeting the growing global energy

demands. We are seeing a growing

number of use cases in our systems to

support microgrids today, demon-

strating the practical applications of

the technology. Beyond the industrial

site opportunities discussed, other

emerging areas include airports, hos-

pitals, educational complexes, min-

eral processing, and critical infra-

structure for government facilities.

As the world grapples with the

challenges of electrication and the

need for sustainable energy solu-

tions, microgrids emerge as a beacon

of innovation and practicality. For

EPCs and their owner-operator cli-

ents, microgrids represent not just a

response to current challenges but a

proactive step towards a more sus-

tainable, efcient, and interconnect-

ed energy future.

Judith Ponniah is Industry Marketing

Director at AspenTech.

THE ENERGY INDUSTRY TIMES - JANUARY/FEBRUARY 2024

Industry Perspective

The shift to greater electrication and clean energy sources requires the use of digital energy management

solutions. More specically, it calls for the rapid deployment of microgrid management systems, says AspenTech’s

Judith Ponniah.

Microgrid management is

crucial in a clean energy world

Ponniah: We are seeing a

growing number of use cases

in our systems to support

microgrids today

s the dust settles after the

controversial, frustrating, yet

historic COP28 at the close of

2023 we are left with perhaps the

best outcomes we’ve seen from the

annual gathering so far. Unfortunate-

ly, the bar for what makes a success-

ful COP remains extremely low, as

agreements – although reached –

seem to consistently lag behind the

pace needed for meaningful change.

The key question on COP28’s

agenda was whether a consensus

could be reached on an approach to

fossil fuels – would they be phased

down, or phased out? President Al

Jaber’s pre-conference focus on the

rise of renewable energy was persis-

tent, declaring that COP should set a

target of doubling energy efciency

and tripling global renewable energy

generation by 2030. Many criticised

this as a tactic, employed to avoid

addressing action on fossil fuels.

While the rst draft of the text in-

cluded the ill-fated word “could”, of-

fering countries more of a choice in

the matter than would be feasible to

reach meaningful targets, the nal

text replaced it with a call for the

world to “transition away” from fos-

sil fuels. While still a weaker instruc-

tion than many would like, what is

remarkable is the new denition this

has prescribed to fossil fuels.

Some reserves of fossil fuel will

never be developed and are now

what is described as a stranded asset.

Germany’s climate envoy, Jennifer

Morgan, conrmed as much: “Now

the signals are clear. If you’re an in-

vestor, the future is renewable. Fossil

fuels are stranded assets.”

For a country that is 78 per cent re-

liant on fossil fuels for its energy –

oil, gas, and a bit of coal – this is a

development that leaves the UK ex-

posed, but equally presents great op-

portunity. Its dependence on oil and

gas has come into stark visibility

over the last 18 months, as we have

faced the biggest global fossil fuel

price shock since the 1970s with

Russia restricting the supply of gas

to continental Europe.

Not only is it important that con-

sumers adopt renewables – a large

piece of the puzzle will be incentiv-

ising investors to do the same. Long-

term, the most cost-effective path to

decarbonisation lies in the markets,

which means that the government

will need to assist comprehensively

in helping the industry secure the

investment needed to make the low-

carbon transition. Providing certain-

ty over net zero ambitions for

industrial sectors; deploying funding

mechanisms to support the use of

carbon capture technologies; and the

potential of using carbon pricing as a

tool to send a clear market signal are

all methods of encouraging growth

of new, low-carbon sectors in the

UK, and investor interest in these

sectors as a result.

From an industrial perspective, de-

carbonising is a core part of the

government’s plan for the green rev-

olution. The UK’s industrial outputs

are vitally important to its economy,

contributing £170 billion each year

and providing 2.6 million jobs. Us-

ing the next decade to lay the foun-

dations for industrial decarbonisa-

tion is more crucial than ever off the

back of COP28, following the sign-

ing of fossil fuel combustion’s death

warrant.

Hydrogen is an exciting space for

the low-carbon movement right now,

caveated with the fact that produc-

tion at signicant scale is yet to be

achieved. In January 2023, the Ger-

man and Norwegian governments

agreed to cooperate on development

of clean hydrogen supplies and car-

bon capture technology – a positive

sign for innovation and development

of the energy class. A supportive en-

vironment is needed for the wide-

spread adoption of hydrogen technol-

ogies, something that will take

business, policy, and community col-

laboration to achieve. As a fuel, hy-

drogen produces only water vapor

when used in fuel cells, making it a

considerably cleaner alternative to

traditional fossil fuels – and poten-

tially a gamechanger in the UK’s

clean energy production, transporta-

tion emissions, heating and power

generation, energy storage, and re-

newable electricity grid balancing.

Carbon Capture Usage and Storage

(CCUS) is a technology aimed at

capturing carbon dioxide (CO

)

emissions from industrial processes

and power generation, preventing

them from being released into the at-

mosphere. Crucially, CCUS creates

a path for industries which cannot

decarbonise at the pace we require –

like cement, steel and chemicals – to

join the green revolution in a man-

ageable way. In October 2023, UK

Secretary of State Claire Coutinho

outlined the potential for carbon

capture in her opening speech at the

Carbon Capture & Storage Associa-

tion annual conference. Her an-

nouncements put the UK on track to

achieve between 20 and 30 million

tonnes of captured and stored carbon

dioxide a year – the equivalent of

taking 4-6 million cars off the road

each year from 2030. If this target is

achieved, it will support 50 000 jobs

by 2030, and add £5 billion to the

economy by 2050.

Despite the opportunities presented

by hydrogen and CCUS, transition-

ing to low carbon alternatives is not a

feat entirely centered around new

classes of energy. Supporting exist-

ing industrial sites to maximise their

energy and resource efciency is a

critical strategy in decarbonising the

UK’s energy sector – for example,

initiatives like comprehensive energy

audits and efciency assessments,

support for businesses in adopting

energy-efcient technologies and

equipment (nancial incentives or

grants can signicantly help in off-

setting these initial costs), encourag-

ing the adoption of circular economy

principles (where waste materials are

viewed as valuable resources), and

both public and private investment in

R&D initiatives to speed up the de-

velopment of innovative technolo-

gies. Furthermore, simple changes

like the implementation of energy

management and monitoring systems

– required to track energy consump-

tion – can go a long way towards

providing industrial sites with the

real-time information they need to

make changes.

Perhaps slightly less exciting, but

equally as important and innovative

as the suggestions above, is the need

for a set of transparent, standardised

clean energy assessment guidelines –

creating a trustworthy compliance in-

dustry to inform decision making by

investors, and legitimising invest-

ment in the industry overall.

Targeting industrial clusters is also

important. Industrial clusters are

places where related industries have

co-located, and are an area of consid-

erable investment from the UK gov-

ernment in its overall green energy

strategy. The benets of industrial

clusters stem from the utilisation of

shared infrastructure, opportunities

for learning, and innovation sharing.

There are a number of industrial

clusters of various sizes, locations,

and emission levels across the UK,

notably in Humberside, South Wales,

Merseyside, Grangemouth, Teesside

and Southampton.

Many of the clusters are in relative-

ly deprived regions and often act as a

driver of prosperity for the surround-

ing area, as key employers pay above

the UK median wage. Targeting the

UK’s industrial clusters as the rst

point of call for the consultation, en-

gagement and rollout of low carbon

improvements makes sense from an

efciency perspective, and if suc-

cessful, will help the UK to make the

most progress towards feeling the

benets of clean growth. Under-

standably, however, this transition

will not be without its challenges.

Most notably, the success of low

carbon initiatives in the UK’s indus-

trial clusters hinges on the active par-

ticipation of the community. Deci-

sion making, project development

and transition timelines must have a

decent degree of buy-in from local

communities, else they face resis-

tance and longer-term challenges to

full integration. High initial costs, so-

cial inequalities, public education

and technological awareness should

all be key considerations in the gov-

ernment’s approach to decarbonising

industrial clusters across the UK.

COP28 highlighted that traditional

fossil fuels are ultimately in terminal

decline – a fate that has been written

on the wall for some time now.

Thankfully, the UK has already made

signicant strides towards a low-car-

bon energy sector, with measures in

place to help the industry secure the

investment needed to make the low

carbon transition. Hydrogen, CCUS,

and supporting the transition of exist-

ing industrial sites and clusters are

key focuses for the government

throughout this transition, although

an increased focus on creating a

trustworthy compliance industry and

fostering active community engage-

ment would be benecial for acceler-

ated change. The UK’s industrial

outputs are vitally important to its

economy – so to watch the sector

make the green transition is of huge

importance not just to overall emis-

sions, but to its position as an inno-

vative leader on the world stage.

Laying the

foundations

for industrial

decarbonisation is

more crucial than

ever off the back of

COP28.

Edison Group’s

Andrew Keen,

analyses the UK’s

approach.

Pathways to a low-carbon

industrial sector

THE ENERGY INDUSTRY TIMES - JANUARY/FEBRUARY 2024

Energy Outlook

Keen: transitioning to low-carbon alternatives is not entirely

centered around new classes of energy

Targeting industrial clusters

for the rollout of low carbon

improvements makes sense

from an efciency perspective

once in 2024. Depending on the di-

rection of ination, it is possible that

the two may actually cut rates mul-

tiple times in 2024. With further cuts

expected in 2025. At the same time,

another general expectation is that

rates will not go back to the virtually

zero per cent level, last seen in the

rst half of 2022.

Higher rates impact nancial in-

vestors and corporations alike.

Think-tank Positive Money Europe

argued in an article that there was

evidence that higher rates do indeed

slow down renewable energy invest-

ments. For example, high nancing

costs had negatively affected the

construction of new offshore wind

farms in Belgium and the UK. These

projects attract corporate invest-

ment, nancial investors, or groups

of investors.

Another example is from US renew-

able energy developer NextEra Ener-

gy Partners. Last September, it ad-

justed its three-year growth target

downward blaming tighter monetary

policy and higher interest rates. A

Reuters headline conrmed this im-

pact, stating: “Renewable energy in-

vestors squeezed by higher interest

rates, costs”, in an article related to

S&P Global’s 2023 annual CER-

AWeek, a renowned energy markets

conference.

All this begs the question: will the

multiple rate cuts in the coming

he huge additional capacity of

renewable energy in recent

years is undeniable. A variety

of data indicates that the push will

continue, if not accelerate, in the years

to come. One example of many, is a

2023 report by the International Re-

newable Energy Agency (Irena),

which illustrates that between 2015

and 2020 about $650- 800 billion was

invested annually on transition-relat-

ed technologies. In the following two

years, funds invested jumped to $1.1

trillion and $1.3 trillion – increases of

31 per cent and 19 per cent year-on-

year, respectively.

The negative economic impact of

the Covid pandemic and signicant

geopolitical disruptions did not halt

the advance. Detailed data for 2023 is

yet to be published but so far, some of

the data indicates that last year was a

record year. The International Energy

Agency (IEA) reported in 2024 that

the 2023 capacity increase was 510

GW, a rise of 50 per cent versus 2022.

The chief engine of the advance was

China while other regions such as

Brazil, the EU and the US also logged

in record high additions.

There are still many stumbling

blocks to the rapid development of

renewable energy. In its 2024 report,

the IEA mentions a number of chal-

lenges. In developed countries, they

include the addressing of policy un-

certainty driven by the global econo-

my’s fragile state, grid infrastructure

shortcomings or under-investment,

and administrative and procedural

hurdles. Issues in developing coun-

tries involve access to nancing,

raising governance levels, and im-

proving regulatory frameworks.

Objectively, none of these obstacles

are new. Developers have faced many

of these drawbacks for a number of

years. Also, broadly speaking, many

nations are making slow but positive

changes on some of these fronts. An-

other challenge highlighted by some

is the supply chain bottlenecks. It is a

problem which rst appeared during

the Covid pandemic and then wors-

ened when Russia went to war by in-

vading Ukraine.

These disruptions have affected the

delivery of equipment as well as that

of the raw materials to the manufac-

turers of the equipment. Now, the

supply chain bottlenecks have seem-

ingly peaked as the Covid pandemic

subsided. The current Red Sea navi-

gation crisis may negatively put

pressure on renewable energy equip-

ment supply chains, this is likely to be

resolved in the short-term.

Another prominent challenge is the

higher cost of capital. A subject which

is not as much of a headline grabber

as some of the others mentioned. The

substantial increase in the cost of

borrowing money in the US, the EU

and other countries has had a detri-

mental effect on the renewable energy

industry (see box for details on how

interest rates impact renewable energy

investments).

The US Federal Reserve raised in-

terest rates in March 2022, the rst

time in over three years. It subse-

quently hiked them 11 times, with

the last increase announced in July

2023. The European Central Bank

(ECB) embarked on a series of ten

interest rate hikes starting in July

2022, through September 2023. The

rate jumped to 5.50 per cent from

0.25 per cent in the US and to 4.50

per cent from zero per cent in the EU.

The ripple effect of the hikes ex-

tended beyond the US and EU,

reaching other important nancial

markets like Australia, India, and the

UK.

In contrast to the past few quarters,

the outlook for interest rates has

brightened considerably. A recent

headline in the Financial Times

stated: “Gearing up for the year of

interest rate cuts: central bankers

get their scissors out”. This echoes

the thoughts of the majority of nan-

cial markets experts. They expect

both central banks to cut rates at least

quarters boost investments? They

will, albeit the outcome will not be

immediate. There will be a lag effect.

Firstly, for investments in brand

new projects, corporations and nan-

cial investors may take a wait and see

approach as to the extent of the rate

cuts (i.e. why borrow today at 5 per

cent when you know you can borrow

tomorrow at 4 per cent). Secondly, for

existing projects and facilities, a

change in the rates do not necessarily

immediately affect the rate of invest-

ment return. The project may already

have loans in place being paid a cer-

tain interest rate, possibly xed over a

number of years, as well as other

types of nancing, such as sustain-

ability-linked bonds. It will take time

before unravelling or renancing the

project’s borrowing.

In essence, the expected rate cuts

starting sometime in 2024, will raise

the amount of renewable energy in-

vestments though the boost may be

delayed by a few quarters after the

cuts begin.

Joseph Jacobelli is Managing Part-

ner at single-family ofce Bougie

Impact Capital and at direct invest-

ments advisor actE Investments. He

is an Asia-Pacic energy markets

expert with over 30 years experience,

the author of‘Asia’s Energy Revolu-

tion’ and host of ‘The Asia Climate

Finance Podcast’.

THE ENERGY INDUSTRY TIMES - JANUARY/FEBRUARY 2024

Financing Renewables

Interest rates in

major markets may

have peaked. A

majority of capital

markets experts are

forecasting multiple

cuts in the US,

the EU, and other

countries in the

coming quarters. The

fall will lower the cost

of capital and the

required investment

returns for renewable

energy projects. This

bodes well for the

growth momentum of

the sector, which has

been expanding at a

fast pace despite the

many hurdles, writes

Joseph Jacobelli

Renewable energy set to soar as

interest rates fall

Global investment in transition-related technologies

Note: see source for important details on the data.

Source: International Renewable Energy Agency & Climate Policy Initiative (2023). Global Landscape of Renewable

Energy Finance 2023. [online] www.irena.org, Abu Dhabi: International Renewable Energy Agency, p.10.

US and EU interest rates

Notes: US – Federal Reserve fund

rates determined by the Federal

Open Market Committee, a branch

of the Federal Reserve System;

EU – European Central Bank (ECB)

interest rate on the main renancing

operations (MRO), which provide

the bulk of liquidity to the banking

system.

Sources: US Federal Reserve and

ECB.

Interest rates and the cost of renewable energy

■ The cost of producing electricity from renewable energy sources like solar and wind power is inu-

enced by equipment costs, interest payments, and O&M (operations and maintenance).

■ Unlike fossil fuels, which have uctuating fuel costs, renewable energy costs are more stable.

■ However, interest rates can meaningfully impact the overall cost of the output per kilowatt-hour

(total electricity produced/total costs) given the large upfront investment.

■ Example: a renewable energy project developer borrows 80 per cent of the cost of a $1 million so-

lar farm to be repaid over seven years. The interest payments at a one per cent rate would total $56

000. However, at a 7 per cent rate, the interest payments would skyrocket to $392 000. A difference

of 600 per cent.

Source: Author

arnessing seawater to gener-

ate electricity is not a new

idea. The roots of this tech-

nology, called Ocean Thermal Ener-

gy Conversion (OTEC), can be

traced back to the 19th century when

scientists and inventors began con-

templating the possibility of using

the temperature difference between

the ocean’s surface and its deeper

layers for power generation.

The rst person to envision this

was French physicist Jacques Ar-

sène d’Arsonval in 1881, and since

then, several demonstrations world-

wide have proven the concept, in-

cluding the operating OTEC dem-

onstrations in Hawaii, USA, and in

Okinawa, Japan.

Although different countries have

tried to implement the technology

over the years, OTEC ended up be-

ing forgotten in the renewable ener-

gy mix, due to several factors. Partly

due to a lack of investment and pop-

ularisation of other sources, but the

application of OTEC in economies

that were funding renewable energy

R&D advancement was limited.

OTEC has experienced waves of in-

terest over time, notable in the late

‘70s and again in the early 2010s.

It appears that another wave of

OTEC interest is underway, in part

thanks to the global energy transi-

tion, but this could also be in part

due to British startup Global OTEC.

Drawing on past OTEC experi-

ments, the company found an inno-

vative solution to reduce costs and

make the technology more viable.

Focusing on a market left behind in

the renewable energy transition, the

Small Island Developing States

(SIDS), the company scaled down

the structure with its rst-of-a-kind

oating OTEC platform, named

Dominique. This not only reduced

the costs of OTEC implementation

but also ensured that SIDS could -

nally generate clean electricity with

a technology that meets their needs

and ts their specicities.

Set to be installed in the African

country of São Tomé and Príncipe,

in the Gulf of Guinea, Dominique

will generate 1.5 MW of clean elec-

tricity, replacing expensive and pol-

luting diesel generators. Subsequent

platforms will be installed to in-

crease power generation and meet

the full demand of the country and

its more than 230 000 people. The

commissioning of Dominique is ex-

pected to start by the end of 2025.

The project’s next step is to con-

duct a seabed survey so that the de-

tailed design of the project-specic

system can progress. Once com-

plete, the construction and installa-

tion can begin.

Global OTEC plans to replicate

this project in other SIDS, with

countries such as Belize, Fiji, Grena-

da, and Tonga already expressing in-

terest in the technology. “A pipeline

of 700 MW of OTEC projects has

been identied through the Global

Ocean Energy Alliance across tropi-

cal islands with little choice but to

continue importing diesel fuels for

their baseload power,” highlights

Global OTEC Founder and CEO

Dan Grech.

On the technical front, the project

has made important advancements

in 2023, with the Approval in Prin-

ciple (AiP) from Lloyd’s Register

(LR) for the OTEC platform. The

LR AiP process serves as an early

validation, instilling condence in

technology developers by conrm-

ing their capability to align with ex-

isting codes and standards. This ac-

knowledgment underscores Global

OTEC’s commitment to meeting

the structural prerequisites for

OTEC technology.

Another noteworthy achievement

was the attainment of a Certicate

of Approval for the Cold-Water Ris-

er installation methodology essen-

tial for the offshore OTEC platform.

This crucial step in the design pro-

cess involved leveraging estab-

lished standards from the oil and

gas industries, ensuring a robust ap-

proach to OTEC deployments.

The certicate, issued by the Ma-

rine Warranty Surveyor company

ABL Group, was particularly im-

portant given the technical chal-

lenges faced by OTEC installations

and the long history of OTEC’s un-

successful implementations.

“Thanks to the oil and gas sector,

we are able to learn from experienc-

es spanning several decades of de-

signing, installing and operations in

the ocean. The standards and regula-

tions as a result of this industry low-

er the risk and improve the invest-

ment case for most ocean-based

renewables. Due to OTEC’s need for

oating platforms and deep-water

riser pipes, our technology particu-

larly benets from this,” said Grech.

OTEC has the potential to de-

crease energy costs and stabilise the

price of electricity, reducing the fre-

quency of blackouts and preventing

economic shocks from political

events while helping islands meet

the UN’s Sustainable Development

Goals (SDGs).

In contrast to other clean energy

sources requiring extensive island

land use and weather-dependent op-

erations, OTEC’s offshore founda-

tion ensures a continuous, 24/7

electricity supply. Leveraging the

consistent warmth of surface seawa-

ter day and night throughout the

year, OTEC outshines other renew-

ables, with 1 MW of installed

OTEC capacity equivalent to 5 MW

of solar power or 10 MW of wind

power. Global OTEC’s innovative

strides mark a pivotal chapter in the

resurgence of OTEC technology,

poised to reshape the renewable en-

ergy landscape for island nations.

OTEC harnesses the vast energy

potential stored in the world’s

oceans. During an average day, the

60 million km

on the surface of the

tropical area of the ocean absorb one

quadrillion megajoules of solar ener-

gy. To release the same amount of

energy through fossil fuels, we

would need to burn 170 billion bar-

rels of oil.

Operating within a closed cycle,

the Global OTEC system navigates

pressures ranging from 10 bar to 6

bar, with ammonia as the chosen

working uid. Temperatures of 24°C

and 11°C correspondingly facilitate

the vaporisation and condensation

processes. This perpetual cycle, fu-

elled by the temperature differential

between warm surface seawater and

cold deep seawater, powers a tur-

bine, generating mechanical energy

for a conventional electricity genera-

tor. This continuous and cyclical

process allows for a consistent and

reliable power output, as the tropical

ocean waters remain warm day and

night, all year round.

Because of that, OTEC can address

the intermittency issues associated

with some other renewable energy

sources, like solar and wind. And as

the structure is positioned offshore,

there is minimal land impact. Plus,

switching fossil fuels to clean energy

allows the countries to stabilise the

price and even lower electricity

costs.

In its pursuit of a full-scale com-

mercial OTEC platform, 500 kW

turbines are employed, strategically

chosen to optimise system efcien-

cy. The design incorporates a robust

steel hull, ensuring ample space for

equipment and pipework. Unlike a

concrete hull, this steel structure al-

lows for under deck refrigerant stor-

age, maintaining a smaller form fac-

tor. The planned dimensions for the

platform are approximately 90 m x

28 m x 5.5 m, for more efciency

and functionality.

During the International Vienna

Energy and Climate Forum last No-

vember, advanced concepts of Dom-

inique were unveiled. ‘‘This design

evolution reects our team’s contin-

uous efforts to enhance functionality

and cost-effectiveness of OTEC, as

we introduced our proprietary modu-

lar concept for the platform’s power

generation systems,” said Grech.

Delving into the structural specif-

ics, the barge is designed with two

decks. Employing a non-redundant

4-point spread moored conguration,

the barge’s positioning for the São

Tomé and Príncipe project involves

mooring approximately 10 km off-

shore. The location specicity con-

siders varying depths and bathyme-

try across different areas. While a

disconnectable riser is not deemed

necessary due to calm sea states, a

proprietary disconnection process for

severe weather scenarios ensures

swift disengagement with minimal

vessel assistance.

PLOTEC is a pan-European con-

sortium comprised of Global OTEC

with six other contributors: Agru,

Cleantech, University of Plymouth,

PLOCAN, WavEc, and Quality

Culture. Thanks to Horizon Europe

funding, the consortium is pushing

the boundaries of ocean energy into

operations in tropical revolving

storm zones.

Using expertise and standards

honed through the offshore oil and

gas sector, analysis of severe sea

states has guided the design of a cy-

lindrical hull capable of surviving in

the Caribbean and Pacic oceans. A

physical demonstration is scheduled

for Q2 2024 in the Atlantic Ocean,

ahead of the summer’s more turbu-

lent metocean conditions. The struc-

ture will validate the performance of

the plant in real-world oceanic con-

ditions against the simulation data.

Ocean Thermal

Energy Conversion

(OTEC) is seeing

another wave of

interest.

Global OTEC’s

project in the African

country of São Tomé

and Príncipe, aims

to demonstrate

this renewable

technology, which can

deliver consistent and

reliable power output

all year round.

First-of-a-kind oating OTEC

platform will generate 24/7 clean

electricity

THE ENERGY INDUSTRY TIMES - JANUARY/FEBRUARY 2024

Technology Focus

OTEC cycle diagram

Dominique will generate 1.5 MW of clean

electricity, replacing expensive and polluting

diesel generators

THE ENERGY INDUSTRY TIMES - JANUARY/FEBRUARY 2024

Final Word

uclear energy has always made

for a divisive and murky topic.

But the recent resurgence in

ambition to build new plant, driven by

climate change and geopolitics, looks

set to cloud the issue still further.

During the COP28 climate summit,

for the rst time nuclear energy was

formally specied as one of the solu-

tions to climate change in a COP

agreement. The summit also saw a

landmark declaration by 22 countries

to triple nuclear capacity by 2050, with

two more countries, Armenia and

Croatia, later signing the declaration.

According to International Energy

Agency, by 2025, nuclear power

generation is forecast to reach an all-

time high globally. And over the last

couple of months there has been a spate

of announcements, with several

countries around the world commit-

ting to plans to start-up or ramp-up

large-scale nuclear power as part of

their strategy to tackle global warming

and at the same time reduce depen-

dence on fossil fuel imports for elec-

tricity generation.

Certainly there has not been this

level of vocal government support for

nuclear in decades.

In late November, Poland approved

the development of its second large

nuclear power plant. The project,

which follows another announced just

over a year earlier, is to be built in the

Patnów-Konin region, with construc-

tion expected to begin in 2026. The

projects are part of a plan outlined by

the Polish Ministry of Climate and

Environment, which aims to reduce

coal dependence by building four to

six nuclear reactors with a total capac-

ity of 6-9 GW between 2026 and the

mid-2040s.

Meanwhile, France is preparing a

new energy bill that favours the further

development of nuclear power and

also recently said it is cooperating with

Czechia to nance joint nuclear en-

ergy projects under a new agreement

between the Czech Technology

Agency and the French National Re-

search Agency.

But perhaps the most signicant

news came from the UK with the an-

nouncement of the biggest expansion

of nuclear power for 70 years. The goal

is to quadruple UK nuclear power by

2050 up to 24GW. The UK is also

investing in technology to reduce

Russia’s dominant position in nuclear

fuel production. The government says

it will invest up to £300 million in the

production of the fuel required to

power high-tech new nuclear reactors,

known as HALEU, currently only

commercially produced in Russia.

Plans to build a new eet of reactors

for the UK have been around for

nearly 20 years but the programme has

been plagued by cost overruns and

delays, and the withdrawal of several

private companies as successive

governments have struggled to nd a

nancing model.

The bill for the Hinkley Point C reac-

tor under construction in Somerset is

now being recalculated. Its costs have

climbed to £35 billion in 2015 prices,

almost double the original forecast of

£18 billion in 2016. In today’s money

Britain’s rst new nuclear plant in 30

years could cost £46 billion. At the

same time its long-delayed opening,

currently scheduled for June 2027, is

likely to be delayed once more to 2031.

Such experiences, although perhaps

not to this degree, are fairly common

for large scale nuclear, and has di-

vided views on the role that nuclear

should play.

Dr Doug Parr, Chief Scientist for

Greenpeace UK, said: “Every few

months the government makes a

grandiose public announcement about

the future nuclear in the hope that a

major investor will believe the hype

and step up to fund this 20th century

technology, but it isn’t working. The

energy industry knows that the eco-

nomic case for slow, expensive nucle-

ar just doesn’t add up, and the future

is renewable.

“This vague, aspirational announce-

ment with it’s unevidenced claims of

cheap energy is unlikely to change

their minds when there are real reactors

overshooting their massive construc-

tion budgets and showing them the

truth. But it will cause anxiety amongst

communities who may be ngered as

potential sites for new reactors, and it

will cause more confusion, uncer-

tainty and delay over the investment

we need in the real solutions: renew-

able energy, efciency and an up-

graded grid.”

According to Capgemini’s World

Energy Markets Observatory annual

report 2023 published at the end of

November, Nuclear capacity will have

to more than double by 2050 to

achieve net zero carbon. This means

reaching 870 GW of capacity by 2050,

up from 390 GW today. Achieving

this, it said, will require not only the

development of large reactors and

SMRs but also a commitment to ex-

tending the life of current reactors.

When assessing the three pathways

for increasing nuclear generation,

each is in some way problematic.

Life extension is a sensible step and

will help plug the gap emissions that

many countries are facing.

It is an option that seems to be gain-

ing traction, even in Switzerland,

which has decided to phase out nucle-

ar energy. In December it joined six of

its European counterparts in a pledge

to get all of their electricity from car-

bon free sources by 2035. In the me-

dium term it will mean that more

electricity will come from nuclear

power plants again.

“New nuclear power plants are being

planned in many countries,” said

Swiss Energy Minister Albert Rösti.

“This is an important form of energy

for decarbonisation,” he added.

Rösti said that although Switzerland

has decided to phase out nuclear en-

ergy, and “that needs to be respected

for the time being”, the Brussels

agreement means that “nuclear energy

will remain important” for Switzer-

land for a long time to come.

“We assume that the existing nucle-

ar power plants will run longer than

the planned 50 years. We are now as-

suming at least 60 years,” he said. “It

won’t be possible to achieve the goal

of carbon emissions-free electricity

without nuclear power plants. “We

won’t be able to add renewables

quickly enough. That takes time.”

In January EDF Energy said it plans

to extend the life of its nuclear plants

in Britain. But Jess Ralston, analyst at

the Energy and Climate Intelligence

Unit (ECIU) noted: “Prolonging the

life of the existing eet may plug a gap

while the government sorts out the

funding model, and these huge infra-

structure projects actually get under-

way, but it’s not a permanent solution.”

Small modular reactors (SMRs) may

be an option. And although the rst

commercial projects of the technology

are still at least a decade away, the

technology is still on the table.

In late December the Estonian gov-

ernment’s nuclear energy working

group recommended building a nucle-

ar power plant with small modular

reactors. The government and parlia-

ment will discuss whether to launch a

nuclear energy programme in the

country in the coming months.

Meanwhile, the pathway to building

SMRs in the UK was smoothed in

January, with the government an-

nouncing that SMRs will be allowed

to be built almost anywhere.

Sam Richards founder of pro-growth

campaign group Britain Remade,

welcomed the news but warned that

the building of “game-changing

technologies” like SMRs must not be

stied by restrictive planning and

regulatory rules.

“Today’s news is a welcome rst step

to delivering a eet of mini reactors

across the country, but the government

must go further to ensure SMRs are

not caught in the same regulatory

bureaucracy as their bigger gigawatt

scale cousins,” he said.

Nuclear’s attraction as a zero carbon

replacement for fossil fuelled baseload

power is understandable but the time

horizon for building new plants does

not align with climate change targets.

Any diversion of resources and money

that stymies renewables and grid de-

velopment is therefore questionable.

Further, the world has not been able to

build plants to time and budget despite

years of trying.

While the benets of nuclear are

clear, those advantages will be hard to

see when we are all paying the price

– both economically and physically

– of global warming. Under the cir-

cumstances, it makes little sense to

wait for a Rolls Royce when there are

other vehicles that can do the job today.

Further, why make a down payment

on that Rolls Royce knowing that its

price will have doubled by the time it

leaves the show room? Any way you

cut it, the issue with nuclear is if you

buy now, you will pay later.

The problem with buy now,

pay later

Junior Isles

Cartoon: jemsoar.com