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DECEMBER 2013
Coal’s growing strength globally – and how to minimise carbon emissions
Renewable energy heads to the Middle East
Getting more from muck – anaerobic digestion in the UK
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Contents
DECEMBER 2013
December 2013
No. 421
From the editor
2
Green taxes and competitive pressure on energy prices
Steve Hodgson
3
International news
Renewables more important than recession for emissions; emissions from US
power plants fall; Germany forces revision on car emission standard; energy
efficiency should be world’s first ‘fuel’; Dubai’s largest PV plant
Coal’s growing strength globally – and how to minimise carbon emissions
Renewable energy heads to the Middle East
Getting more from muck – anaerobic digestion in the UK
published by
Viewpoint
7
Rebooting CCS in Europe following momentum loss
Chris Davies MEP
8
Home news
Published by
Energy companies ‘must rebuild trust with customers’; nearly half a million
homes use solar power; offshore wind achieves record growth; Britain’s
biggest fuel cell for London; new bioenergy and solar research centres
Energy Institute
61 New Cavendish Street,
London, W1G 7AR, UK
Chief Executive
Louise Kingham OBE FEI
12
EI News
14
Coal holds its own, globally, and ‘will outlast oil and gas’
Robert Stokes and Mark Godfrey
Email
17
Three ways to clean up coal-fired power generation
Ian Barnes, Colin Henderson and Qian Zhu
Editor
20
Accelerating the development of CCS in the UK
Den Gammer
Steve Hodgson
t/f: +44 (0)1298 77601
e: [email protected]
22
Unlocking stranded coal with deep underground coal gasification
Deputy Editor
24
A professional workforce at every level
Sarah Beacock FEI and Kevin Dinnage
26
Creating more value from what we know
Gareth Parkes MEI
28
Renewable energy opportunities in the Middle East
Marc Norman
Yvonne Laas
t: +44 (0)20 7467 7117
e: [email protected]
30
Getting more from muck
Marc Height
Advertisement sales
32
Planning, energy bills and the future for onshore wind
Anna Stanford
33
Renewable energy
Solar power for De Montfort University; Gazprom purchases UK hydro plant
outputs; schools make savings with biomass
Energy Institute membership
35
Renewable energy finance – where to now?
Theresa Ruhayel
36
Events calendar
Chris Baker MEI
t: +44 (0)20 7467 7114
e: [email protected]
General enquiries
t: +44 (0)20 7467 7100
e: [email protected]
www.energyinst.org
Features
Cover
Coal-fired power generation – this is a UK plant, but coal’s real strengths lie
outside Europe and, globally, coal fuels 40% of power generation. Articles
in this issue cover both the global coal picture, but also its use in power
generation world-wide and the main methods of reducing resulting carbon
emissions. The prospects of both carbon capture and storage, and underground gasification, are discussed.
This issue also goes to the other end of the energy spectrum – renewables,
covering the rise, mainly of solar power, in the Middle East. We also look at
the growing anaerobic digestion waste-to-energy sector in the UK and how
new planning regulations are affecting onshore wind here.
Last, we include articles from the EI itself, introducing its new Energy Matrix
and asking why so few engineering technician members currently maximise
their professional recognition through acquiring ‘EngTech’ status.
e: [email protected]
Marc Height GradEI
t: +44 (0)20 7467 7152
e: [email protected]
Production Officer
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t: +44 (0)20 7324 2785
e: [email protected]
e: [email protected]
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Energy World
December 2013
1
From the editor
Green taxes and competitive
pressure on energy prices
T
he unseemly and public
row
taking
place
between the ‘big six’
retail energy suppliers and
representatives of domestic
and business energy users,
most environmentalists and
the government, led by
Energy Secretary Ed Davey,
rumbles on, a full month now
since I mentioned it in this column last issue. And it’s
getting more serious.
As we report on page 8, Davey entered
the lion’s den that was the annual conference of energy industry trade association
Energy UK and told the industry that it
had lost the trust of its customers. He said
that consumers think – fairly or not – that
the suppliers’ recent above-inflation price
rises amounted to ‘taking them for a ride’
and ‘a reflection of the greed that consumed the banks.’ Serious stuff indeed –
surely this sort of thing normally goes on,
when it goes on at all, behind closed
doors.
Davey is also in the process of implementing new measures to make switching
suppliers a much quicker process; to insist
that suppliers display their lowest tariff
more clearly; and to be quicker in returning credit balances to consumers that have
moved to a new supplier. Last, he is consulting about instituting criminal penalties
for those caught manipulating energy
markets. Does it get more serious than
this?
No-one outside the suppliers truly
knows whether they are being forced to
put up prices because of rising international fuel costs, or in response to
ever-increasing levies imposed by government to stimulate new low carbon
generation, smarten the grid and mitigate
fuel poverty. Or is it just corporate greed
taking customers for a ride? Whatever
combination it is, the suppliers aren’t
telling us.
2013
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The views and opinions expressed in this article are strictly
those of the editor only and are not necessarily given or
endorsed by or on behalf of the Energy Institute.
Exploration investment heading down-under
Where has all the marine fuel gone?
Unified communications strategies
A professional workforce at every level
Petroleum Review is the monthly sister publication to Energy World, covering
all aspects of the international oil and gas industry. As an EI member,
you can subscribe to Petroleum Review for £45, saving up to £225.
ASIA
G
Steve Hodgson
In this month’s Petroleum Review:
•
•
•
•
G
In truth, both rising gas
costs and government levies
have played parts in rising
prices – and the nearest thing
we have to a consensus view
is that gas costs have played
the larger part. It’s the third,
profiteering, option that noone can be sure about, and
that’s because the precise
answer to the question is lost
within complicated and
inaccessible inter-company
accounting practices.
The big six are ‘vertically-integrated’
companies, some owned overseas and
most incorporating a maze of subsidiary
companies that do some or all of: source
and trade fuels, generate power from a
number of fuels, transmit and distribute
electricity and gas, and sell energy to the
domestic and the industrial and commercial sectors. Financial reporting standards
do not require them to reveal details of
inter-company trades in any detail, so there
is no clear picture of the performance of
the energy sales part of the business.
Nor should we kid ourselves that these
giant companies are in business, primarily,
to be nice their customers – they are in
business to maximise returns for shareholders. One supplier’s annual report defines its
principal financial objective very clearly: to
deliver annual above-inflation increases in
the dividend payable to shareholders.
Meanwhile, competition within the regulated, privately-owned energy market is
meant to drive prices down. Customers
can also switch supplier if they are
unhappy. However, smaller competitors
argue that the six companies are simply
too big, and operate within too many
interconnected sectors, to allow new
entrant and smaller niche companies to
gain significant footholds in the market.
We don’t have a truly competitive market
and prices are therefore not driven down.
I have even seen the argument that
energy should be a state-run function; ie
that the 30-year privatisation model in the
UK has failed. No shareholder dividend to
maximise with this model.
The latest ingredient in the row is the
suggestion that the government is about
to end the Energy Company Obligation
(ECO) on suppliers to help customers, particularly those on a low income, to install
energy saving measures in their homes.
This is part of an initiative to ‘roll back
green taxes’ mooted by Prime Minister
David Cameron. Many think the current
ECO scheme, the latest in a long line of
efficiency incentive programmes, is clumsy
and overly bureaucratic, but the schemes
have also been highly successful. The
Association for the Conservation of
Energy estimates that ECO and its predecessors are primarily responsible for the
fall in the average annual energy consumption of British homes from 26 to 19
MWh between 2005 and 2011.
Removing this ‘green tax’ might deliver
some relief to domestic energy bill payers
(perhaps £25 a year), but such a move
would make no economic sense overall –
saving energy is almost always cheaper
than generating it.
• Echoing Chris Davies view (see page
7) that the EU’s strategy to promote
carbon capture and storage (CCS) has
all but collapsed, the Chief Executive
of the UK CCS Association has agreed
in an interview that: ‘Europe has lost
its way on CCS.’ There is widespread
agreement that, given coal’s dominant position in the world energy
scene, the development and deployment of large-scale CCS schemes is
essential in any effort to reduce carbon emissions. However, despite
Europe and the UK making much of
the early running in arguing for CCS
five years ago, the financial crisis and
rock-bottom carbon prices in the EU
emissions trading scheme have
helped surrender the initiative to
China, Canada and the US.
nst.org
nergyi
www.e
For more information visit www.energyinst.org
Energy World
December 2013
International news
Renewables ‘had more
impact than recession’
on recent emissions
A recently published study has suggested
that, contrary to widespread belief, the
reduction of carbon emission levels in
Europe has had more to do with the
uptake of renewable energy technologies
since 2005 than the impact of the
economic slowdown.
The study, from CDC Climat, a French
investment group, features a baseline scenario that predicts that around 40–50% of
the 1.1 gigatonne (since 2005) decrease in
carbon emissions result from the deployment of renewable energy. The economic
crisis has played a significant but not
dominant role, it says, at between 20 and
30%. Improvements in energy intensity
have resulted in between a 10 and 20%
reduction.
The renewables part of the EU’s 20:20:20
targets by 2020 has been the most successful of the three policy objectives according
to CDC. It calculates that it has resulted in
500mn tonnes of avoided carbon emissions – around 50% of the total. The
economic slowdown’s contribution is estimated at 300mn tonnes of carbon.
CDC Climat suggests that this is part of
the reason the EU ETS is in poor shape –
lower emissions in Europe due to renewables resulted in an artificial abundance of
emission quotas, and thus a lowering of
the carbon price. It goes further to state
that, given this, there could be a more
effective way of organising European
energy policies.
Photo: Kyocera
The 70 MW Kyocera Mega Solar Power
Plant in Kagoshima Japan, due to go
into operation this month, which, when
planned, was the largest PV power plant
in Japan to date. The plant is made up of
290,000 polycrystalline silicon solar
modules.
Kyocera has also been busy elsewhere
in Japan. In collaboration with Mitsui &
Energy World
December 2013
Despite this good performance of
renewables over recent years in Europe,
investment levels in renewable energy
technologies globally for the third quarter
of 2013 are down by a fifth on the same
quarter of 2012, making it almost certain
that investment levels in renewables this
year will end below 2012 levels.
The investment figures on deals and
projects,
from
research
company
Bloomberg New Energy Finance, show
that there was $46bn of investment in
renewables in the third quarter of 2013,
down 14% on the second quarter of this
year and 20% below the number for Q3
2012. The company is confident that
investment in renewable energy and
energy-smart technologies such as smart
grids, efficiency, storage and electric vehicles will end this year below 2012’s $281bn
– a total that was itself 11% down from
the record established in 2011.
Michael Liebreich, Chief Executive of
Bloomberg New Energy Finance, said:
‘After the slightly more promising second
quarter, we now have a very disappointing third quarter figure for investment.
$46bn is still a substantial amount of
money, greater than that invested in the
whole of 2004, but the loss of momentum
since 2011 is worrying.’
The company states that the drop in
investment is due to policy uncertainty in
Europe, cheap gas in the US and a levelling
off of renewables investment in China.
Co and SB Energy, the company is currently working on the construction of
the 20 MW SoftBank Izumiotsu Solar
Park in the Japanese prefecture of
Osaka. Around 80,000 Kyocera modules
will supply the equivalent amount of
electricity for around 5,700 local homes.
The plant is set to go online in July 2014.
Alongside supplying and building several large-scale PV
plants and smaller PV
projects in Japan, the
company is involved in
an investment project
to provide a new business model for the
spread of renewable
energy. The project
sees profits from the
sale of electricity generated by PV systems
donated to local nonprofit organisations
that support social
contribution in Japan.
Emissions
from US
power
plants fall
The growing use of natural gas in the US
has resulted in a drop of carbon emissions
from the country’s power plants – now
down 10% on 2010 levels, reaching their
lowest level since 1994.
The emission figures were collated by
the US Environmental Protection Agency
(EPA) for the third time, at the request of
the US Congress. They highlight the
decrease in carbon ‘pollution’ (as it is
defined in the US) in a comprehensive
study breaking down emissions by industrial sector, greenhouse gas and
geographic region, to the level of
individual facility.
The Greenhouse Gas Reporting
Programme collects the data from 8,000
facilities and large emitting industries,
which include power plants, refineries,
mills and landfills. The data, from 2012,
show that the decline in emissions is due
to a switch from coal to natural gas,
alongside a small decrease in electricity
production.
Power plants in the US remain the
country’s largest source of emissions –
1,600 plants emitted over 2bn tonnes of
carbon dioxide in 2012, around 40% of
total US carbon emissions. The data are
publically accessible through EPA’s
online data publication tool, called
FLIGHT.
The results will be good news for US
President Barack Obama’s Climate Action
Plan, under which stringent emission standards have recently been set for future
coal-fired power plants in the US (see last
month’s Energy World).
And it is not just within the country’s
borders that policies to affect coal generation are being put in place. The US
treasury is now acting to effectively end
US public financing for inefficient overseas coal power. Now, multi-lateral
investment in coal power outside the US
will be subject to the plants meeting the
same EPA emission standards as those
within the country itself.
• The US and Canada are the only
major producers of commercially
viable natural gas from shale foundations in the world, says the US Energy
Information Administration. While
China has registered commercially
viable production of shale gas, this is
at less than 1% of gas production –
compared to 39% in the US and 15%
in Canada.
3
International news
Energy efficiency should be the
treated as world’s first fuel – IEA
Energy efficiency is increasing in global
importance, and it should be treated as
the world’s most important ‘fuel’, said the
International Energy Agency (IEA) when
releasing its inaugural Energy Efficiency
Market Report.
Investment in energy efficiency hit
$300bn in 2011 according to the publication. It argues that this scale of global
investment, and its contribution to
energy demand, are as significant to
those of other developed supply-side
resources.
The report joins other IEA market
reports for oil, gas, coal and renewable
energy. It notes that the $300bn investment is on par with global investments in
renewable energy or fossil fuel power
generation.
‘Energy efficiency has been called a
“hidden fuel”, yet it is hiding in plain
sight,’ said IEA Executive Director Maria
van der Hoeven when presenting the
report at the recent World Energy
Congress in Korea. ‘Indeed, the degree of
global investment in energy efficiency and
the resulting energy savings are so massive that they beg the following question:
Is energy efficiency not just a hidden fuel
but rather the world’s first fuel?’
The report states that:
• From 2005 to 2010, efficiency measures saved the energy equivalent of
$420bn worth of oil in a group of 11
IEA member countries.
• Had it not been for these measures,
consumers in those 11 countries
would now be consuming around
two-thirds more energy than they
currently use.
• In 2010 in those countries, the energy
savings from efficiency measures
exceeded the output from any other
single fuel source.
The report notes that two key factors
have driven the recent growth of the
energy efficiency market: effective policies and the high price of energy. On the
policy side, effective measures include
energy standards, labelling, access to
assessments and financing, and obligations on suppliers. High oil prices have also
encouraged savings.
The IEA says there are still some barriers
that can act to impede energy efficiency
improvements – the absence of dynamic
pricing in energy markets, together with
subsidies, high transaction costs, information failures and a lack of institutional
capacity.
The report points out that energy efficient products and information and
communication technology equipment
are growth areas for energy efficiency.
Other markets have remained relatively
static, it adds.
Photo: Morgan Advanced Materials
Mumbai to
replace every
streetlight
with LED
lamps
An offshore wind power converter platform for the North Sea that is in the
process of being insulated with a
‘FireMaster Marine Plus’ blanket from
Morgan Advanced Materials.
This high-voltage, direct current converter platform, to be part of a network
from TenneT for the German North Sea,
will step up the low voltage power generated by offshore wind turbines for
more efficient transmission to shore.
Fabricated by Nordic Yards, the platform
has a foundation support structure
and a topside that incorporates
conversion equipment, workshops, a helicopter deck and accommodation
quarters.
4
Each converter platform houses hydrocarbon products that can produce fire
temperatures of up to 1,100°C. They
have 4,000 m2 of transformer rooms that
require 60 minutes resistance against
hydrocarbon fuel fires, thus prompting
the need for efficient insulation. The
insulation is designed to provide high
temperature resistance, with low thickness and low weight, where blanket
temperatures of 140°C on the internal
face are not exceeded in the event of a
fire.
The material weighs less than 6 kg/m2,
and is provided at a thickness of 80 mm
to offer the necessary fire protection,
says Morgan. It is certified by DNV.
Mumbai, India – one of the world’s most
densely populated cities – has laid out
plans to replace every streetlight with an
LED alternative. This will see around
40,000 lamps replaced during the scheme.
Research and testing is currently being
carried out on a number of different LED
lamps for the project, which will not only
have the benefit of saving energy, but will
also result in more reliable lighting.
Steven Ellwood, Managing Director of
BLT Direct, a UK supplier of LED light bulbs,
said: ‘[LED] light bulbs are incredibly stable,
they can dramatically reduce energy bills
and they are estimated to last not just for
years, but decades. 8 W LEDs can give off
the same amount of light as a 65 W halogen bulb, which last for a fraction of the
time and run up huge energy bills.’
It is estimated that the conversion to
LED light bulbs in Mumbai will help to
save the city up to 40% in energy on a
yearly basis. The lights are also brighter –
an advantage that has been proven in
other destinations to aid reduction in
crime levels; another advantage for the
city.
Energy World
December 2013
New power stations in Germany, the
US, Indonesia and Israel
In the news of new power plants built or
in planning this month, first, Lubmin, the
landfall of the Nord Stream Baltic Sea
pipeline in Germany, has had an industrial
gas turbine delivered for a cogeneration
plant. The plant will be operated by
Industriekraftwerk Greifswald, a joint
venture of WINGAS and E.ON Energy
Projects.
The 37 MW Siemens gas turbine will
generate electricity to be fed into the
grid, while the 47 MW of waste heat will
serve to heat the natural gas from Nord
Stream upon its arrival at the landfall station. The gas in the pipeline is at too high
a pressure when it arrives in Lubmin.
When the pressure is reduced at the
Lubmin landing station to suit the
onshore pipeline systems a drop in gas
temperature occurs, which is compensated for with the exhaust heat from the
SGT-750 gas turbine.
Meanwhile, in Salem, US, an old power
station in Salem Harbor which has been
generating power for more than 60 years
is to be replaced with a new, efficient
670 MW natural gas power station. The
plant will act to solve local reliability
issues, reduce emissions, and is designed
to be flexible, using GE’s FlexEfficiency 60
technology, which enables it to turn down
during off-peak hours and ramp up to full
power in 10 minutes.
The plant (pictured) will be built following an agreement between GE and
Footprint Power, and will turn the facility
into a smaller and quieter plant – occupy-
An artist’s impression of the new gas-fired power plant at Salem, US
ing less than a third of the current site.
The existing coal and oil-fired Salem
Harbor Station will shut down at the end
of May 2014.
Elsewhere, in Indonesia, a 184 MW
peaking gas power plant – the largest gas
engine-based peaking power plant in the
country – will be built in Lhokseumawe in
Aceh Special District in northern Sumatra.
The gas-engine based power plant, from
Wärtsilä, is scheduled to be completed in
2015. Power will be generated by a total
of 19 Wärtsilä 34SG engines running on
liquefied natural gas.
Finally, gas engines that are to be run
Germany forces revision on
car emission standard
An agreement to cap carbon dioxide emissions from new cars at 95 g/km in 2020 has
been postponed and negotiations
reopened following pressure on European
environment ministers from Germany.
According to news from the Low Carbon
Vehicle Partnership, the German government, which was under pressure from its
car manufacturers, argued that the regulations would cost jobs and damage its
premium manufacturers.
The Brussels-based Transport &
Environment (T&E) described the moves
from Germany as a massive lobbying operation by the government on behalf of
Germany’s luxury car industry, calling it an
unprecedented abuse of the EU legislative
process.
Energy World
December 2013
Germany had argued that there needs
to be more room for flexibility, and is proposing that only 80% of a car
manufacturer’s vehicles should meet the
95 g average by 2020, with the remaining
20% to be phased in over the subsequent
four years.
The European Parliament, Commission
and governments had reached the
95 g agreement in June, but Germany
sought the renegotiation and was
backed by a number of countries,
including the UK. The opposition from
Germany is reported to be due to the
fact that German car manufacturers
produce
heavier
vehicles
which
have typically higher carbon emission
levels.
Photo: GE
on renewable gas are also being used for
a new cogeneration plant that will deliver
11 MW of on-site power for the Dan
Region (Shafdan) Wastewater Treatment
Plant, one of the biggest of its kind in
Israel, located south of Tel Aviv, near the
city of Rishon Lezion. GE will supply eight
1.4 MW Jenbacher J420 biogas engines.
The gas will come from eight anaerobic
digesters with a volume of 13,200 m3
each. Part of the energy produced will, in
turn, be used to help run the digesters.
To read more on anaerobic digestion, see
page 30.
Connie Hedegaard, the EU Climate
Commissioner, said that flexibility was limited and a German proposal to delay full
implementation of the 95 g target to 2024
was not acceptable.
British-based consultancy Cambridge
Econometrics said Europe would save
€70bn on oil imports if the 95 g/km target
was implemented across the EU fleet by
2020.
Greg Archer from T&E said: ‘It’s an unacceptable price, which will be paid by every
European driver in higher fuel bills, by the
planet that will warm quicker and potentially by Europe’s auto sector that will be
less competitive.’
Despite the political arguments, reports
from the European Environment Agency
show that the car makers are actually on
track to hit carbon targets to 2020. EU
governments now have to agree what
they want to change in a new 2020 deal
before MEPs can consider it again, says
T&E.
5
International news
New nuclear in the US,
Belarus, Jordan and India
Progress on new reactors form part of
noteworthy nuclear developments this
month, starting with the pouring of concrete at the second of the two nuclear
reactors at the VC Summer plant in South
Carolina, US.
The two planned Westinghouse AP1000
1.1 GW reactors will share the site with an
existing reactor operated by South
Carolina Electric & Gas. ‘It has been less
than eight months since first nuclear concrete for Unit 2 was poured at VC Summer,
and since then… progress includes the
placement of the containment vessel bottom head and placement of the reactor
vessel support module, as well as concrete
placement that will enable further
progress on the nuclear island. In addition, one of the cooling towers is nearing
completion,’ said Westinghouse Electric
Company Nuclear Power Plants Senior
Vice President Jeff Benjamin. Elsewhere
Westinghouse is also building two reactors in Georgia, US, and another four in
China.
Meanwhile, World Nuclear News
reports that the foundation slab of the
first of two Russian reactors at Ostrovets
in Belarus has been poured. The units are
1.2 GW AES-2006 types, developed by St
Petersburg Atomenergoproekt (now
VNIPIET). Each unit is expected to take five
years to build. The Russian state-owned
Vnesheconombank (VEB) is reported to be
lending up to $10bn for 25 years to
finance 90% of the contract.
Russian technology has also been
selected for Jordan’s first nuclear power
plant. The Jordan Atomic Energy
Commission
has
announced
that
Rosatom’s reactor export subsidiary
AtomStroyExport will be the supplier of
AES-92 nuclear technology, while
Rusatom Overseas will be strategic part-
Power sector worldwide could
cut emissions by ‘a Europe’
In the face of rising global power demand,
the power sector worldwide has the
potential to reduce emissions by the
equivalent of the EU’s total emissions by
dispensing with coal-fired power generation, instead using gas, says a study
commissioned by Siemens.
Global power demand is set to increase
by 3% per year on average over the current and next decade. This growth will
cause overall power demand to rise by
more than half of its current level
between now and 2030, and associated
carbon dioxide emissions are likely to
increase by a quarter, or 3,500mn tonnes.
The study, written by Professor Horst
Wildemann of the Technical University of
Munich, highlights the significant gains in
emissions that could be achieved by
switching fuels from gas to coal. ‘If coalfired power plants were replaced on a
wide scale with gas-fuelled power plants
by 2030, carbon dioxide emissions in the
power sector would even drop by 5%
compared to today’s levels,’ said Professor
Wildemann. ‘Of course, it would be illusionary to replace all coal-fired power
plants with gas-fuelled units – but the
potentials identified are really impressive,’
Wildemann continues.
The study categorises countries into one
of five archetypes in the energy context.
In countries with only slowly rising power
demand there are on the one hand the
‘green pioneers’ which bank heavily on
renewables, and on the other the ‘traditionalists’ with a low proportion of
renewable power.
Among the countries with rapidly
increasing demand for electrical power
there are the ‘energy-hungry’ nations that
have already achieved a high level of electrification, and the ‘next-wave electrifiers’
where there are still major gaps in power
supply to all households. The fifth group
identified is the ‘oil export maximisers’
Dubai’s largest solar PV plant completed
A flagship 13 MW solar PV plant has been
completed in Dubai, the United Arab
Emirates (UEA). The plant, covering 24 ha,
is the region’s largest PV facility, and was
completed in 30 weeks.
The project is the developer First Solar’s
first utility-scale project in the Middle East.
6
The company was selected by the Dubai
Electricity and Water Authority to provide
engineering, procurement and construction services, for the plant, as well as its
advanced thin-film modules. The project
had a workforce of 1,280 personnel at its
peak. It is powered by 153,000 PV modules.
ner and operator of the plant, reports
World Nuclear News. The first reactor is
expected to begin operation in 2020.
Finally in terms of new build, the first
unit of India’s Kudankulam nuclear power
plant in Tamil Nadu state has commenced
operation. The reactor is the 21st in India
and was again built using Russian
technology.
In other nuclear news, the Olkiluoto 2
power plant in Finland has achieved
200 TWh of commercial electricity production in commercial operation, since being
commissioned in 1982. 2012 was the
reactor’s best performing year, with it producing 7.48 TWh of electricity, reaching a
load factor of 96.9%.
And finally, AREVA is now producing
MOX fuel for the Borssele power plant in
the Netherlands, at its MELOX facility. The
use of MOX fuel at the plant follows the
decision of the Dutch utility EPZ in 2008 to
diversify the fuel supply for the 500 MW
plant. The decision will see the
Netherlands becoming the seventh
country to use or have used MOX fuel
in its reactors, joining a list that
includes Germany, Switzerland, France
and Japan.
that are characterised by the challenge to
enhance efficiency in the field of oil and
gas exploration.
In regional highlights of these analyses,
the study found for example that Europe
could save some €45bn in its drive to
expand power generation from renewable resources by 2030 if those sources
were tapped at the best locations – while
achieving the same ratio of renewables in
the power mix. In this scenario, new solar
power plants would be installed mainly in
Europe’s sunbelt in the south, while wind
power plants would be built in the windy
northern regions.
The study also finds that in China it
could be possible – despite the doubling
of power consumption – to freeze carbon
emissions at today’s level if renewable
energy sources were exploited at fullscale. However, this would also require
nearly double the investment volume. By
contrast, emissions could be cut back by
almost as much, but at no extra cost, if
one third of China’s coal-fired power
plants were replaced by modern gas-fired
units by 2030.
The full study can be viewed at
www.siemens.com/wec
The development is the first part of the
Mohammed bin Rashid Al Maktoum Solar
Park, which has the aim of reaching 1 GW
of capacity and cover 40 km2, consisting of
both PV and solar thermal technology.
For more on renewable energy in the
Middle East, see the feature article on
page 28.
Energy World
December 2013
Viewpoint
Rebooting CCS in Europe
following momentum loss
H
opes that Europe might play a lead
role in the development of carbon
capture and storage (CCS) technology show little sign of being realised. The
public’s view of CCS is often sceptical and
in some Member States downright
hostile. Governments are reluctant to provide the necessary financial support or to
intervene directly. Private companies see
risk, expense, long-term liabilities, and no
prospect of rewards that could justify their
involvement.
The European Union’s strategy for CCS
promotion has all but collapsed; its claims
to leadership in the field abandoned. The
knowledge, commitment, time and money
of a great many people is going to waste.
Yet both the International Energy Agency
and the European Commission continue to
claim that use of the technology is essential
if long term carbon dioxide reduction goals
are to be achieved at least possible cost.
China, Canada and the US are not usually
considered to be leaders in the fight against
global warming, but these are the places
where CCS projects are actually being
developed. Admittedly their business models are strengthened by the assumption
that the carbon dioxide captured will be
used to enhance oil recovery but they will
gain the rewards of experience. The lessons
learnt from building Canada’s Boundary
Dam post-combustion coal project should
enable its successor to be built 30%
cheaper. Improved technologies like the
use of graphene membranes for carbon
dioxide separation will be seized upon by
those who are putting CCS into practice to
increase efficiency and reduce costs.
Europe was the frontrunner
Five years ago the EU looked set to be the
frontrunner in CCS deployment. Heads of
government had not only embraced the
idea of having up to 12 demonstration
projects in operation by 2015, but had
endorsed a European Parliament proposal
for a funding mechanism (NER300) that
seemed likely to provide sufficient financial support to ensure delivery.
An
additional €1bn for a range of pilot projects was found by the European
Commission from budget underspend.
Tens of thousands of jobs should by now
have been created.
Thirteen significant projects linked to
electricity generation, from seven countries, were amongst the initial applicants
for the first phase of NER300 funding. All
proved incapable either of meeting the
EU’s restrictive and inflexible requirements
for its allocation or of securing the necessary financial and political support from
national governments. Meanwhile most of
the pilot projects never achieved fruition.
Energy World
December 2013
Europe’s failure has stemmed from a
lack of commitment to CCS by Member
States and the absence of a business model
that can promote private investment.
While promoters of renewable energy
have received cash subsidies, the presumption was that carbon allowances would be
priced so high that investors would invest
in CCS development to avoid emitting carbon dioxide.
But the carbon price
collapsed, and with it went both the financial justification for CCS and the value of
the NER300 support fund.
It remains the case that the best way to
stimulate investment in CCS is to put a
price on carbon dioxide emissions, so if the
EU wants progress made, then reforms to
its emissions trading system are essential.
Investors must be confident of the direction of travel and be convinced that
tougher carbon dioxide reduction requirements are certain.
To oil the wheels of investment, policy
makers in Brussels should give priority to
ensuring that at least some full chain CCS
projects are taken forward to operation.
Flagship schemes are needed to gain
knowledge and build CCS into mainstream
policy. Setting a modest target could help
facilitate the release of funds from different lines within the EU budget. Support
may be needed in particular for pipeline
construction and evaluation of carbon
dioxide storage sites.
Additional EU funding might stimulate
national investment. An innovation fund
could be created from the sale of carbon
allowances. Longer-term financial support
might come from creation of a certificates
scheme similar to that used by Sweden to
promote renewable energy, with fossil
fuel producers required to invest in CCS
development or purchase certificates to an
equivalent value. The difficulty of securing
political backing for such initiatives should
not be underestimated.
EU mechanisms aside, the CCS initiative
rests principally with Member State governments. No investor is going to proceed
without their enthusiastic support and
very few have provided that. Too many
give the impression that they have dismissed CCS as an option without giving it
real consideration. This may be because
most have not explained how they will
achieve the 2050 carbon dioxide reduction
goals without it. EU legislation requiring
every Member State to publish a long term
carbon dioxide reduction strategy would
promote fresh thinking.
Governments that choose to endorse
CCS will have to play a more active role
than formerly conceived: providing financial support mechanisms, assisting in the
building of a pipeline network, and help-
Liberal Democrat MEP Chris Davies is
the European Parliament’s rapporteur
on CCS, wwww.chrisdaviesmep.org.uk
ing to prepare storage sites. It will be their
task to win public opinion, and they will
have to accept a share of the financial liability in case problems occur at a storage
site that they have themselves approved.
Hopes rest largely with the UK
Immediate hopes for progress rest very
largely with the UK. The government
remains firmly committed to CCS development and the technology commands
cross-party support. A billion pounds of
support for capital expenditure remains on
offer and efforts are being made to determine how operating support could be
provided through the UK’s contracts-fordifference (CFD) arrangements. Progress is
slow, but the sums involved are not small
and the means of providing them innovative and complicated.
An announcement that the government
will support a FEED study for the 450 MW
oxyfuel White Rose project at Drax is
expected shortly, and next June this may
also secure the promise of €300mn of
funding from the second phase of the EU’s
NER300 mechanism, for which it is the only
CCS bidder. Shell’s CCS project at the
Peterhead gas power plant looks set also
to secure funding for a FEED study.
Meanwhile 2Co’s IGCC Don Valley scheme
refuses to admit defeat despite not being
included amongst the UK’s top priorities.
It could benefit from the planned contract
for differences arrangements and through
being seen as complementary to White
Rose, with both sharing the same carbon
dioxide pipeline to the North Sea.
Outside the UK, political backing for CCS
is anything but strong. Politicians who
speak up for the technology might welcome business support but the voices of the
electricity generators and their coal and gas
suppliers have gone quiet. CCS, it seems, is
for the future not for now. If the fossil fuel
power companies one day find they have
no role to play in a low carbon economy
they will have only themselves to blame. ●
The views and opinions expressed in this article are strictly
those of the author only and are not necessarily given or
endorsed by or on behalf of the Energy Institute.
7
Home news
Davey: big energy companies ‘must
rebuild trust with customers’
The bruising and very public row over rising retail energy bills continued as this
issue of Energy World went to press, with
Energy Secretary Ed Davey delivering a
tough message to the industry at annual
conference of the main trade association,
Energy UK, held in London last month.
Davey said: ‘Trust between those who
supply energy and those who use it is
breaking down. You’ve admitted as much
to me. For it is so difficult for people to
work out what exactly they are paying for,
that they fear the big energy companies
are taking them for a ride when bills go
up. Fair or not, they look at the big suppliers and they see a reflection of the
greed that consumed the banks.’
‘So this is a “Fred the shred” moment
for the industry to avoid the reputational
fate of the banks,’ added Davey: ‘You
deliver an essential public service, so your
industry must serve the public – and the
public must have trust in what you do.
And we want to see that trust rebuilt.’
Davey also indicated that proposals by
some on the political right and left either
to cut levies that help the fuel poor and
boost green energy, or to freeze retail
energy prices, would not solve the problem. But he added that there is a valid
debate to be had ‘about the method
through which these policies are paid for
– through bills, through taxation, or some
other means. So it is right the government
looks at how we can reduce the impact of
policies on bills and we expect to make
announcements on or before the autumn
statement in December. But I am also clear
that the role of government is not to fix
prices. This will have a huge detrimental
impact on the investment we need to
deliver secure energy supplies.’
Prior to the conference, as part of the
government’s annual energy statement,
the Department of Energy and Climate
Change (DECC) announced plans to make
switching supplier simpler and quicker,
and a new enquiry into energy company
accounts, to make them more transparent
on profits and prices, as well as increasing
penalties for market manipulation.
Davey said then: ‘We want to push
energy companies to make switching
quicker and easier – because consumer
action can force suppliers to change their
ways. Bills are being re-designed through
Ofgem’s retail market reforms to give
people the information they need to
make switching easy – and we are taking
direct action through the Big Energy
Saving Network to bring first hand help to
those vulnerable people who find switching difficult.’
Davey set out a number of new measures aimed at giving consumers more
control:
• Energy companies will be told that
they must make switching suppliers
faster for consumers – with an ambition to move to switching in 24 hours,
rather than the current five weeks,
without increasing consumer bills.
• As well as energy companies now
being required to tell consumers
about their cheapest tariff on the
front of every bill, energy companies
will be required to include a ‘quick
response’ code on energy bills, so that
smartphone users can switch to the
best deal through a few clicks on a
mobile phone.
• Energy companies should be more
open about how they treat credit balances in consumers’ accounts, making
every effort to return money to customers with closed accounts.
• Appropriate penalties for those
organisations who step out of line are
a crucial part of a fair market. DECC
will consult on introducing criminal
sanctions for those who manipulate
the energy markets in the same way
as manipulation of the financial markets attracts criminal penalties.
Davey also set out the steps the government is taking to increase energy security
by attracting investment in new, clean
generation.
He said: ‘This is a critical time for our
energy future as we deal with years of
neglect and under-investment. The
choices we are making now will affect the
lives of every person in this country for
decades to come. We’ve done what’s necessary to make sure the lights stay on in
the short term, while the record £35bn
investment we’ve attracted since 2010 will
make sure that old, dirty power stations
are replaced with cleaner, more efficient
and more home-grown alternatives –
ensuring energy security and more stable
bills in the next 50 years.’
In response to the annual energy statement, Energy UK suggested that little or
no action is necessary: ‘Energy companies
welcome scrutiny about how the market is
working and our members have nothing
to hide. Energy companies are also committed to quick switching and have kept
government fully informed of the work
already underway to cut switching times
dramatically while making sure customers’
consumer rights are protected. Already
around quarter of a million customers
switch every month proving it is not only
possible but easy.’
Nearly half a million UK homes use solar power
Nearly 460,000 homes across the UK now
have solar panels and, together, these
households have a combined peak generating capacity of 1.3 GW, making domestic
solar the largest sub-sector of the overall
solar energy market. This is according
to new data from DECC on solar PV
installations.
The Solar Trade Association (STA) suggests that the cost of installing solar
panels has dropped exceptionally quickly,
due to ‘massive international production
volumes and major efficiencies achieved
by the UK industry,’ When the feed-in
tariff scheme began in 2010, domestic
solar panels attracted 43 p for every unit
of power they generated. Today domestic
solar attracts a much lower 14.9 p/kWh – a
8
drop of 65% in three years, yet returns
remain steady. The Association’s calculations shows that homes installing a 4 kWp
system today could expect returns of
around 12% and payback within eight
years.
STA CEO Paul Barwell stressed the
advantages to householders of generating a portion of their own electricity
needs: ‘Nearly half a million UK homes are
now much less exposed to frustrating
energy bill rises because they have chosen
to go solar. It’s a particularly clever choice
right now because the returns are excellent. People who are fed up with their
energy supplier could do no better than to
switch to supplying themselves with solar
power on their roof.’
And Barwell looked towards grid parity:
‘The more people that invest in solar
power today, the quicker the price
comes down tomorrow. We need to
keep going down this path until solar
power is cheaper than retail electricity
prices and everyone can have access to
cheap, green power and stable energy
bills.’
The STA wants to see 1mn solar roofs
across the UK achieved in 2015. Currently,
around 100,000 solar PV systems are being
installed every year and, if this rate could
be doubled the 1mn home milestone
could be achieved in 2015. The STA is confident that domestic solar will be able to
compete with retail electricity prices by
the end of the decade.
Energy World
December 2013
EDF and unions reach agreement
on building Hinkley Point C
EDF Energy, the GMB and Unite trade
unions have reached a major new labour
agreement for workers who will build the
proposed new Hinkley Point C nuclear
power station in Somerset. The agreement applies to electrical and mechanical
workers who will work on the project. It
confirms their pay and conditions of
employment, including welfare facilities
and training.
This latest milestone follows the signing
of similar agreements with unions in June
2013 for civil workers, as well as an overarching agreement establishing the
framework for industrial relations for the
project.
Together, the agreements play their
part in EDF Energy’s commitment to work
together with unions and contractors to
create a climate for positive industrial
relations which promotes safety, quality
and productivity, says the GMB.
Phil Whitehurst, GMB National Officer
said: ‘These agreements are ground
breaking not only in the increased levels
of pay terms and conditions compared to
other agreements in the UK construction
industry, but they are bound together by
a ‘common framework/social covenant’
agreement which is good solid industrial
relations foundation, which binds all the
agreements together.
On skills, Whitehurst added: ‘GMB welcome EDF Energy’s intentions to buy into
the need for investment, not only in the
present workforce with up-skilling, but in
traditional apprentices, with proper pathways of learning to obtain their skills,
these apprentices will help replace our
already ageing workforce, and ensure the
traditional mainline construction skills are
maintained in the UK.’
Vincent de Rivaz, Chief Executive of EDF
Energy, said: ‘Hinkley Point C has the
potential to create 25,000 job opportunities in the UK during its construction,
including over 400 apprentices, and it will
create 900 jobs when operational.’
GDF SUEZ company Cofely has acquired the energy centre connected to the ExCeL exhibition and conference centre in East
London (pictured) and signed a 40-year energy services contract
with ExCeL to supply heat, chilled water and CHP-generated electricity to the venue. The transaction makes possible future
development to link this scheme to Cofely’s existing district
energy network at the Queen Elizabeth Olympic Park and
Stratford.
The ExCeL energy centre currently has the capacity for 18 MW of
heating and 5 MW of cooling, but the envelope of the building can
contain significantly more plant and was built to supply energy
to the wider area. Cofely will initially be installing a
2.6 MWe CHP, as well as additional cooling equipment. It will also
be replacing the existing 300 m of pipework that serves the centre.
Britain’s biggest fuel cell installed in London
Fuel cell solutions provider Logan Energy
has installed what is said to be Britain’s
largest fuel cell system at Quadrant 3, the
landmark Regent Street redevelopment
project in central London.
The installation was undertaken at The
Crown Estate’s £400mn mixed use
Quadrant 3 scheme, where the fuel cell –
the UK’s first molten carbonate fuel cell –
now forms part of one of the world’s most
sophisticated central energy systems, says
Logan.
Fuel cell technology provides the most
efficient combined cooling, heat and
power distributed energy schemes, and
was chosen to help the project meet clean
air and carbon reduction targets. The
300 kWe fuel cell CHP installation converts
natural gas into electricity via an electrochemical process. As a result, no products
of combustion, such as NOx, SOx and
particulates, are emitted. The projected
carbon dioxide emission saving is
350 tonnes per annum.
The heat from the installation will be
used for facility heating and cooling. The
overall efficiency of the installation is estimated at 83% but it provides a higher
Boost for energy storage innovation
Two British entrepreneurs have been
awarded a share of over £5mn to spur on
innovation in energy storage. Contracts
have been awarded to REDT UK and
Moixa Technology, as part of the
Department of Energy and Climate
Change’s innovation competition to support energy storage research and
demonstration.
Energy storage systems can store surplus
energy for use at times of high demand.
Energy World
December 2013
This innovative technology has an important role to play in supporting the UK
growth in low carbon, renewable energy
sources.
REDT UK has developed a technology to
store electricity from wind turbines, and
Moixa Energy has developed small
battery-based storage units which could
be installed directly into people’s homes
to store power and re-use it at times of
peak demand.
electrical energy contribution than other
types of distributed generation, says
Logan.
The
Crown
Estate’s
Head
of
Development Alastair Smart said:
‘Occupiers are increasingly looking to
operate more sustainably and this
includes factoring in the green credentials
of their premises. The fuel cell is a real flag
in the sand, demonstrating what is possible in terms of energy efficiency and
carbon reduction, and it will only enhance
the building’s reputation as a world leading example of sustainable development.’
Gary Simmonds, Head of Operations,
REDT UK said: ‘The timing of DECC’s
energy storage competition is ideal for
the company’s next stage of development
– to design, build, and demonstrate larger
scale, lower cost energy storage systems.’
Simon Daniel, CEO and founder of Moixa
Technology said: ‘Energy storage aims to
help customers save money and reduce
peak energy demand, by using low carbon,
night, wind and solar resources. Government’s funding will ensure that we can
continue our work to make energy storage
cost-effective for wide deployment.’
9
Home news
Offshore wind R&D projects win funding
as sector achieves record growth
Four offshore wind R&D projects are to
receive shares of £2.5mn of investment
under the government’s Offshore Wind
Component Technologies Scheme to
develop technologies to cut the cost of
offshore wind energy. Energy Secretary Ed
Davey made the announcement at the
RenewableUK annual conference in
Birmingham last month.
The UK is the world leader in offshore
wind power generation, with more capacity than any other country. According to
the Department of Energy and Climate
Change, renewable energy capacity has
increased by almost 40% since 2012, and
renewables now supply a record of over
15% of total electricity generation –
around half way to the government’s 2020
renewable electricity goals.
The four projects to share the funding
are:
• Ricardo UK – awarded £635,000 to
develop and demonstrate its Offshore
Wind Drivetrain Innovation technologies, which are expected to increase
the reliability and lifetime of drivetrains for large offshore wind systems.
• Nottingham-based
TetraFloat
–
awarded £134,000 to validate and
improve a novel floating platform
design.
• Blade Dynamics – awarded £843,000
to design, evaluate, build and test an
innovative composite wind turbine
hub. This will reduce the loads on the
Knauf Insulation’s ‘ThermoShell’ Internal
Wall Insulation (IWI) system has been
installed in an ambitious project to refurbish almost 600 social housing
properties, across six tower blocks in
north Glasgow. The project is expected
to make significant savings for residents
in heating bills in an area that is heavily
affected by fuel poverty.
The system incorporates ‘Earthwool’
batts, high performance, water repellent
glass mineral wool slabs, that are friction
fitted between insulated studs to completely fill the available space and
deliver benefits over other systems that
use rigid insulation boards. Overall, the
ThermoShell IWI system is almost 13%
more thermally efficient than a timber
stud system of the same thickness, says
Knauf.
The insulation has been developed to
be the most effective solution to ‘whole
house – low energy’ refurbishments,
delivering exceptional thermal performance through a very straightforward
installation process, adds Knauf. The simplicity of the ThermoShell IWI system
10
entire turbine, tower and foundation.
• SSE Renewables UK – awarded a
grant of £1mn for its National
Offshore Wind Turbine Test Facility
project. Among other things this will
test foundations, logistics, and grid
integration on a Siemens 6 MW preproduction turbine.
This scheme is part of a package of support being provided by members of the
Low Carbon Innovation Coordination
Group (LCICG), who together are providing over £100mn of targeted financial
support to develop innovative offshore
wind technologies between 2011 and
2015.
Wind and marine energy trade association RenewableUK welcomed both the
announcement and a wider endorsement
of the wind, wave and tidal energy industries by Secretary Davey, who spoke of the
government’s ambition to achieve the
‘high end’ of deployment offshore, making it clear that any concerns about
reducing commitments on deployment
levels were misplaced. The UK has the
potential for 39 GW of offshore wind by
2030, says RenewableUK.
The offshore wind industry has enjoyed
a record breaking year in terms of new
deployment, according to RenewableUK’s
latest annual report: Wind Energy in the
UK. The study, which assesses the state of
the wind industry from July 2012 to June
2013, reveals a step change in the offshore
wind sector. Installed capacity stood at
3,321 MW at the end of June 2013, up
from 1,858 MW twelve months earlier –
an increase of 79%.
Four large-scale offshore projects went
operational during the 12-month period
covered by the report – Greater Gabbard,
Gunfleet Sands III, Sheringham Shoal, and
London Array which is currently the
biggest offshore wind farm in the world
(630 MW), exemplifying the trend
towards larger offshore schemes.
The 1,463 MW installed offshore marks
the first year in which offshore deployment has outstripped onshore wind.
Onshore, 1,258 MW of new capacity came
into operation, bringing the total installed
onshore to 6,389 MW – an increase of
25%, adds RenewableUK.
Onshore and offshore, a total of
2,721 MW were installed between July
2012 and June 2013, taking the UK’s total
wind capacity up to 9,710 MW – a 40%
increase and enough to power more than
five and a half million UK homes.
Onshore, project sizes are declining
overall, due partly to the growth of the
vibrant sub-5 MW market under the Feedin Tariff, with projects at this scale now
making up two-thirds of new onshore
submissions, says RenewableUK. Other
factors include a reduction in the availability of larger sites, and developers’
responses to changes in the planning
system.
allows a competent tradesman to
become an approved installer, and to
install and finish the system using a traditional plaster skim finish or dry lining
techniques. Knauf Insulation offers a
25-year guarantee on the system – a key
requirement under the Green Deal
legislation.
Alstom’s full-scale tidal energy device
installed at the European Marine
Energy Centre (EMEC) in Orkney,
Scotland, has now injected over
100 MWh of electricity into the grid.
This milestone in the development of
Alstom’s tidal stream device follows the
earlier connection of the turbine to the
grid and the progressive ramp up to
full nominal power of 1 MW over the
past months.
The latest technical milestone is part
of the ReDAPT 1 testing programme,
which aims at demonstrating the performance of the machine in different
operational conditions. The programme is building confidence in the
endurance of the machine, and in its
reliability.
Energy World
December 2013
Bioenergy and solar power
research centres open
October saw the opening of two new centres dedicated to research into renewable
energy technologies – bioenergy at Aston
University in Birmingham, and solar power
at the Baglan Energy Park in South Wales.
The European Bioenergy Research
Institute (EBRI) opened its new facilities at
Aston University, which will allow the
organisation to expand its world-class
bioenergy research and knowledge transfer
activity.
The
new
£16.5mn
development, funded jointly by the
University and the European Regional
Development Fund (ERDF), contains six
research suites, laboratories and technology demonstration facilities. It also houses
the only pyroformer/gasifier bioenergy
power plant currently up-and-running in
the UK, which will provide power, heat
and cooling to the building as well as part
of the Aston University campus.
The pyroformer is a groundbreaking
bioenergy solution, developed by
Professor Andreas Hornung of EBRI, which
uses multiple waste sources to generate
heat and power. EBRI at Aston University
was established in 2008 and bioenergy
research has been taking place at the
University from as early as 1978. EBRI staff
conduct research into all aspects of bioenergy, ranging from fundamental research
through development, to deployment of
innovative technologies, in collaboration
with industry.
Professor Dame Julia King, ViceChancellor of Aston University, said: ‘In the
UK we have a legally binding commitment
to cut carbon emissions by at least 80%
from 1990 levels by 2050. Aston University’s
strong commitment to cutting emissions is
not only evident through our operations
but is also reflected in our academic offer-
ings. However, we are aware that the UK
will not meet its targets – and at an affordable cost – without new technologies and
that is why we established our European
Bioenergy Research Institute.’
King expanded: ‘We believe that we can
take waste such as sewage sludge, industrial waste, green waste from our parks
and gardens, and even autumnal leaf fall,
and turn it into a power source that by
2050 could be a thermal ring of mini
bioenergy
power
plants
around
Birmingham. EBRI is therefore a critical
component in enabling the UK to become
more energy efficient, and to reduce our
current reliance on fossil fuels, imports,
and volatile energy markets.’
Meanwhile, a new, world-class solar
energy research centre to support the
growth of the solar industry in Wales was
The imposing entrance to the European Bioenergy Research Institute (EBRI) at Aston Univ
Onshore wind for Northamptonshire,
Scotland tower manufacturing
US-based GE is supplying turbines to two
new wind farms in central England; the
company has supplied the Chelveston
wind farm in Northamptonshire with nine
2.85 MW wind turbines and will deliver
nine 1.6 MW wind turbines to the Burton
Wold wind farm extension in Kettering,
around 15 miles away.
The Chelveston wind farm, part of the
Chelveston Renewable Energy Park, was
commissioned in September and entered
full operation in October. The site was
formerly a Ministry of Defense
bomber base throughout World War II
later a radio-mast transmitter site
Energy World
December 2013
launched by Swansea University after
being awarded £6mn from the Welsh
Government’s Sêr Cymru programme.
Edwina Hart, Minister for Economy,
Science and Transport welcomed Professor
James Durrant from Imperial College
London as the Sêr Cymru Solar Energy
Research Chair who will lead the new Sêr
Solar initiative based, alongside Swansea
University’s SPECIFIC project, at the
Innovation and Knowledge Centre,
Baglan Energy Park.
The Sêr Solar initiative is funded as part
of Sêr Cymru programme which is the
Welsh government’s £50mn programme
designed to enhance research capability in
Wales by attracting world leading scholars
and their teams to the country.
Researchers from Imperial College
London, home to the UK’s largest research
group dedicated to the development of
new solar technologies, will join with
Welsh researchers to form the research
centre. This will be led by Swansea
University and also includes Bangor
University and the Welsh School of
Architecture.
until 2005. The renewable energy park
will also contain biomass plants, biofuel
generators and solar photovoltaic
arrays.
Meanwhile, Scottish Energy Minister
Fergus Ewing has granted planning consent for a proposed extension at Mid Hill
wind farm, near Banchory. The Mid Hill II
extension is to have up to nine Siemens
turbines, bringing the total number to
34, and have a generating capacity of
102 MW. The original, 25-turbine Mid Hill
wind farm is currently under construction
in Fetteresso Forest, near Stonehaven in
Aberdeenshire.
Last, production at a wind turbine
tower manufacturing plant on the Kintyre
peninsula in Scotland has been doubled in
the last few months. Wind Towers
(Scotland) says it is now experiencing a
faster assembly time thanks to intervention by Highlands and Islands Enterprise
(HIE) and Scottish Manufacturing Advisory
Service (SMAS), which have been working
with WTS to improve productivity. WTS
commenced tower manufacturing at the
Campbeltown site in August 2011.
The company is currently working on
two contracts: one for Vestas, producing
towers for Keadby wind farm and the
other for Scottish Power Renewables
where towers are required for the Beinn
anTuirc II wind farm extension. Work will
then start on a Siemens contract producing towers for the Bruckana wind farm in
County Kildare, Ireland.
11
EI NEWS
Efficiency and carbon
management dominate
EI Awards 2013
IN YOUR AREA
EI Nigeria holds its first Marginal
Field Forum
Earlier this year, EI Nigeria hosted a
successful two-day forum focusing
on the Marginal Field programme's
development status. The event
brought together industry, academia and policy makers to discuss the
critical issues that pertain to the
Marginal Field programme. EI
Nigeria has since held a second conference which examined Nigeria’s
downstream sector, considering
refining, trading, shipping, storage,
distribution and regulation issues
for the industry.
EI Yorkshire branch award student
poster winners
A major part of the University of
Sheffield’s MSc (Eng) Environmental
and Energy Engineering course is
the research project. At the end of
the course, students submit their
dissertations and present their
research as posters. Towards the end
of summer, the students’ posters
were presented in the presence of
staff, EI members and guests. The
top three posters are annually
awarded prizes by the EI Yorkshire
branch. This year they went to
Yahaya Yakubu Umar GradEI for
‘Experimental investigation of the
stability of hydrogen-biogas jet diffusion flame’, Francesco Mattoli
Bisleti for ‘Thermoelectric power
generation from waste heat of biomass stove’ and Funmilayo Adisa
GradEI for ‘Application of hazard
identification technique to hydraulic
fracturing – shale gas’.
Sustainable energy options for the
United Arab Emirates
EI Middle East, in association with
Abu Dhabi Men's College, held a
conference in September to uncover
more about the current trends in
sustainable energy. Over 170 delegates attended this event. The aim
was to provide engineering students
and local professionals with the
chance to see how both technical
and managerial solutions can reduce
energy consumption in the UAE,
making energy more sustainable.
Detailed reports and speaker
presentations from these and other
branch activities, together with
further information on forthcoming
events,
can
be
found
at
www.energyinst.org/branches
12
On 14 November, Ben Fogle, TV presenter, writer,
adventurer, hosted the EI Awards ceremony in London.
This EI Awards competition saw more companies recognised
than ever before.
A wide range of entries were received
from many differing sectors. The EI is
pleased to see so many winners
recognised for their contributions to
efficiency across the energy sector, from
oil and gas, health and safety, and
renewables, to energy management.
Identifying the overall winner in each
category proved challenging and this
year’s competition saw a record number
of entries being highly commended by
the judging panel.
Communication Award –
sponsored by Etra
G
Winner – Oil & Gas UK for its Piper 25
conference.
G
Individual Achievement Award –
sponsored by Mott MacDonald
G
G
Winner – Islington Council and Vital
Energi for Bunhill Heat and Power –
energising a community.
Highly Commended – Bryson Energy
for its oil brokering pilot scheme.
Energy Excellence Award –
sponsored by Ninox
G
G
Winner – BBOXX for launching ‘the
solar revolution’.
Highly Commended – The Co-operative
Group for saving the Co-operative
£100mn and reducing carbon dioxide
(CO2) emissions by 40% since 2006.
Environment Award –
sponsored by Tullow Oil
G
Winner – National Grid Grain LNG for
reducing carbon emissions through
Winner – Laurie Ayling TD FEI, Maris
International.
Innovation Award –
sponsored by SGS
G
G
Community Initiative Award –
sponsored by Nexen
G
collaboration.
Highly Commended – Dahab Tesfanicael
stove and solar applicants for its highintegrated efficiency stove design.
Winner – Glori Energy for the AERO
(Activated Environment for the
Recovery of Oil) system.
Highly
Commended
–
Subsea
Deployment Systems for an alternative
method for the installation of large
subsea structures.
Safety Award –
sponsored by Shell
G
G
G
Winner – Sodexo for Well Track.
Highly Commended – The Bahrain
Petroleum Company for its health and
safety community outreach.
Highly Commended – Nexen Petroleum
UK for its hydrocarbon release
reduction.
Technology Award –
sponsored by Costain
G
Winner – FoundOcean for its super pan
grout mixer.
Further information about the winning
entries, along with photographs and a
video from the event can be found at
www.energyinst.org/ei-awards
Energy World
December 2013
Celebrating 100 years
of professionalism
In March 1914, Sir Boverton Redwood opened the inaugural meeting of the
Institution of Petroleum Technologists as its newly-elected President, declaring that
the aim of the institute was to determine ‘the hallmark of proficiency in connection
with our profession’. This momentous event would eventually lead to the creation
of the EI. A century later, we continue to fly the flag for professionalism, this time
across the whole of the energy industry, supporting its people and companies to
achieve excellence in their field for the benefit of society.
To mark this significant milestone and acknowledge our members’ contribution
to our work, we are developing a programme of activities to run throughout 2014.
Details will be posted on our website in due course.
Make sure you continue to receive
the benefits of membership in 2014
Our thanks go to all EI members for your continued support. Individual membership renewal notices have been issued, to be followed by those to our company
members later this month. We kindly ask for your prompt payment to ensure no
interruption in the receipt of EI services.
The easiest way to pay is online by logging in at www.energyinst.org; details of
the benefits of membership and 2014 fees can be found at:
www.energyinst.org/membership/individual-membership
Over 40 senior figures
from the oil and gas sector
will address IP Week 2014
The EI’s International Petroleum (IP) Week will be held in
London on 17–19 February 2014. This flagship event boasts
over 40 senior figures on the conference programme, with
representatives from Amec, BG Group, BP, ConocoPhillips,
Eni, ExxonMobil, Shell and the US Department of Energy.
Over the three days, there will be six conference
sessions and, new for 2014, a series of round table discussions. These will be held on 19 February and have been
created for groups of executives who face similar challenges. The aim is to get away
from lengthy presentations and discuss the issues in a boardroom style format. It is
a fresh addition to the IP Week schedule, which will allow attendees to take ‘timeout’ to see the bigger picture and to help find solutions in a short space of time.
Topics for discussion will include carbon capture and storage, the global skills gap,
activities in the Eastern Mediterranean, and Iraq and Kurdistan’s oil and gas sector.
IP Week will close with the prestigious IP Week Dinner, attracting an audience of
over 1,300 guests from all over the world. The Guest of Honour will be Chris
Finlayson, Chief Executive, BG Group.
Don’t miss your opportunity to attend the leading strategic forum for the international oil and gas industry – book your place today. EI members can benefit from
a 10% discount on delegate rates by quoting IPWKGEN03.
For more information, please visit www.energyinst.org/ip-week
Follow the EI on:
If you would like to include a news item on these pages, please contact
Katie Crabb, Communications Manager, t: +44 (0)20 7467 7173, e: [email protected]
Energy World
December 2013
IN BRIEF
Business insurance for energy
contractors
EI members who work as contractors
may have specialist insurance needs
that are specific to the energy industry.
We have teamed up with freelance
insurance specialists Kingsbridge
Professional Solutions (KPSol) to bring
you a number of comprehensive insurance packages, including public
liability, professional indemnity and
employers’
liability,
designed
specifically for contractors in the
engineering, oil and gas, power and
energy sectors – both on and offshore.
For more information or to obtain a
quote visit ei.kpsol.co.uk or contact
KPSol on t: +44 (0)1242 808740,
e: [email protected]
Consultants appointed to work on
Power Generation Industry
Contractor engagement programme
The EI's new Power Utility Committee
(PUC) is developing a work programme to increase safety at work on
power generation sites. The PUC has
appointed global management consultancy Oliver Wyman to lead an
industry-wide initiative drawing
together a snapshot of commercial
best practice. This project will seek to
capture good practice from projects
and working arrangements, improving the safety approaches across the
industry, and incorporate lessons
learnt from previous incidents.
Can you demonstrate innovation in
engineering?
The Royal Academy of Engineering’s
MacRobert Award is one of the
premier prizes for UK innovation in
engineering. The winning organisation is honoured with a gold medal
and the team members receive a
£50,000 cash prize. Entries must
demonstrate innovation, commercial
success and benefit to society. The
closing date for submissions is 20
January 2014. For more information,
please visit www.raeng.org.uk/
prizes/macrobert
Sadly we have been notified over the
past few months of the deaths of the
following members:
Mr D W Dutton MEI (b.1952)
Mr D E A Evans CEng MEI (b.1935)
Mr B Jones MEI (b.1945)
Mr D K L Morgan FEI (b.1929)
Mr D H Watson CEng MEI (b.1934)
Mr J T Williams FEI (b.1940)
13
International coal
Coal holds its own, globally, and ‘will
outlast oil and gas’
Coal isn’t the most talked-about energy source but, as Robert Stokes and Mark
Godfrey point out, it will soon be the largest source of primary energy in the
world, surpassing petroleum. So where is the coal; how is it used; and what
does the future hold for this the most carbon-intensive of fuels?
C
oal might be regarded as the oldest
energy source going, but it is still currently the world’s largest long-term
source of electricity. It fuels around 40%
of global electricity production, according
to the UK-based World Energy Council.
Coal consumption and production are
growing despite renewables taking an
increasing share of the energy mix in key
markets among member nations of the
Organisation for Economic Co-operation
& Development (OECD).
Some commentators say production has
or will soon peak and decline, but there
will probably still be recoverable coal
when the last barrel of oil and cubic metre
of gas have been extracted.
Reserves are high. Proven reserves of
hard coal are 730 gigatonnes (Gt), approximately 3.6tn barrels of oil equivalent,
according to the International Energy
Agency’s (IEA) Resources to Reserves
2013 report. Proven reserves of lignite are
some 280 Gt. Remaining recoverable
‘resources’ – not currently extractable for
economic, technical or other reasons – are
around 18tn and 4tn tonnes (18,000 and
4,000 Gt) for hard coal and lignite
respectively.
At current production rates, reserves to
production ratios indicate that reserves
should last 115 years, according to the
World Energy Council’s (WEC) October
2013 World Energy Resources (WER)
report based on the most recent data, for
2011, from WEC member committees and
from national and international published
sources.
Energy giant BP calculated there was
around 112 years of coal left at the end of
2011, while Herminé Nalbandian and
Nigel Dong, researchers at the IEA Clean
Coal Centre, projected 118 years more
coal from that date. Such estimates are
around double the 59 and 46 years that
recoverable gas and oil reserves respectively are widely expected to last,
Nalbandian and Dong noted in centre’s
August 2013 newsletter.
Coal was the world’s second largest
source of primary energy from 2000 to
2010 and should replace oil as the largest
‘within a few years’, according to the WER
report.
Abundance, affordability,
ubiquity
Coal is important because of its abundance, affordability and ubiquity: 70
countries have proved coal reserves and it
is mined in 50, the report found. Largest
reserves in 2011 were: US, 237 Gt; Russia,
157 Gt; China, 114 Gt; Australia, 76 Gt;
Germany, 41 Gt; Ukraine and Kazakhstan,
both 34 Gt; South Africa, 30 Gt; and
Colombia, 7 Gt.
Global trade in hard coal in 2011 was
1.14 Gt, 15% of world coal production,
the IEA found. Seaborne trade in steam
coal rises by around 7% a year on average,
and seaborne coking coal trade by 1.6% a
year.
The WER report noted that Indonesia
had overtaken Australia as the largest coal
exporter, exporting more than 300 megatonnes (million tonnes – Mt) in 2011,
although Australia was the main source of
coking coal, supplying around 50% of
world exports.
However, most coal is used where it is
produced. The WER report stressed the
particular importance of ‘significant coal
reserves in Asia and southern Africa, two
regions of the world that face major challenges in providing energy to their
populations.’
Two thirds of hard coal and 90% of lignite is used to fuel power plants. The IEA
Clean Coal Centre’s Coal Power database
of plants operating, mothballed or under
construction lists more than 2,300 coalfired power stations, incorporating 7,000
individual units. Around 620 of these stations are in China, it says.
‘Many countries with electricity challenges, particularly those in Asia and
southern Africa, are able to access coal
resources in an affordable and secure way
to fuel the growth in their electricity supply,’ according to Benjamin Sporton
commenting in the WER report as Deputy
Chief Executive of the World Coal
Association (WCA), the global industry
association of major international coal
producers and stakeholders. ‘Coal will
therefore play a major role in supporting
the development of base-load electricity
where it is most needed,’ Sporton added.
How robust are reserves data?
Coal was industrial energy’s first feedstock – will it stay a key player?
14
Photo: oatsy40, Flickr
How robust are data on resources and
reserves? The United Nations Framework
Classification for Fossil Energy and Mineral
Reserves and Resources (UNFC) is a widely
accepted methodology for reporting
‘resources’.
Using market-based economic criteria, it
allows incorporation and unification of
national systems into global reporting
while allowing their classification units
and glossary of local terms to be retained.
Energy World
December 2013
A Vattenfall power station in Saxony, Germany – powered by brown coal deposits in the
foreground
Photo: gbohne
However, resources as defined by the UN
are those that are currently not
extractable for technical, economic or
other reasons, the US-based Institute for
Energy Economics and Financial Analysis
pointed out in a September 2013 report
sponsored by environmental campaigner
Greenpeace.
The study controversially claimed that
Coal India, the world’s largest coal producer, used an outdated method to
overstate proved reserves by 16% during a
share flotation in 2010. The company,
majority owned by the Indian government, has denied the allegation and
insisted its methods for estimating
reserves were within Indian law. Still, the
argument underlined the need for caution in analysing data and comparing
what methods were used.
In fact, coal reserves can often be underestimated, the WER report noted: ‘Rather
than a lack of coal resources, there is lack
of incentive to prove up reserves.
Exploration activity is typically carried out
by mining companies with short planning
horizons, rather than state-funded geological surveys, and there is no economic need
for companies to prove long-term reserves.
Coal resources are often estimated to be as
much as four to five times greater than
estimated reserves.’ This, the report suggested, demonstrates potential to increase
coal reserves: ‘Furthermore reserve figures
do not consider alternative ways of accessing energy from the coal resource, such as
underground coal gasification,’ it added.
While technological advances may
increase estimates of recoverable reserves,
production is growing despite renewable
energy sources gaining a larger share of
the energy generation mix in key markets.
The share of coal-fired power generation
rose from 37% in 1990 to 42% in 2010,
according to the IEA’s 2013 Resources to
Reserves report.
In 2011, according to the WER report,
China was the largest coal producer
(3.38 Gt in 2011), followed by the US (1.1
Gt), India (516 Mt) and Australia (398 Mt).
Coal production increased significantly in
Indonesia (16%), Colombia (13%),
Ukraine (12%) and China (11%).
The UK-based World Coal Association
cites the top coal producers in 2010 as:
Coal India, 431 Mt; Shenhua Group, China,
352 Mt; Peabody Energy, US, 198 Mt;
Datong Coal Mining Group, China,
150 Mt; Arch Coal, US, 146 Mt; ChinaCoal,
officially the China National Coal Group
Corporation, 138 Mt; BHP Billiton,
Australia/UK,
104
Mt;
Shanxi
Coal International Energy Group Co,
China, 101 Mt; RWE Power, Germany,
99 Mt; and Anglo American, UK, 97 Mt.
Global coal consumption was 7.2bn
tonnes in 2010, according to the IEA, with
China consuming 46% of this, followed by
the US (13%) and India (9%).
The WER report found that five countries accounted for more than 75% of
consumption in 2011: China (48%), the US,
India, Russia and Japan. Coal consumption
fell by 2% on average across OECD countries; but outside the OECD, consumption
rose by 9%, mainly on growing demand in
China.
‘Despite projected declines in OECD
countries, coal use is forecast to rise by
more than 50% to 2030, with developing
countries responsible for 97% of this
increase, primarily to meet improved electrification rates,’ the report added.
Global coal production record
There have been forecasts in recent years
that ‘peak coal’ has been or is about to be
reached in the same sense that oil production will peak and then go into long-term
decline.
IEA statistics for 2011 estimated global
coal production at a record 7.7 Gt – 6.6 Gt
of this being hard coal and 1.0 Gt brown
coal – 6.6% higher in total than in 2010.
Energy World
December 2013
The peak coal scenario
In 2010, coal experts in America predicted that global ‘peak coal’ production
would be in 2011. One of them, Professor
Greg Croft of St Mary’s College of
California, says that while this has not yet
happened, production has slowed dramatically because of factors including
slower economic growth in China; substitution of natural gas for coal in the US;
depletion, as evidenced by increasing production depths in China, Russia and
Ukraine; and a shift to softer coal for
power generation in many areas.
Croft told Energy World: ‘I expect a
peak in hard coal, anthracite plus bituminous, production worldwide sometime
this decade. Hard coal is becoming scarcer,
while sub-bituminous coal production is
increasing and many known lignite
deposits are as yet unexploited. It means
the energy from coal will peak before the
tonnage produced does.’
The peak coal scenario is not hard to
envisage as major economies tackle emissions and pursue decarbonisation
agendas. Wind power could generate up
to 18% of the world’s electricity by 2050,
compared with 3% today, the 2013 edition of the IEA’s Technology Roadmap:
Wind Energy suggested in October.
Chronic air pollution in China
Take China, the biggest consumer of coal,
which has accounted for 82% of the
increase in world coal use since 2000,
according to the US Energy Information
Administration. In a September 2013
research note, analysts at Citi Research, a
division of Citigroup Global Markets, US,
said factors slowing the Chinese power
sector’s use of coal pointed to ‘a possible
flattening or peaking before 2020.’ One
such factor is concern over air quality.
Brought in to combat chronic air pollution
in key cities, the Chinese government’s
newly announced air pollution plan aims
to reduce air pollution levels in three key
manufacturing and population zones
from 2012 levels by 2017. This includes a
20% drop in the Yangtze region (which
encompasses Shanghai), while the Pearl
River Delta region around industry-heavy
Guangdong province has been earmarked
for a 15% drop. The third is the BeijingTianjin-Hebei area.
The plan, which directs provinces to cut
pollution through cutting coal consumption as well as industrial and car emissions,
aims to squeeze coal use to 65% of total
primary energy consumption in 2017,
from 70% in 2012. This will be achieved in
part through a ban on permitting new
coal-fired power plants in the three key
regions.
However, absolute coal consumption
cuts will depend on individual provincial
governments, which have been known to
be very protective of local interest over
national government targets.
Calvin Quek, a China-based climate
change analyst at Greenpeace East Asia, is
predicting that regional officials will this
15
International coal
time use the coal cuts as an excuse to shutter inefficient and outdated heavy
industry, in parallel to their coal consumption reduction targets. ‘Thus, these
consumption cuts are no mere environmental issues, but really a structural
readjustment
of
local
provincial
economies,’ he told Energy World.
This year, China’s August coal imports
were down 9.4% month-on-month, with
key suppliers such as Indonesia seeking to
create domestic demand for their coal,
given an 8% year-on-year drop in shipments to China in the first half of 2013,
according to the Chinese Customs
Administration. It is well-documented in
the Chinese press that, while a coal clampdown in the three east coast clusters will
affect use in those zones, much of China’s
economic and manufacturing growth has
shifted to less developed regions such as
Sichuan and Xinjiang provinces.
Still, Quek said gas and renewables: ‘are
now clearly favoured over coal.’ He
added: ‘In speaking with banks, analysts
and investors, the general near-term consensus is that the plan is positive for gas
and renewables, neutral for autos, and
neutral to bearish for power producers,
steel, cement and coal producers.’
A look to the future
China is of course not alone in pursuing
green energy growth and this global
trend will, assuming fuel prices are
favourable, spur investment in the spread
of higher efficiency coal-fired power stations; the use of renewables in co-firing
alongside coal; low emission coal technologies; and in carbon capture and
storage (CCS).
While these might moderate the rate at
which coal might otherwise be extracted,
the picture is complex. For example, the
greater the effectiveness of higher efficiency coal-fired power stations and CCS,
‘the less will be the emphasis on switching
to lower-carbon alternatives,’ the IEA
stressed in its 2013 Resources to Reserves
report.
Power generated from coal globally
releases more than 1,000 g of carbon
dioxide per kWh, but a state-of-the-art
coal-fired generation plant releases
around 74% of that. ‘So there is much
potential to reduce emissions simply by
deploying more efficient technology,’ the
IEA commented.
Fuel prices and carbon pricing will
clearly play roles in determining investment in prospecting, characterisation of
reserves, production levels and technology.
On coal mining trends, the IEA report
said: ‘Moving towards ever thinner,
deeper and less uniform coal seams poses
a number of challenges for mining, all of
which are likely to lead to an increase in
the cost of production. Alternatively, it
may trigger a move to exploit the abundant
reserves
of
shallower
but
lower-quality coal. Technology is constantly
being
improved,
offering
opportunities for those with state-of-theart mining techniques to export them to
regions where such techniques have yet to
be deployed.’
At some point in the future, declines in
demand for various coals will inevitably
reach tipping points beyond which supply
becomes prohibitively expensive, because
economies of scale are no longer available, but this is a long way in the future.
‘Coal is a major economic and energy
resource and will remain a key part of the
energy mix well into the future,’ Sporton
commented in the WER report.
Dr Alessandro Clerici, Chair of the World
Energy Council’s 2013 WER report and
senior corporate adviser to Italian technical services company CESI, told Energy
World: ‘In recent years, coal has often
been portrayed as a “dirty” fuel, mainly
due to its relatively high carbon dioxide
emissions. However, despite its poor environmental credentials, coal is expected to
remain the principal fuel for power generation for many years. Coal-fired power
plants are designed to run for three to
four decades to recover the investment
costs. It is therefore more appropriate to
look at the many decades of coal availability rather than ‘peak coal’.
He added: ‘It is important to underline
that there is a number of other factors
which may affect the reserves to production ratio, including a global agreement
on carbon dioxide emissions management, or wide deployment of CCS.’
●
Cleaner coal
Three ways to clean up coal-fired
power generation
Coal is likely to remain the world’s favourite fuel for
power generation for quite some time. So even
small improvements to its combustion process
efficiency and emissions footprint will be welcome.
Ian Barnes, Colin Henderson and Qian Zhu
summarise recent guidance offered by the IEA
Clean Coal Centre.
C
oal is expected to remain an essential energy source well into the
twenty-first century due to its low
cost and wide availability. However, as
coal-fired power plants are one of the
largest sources of carbon dioxide emissions, it is important that cleaner
technologies for coal utilisation in high
efficiency power cycles are developed.
One route to reduced emissions is by
retrofitting existing pulverised coal-fired
power plants to increase efficiency.
Alternatively, circulating fluidised bed
combustion (CFBC) has potential for lowering emissions of oxides of sulphur (SOx)
and nitrogen (NOx), especially for lower
quality coal. There is renewed interest in
integrated (coal) gasification combined
cycle (IGCC) power plants partly for their
potential compatibility with carbon capture and storage (CCS). All three subjects
are examined in this article, based on
work by the IEA Clean Coal Centre.
Efficiency improvement in
coal-fired power plants
Improving the efficiencies of the large
number of older coal-fired power plants
operating around the world would give
major savings in carbon dioxide emissions,
together with significant other benefits.
This could be achieved by improvements
to operating and maintenance practices
and through more major activities (retrofits). This article focuses on retrofits.
The efficiencies of coal-fired plants
decrease over time as components deteriorate with age and use. The losses that
develop in the earlier part of the life of a
plant can generally be contained by
employing good operating and maintenance practices. However, after about
25–30 years of operation, performance
and reliability will usually have decreased
to the extent that substantial works may
be merited, so that the unit can be
restored to efficient operation. The lower
performance of older plants also stems
Energy World
December 2013
from the limitations of the prevailing
technology at the time of plant design.
Retrofitting offers the opportunity to
incorporate technology advances made in
the period since the unit was built.
Retrofits will increase efficiency significantly, by up to as much as 2–3%, and may
compensate completely for loss of performance from the addition of
environmental control equipment after a
plant was first commissioned. For example, the annual average efficiency in
1982–83 of the first three units of Drax
power station (UK), with no flue gas
desulphurisation (FGD) equipment was
39% LHV. Recent turbine retrofit work has
now increased the efficiency to almost
40% LHV even with FGD. Major plant
upgrading involving conversion of subcritical to supercritical or ultra-supercritical
(USC) could raise efficiencies more substantially, but has seldom progressed
beyond studies because of the high cost.
Major boiler and turbine retrofits are
the main subject here, but optimisation of
the combustion process can also give valuable benefits in efficiency and costs. The
gain may typically be about 0.1–0.15% in
fuel cost saving, efficiency and carbon
dioxide emissions. Improvements in combustion efficiency can be achieved in
parallel with other improvements, for
example, reductions in primary NOx production from replacement burners and
new air supply arrangements. Intelligent
sootblowing systems can improve boiler
efficiency by 1% or more and reduce the
incidence of outages from fouling. Table 1
lists some potential efficiency improvements that could be made to plant in the
Asia-Pacific region.
Programmes to drive efficiency
improvements of coal fleets are important
and include Australia’s Energy Efficiency
Opportunities Program, the USAID
CenPEEP programme in India and India’s
Partnership
in
Excellence
(PIE)
Programme. Notably, China has recently
set up a major programme providing
incentives for plant owners to carry out
upgrading and efficiency improvements
through retrofits, with a total capacity of
over 350 GW expected to have been
improved or to be undergoing improvements by 2015. Many companies provide
efficiency improvement and upgrading
services.
An interesting example from China is
one of relentless pursuit of all the smaller
potential losses in a new USC plant, to
push efficiencies higher, by focusing on
detailed areas, including those not previously recognised as worthy of attention.
One conclusion drawn is that there may
be other unrecognised losses capable of
being reduced.
Category
Area of improvement
Combustion
systems
Pulveriser and feeder upgrades
Air heater repair or upgrade
Sootblower improvements
Excess air instrumentation and control
0.3
0.25
0.35
0.2
Steam Cycle
Feedwater heater repairs
Heat transfer tube upgrades
Steam turbine blades
Cycle isolation
Condenser repairs
0.4
0.6
0.5
0.5
0.4
O&M
O&M training
Computerised maintenance and management
systems and reliability centred maintenance
Distributed control systems
Combined total
Net efficiency gain (%)
Included in
combustion and
steam cycle gains
3.5
Table 1. Potential plant efficiency improvements for APEC countries
17
Cleaner coal
Best practice in plant upgrading and
improvement is also important. The first
requirement is to reduce losses through
better operational practices, including
monitoring of important plant parameters. A unit identified for retrofitting
should have potential for long life, secure
fuel availability and high future capacity
factor. It should have a good track record
of competent management, and the
recent history of plant faults must indicate
good prospects of achieving sustainable
improvements. The improved plant must
have a future-proof environmental control strategy with secure outlets for waste
streams as by-products. A thorough plant
examination should follow, including current performance measurements.
In planning the upgrading and refurbishment activities, the components that
require replacement or renovation have
to be identified. The proposed work then
needs to be analysed in detail in order to
provide estimates of performance and
reliability improvements, carbon dioxide
savings and costs.
There is extensive expertise and experience available among the major suppliers
of new plants and other companies
involved in retrofit work. Projects have
been realised on schedule or ahead of
time and gains in efficiency and output
have been substantial. Overall, environmental and economic benefits are
routinely achievable from plant modernisations and the potential gains are now
very considerable. Progress is being made
to realise these gains through projects at
increasing numbers of plants. Technology
sharing between all countries will be valuable in increasing the benefits.
Developments in circulating
fluidised bed combustion
Circulating fluidised bed combustion
(CFBC) offers several benefits as an alternative to pulverised coal combustion (PCC)
for power generation. CFBC boilers are
extremely flexible, allowing a wide range
of fuel qualities and sizes to be burned.
Emissions of SOx and NOx are significantly
reduced without the addition of expensive flue gas emissions control systems.
This is due to the fact that the combustion
temperature in a CFBC boiler (800–900°C)
is significantly lower than in a PCC boiler
(1,300–1,700°C), which results in considerably reduced NOx formation compared to
PCC. The majority of the sulphur in the
coal is captured by limestone that is
injected into the furnace; about 90–95%
SO2 reduction can be achieved.
The lower combustion temperature also
limits ash fouling and corrosion of heat
transfer surfaces, allowing the CFBC to
handle fuels that are difficult to burn in a
PCC boiler. Even though the combustion
temperature of a CFBC boiler is low, the
circulation of hot particles provides efficient heat transfer to the furnace walls
and allows a longer residence time for
combustion and desulphurisation reac-
18
feed water
steam
ammonia
injection
state-of-the art
quality control system
solid
fuel
cyclone
collector
heated air
to boiler
limestone
air
pre-heater
circulating
fluidised-bed
boiler
economiser
secondary
air
air
lime slurry
reheat
exchanger
particulate
control
device
stack
air
condenser
air
bed ash
to by-product storage
air
high temperature steam
low temperature steam
water
particulate
lime slurry
to by-product storage
polishing scrubber
steam
steam turbine
generator
Figure 1. A CFBC power generation plant
tion. This results in good combustion efficiencies, comparable to PCC boilers.
CFBC technology was developed to
burn low grade and/or difficult-to-burn
fuels. Figure 1 shows the layout of a typical CFBC power plant. Many existing CFBC
units are fired with waste coal and serve
to clean up waste piles left over from mining activities. CFBC technology has been
employed for power generation for over
25 years and the technology is still evolving. Almost all of the existing CFBC power
generating units are small in size (<330
MWe compared to >1000 MWe for a PCC
boiler), and use subcritical steam conditions that makes CFBC systems less
efficient than supercritical/ultra-supercritical PCC plants. The poorer economy of
scale and lower efficiency of the CFBC
plants result in higher plant costs and has
limited its deployment.
Over the last decade, significant
advances have been made in scaling-up
CFBC units and in the adoption of supercritical (SC) steam cycles. Alstom and
Foster Wheeler both adopted oncethrough boiler technology in their large
SC CFBC boiler design. In 2009, the first
supercritical and the largest hard coalfired 460 MWe CFBC power generating
unit was successfully commissioned in
Lagisza, Poland. More coal-fired SC CFBC
power plants with unit sizes of 550 and
600 MWe are under construction or being
commissioned in South Korea and China.
Today, SC CFBC boilers with capacities
up to 800 MWe are commercially available. It is anticipated that future CFBC
power plants will routinely use advanced
steam parameters. In addition to the
increase in size and the use of advanced
steam cycles, the engineering designs of
the CFBC furnace, solid separation system,
ash cooler, as well as the arrangement and
designs of heat exchangers continue to be
improved. The operation of CFBC systems
has also been optimised. Many problems
encountered in the early years of operat-
ing CFBC plants have been addressed and
CFBC technology is emerging as a real
competitor to PCC systems.
Intensive R&D is ongoing to develop
and commercialise technologies for carbon capture and storage (CCS). For PCC
and CFBC boilers, oxyfuel combustion systems that produce high purity carbon
dioxide exhaust streams ready for carbon
capture are under development. The basic
concept of oxyfuel firing with today’s PCC
and CFBC technologies is to replace combustion air with pure oxygen. However,
firing coal in pure oxygen would result in
a flame temperature too high for existing
furnace materials. In order to allow conventional combustion equipment to be
used, the combustion temperatures have
to be moderated by recycling a proportion
of the flue gas and mixing this with the
incoming oxygen.
The remainder of the flue gas that is not
recirculated comprises mostly carbon dioxide and water vapour. The water vapour is
easily separated by condensation, producing a stream of carbon dioxide ready for
storage. An optimised oxyfuel combustion
power plant will have ultra-low emissions.
A power generation technology based on
oxy-CFB with carbon dioxide capture will
provide typical benefits of CFBC boilers, in
particular the fuel flexibility. In addition,
higher oxygen concentrations in the combustion gas are expected to increase
combustion efficiency and reduce the flue
gas flow rates and thus increase the boiler
efficiency. Smaller furnace volumes may
reduce costs of the boiler island.
Also, oxy-CFB technology may have
some advantages over oxy-PC combustion
designs. When oxyfuel combustion is
applied to a CFBC boiler, the combustion
temperature can be controlled by recycling a portion of the cooled solids to the
furnace through a fluidised bed heat
exchanger, therefore minimal flue gas
recirculation is required. This characteristic
allows the oxy-CFB boiler to be made
Energy World
December 2013
Operating experience and
improvement of commercial
IGCC
Coal gasification, by which coal is converted into a fuel gas rich in hydrogen and
carbon monoxide, has been undertaken
on an industrial basis for over two hundred years. In the 1970s one technology,
integrated (coal) gasification in a combined cycle (IGCC), offered the promise of
generating power from coal at high efficiency with low emissions and this sparked
R&D activity aimed at demonstrating and
commercialising these plants.
Today, IGCC has reached a status where
experience is available from first and second generation plants, built in the
1970s/1980s and in the 1990s respectively,
as commercial-scale demonstration plants
for coal-based applications. These plants
feature variations on gasification technology and subsequent environmental
controls and in operating them a number
of lessons have been learned that will help
to improve the next generation of IGCC
projects.
The IGCC plants studied (from Spain to
Japan) have accumulated many thousands
of hours of operation on a range of coal
and, in some cases, co-fuel feedstocks. The
plants feature important differences in
technology, especially in the selection of
gasifiers, but also commonalities. The one
development that runs across all IGCC
operations is the development of high
performance gas turbines for the utilisation of syngas. Unlike natural gas which
mainly consists of methane, the combustible components of syngas from coal
are mostly hydrogen and carbon monoxide. The combustion properties of
hydrogen and carbon monoxide are quite
different from those of methane and the
high flame speed, high flame temperature
and wide flammability range of hydrogen,
along with low ignition energy and low
density, may cause blowout and flashback.
Future IGCC plants will require reduced
Energy World
December 2013
100
90
80
70
Availability, %
smaller and less expensive in a new unit
application.
Oxyfuel combustion based CFBC power
plants concepts are being developed and
validated. Foster Wheeler is developing an
oxy-CFB combustion system called FlexiBurn CFB. A European R&D initiative
focusing on CCS is the Technological
Centre for CO2 Capture and Transport,
which is supported by the Spanish
Government through the Fundación
Ciudad de la Energía (CIUDEN). A
30 MWth pilot-scale oxy-CFB demonstration unit at CIUDEN was commissioned in
September 2011 and a series of tests have
been carried out. The test results will be
used to validate the design of the OXYCFB300
Compostilla
Demonstration
Project’s 300 MWe SC oxy-CFB boiler. The
OXYCFB300 commercial demonstration
plant has already attracted EU funding of
€180mn for pre-feasibility studies, with
the intention of operating in 2015.
60
50
40
Nuon
Wabash
30
TECO
Elcogas
20
Nakoso
10
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Year of operation
Figure 2. Coal IGCC availability
emissions of carbon dioxide and a typical
decarbonised syngas with 90% carbon
dioxide removal contains over 90% hydrogen. More diluent is required for NOx
reduction, depending on several factors
such as the type of gasifier, heat recovery
and air separation unit. Decarbonised syngas may require derating of the turbine
firing temperature. Zero air integration,
which reduces operating complexity, may
be advisable for a plant which is carbon
capture ready. Various configurations for
carbon dioxide reduction in IGCC for hard
coal result in a wide range of relative
losses in the net plant efficiency. The
effect on performance of an IGCC of converting to hydrogen firing which had
been initially optimised for syngas is currently uncertain.
IGCC plant is inherently a high efficiency
technology from its use of closely-coupled
combined cycle generation, but the complexity necessary for this configuration can
also introduce problems with plant availability. IGCC availability is therefore,
perhaps, the most important technical
issue governing the success or failure of
this plant. All the plant studied show a similar trend in ‘getting to grips’ with plant
operation and maintenance issues. Figure
2 sets out the rise in plant availability from
initial start-up to more established operation – in some cases fully-commercial
generation for five IGCC plants.
Many of the improvements described
arise from a careful study of the performance of the plant and the reasons for
failure and this is reflected in the figure
where plant has generally ‘settled down’
after about five years use. The improvement of plant has primarily been
undertaken by the plant operators, but
the existence of a considerable body of
published information and regular systems of information of exchange such as
the
Freiberg
and
Gasification
Technologies Council Conferences means
that developments can benefit from crossfertilisation. The Nakoso IGCC has
demonstrated an impressive accumulation
of operating experience in a very short
time and this may be due to learning lessons from earlier IGCC plant.
However, IGCC still appears to be less
attractive to investors than conventional
PC combustion plant. Specifically there are
few incentives for ultra-clean technology
such as IGCC since new PC-fired plants
have reduced emissions and in most locations can meet the current environmental
standards. Importantly, PC is a very wellknown and accepted technology in the
power industry and most of the new coal
plants that are being developed worldwide are PC plants with high efficiency
cycles and emissions control technologies.
A large number of IGCC projects have
been announced, offered for sale, and
then failed to proceed. However, some
countries with large and strategically
important coal deposits are continuing to
develop IGCC plants. In April 2012, China’s
first coal-gasification power plant opened
in Tianjin. GreenGen is the world’s largest
IGCC generator and is also the first plant
built explicitly as a test bed for capturing
carbon. The future prospects for IGCC will
depend heavily on the performance of
plant such as this, as well as developments
in the wider energy world.
●
Ian Barnes, Colin Henderson and Qian
Zhu are analysts and authors for the IEA
Clean Coal Centre.
This article has considered a variety of
ways to increase the efficiency and
reduce the emissions from getting
energy from coal. It is based on reports
published by the IEA Clean Coal Centre.
Residents of member countries (the UK
is one) can register at www.iea-coal.org
and download reports at no charge.
19
CCS
Accelerating the development
of CCS in the UK
Little progress has been made so far with full-scale carbon capture and storage
projects in the UK. Here, Den Gammer, CCS Strategy Manager for the Energy
Technologies Institute, argues that early action and a national infrastructure
approach are essential, both to the CCS industry and to the national interest.
C
arbon capture and storage (CCS) is
one of two critical levers (alongside
bioenergy) in delivering an affordable, secure and sustainable UK energy
system. Not equipping the UK with a
national CCS infrastructure would double
the cost of reaching the UK’s Climate
Change targets from a minimum of
£30bn/year in 2050. This is the equivalent
of an additional 2p/kWh on all UK energy
use in 2050. Therefore the economic prize
of CCS to the UK is potentially huge.
Our modelling work shows that each
five years of delay in implementing CCS
until 2030 will add the equivalent of £4bn
per annum to the total cost of the UK
energy system. The importance of CCS lies
in its capability and flexibility to reduce
carbon emissions from a large range of
activities. It also has the potential for relatively low production costs when practiced
at scale. For example in the power sector, a
fossil fuel plant fitted with CCS can not
only provide clean electricity at an attractive base load price, but it can also operate
in a role which offers the lowest cost additional power when peaks in demand occur.
Why CCS?
Whilst there are other affordable ways to
generate power, CCS might be the only
practical option for avoiding industrial
emissions. Also, by applying CCS to biomass, the country can effectively remove
carbon dioxide from the atmosphere, creating ‘negative emissions’. These could
offset our continued use of gas and liquid
fuels in specific parts of the domestic heating and transport sectors, where their
replacement is likely to be particularly difficult and hence very expensive.
CCS creates a huge opportunity to save
energy system costs if it is adopted early
enough, but there are large challenges.
Capturing carbon dioxide on a large scale
incurs significant costs, and storage of carbon dioxide has long planning times –
selecting, appraising, drilling, testing and
constructing potential sites could take up
to 10 years.
The most effective way to implement
CCS is through a national infrastructure,
comprising a handful of shared transport
and storage networks, because this captures economies of scale and drives asset
utilisation. Initially, these networks would
20
reduce power generation emissions, but
then extend to meet industry needs and
allow for the clean production of hydrogen
from biomass, waste and fossil fuels. The
development of this national infrastructure
is vital for any future CCS industry in the
UK. Planning, developing and proving the
national infrastructure is now on the critical path for future success because of the
long timescales involved, especially for the
technical and regulatory processes involved
in carbon dioxide storage appraisal.
How has the ETI supported
CCS?
The ETI has so far committed to invest
£55mn in a range of CCS projects, which
include, first, the UK CO2 Storage
Appraisal (UK SAP). This project gathered
data on potential carbon dioxide storage
sites around the UK. The database has
been commercially available since June
2013 under license from The Crown Estate
and British Geological Survey through a
platform called CO2 Stored. The webenabled database – the first of its type
anywhere in the world – contains geological data, storage estimates, risk
assessments and the economics of nearly
600 potential carbon dioxide storage units
of depleted oil and gas reservoirs, and
saline aquifers around the UK.
The project found that the UK is potentially well served with offshore storage
and, although various estimates have
been made of the total amount available,
these figures vary widely. This database
enables interested stakeholders to access
information about storage resource and
to make more informed decisions related
to the roll out of CCS in the UK.
Second, the ETI is currently seeking
organisations to take part in a multimillion pound project to accelerate the
development of advanced carbon capture
technologies for gas-fired power stations.
We recognise that both coal and gas-fired
power generation will remain a core part
of the UK generating mix for the foreseeable future.
We launched a project last year (led by
Inventys Thermal Technologies, in collaboration with Howden Group and Doosan
Power Systems) to develop their advanced
carbon capture technology for gas-fired
power stations.
Third, assisted by ETI funding, National
Grid has completed the UK’s first drilling
assessment of a saline formation site for
the storage of carbon dioxide, 70 km off
Flamborough Head in Yorkshire in August.
Early indications are that the undersea site
is viable for carbon dioxide storage and
will be able to hold around 200mn tonnes
permanently. This is equivalent to taking
10mn cars off the road for 10 years.
Fourth, a report in partnership with the
Ecofin Research Foundation into attracting private sector finance to support the
development of CCS was published in late
2012. This concluded that successful
deployment of the technology could be a
huge economic prize for the UK in its low
carbon transition – cutting the annual
cost of meeting the country’s carbon targets by up to 1% of GDP by 2050. The
report explored the challenges that both
the public and private sector needs to
overcome to help build CCS into a viable
low carbon industry that is economically
competitive.
Making early CCS projects investable is
a key priority to allow CCS to develop as
an industry and fulfil its potential in the
UK’s transition to a low carbon economy.
Both ETI and Ecofin believe that creating
a vision for CCS financing requires willingness on the part of the key public and
private sector players to engage and to
explore the issues and options openmindedly.
Last, the ETI launched a project in early
2013 with Foster Wheeler and the British
Geological Survey to assess flexible power
generation systems. The project is to
increase the understanding of the economics and potential use of energy
systems involving low carbon hydrogen
production, storage and flexible turbine
technology. It has assessed the economics
of flexible power generation systems
which involve the production of hydrogen
from coal, biomass or natural gas, its intermediate storage (for example, in
underground salt caverns) and the production of power in flexible turbines.
The ETI will now look to map suitable
hydrogen storage salt cavern sites in and
around the UK. The sites – which tend to
be located inland or up to 25 miles off the
UK coastline – will need to be of sufficient
size, depth, location and quality before
Energy World
December 2013
The drilling platform used for the project with National Grid, Endeavour, was used to carry
out the UK’s first drilling assessment of a saline formation site for the storage of carbon
dioxide, at a site 70 km off the Yorkshire coast
they can be considered for suitable
hydrogen storage.
What have we found so far?
Our modelling indicates that about 3 to 4
gigatonnes (Gt) of carbon dioxide storage
are needed by 2050 if the UK is to adopt a
lowest cost solution in order to meet its
climate change targets, all of which could
be accommodated within UK waters. Our
modelling suggests that final investment
decisions on capture projects will depend
on a significant degree of confidence and
commitment to specific storage sites. We
anticipate that final appraisal will be
required for 2 Gt by 2025, 4 Gt by 2030
and 5 Gt by 2050.
Large saline aquifers can provide
economies of scale in CCS. Networking
onshore emitters would allow these
economies of scale to be realised, whereas
offshore networks permit the re-use of
infrastructure, driving cost further down.
A storage design of six onshore hubs, less
than 20 stores and with a net present cost
of less than £5bn should then be sufficient
to furnish the nation’s needs.
Although development of CCS around
the coast will be necessary to affordably
store emissions, the development of the
southern North Sea is key to keeping
transportation and storage costs
down. This is because much of the
Energy World
December 2013
emissions are from eastern and southeast England.
Cheaper capture technologies are
required and more stores will need to be
appraised because currently very few are
credibly ready for storage. Having readyto-use storage takes a large burden off
the emitters involved in a CCS project.
Critically, there is an urgent need to
demonstrate full chain CCS for power stations, which is where the government’s
£1bn CCS commercialisation competition
comes in.
The next steps for CCS
Fossil fuel power generation can occupy
the gap in cost-effective base load generation that new nuclear capacity does not
fill, should nuclear build remain slower
than expected. Unabated gas will provide
the flexible generation required for periods of high demand and to support the
intermittency of renewables.
The capture of carbon from the power
sector is a key feature of the lowest cost
pathway to meeting 2050 climate change
targets, and CCS, if fitted and run at full
load, would reduce emissions at a cost of
£45–85/tonne.
Over a wide range of scenarios explored
through our modelling, the carbon dioxide storage rate needs to be ramped up to
around 100 Mt/year by 2030. Early-stage
store appraisal and infrastructure planning are key to minimising costs and risks
in the use of geological storage.
In addition to assessing the security of
the stores, projects will have to consider
ease of expansion and interfaces with the
oil and gas industry.
The currently anticipated rate of renewables growth will require significant
flexible generation capacity, given the
extraordinary peakiness of electricity
demand. CCS systems can operate at high
loads and provide flexible power by producing and storing hydrogen in salt
caverns. The hydrogen can be manufactured from gas, coal or biomass and stored
when power is not required. When power
is demanded, the hydrogen would be
drawn from the store and burned in flexible turbines and these are likely to be the
only system components in part-load use.
Moreover, the gasifiers and CCS equipment
may operate at high load. Hydrogen may
also find use in decarbonising other sectors
– transport and industrial applications.
To be economic, early transport and
storage networks must build off the platform of the DECC commercialisation
competition for CCS, which will make
available £1bn of capital funding,
together with additional support through
the UK Electricity Market Reform, to support the design, construction and
operation of commercial-scale CCS.
CCS, renewable power and nuclear
power, combined with increasing energy
efficiency, will help form the right mix for
the greatest environmental impact.
Seizing the initiative
Our investments in CCS knowledge and
technology will, we hope, create global
business opportunities and enhance the
UK skills base and industrial capacity.
Importantly, we should not delay the
demonstration of the CCS chain at full
commercial-scale in the UK, since the benefits of scale, supply chain development
and reduced cost of finance from demonstrating the end-to-end model early is,
over time, more important than technology development.
Of equal importance is the need to
develop business and regulatory models
to reduce market uncertainty and attract
private sector investment.
CCS is a critical global technology; and
the development of technological capability and capacity can provide the UK with a
major business opportunity. However, if
we are to capitalise on CCS, time is of the
essence. The economic rewards of largescale investment in the upgrade of the UK
energy system are potentially huge and,
at a time when our industry in other sectors is struggling, we must embrace new
energy technologies for economic as well
as scientific reasons.
●
Den Gammer is the CCS Strategy Manager
for the Energy Technologies Institute (ETI),
www.eti.co.uk.
21
Coal gasification
Unlocking stranded coal with deep
underground coal gasification
Deep, stranded coal seams lying under Britain’s land mass and coastal regions
could become a substantial source of new low carbon ‘syngas’ supplies. Cluff
Natural Resources aims to achieve this by underground gasification.
T
he UK has become one of the world’s
most gas-dependent states and as a
result is facing an energy supply
deficit, with Ofgem warning that the UK
back-up energy stocks will fall to 2% by
2015. In order to address the UK’s dwindling energy sources, rather than
targeting shale gas via the much debated
hydraulic fracturing, deep underground
coal gasification (UCG) is a proven process
that targets stranded coal in a safe way,
producing low cost clean energy in the
form of ‘syngas.’
In November 2012, the UK government
published a gas generation strategy which
proposed up to 20 new large gas-fired
power stations over the next 15 years to
generate electricity as old coal burning
plants and other nuclear plants close. This
will almost double the amount of gas the
UK uses to generate electricity and a
diversified gas feedstock will be crucial to
balance security of supply and price.
Syngas from under the North Sea could
soon be a vital alternative supply to the
industry. No new nuclear power stations
will be built in the UK before 2023, but
the UK can both meet carbon resolution
reduction targets and ‘keep the lights on’
with gas produced from the billions of
tonnes of stranded coal both offshore and
onshore.
Deep underground coal
gasification
Deep UCG is a proven industrial process
which enables coal, in situ, to be converted
into syngas by partial combustion. This gas
is bought to the surface via a production
well. This is achieved by drilling two boreholes from the surface, one to supply
oxygen and steam, the other to bring the
product gas to the surface. This industrial
gas can be used for power generation as
feedstock to the chemical industry and to
create synthetic fuels. The gas can be
processed to remove carbon dioxide
before it is passed on to end users, thereby
providing a source of clean energy with
minimal green house gas emissions.
UCG provides a clean and convenient
source of energy from coal seams where
traditional mining methods are either
impossible or uneconomical – without the
use of fracking.
The concept of underground coal gasification is not new, with trials taking place
as long as a century ago, and subsequent
22
trials, primarily in coal
seams lying close to the
surface (less than 200 m
deep).
However
the
significant change in
the
development
of
UCG technology became
apparent
with
the
European trial in the
Teruel Region of Spain
(1992–1998)
which
demonstrated that using
recent
developments
from the oil industry it
was possible to undertake
directional drilling within
a coal seam some 500 m
beneath the surface and
gasify the coal. In addition there appeared to be Onshore underground coal gasification
advantages in gasifying
at greater depth, in terms of gas quality.
Furthermore government policy is supAs the UK is well placed within Europe,
portive in encouraging the development
having large resources of indigenous coal
of cleaner coal technologies stating that
still remaining both onshore and offshore
‘the potential for UCG in the UK relates
in the North Sea (around 17bn tonnes:
not only to reducing environmental emisBritish Geological Survey), these resources
sions but also to ensuring security of
have the potential to provide security of
energy supply and maintaining an
future energy supplies long after North
acceptable level of diversity of energy
Sea oil and gas are exhausted. Given the
supply.’
decline in conventional coal mining operThe deep UCG technique offers many
ations in the UK and the increasing
financial and social benefits over tradidependence on imported energy supplies,
tional extraction methods, most notably
by applying the latest UCG technology to
lower emissions, as no coal is brought to
the UK’s remaining deep coal seams
the surface, and the gas can be processed
cleaner energy can be generated from our
to remove its carbon dioxide content. ●
indigenous coal.
Cluff Natural Resources
Cluff Natural Resources is aiming to
become a pioneer in the unlocking of
stranded coal in the UK, 75% of which of
have been untapped, in order to keep
the lights on.
The company, established by UK
resource entrepreneur Algy Cluff, is the
only AIM listed company focused on
unlocking the energy potential in the UK
via the UCG process. In 1975, Cluff was
involved in the discovery of the Buchan
oil field, the 14th discovery made in the
UK North Sea, and now, rather than
focusing on the hydrocarbon potential
of the sea beds, he has turned his focus
to the abundant UK coal reserves, for
energy.
The company currently has 100%
working interest in five UCG licences in
the UK with an estimated resource of
1.75mn tonnes of coal covering a total
of 31,000 hectares of predominately
offshore UK. The licences are located in
Carmarthenshire, South Wales; the
Dee Estuary, on the North Wales/
Merseyside border; Whitehaven in
North Cumbria; and Largo Bay and
Kincardine in the Firth of Forth,
Scotland. These licences were selected
based on the thickness and quality of
the coal. Once planning and environmental permits are in order for the
licences, it is intended that they will be
developed to production.
●
www.cluffnatuaralresources.com
Energy World
December 2013
What does it
take to make it
in energy?
Visit careers.energyinst.org
Your source for:
• Degrees and
courses
• Job profiles
• Professional
development
support
and much more...
Lean, green and
mean – meeting
energy efficiency
targets
16 January 2014
Energy Institute, London
At this conference we will examine the opportunities available as well
as the barriers that need to be addressed if we are to meet the UK
Government's ambitious energy efficiency targets.
Confirmed speakers:
• Peter Atherton , Equity Research – Utilities, Liberum Capital
• Malcolm Ball, Director, Green Investment Bank
• Dr Steven Fawkes CEng FEI, Non-Executive Director, Bglobal
• Mark Gouldstone, ISO50001, BSI
• Professor Martin Fry CEng FEI, Director, Martin Fry Associates
• Nick Katz, Market Development, Honest Buildings
• Myles McCarthy, Managing Director, Carbon Trust Implementation
Services
• John Mulholland CEng MEI, Founder and Principal Consultant,
Mulholland Energy Solutions
• David Purdy, Director, Energy Efficiency Deployment Office
For more information contact: Rebecca Richardson,
t: + 44 (0)20 7467 7174; e: [email protected]
www.energyinst.org/energy-efficiency
Energy Institute
A professional workforce
at every level
Are your engineering technicians getting the right
professional support? Here, Sarah Beacock FEI and
Kevin Dinnage CEng FIChemE outline how the EI’s
EngTech registration programme can help.
I
n March 2012 the Technician Council
reported that the UK will need an estimated 450,000 new or replacement
professional STEM (science, technology,
engineering and mathematics) technician
roles by 2020. Technicians make up over
half the nation’s professional engineering
population and are an essential component of the capability the profession
provides to UK plc. All engineers will
know full well that without the practical
skills and technical competence of engineering technicians, new technologies
would never get beyond the drawing
board; buildings and plant would never
be constructed to enduring high standards, and the safety and environmental
integrity of any equipment in operation
could never be assured.
Yet despite this, whilst the professionalism of over a third of those who have
graduated in engineering is publicly
recognised through the achievement of
‘Incorporated’ or ‘Chartered’ status, the
equivalent professional recognition available to technicians – ‘EngTech’ – has been
taken up by less than 1% of the potential
population. As a consequence, the registered membership of the Professional
Engineering Institutions (PEIs) does not
mirror the profession they represent. If it
were to do so, there would be almost
300,000 rather than 14,500 EngTech registered members.
Although there have been recent
improvements in the number of individuals becoming EngTech registered – with an
average annual increase of about 15% –
an 800% increase in new registrants,
which is then maintained for eight years
without loss, would be required simply
to capture a nominal 10% of the
current ‘market’ and result in 100,000
registrants.
Aims
Actions
Provide leadership by establishing and
publishing a strategic vision for 2023
that sets aspirational intermediate and
final targets for the number of
registered technician members of their
organisations.
Working with our members, including
Company Members and EI Partners, to
develop a plan for achieving 1,000+ new
EngTechs by 2023.
Resource for success by securing and
committing sufficient resources to
identify and deliver improvements to
the value offered by the EngTech
‘product’.
Surveying our existing members to
identify the membership services that
would be of value to EngTech members,
developing membership workshops
specifically aimed at this grade for
in-house delivery.
Engage widely by working with
employers, vocational learning providers
and unions to explore ways in which to
raise the awareness and value of
technician registration.
Developing a communications plan for
targeting those employers that employ
technicians and want to make the most
of their skills and capabilities as well as
attracting the next generation of skilled
workers.
Address actions recommended in the
Project TRaM report.
Our first step is to invite you to
participate in the project via this article.
Tell us about your engineering
technicians and find out how your
organisation can benefit.
Please contact Sarah Beacock on
t:+44 (0)20 7467 7170 or
e: [email protected]
Table 1: The Energy Institute’s EngTech work programme
24
What next?
Achieving professional recognition provides significant benefits to technicians
and their employers alike – not least
because EngTech offers a benchmark quality standard which provides (through
UK-SPEC – the UK Standard for
Professional Engineering Competence)
a straightforward, universally understood statement of achievement and
competence.
Added value
Bruce Buchan at Score (Europe) is a
strong believer in the value of EngTechs
to his business. His company has already
registered over 70 mechanical engineering technicians in the last four
years. The company believes in developing staff at all levels to their full
professional capacity and, as a service
company to the oil and gas industry,
Score’s clients recognise and value the
professional status that their technicians hold. Some have even extended
this appreciation to investing in the
capacity of their own staff at this level.
Although some companies resist such a
move through concern at losing qualified staff to a competitor, Bruce is clear
that the value of fully trained and competent EngTechs hugely outweighs the
risk of them moving to a company that
does not value them in the same way.
The principles of competence development and commitment to their own
ongoing professional development at
all stages exactly mirrors that required
of other grades of registrant. The technician develops new skills on their way
to registration through both formal
and informal training. Bruce believes
that this development process combined with the need to meet EngTech
competences results in a real difference
to their ultimate productivity and value
to the company. The EngTechs themselves also see the value of their path
to professional status. They are
reminded that putting their professional status after their name on work
reports means something to those that
are appraising their work and accepting their status as competent
professionals.
Once the technicians receive their
EngTech qualification, they are encouraged to add their post-nominals on
e-mails to demonstrate to colleagues
and clients both their own and the
company’s commitment to the professional standards they represent.
Ongoing contact with their membership
body
gives
them
the
understanding at an early stage of the
value of being attached to their
professional institution and the
future professional development
opportunities available.
Energy World
December 2013
So, what needs to be done to persuade
technicians, with the support of their
employers, to follow the example of the
14,500 existing EngTechs?
To help answer the question, the
Engineering Council commissioned a project (Project TRaM) in May 2012, sponsored
by the Gatsby Charitable Foundation, with
the following aim: ‘To create and launch a
revised registration product that is valued
by employers and is embraced by technicians’. The project’s initial report provides
concrete evidence of the need for action
and prioritises the importance of many
anecdotal insights which will be familiar
to those who have been concerned about
this issue over the years.
Whilst the report highlights a number
of challenges and barriers that need to be
tackled, it also provides positive messages
and clear guidance to help focus on delivering a step change increase in the
number of EngTech registrants. The
Energy Institute (EI), as one of the professional bodies that registers EngTechs, has
joined others in seeking to use the report’s
findings to provide a registration option
to a target of 1,000 UK technicians in the
energy industry.
Positive messages
Amongst the key findings arising from 50
one-to-one interviews with engineering
technicians and their employers, and an
online survey of almost 1,000 technicians
in work or in training, including over 250
who were not PEI members, were a number of positive messages to build on:
• Based on responses from the whole
sample, engineering technicians are
generally aspirational individuals
wanting to achieve and further their
careers.
• Those that are professionally registered largely believe that registration
helps them achieve these aspirations.
The main reasons cited by technicians
for becoming registered are that it
gives them recognition for their skills
and competence and improves their
career prospects and employability
(see Figure 1).
• Employers who already actively support registration were very clear
about its benefits to their employees
and their organisations, and provide
good case studies for the value of
EngTechs.
• Over 80% of registered technicians
would recommend EngTech to fellow
technicians.
Challenges ahead
Inevitably, there were a number of more
challenging messages offered by the
research which include:
• The age profile and retention of
EngTechs joining and leaving the register has a long way to go to mirror
that of Chartered Engineers who
become registered early in their
Energy World
December 2013
Figure 1: Engineering technicians become EngTech registered to be recognised for their skill and
competence – the graph lists the main reasons why those surveyed first chose to register for
EngTech certification
Source: Project TRaM
Taking the first step
Rob Harrison EngTech TMEI at Metco
Emerson Process Management is one of
the EI’s newest Engineering Technicians
who has been in the energy industry
since the age of 17, when he started as
an Instrumentation Apprentice at
Coryton oil refinery in Essex. After completing an HNC in Instrumentation and
Control, followed by an Advanced
Modern Apprenticeship, he was promoted to Analyser Technician and later
Senior Analyser Technician when the
refinery changed hands from BP to
Petroplus. Since the closure of the refinery Rob has moved to his new post as a
Metering Technician and Analyser
Specialist and works on Nexen’s Buzzard
platform in the North Sea, where he is
also the Safety Officer.
It was at the time of leaving Petroplus
that Rob decided a professional qualification would be a good step for any
future career moves. He sought the
advice of the EI and Chair of the
Membership Panel, Clive Walter, who is
also Chair of the EI’s Essex and East
Anglia Branch, on how to go about it.
He says: ‘After leaving school I was
good at repairing things and doing
things of a technical nature. I considered
various job options, but nothing
appealed as much as the refinery. It
offered a varied career with lots of different experiences, opportunities for
travel and potential for development in
an industry of obvious national and
global importance. I was always one of
the youngest in the workshop, but managed to progress by always being
available when needed and volunteering
to have a go at new challenges.’
Applying for EngTech has whetted
Rob’s appetite for furthering his learning
towards his next career challenge and he
is already working towards another
qualification in measurement. Explaining
his reason for becoming an EngTech,
Robs says: ‘I wanted to show people that
I was serious about my work’. He believes
that as an energy professional: ‘You are
always looking to improve both yourself
and your work; how things operate in
general. EngTech is a way of showing
that improvement and also learning
more about the roles and responsibilities
an EngTech has. It’s a good way of
advancing yourself and your career
whilst still working – you don’t need to
take time away from work, which is a
benefit to the company as well as
yourself.’
In the meantime Rob is becoming a
role model to others both in the industry
and for future potential recruits. He has
become a ‘STEM Ambassador’ and gives
talks to school students about his job and
its importance to their lives and futures.
He says: ‘Kids ask good questions. It’s a
good time to grab their interest in engineering and energy at a stage when you
can make a difference.’
Rob’s boss is also keen on his EngTech
status. Will Neish, Operations &
Maintenance Metering Engineer, comments: ‘Membership of the Energy
Institute for our employees is a desirable
quality to the company as it demonstrates an individual’s willingness for
self-development, broadening their horizons amongst a cross-discipline peer
group in which discussion is promoted on
wider ranging subjects than just the field
they are working in. As Rob’s line manager, I can see that membership of the EI
shows that he demonstrates the same
professionalism, skill and technical
requirements expected of both the EI
and within the industry so when either
recruiting or tendering for work we can
assure the client that everyone has the
competencies for the job.’
25
Energy Institute
career and stay at least until they
retire.
• Apprenticeship routes to EngTech
offer the potential to increase numbers of registrants significantly, with
20,000 achieving a relevant advanced
or higher apprenticeship every year.
However, conversion rates to EngTech
at the end of their apprenticeship are
currently low and information on
approved engineering apprenticeships
is not easily accessible to enquirers.
• There is a need to address many barriers and dispel the ‘myths’ that exist
around the perception of registration
for both employers and technicians –
Creating more value
from what we know
The Energy Institute’s Knowledge Manager Gareth
Parkes has been hard at work masterminding the
EI’s new knowledge platform. Here he explains some
of the thinking behind the new resource, and how
the array of information it contains is organised.
I
n 2010 it was decided that the Energy
Institute (EI) should work to capture and
make available the energy expertise and
knowledge available within its membership. In 2012 the Energy Institute
Knowledge Service (EIKS) was unveiled,
combining the EI’s library and information
service with a deeper understanding of
our members’ interests and expertise.
The EIKS team is busy implementing the
EI’s ‘Knowledge Framework’ strategy, created to create and curate knowledge, to
assess where gaps in the EI’s knowledge lie
and to strategically fill those gaps, whilst
providing support for other EI teams and
the wider membership. An EIKS website, at
knowledge.energyinst.org, was developed
to expand electronic access to material
held by the EI – as well as to build new and
diverse streams of electronic information.
Another major driver for the website
was to bring different streams of information under the same umbrella and provide
one uniform means of searching through
this knowledge. In order to do this effectively, it was essential that a means of
accurately classifying these holdings was
implemented.
Classification requirements
The EI has many diverse activities, products and, critically, people. I think of the EI
as an organisation 17,000 strong, dispersed across a range of disciplines and
spread around the globe – consisting of
new entrants through to highly trained
experts. How do we, the EIKS, connect our
diverse membership with information
they require and build networks between
these individuals?
The answer, albeit very complex, rests
upon the ability to take a consistent
approach and employ a common set of
26
terms to our sector, our members and our
energy knowledge and information.
Harmonising the EI’s classification systems and creating an organisation-wide
taxonomy that covers the entire energy
industry, for use both internally and externally is no easy task. EIKS began by aiming
to understand why and how we capture
knowledge, and providing a forwardthemed energy knowledge programme to
identify future opportunities.
In its various incarnations, the EI goes
back 100 years. As you would expect, the
EI’s predecessors had their own requirements, processes and methods for
recording information. From the outset of
the EI’s knowledge management efforts,
it was clear that a consistent method for
classifying the information we were holding across the organisation was required.
This issue was compounded by the
changing nature of our audience’s needs
and our requirements to communicate
with them. Our membership is becoming
more geographically diverse and we are
seeing increased requests for content to
be made available electronically.
Understanding the organisation’s history has been extremely useful for the
EIKS in managing what we know, fostering links between teams and engaging
our members. In order to classify, record
and retrieve this content an organisational taxonomy was constructed to
provide a framework for our energy
knowledge.
Creating the taxonomy
Creating this classification system was one
of the first knowledge management priorities. Having identified the multitude of
different classification schemes previously
used across the organisation, we discov-
in particular the belief that PEI membership is reserved for graduates.
• Only 23% agreed that professionally
registered technicians are highly valued by their employers and only 34%
agree their employer recognises the
important role engineering technicians play in their company. There is an
ered that different attributes and categories were used for numerous databases,
member interests, training, events, technical publications, consultant competencies
and book listings.
Whilst many of these assets used similar
basic categories, there was little commonality and limitations to each, particularly
given the expanded scope of the EI’s operations. They had served a purpose but
now were in need of an overhaul.
We required a system that reflected
both detailed labelling, such as for library
cataloguing, whilst minimising the time
people would have to spend inputting
data, for example members updating
their professional interests. At the same
time, the classification scheme needed to
deliver an understanding of the breadth
and depth of the energy system without
being too cumbersome.
The solution we settled on was a taxonomy built around three hierarchical facets
– three axes, enabling the EI to pinpoint
any specific asset within our own energy
system by asking three questions:
• What sort of energy product is this?
• Where in the energy process or
energy value chain does this fit?
• What is the expertise or energy discipline that relates to this?
You can help improve the services we
provide to you by logging on to
energyinst.org and answering these
questions, using the tick boxes provided.
With these facets in place, we were able
to start populating the detail. Fortunately,
we did not have to start from scratch here.
We were able to draw upon the many different classifications, categories, terms
and definitions specific to the energy system that already exist. After considering
several, such as Standard Industry
Classification (SIC) codes and terms and
definitions from the International
Standards Organisation (ISO), we settled
on the United Nation’s International
Recommendations for Energy Statistics
(IRES) as a starting point for both the
product and process facets.
Building the taxonomy using international standards allows us the option to
link our work to that of other organisations and to integrate the terms used by
the EI with those used for statistical
reporting of energy use, opening up many
possibilities for the future. To define the
myriad of energy disciplines, and with the
wealth of expertise we have across the EI’s
membership, we combined several different schemes, such as higher education
Energy World
December 2013
urgent need to focus on turning
around these negative perceptions,
which are most keenly expressed by
technicians who are not PEI members
or registered.
• Only 27% of PEI members cited that
membership and registration were valued by their employers and only 22%
science and engineering course listings,
environmental protection definitions and
Health and Safety Executive categories.
Having amalgamated these elements
into our taxonomy, we then began a series
of iterations and mapping exercises to
ensure this structure was able to accommodate our requirements. This meant
analysis of each of the EI’s existing classifications, understanding how they would
feed across into the new system, and identifying what could be replaced.
This refining process went through
many stages, before arriving at one that
we were happy with and able to test on
members. The biggest hurdle we had to
overcome was the size of the structure
and therefore how to present it. There are
many categories for staff and members to
consider and the potential not to find
what they are looking for.
There will be a continuous need to
reassess this taxonomy to ensure it
remains contemporary and tweak where
necessary. With new technologies, skills
and industries constantly being developed
across the energy sector, this is no small
task. However, with the help of our
membership, we will be able to adapt
this structure to incorporate new
elements.
How we add value
In order to ensure the quality of the content from EIKS and to oversee new
developments, the EI has established a
panel of advisors, the Energy Advisory
Panel (EAP), which is made up of EI members and stakeholders to provide counsel
and offer strategic insight.
We have two simple channels to share
our activities:
• enhancing discussion and debate
amongst EI members; and
• raising awareness and improving
understanding amongst wider stakeholders.
The EIKS has set up an internship programme designed to tackle pertinent
challenges identified by the EAP and foster a new generation of energy
professionals. The projects selected for
each intern are carefully scoped and prioritised by the EAP who then provide
mentoring to ensure delivery.
Each intern is provided with a subject
area and project that consists of two elements. The first task of a project,
consistent across all internships, is to
undertake reviews of existing material
and collate this information for inclusion
Energy World
December 2013
of EngTech registrants were encouraged to register by their employers.
Again, this calls for more powerful
engagement with employers.
The way forward
Along with other CEOs of the PEIs, EI CEO
Louise Kingham has signed up to a com-
mitment to this project. Table 1 summarises
the EI’s work plan.
●
Sarah Beacock FEI is the EI’s Skills and
Capability Director. Kevin Dinnage CEng
FIChemE runs KJD Consulting and is
Project Manager at TRaM.
Violeta Argerich, EIKS staff member, takes EI members through the Energy Matrix
in the EI’s database, the Energy Matrix, an
online repository for energy knowledge,
accessible at knowledge.energyinst.org
Outputs for this, first, element include
web content, articles and presentations.
During the drafting stages for these deliverables, each intern is required to engage
the EI’s membership with knowledge in
that particular area, using the previously
established EI taxonomy and enhanced
membership profiles to identify members
with expertise in the selected area.
Depending on the requirements, these
engagement activities might be member
workshops, consultations, calls for evidence or peer review. For certain, more
established areas, we are now looking to
formalise these arrangements with subcommittees of the EAP.
The second element to each internship
is more subject specific, building upon
relationships with EI members to scope
the strategic challenges that particular
group of members is facing, and identify
additional opportunities that enable the
EIKS and members to work together to
tackle these issues.
Underpinning all of this activity, and
facilitating the transfer of knowledge is
the knowledge database, the Energy
Matrix, designed to allow users (from
EI members to key decision makers to
the general public) to easily access material and information that is relevant to
them.
We are excited by our new potential to
cross-reference the information we hold,
identify synergies and carry out gap analyses. The culmination of this work ensures
that all EI activities can be classified uniformly regardless of the functional unit.
The Matrix provides a direct link between
energy information and the individuals
who will need it, both internally and with
external stakeholders. It allows EI data
and information to be directly correlated
against internationally recognised definitions, creating a robust platform for
future research and development.
There are challenges we face for the
future in terms of growing the resource,
made more complicated by the fact that it
requires input from all sectors: we all have
a vested interest in energy. We will only
meet those challenges through collective,
integrated and interdisciplinary action.
The EI and its Knowledge Service is striving to meet these challenges by providing
a platform for knowledge transfer and
engagement.
●
To find out more about EIKS and to try out
the Energy Matrix database yourself, visit
knowledge.energyinst.org
If you have any comments or would be
interested in supporting the EAP and
internship programmes, then I would be
very pleased to hear from you –
[email protected]
27
Renewables
Renewable energy
opportunities in the
Middle East
Amidst the high hopes surrounding the
Middle East’s drive towards renewable energy, and
solar power particularly, the reality is that the pace
of deploying commercial procurements has been
sluggish to date. Marc Norman writes from Dubai.
J
ordan has an aim to increase the share
of renewables in its energy mix from
around 1% currently to 10% in 2020.
The country, arguably the most active
renewable energy market in the Middle
East, has initiated the second round of its
unsolicited proposals scheme that permits
developers to submit renewable energy
project proposals directly to the
government.
This process has seen the Kingdom’s
Ministry of Energy and Mineral Resources,
or MEMR, seeking expressions of interest
from qualified investors interested in
developing renewable energy projects on
a build, own and operate basis.
This round, which is restricted to wind
and solar power, follows a first round of
unsolicited proposals, in May 2011, which
extended to an array of renewable
energy sources such as wind, solar, waste
and geothermal. The first round saw 34
applications including 12 wind projects, 15 solar photovoltaic projects, two
concentrating solar photovoltaic projects
and five solar thermal projects qualified
initially. However, only two wind projects
and 12 solar PV projects were eventually
approved. The aggregate capacity of
the two wind projects is around 200 MW,
and the aggregate capacity of the 12
solar photovoltaic projects is also around
200 MW.
The launch of the second MEMR round
prior to the completion of the first round
has surprised the market, but it is consistent with Jordan’s aim to increase its share
from renewables and reduce its dependence on imported energy – 97% of the
energy it used in 2011 was imported.
International renewable energy developers should view Jordan as a place to
plant a flag in the Middle East and eventually as a stepping stone toward other
high potential, but currently less active,
regional markets, including Saudi Arabia
with its colossal programme to procure
54 GW of renewable energy facilities by
2032.
28
But, in the Middle East as a whole, few
renewable energy tenders have recently
come to market. At present, the key
Middle Eastern renewable energy markets alongside Jordan, are Saudi Arabia,
the United Arab Emirates, Kuwait
and, with some reserve, Qatar.
The MEMR process
An applicant’s expression of interest to
Jordan’s MEMR must include a description
of both the applicant and the project, evidence of the applicant’s technical
capability and experience and a demonstration of the applicant’s ability to raise
debt and equity. The applicant must provide a project description, including the
location with coordinates on a map,
capacity and estimated generation per
year and envisaged wind or solar
power technology.
In the first round, MEMR chose to focus
most of its efforts on the southern region
of Ma’an and, in particular, a 9 km2 zone
dubbed the Ma’an Development Area
(MDA). The MDA is attractive because the
applicable regulatory and administrative
regime is more streamlined and flexible
than would otherwise be in Jordan,
and the fiscal regime is also more
advantageous.
The MDA is also attractive from a
resource standpoint. The area had been
earmarked as the best location in Jordan
for concentrated solar power projects by
Lahmeyer International, a German-based
technical advisor. MEMR’s initial focus in
the first round was on concentrated solar
power. In the second round, Jordan wants
to shift the focus away from the Ma’an
region towards the northern and eastern
parts of Jordan. MEMR said explicitly in its
expression of interest request that submissions for projects in those parts of
the country will be prioritised.
The key driver behind this geographic shift is to ease the pressure on the
already fragile grid in the southern part of
the country. The grid in the northern
and eastern parts of Jordan is currently
less saturated.
But, the northern and eastern parts of
Jordan may pose a number of challenges
to wind and solar developers. First, there
is no MDA equivalent; although, there are
rumours that the granting of development area status for a specific parcel of
land is being considered. Second, the
northern and eastern parts of Jordan are
more industrialised than the Ma’an
region, which could lead to complications,
particularly in terms of land rights
and permits. Third, proximity to the border with war-torn Syria cannot be
ignored; certain plots being targeted by
developers are only around 25 km from
the Syrian border, and even closer to the
growing refugee camps inside Jordan.
A ‘reference price list’ prescribes the
pricing mechanism for the purchase of
electrical
power
from
renewable
energy sources in Jordan. It is issued by
Jordan’s Electricity Regulatory Commission
(ERC). The reference price list, which will
be reviewed on an annual basis, sets a separate electricity tariff cap for electricity
generated by wind facilities, solar photovoltaic facilities, non-photovoltaic solar
power facilities, biomass facilities and biogas facilities, with solar projects receiving
higher prices than wind projects.
Saudi Arabia
Although Jordan has seen the most activity, Saudi Arabia is the market with the
highest potential and, accordingly, the key
focus of most market participants. By
2032, the Kingdom plans to issue procurements for 25 GW of solar thermal projects
and 16 GW of solar photovoltaic projects
worth more than $60bn, plus another
13 GW of wind, geothermal and waste-to
energy plants.
In February this year a white paper was
issued by the King Abdullah City for Atomic
and Renewable Energy or K.A.CARE, Saudi
Arabia’s renewable energy procurement
agency. One month after the paper,
K.A.CARE was due to issue both a draft
request for proposals and a draft power
purchase agreement marking the onset of
an introductory procurement round of up
to 800 MW of renewable energy facilities,
including around 600 MW of solar and
100 MW of wind. To date, no such documents have been issued which means that
the programme is already half a year
behind schedule.
The roll-out of the programme depends
on K.A.CARE’s financial empowerment.
This, in turn, requires the approval of an
implementing regulation by the Saudi
Arabian Council of Ministers. Arguably,
the deployment of the programme also
hinges on garnering sufficient buy-in from
Saudi Aramco. Sources say that Saudi
Aramco’s increasingly apparent lack of
buy-in on the programme has caused friction and may continue to do so. It is
unlikely that tenders will be issued in 2013
for the programme.
Energy World
December 2013
There are opportunities beyond
K.A.CARE, however. Saudi Electricity
Company, the state-controlled listed electric utility, is set to launch tenders for two
gas-fired integrated solar combined cycle
projects in Dibba City. The solar power
component of Dibba 1 IPP reportedly
amounts to 30 MW. Saudi Electricity
Company expects the project to be completed in 2016.
In 2014, Saudi Electricity Company plans
to tender the Dibba 2 IPP, a 1.8 GW integrated solar combined cycle project. The
solar
portion
has
yet
to
be
confirmed. Saudi Electricity Company
expects this project to be completed in
2017. For each of Dibba 1 IPP and Dibba 2
IPP, the procurement will be undertaken
on a build-own-and-operate model. The
solar power technology, in each case, has
yet to be confirmed.
United Arab Emirates
The two key markets in the United Arab
Emirates are the Emirates of Abu Dhabi
and Dubai. Each emirate has its own utility – the Abu Dhabi Water and Electricity
Authority and the Dubai Water and
Electricity Authority – and each develops
and issues its own independent policies
and procurements, subject to federal
laws.
Abu Dhabi has an aim to generate 7%
of its electricity from renewable sources
by 2020 while Dubai has a 5% solar
energy target by 2030. The key focus in
the United Arab Emirates is solar
power. Abu Dhabi has been at the forefront of renewable energy developments,
last year commissioning the Shams 1
solar power project, a 100 MW solar thermal plant (pictured).
Shams 1 was precedent setting for a
number of reasons, but mainly because it
was the first utility-scale solar power facility in the Gulf to be procured on an
independent power project basis. The
project was developed largely on the basis
of the Abu Dhabi Water and Electricity
Authority independent power project
model for conventional power. This model
has been banked on numerous occasions
and is arguably one of the Middle
East’s most advanced independent power
(and water) project models.
Masdar, a wholly-owned subsidiary of
the Abu Dhabi government, is procuring the 100 MW solar PV Noor-1 project,
which was intended to figure as the first
phase of a 200 MW solar park. The preferred bidder has yet to be to be selected,
however, and severe delays have caused
uncertainty as to whether the project will
ever follow through.
Although in a regional context Abu
Dhabi’s track record is impressive, from a
forward-looking perspective, opportunities for renewable energy developers, at
least in the short-to-medium term, are
somewhat limited. The only concrete
and notable development is the possible
launch of a solar PV rooftop programme.
Energy World
December 2013
The Shams 1 solar power project in Abu
Dhabi
Photo: Shams Power Company
This plan has been in the pipeline for several years, however, and is unlikely to
be launched in 2013.
Dubai plans to source 5% of its power
supply from solar energy by 2030. Last year,
the Dubai Water and Electricity Authority
launched the Sheikh Mohammed bin
Rashid Al-Maktoum Solar Park. The
project’s aim is to reach a capacity of 1 GW
by 2030 using a combination of solar
thermal power and PV. The first phase, a
13 MW photovoltaic plant, was awarded
last year and has just been completed (see
page 6).
The procurement of the first phase of
the Solar Park was undertaken on a publicly financed engineering, procurement
and construction basis. The Dubai Water
and Electricity Authority recently
divulged details on the procurement of
the second phase of the solar park. The
project will be procured on an independent power project model. Like the first
phase, it will be a solar PV project. Its size
remains uncertain, but it seems likely that
it will be large – between 100 and 200
MW. Regrettably, no details have been
provided on the timing for tender
issuance.
Separately, Dubai is also planning to
launch a solar PV rooftop programme. It
appears to be in more advanced
stages than Abu Dhabi, with reports suggesting that it is finalising legislation for
the programme that would include a
feed-in tariff. The programme launch date
is uncertain, however, and some reports
from the start of the year suggested that
it had been shelved. In any event, Dubai’s
solar rooftop program is unlikely to be
launched in 2013.
Kuwait
Kuwait is one of the newest players in the
Middle Eastern renewable energy sector.
The country plans to generate 15% of its
electricity from sustainable sources by
2030, and its key focus is on solar power
and wind.
In June this year, the Kuwait Institute
for Scientific Research, or KISR,
announced that it had invited pre-qualified contractors to submit bids for three
pilot renewable energy projects. This
is the first phase of a planned 2 GW
renewable energy project known as the
Shagaya renewable energy park that, as a
whole, is due for completion in 2030.
The first phase of the park, which is
scheduled for completion in the second
half of 2016, is being procured on an engineering, procurement and construction
basis. The overall capacity of this initial
phase is 70 MW, comprising a 10 MW
wind farm, a 10 MW solar PV plant and a
50 MW solar thermal plant. The strong
emphasis on solar thermal mirrors the
approach of neighbouring Saudi Arabia.
The second and third phase projects will
be procured on a build-own-andtransfer basis, with a 25-year power purchase agreement. KISR plans to procure
930 MW of solar power facilities in phase
two and another 1 GW in phase three. It is
not clear whether further wind power
capacity will be procured in the second
and third phases. The renewable energy
park will be built on a 70 km2 area in
Shagaya, a desert zone 115 km west of
Kuwait City and near the country’s borders with Iraq and Saudi Arabia.
In parallel, the State of Kuwait’s
Partnerships Technical Bureau is set to tender the Al Abdaliya integrated solar
combined cycle project, a 280 MW power
project with a 60 MW solar power component. The solar power technology has not
been confirmed, and no time indication
for tender issuance has been provided for
the project.
Qatar
Turning last to Qatar, the country plans to
meet 20% of its electricity demand from
renewable sources by 2030. The key
emphasis is again on solar power. The only
large-scale solar facilities currently in
Qatar are a 780 kW solar PV rooftop system on the Qatar National Convention
Centre and an 800 kW solar PV rooftop
system on the student halls of the Qatar
Foundation.
In 2012, Qatar announced plans to
launch 1.8 GW of solar projects by 2014. A
first phase of 200 MW was due to be tendered in the first quarter of 2013. Lack of
progress has created uncertainty, however, and has led to some loss
of confidence in the market.
Notwithstanding recent public spats,
Qatar should be the host of the 2022
World Cup, which potentially creates a
major opportunity for renewable energy
players. The country has said publicly that
the event would be the first carbonneutral World Cup and explicitly said that
this would be accomplished by using solar
power and other renewable energy
sources to power and cool stadiums. Time
will tell, but if this is to be things need to
move quickly.
●
Marc Norman is at Chadbourne & Parke
LLC and is a board member of the Middle
East Solar Industry Association.
This article is an edited version of an
article that appeared in Chadbourne &
Parke’s Project Finance NewsWire,
www.chadborne.co
29
Anaerobic digestion
Getting more from muck
More and more, anaerobic digestion installations
are becoming popular in farms around the UK –
from a relatively small market just a couple of years
ago. With a spate of new projects entering the
pipeline, Marc Height looks at the economics
behind the technology in the UK.
A
naerobic digestion (AD) waste-toenergy systems seem to be
becoming more popular for farmers around the UK. Amid a steady stream
of the digesters being built, recently more
support has been given to farmers that
are interested in building an AD plant, in
the form of grants to help the capital cost
of building the equipment.
The AD process sees microorganisms
break down organic matter or biowaste
(such as food waste, slurry or crop
residues) in the absence of oxygen, to
form biogas, as well as digestate (the
semi-solid material that is left over from
the process). This biogas can then be
cleaned and injected into the gas grid, or
used on-site to generate heat and power.
More popular around Europe, you may
have now seen a few AD facilities appearing at farms across the UK. The
dome-roofed circular digesters are where
the gas is created and the digestate
formed. Farms are not the only place that
AD technology is used though – sewage
treatment works and various industrial
facilities, including waste facilities and
breweries, have AD plants.
The market for AD at UK farms is still
young, with plants only really appearing
within the last three years. Currently
around 125 AD plants exist in the UK,
according to the biogas arm of the
Renewable Energy Association (REA). This
places the UK way behind Europe, with
the market leader, Germany, boasting
around 7,500 AD plants.
The economics are gradually becoming
favourable in the UK, particularly considering that farmers can also make money
from the digestate they produce through
the process.
And there is now support available to
get the schemes off the ground. Farmers
in England with access to slurry or manure
and which are planning a digester of
below 250 kW are now eligible for a grant
of £10,000 to create a business plan and a
loan of £400,000 (50% project cost) to
build the plant. The funds have recently
been confirmed by Defra as part of its
new WRAP On Farm AD Fund – despite
reports at the time of writing about the
removal of AD from Defra’s remit in the
future.
The announcement to provide grants
for farmers follows the government’s
response to the Ecosystem Markets Task
Force report, which recommended the
finance measures, alongside the measure
of access for farmers to markets for digestate – another key revenue stream.
This means profit can be made not just
from the gas created, but from the digestate produced too – a by-product originally
classified as waste which was expensive to
deal with. In order to do this the digestate
has to be certified to be fit for use.
The digestate can be used as a fertiliser,
and the Biofertiliser Certification Scheme
was set up in 2010 to provide assurance to
consumers, farmers, food producers and
retailers that digestate produced from AD
is safe for human, animal and plant
health. The scheme was set up by
Renewable Energy Assurance Ltd, a subsidiary of the REA.
In 2011, Langage Farm in Devon
installed a 500 kW digester and subsequently was accredited under the
Biofertiliser Certification Scheme. Now,
the farm is forecasting that demand will
outstrip supply for its biofertiliser products in 2014 at which point the farm will
be making a profit on the fertiliser produced. The success of the market built by
the farm is in part due to the fact that fertiliser from digestate can be less expensive
than traditional chemical fertilisers.
Initially, says John Deane, who manages
Langage
AD’s
Digestate
Business
Development, the full scale of the challenge wasn’t realised until the digestate
tank started rapidly filling up. ‘We knew
we had to respond with a strategic solution which, it seems, has set a good
precedent,’ he said. ‘We have worked very
hard to explain to farmers the benefits of
using digestate as biofertiliser, and there
are a lot of variables to consider, such as
farming systems, soil nutrient levels and,
above all, the farmers’ willingness to
explore innovative new products.’ Costs
for managing the digestate at Langage
have dropped from £100,000 in 2011 to
£20,000 this year.
The Anaerobic Digestion and Biogas
Association (ADBA), has recently set up a
free farmers’ consultancy service to advise
farms if AD is suitable for them, in terms
of location, the amount of waste, on-site
energy demands and grid connection
issues.
According to James Beard of the REA,
the RHI is performing well for biogas grid
injection, and he sees 2014 as being the
breakthrough year for green gas injection
in the UK with the Green Gas Certification
Scheme enabling end users to buy 100%
renewable gas. The organisation has some
concern though about the level of
planned FiT degression for AD, particularly for smaller plants, and argues that
current FiTs are not driving enough
growth as it is.
New plants
A spate of plants are currently in the
planning process or being constructed.
Multiple benefits
The potential benefits of AD for farmers
are numerous. Beyond the energy generated, of which they will receive cash for
through the Renewable Heat Incentive
(RHI), and through the Feed-in Tariff (FiT)
if electricity is generated, on-farm AD systems help to reduce emissions, manage
manures and slurries, enhance the soil and
recycle nutrients. As well as generating
renewable gas, it is a means of the disposal of organic waste products.
30
Biogas storage
Energy World
December 2013
Tamar Energy, for example, has plants
currently in the final stages of being commissioned in Lincolnshire, Farleigh and
Retford, and it has aims to build a network of 40 AD plants in strategic locations
around the UK by 2018, enough to provide 100 MW of electricity.
Agraferm Technologies is another
player in the UK AD market, currently
with an output of 70mn cubic metres of
raw biogas per year from its plants. It is
currently planning to build its tenth AD
plant in the UK, at Holkam, Norfolk. The
German company built the first agriculture-based commercial-scale (5 MW)
biomethane plant in the UK to feed into
the national gas grid, following upgrading, in 2012 in Poundbury, Dorset.
The company not only builds the
digesters, but also combined heat and
power (CHP) units to accompany them. It
sees a fairly strong market in the UK for
these products, but states that the government should create an AD master plan
to commit beyond the 2015 elections, to
develop investor trust.
Dalkia is another biogas CHP technology supplier. Its technology is installed at
Southern Water’s Bexhil, Ford and
Sandown’s wastewater treatment works.
CHP plants from Cogenco (Dalkia’s CHP
arm) at each of the sites capture biogas
created during AD treatment of the
wastewater and sewage. The plants,
770 kWe at Bexhill and Ford, and 360 kWe
at Sandowns, recover heat, which is recycled to the AD treatment plants to speed
up the bacterial digestion process.
In each case the biogas becomes the
fuel source for the CHP and the power
and heat is directly used on site, with any
surplus exported to the national grid.
Cogenco Sales Director Damian Shevloff
estimates that the plants at the sites are
resulting in carbon dioxide savings of
around 7,500 tonnes per year.
Future for the market
What of the future for AD in the UK? The
UK’s Green Investment Bank (GIB) has
taken an interest in waste as one of the
key areas it is looking to finance, alongside offshore wind power and energy
efficiency. It is investigating the opportunity to directly participate in up to £50mn
of debt financing for AD projects, while
continuing to make equity investments in
AD through its waste fund managers
Foresight and Greensphere.
The government thinks that AD could
deliver between 3 and 5 TWh of electricity
by 2020, but the industry is concerned
about availability of funding according to
the GIB.
Despite the fact that the AD capacity
installed in the UK is growing (106 MW was
installed in 2012 – over double the 45 MW
capacity installed in 2010), the market is
still fragmented and young, says the GIB.
The top five operators account for less than
28% of the market (compared to 71% in
the offshore wind sector, for example).
Also, interestingly, the majority of AD
projects in the UK have been in operation
for less than three years. This is where the
funding challenge comes in, with the sector lacking an established and informed
investor community.
The GIB sees the critical factors to AD
project success as:
• feedstock selectivity;
• a deep understanding of, and access
to local markets for digestate;
• dedicated operating personnel; and
• active process management.
The report identifies a development
pipeline of projects in place which initially
requires a capital investment of around
£650mn.
So, while AD is a relatively young sector
in the UK, support schemes and especially
those for farmers could see a promising
future for the market. And, upcoming
technology, such as that from H2 Energy
for example, could see smaller AD systems
installed to deal directly with food waste
on-site for supermarkets and other businesses, providing more ways of turning
our waste into energy.
But, at the time of writing, announcements from Defra on cuts to waste
services, including energy-from-waste (the
WRAP On Farm AD Fund is safe) has left a
little uncertainty around future policy
certainty for AD.
●
Renewable energy
Planning, energy bills and
the future for onshore wind
The planning framework around onshore wind is
changing, writes Anna Stanford, suggesting that
the UK can ill afford to obstruct what is the
cheapest form of renewable energy.
T
he UK faces an energy trilemma –
how to provide a low carbon and
secure supply of energy at an affordable price for consumers. In the current
economic climate, affordability might be
the key political concern, but the three
objectives are fundamentally interlinked.
While renewable energy frequently bears
the brunt of the blame when it comes to
rising consumer bills, it is onshore wind
that can most effectively solve this
predicament.
For example, take energy security. In
2012, UK net energy imports hit 43%,
their highest level since 1975. As a homegrown, reliable source of energy, onshore
wind can reduce our reliance on imported
energy, enhancing the security of our
energy supply chain, and can help to insulate consumers against volatile fossil fuel
prices.
Secondly, according to Ofgem figures
for 2012, onshore wind is the cheapest of
the renewable energy technologies and
costs the average household just over 3p a
day to support. It is estimated that green
energy policies overall will make household bills £166 lower by 2020 than if we
do not follow the low carbon route.
Therefore, to say that renewable energy is
unaffordable is a false economy that risks
locking the country into a high-cost
energy future.
In terms of investment, a study in 2012
showed that every MW of onshore wind
installed is worth £700,000 to the UK
economy, £100,000 of which stays in the
area local to the installation. Onshore and
offshore wind are together supporting
more than 34,000 UK jobs, many in areas
of high unemployment, and by 2023 this
number could be closer to 70,000.
The UK renewable energy sector’s independent players are essential for solving
the UK’s energy trilemma as they will provide between a third and a half of the
£110bn of investment needed in low carbon infrastructure by 2020. The growth of
independents also means greater competition in the energy sector, which will drive
down costs to the consumer.
The wind industry is committed to
ensuring that local communities share in
this economic success, driving forward
community benefit schemes that provide
32
£5,000 per MW per year for the lifetime of
each project. RES’ new Local Electricity
Discount Scheme (LEDS), for instance,
reduces the electricity bills of residents in
the vicinity of its new wind farms by at
least £100 per annum, making the low carbon transition more affordable.
Finally, as demonstrated by a whole
raft of opinion polls over the past year,
wind energy is popular with the electorate and, interestingly, support tends
to be higher in rural areas. A DECC public
attitudes survey published in September
2013 found that two thirds of those
polled support onshore wind and are
concerned about the UK becoming too
dependent on imported energy. Contrary
to recent political rhetoric against green
levies on bills, a poll in October 2013
revealed that the public supports green
taxes in order to help investment in
green energy.
Legislation and planning
However, onshore wind faces significant
challenges, and unless these are
overcome, the UK economy and local
communities will miss out on these
benefits.
Electricity Market Reform (EMR) aims to
provide a more stable policy environment
with guaranteed support for renewables
under contracts for difference feed-in
tariffs. However, it has to work for independent generators who, under the
current Bill, are not provided with a route
to market to sell their electricity. Instead,
EMR risks entrenching the dominance of
the ‘big six’ by forcing independents to
remain reliant on large utilities for the
long-term power purchase agreements
they need to secure bank finance for their
projects.
The government has recognised this
and is collaborating with the wider industry for a solution. This solution must now
be developed to be robust, workable, and
implemented in time to safeguard the
role of independents in the sector and the
investment they will bring.
However, a stable and sufficient system
of support for renewables won’t be
enough to help get capacity into the
ground to meet our energy objectives for
2020 and beyond. Investment decisions
must also consider the risks involved in the
planning system.
Delays in planning consent for onshore
wind, and other renewable energy projects, are leaving significant economic
benefits locked in the system and unavailable to local communities. These delays
are also hindering the growth of the UK
renewables sector, jobs and the achievement of legally binding targets.
The recently updated renewable energy
planning practice guidance gave welcome
clarity, showing that the planning system
is fit for purpose in balancing the need for
more renewables with addressing local
issues. We have welcomed the emphasis
on local authorities planning positively for
renewable energy in their areas. However,
the question is how this will be done in
practice and whether it will be resourced
adequately. The new guidance should
assist councils in processing planning
applications for wind farms, and other
renewable energy infrastructure, with
greater efficiency and speed. Now
the challenge is to ensure that the secondary legislation is appropriate and does
not place an additional burden on developers, local planning authorities or
communities.
Local engagement is of paramount
importance to responsible developers
and the industry as a whole has a strong
track record of excellent consultation
and good development practice.
Developers understand how to engage
with communities to produce low-impact
wind farms that are environmentally
sound, economically competitive and
welcomed by local residents. While concerns are often raised when projects are
first proposed, the wind farms we build,
once up and running, are seen as positive
assets by the local communities who host
them. They are often used as an educational resource and a tourist attraction
and become a resource that brings direct
financial benefits to local community
groups, farmers, landowners and to
nearby households.
However, in order to continue providing
these benefits at a local and national
level, renewable energy businesses need
to be confident that the planning system
will remain stable and will not be subject
to alterations that create confusion and
uncertainty. As well as stable support
mechanisms and long-term targets, costeffective green growth needs a clear,
consistent and level playing field where
investors can understand the lie of the
planning land at an early stage.
With energy use and gas prices likely to
rise long beyond 2020, wind energy will
continue to be a significant part of a balanced UK energy mix, an engine of
growth for the UK. Now is the wrong time
to back away from onshore wind.
●
Anna Stanford is Head of Public Affairs at
RES Group, an independent renewable
energy developer. www.res-group.com
Energy World
December 2013
Renewable energy
The 3 MW Infinis Elan Valley hydropower
plant in south Wales, the power from
which has been purchased by Gazprom
Energy under a seven-year deal which
will see the suppliers’ businesses powered with a total 17 MW of renewable
power.
Alongside Elan Valley, another nine
hydro plants are covered under the deal,
which will see the Manchester-headquartered Gazprom Energy receive the
associated renewable energy certificates
for the power. The sites also include
Barton Lock in Greater Manchester,
Beeston Weir in Nottingham and Duror
in the Scottish Highlands.
The transaction includes the ability for
Infinis to trade the Renewables
take agreement follows Gazprom
Energy’s purchase of power (and associated certificates) generated from 37 of
Infinis’ landfill gas sites in 2011.
Gazprom Energy’s embedded generation team works with independent
energy producers to help them trade the
power they produce from wide range of
sources including hydro and biomass,
landfill gas, wind, anaerobic digestion,
solar and energy-from-waste.
Infinis has an installed renewable
energy generating capacity in the UK of
620 MW, comprising landfill gas, onshore
wind and hydro generation.
●
Obligation Certificates and Levy
Exemption Certificates associated with
the power purchased. This particular off-
www.infinis.com
www.gazprom-energy.com/uk
On-site renewables could save
UK business £33bn by 2030
E
lectricity and heat generated from
recycled food waste, wind turbines
and solar panels could save UK businesses £33bn between 2010 and 2030 and
cut carbon emissions significantly, according to a study from energy consultancy
Utilyx.
The study predicts that by 2030 on-site
energy generation could contribute 14%
of the UK’s energy needs – compared to
the 9% recorded in 2011.
Energy-from-waste, alongside combined heat and power, are predicted to
deliver the greatest savings – an estimated
£20bn – to UK businesses by 2030. The
study also predicts that solar, as well as trigeneration (the simultaneous creation of
cooling, heat and power), are the technologies that are expected to grow the
fastest.
The research was based upon a forecast
model that analysed the uptake of six
major decentralised energy technologies
across 23 sectors including retail, banking,
manufacturing, utilities and construction.
It was carried out by independent analyst
firm Verdantix. In terms of emissions, the
study predicts that decentralised energy
will deliver total carbon emissions savings
of 350mn tonnes by 2030.
The research was supported by interviews
with
decentralised
energy
stakeholders including UK-based businesses with annual revenues each of at
least £150mn, decentralised energy technology service providers, energy finance
firms, government and trade bodies.
Unlike electricity from the UK grid,
where heat from the generation is largely
released into the atmosphere and further
electricity is lost in transmission and generation, decentralised energy is highly
efficient and can be sized to suit the
specific local load profile, says the report.
Traditionally businesses and organisations have focused on one aspect of
energy management – typically procurement or energy efficiency,’ said Mark
Stokes, Managing Director for Utilyx’s
asset management business. ‘The report
reveals the need to look at the bigger picture and adopt a joined up approach
including considering on-site energy generation. In a climate of volatile and rising
energy prices, decentralised energy can
help businesses save money, reduce
carbon, and provide energy security.’
The research identified six actions for
financial officers keen to explore the
potential of decentralised energy for their
business:
• review the firm’s existing energy bill
and request a three- to five-year forecast of energy costs;
• identify feasible sites for decentralised energy;
• evaluate decentralised energy technologies for business applicability;
• understand the contribution of policies and incentives, and their
sensitivities to the business case;
• request examples of similar success
stories; and
• move energy procurement up to the
board-level agenda.
●
www.utilyx.com
www.verdantix.com
Photo: Mark Group
A total of 502 solar panels have been installed across three of
De Montfort University in Leicester’s main buildings as part of an
initiative by the university to make long-term energy savings.
The move is expected to see the university save around £25,500
on its annual electricity bills, according to installer Mark Group.
The installation of two 50 kW (208 panels each) and one
23 kW (94 panels) PV arrays has cost the university £180,000 to
install, but De Montfort is expected to break even within seven
years with the energy supplied alongside feed-in tariff revenue.
‘By investing in the solar panels we will be able to reduce our
energy bills considerably over the next 25 to 30 years by utilising
solar energy as a sustainable source of energy for the university,’
said Paul Eccleshare, Energy Manager at De Montfort University.
www.markgroup.co.uk
Energy World
December 2013
33
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Finance
Renewable energy
finance – where to now?
Financing for renewable energy projects
internationally is changing. Here, Theresa Ruhayel
shares some insights from Euromoney’s Renewable
Energy Finance Forum held in London in September.
H
as global investment in clean
energy fallen from its 2011 peak?
China is now the global leader,
heavily investing in renewable generation
and equipment manufacturing, with the
intent of reducing its dependence on coal
and probably improving international
competitiveness. In 2013, average Chinese
quarterly investments into clean energy
are $13bn, which is down on last year’s
average quarterly levels of $17bn. Europe
averaged $10bn per quarter in 2013,
which is half of quarterly levels of $20bn
in 2012. US average quarterly investment
at $6.2bn is down by a third from 2012
quarterly levels of $9.6bn.
In terms of development banks’ investment into clean energy, they have in the
first three quarters of 2013 increased their
total investment by nearly 20% on 2012
levels of $109bn. KfW (Kreditanstalt fur
Wiederaufbau) maintains it’s position as
the global leader, China Development
Bank (CDB) ranks second, and the
European Investment Bank (EIB) is the
third largest lender.
To date, utilities and development banks
have together contributed the greatest
proportion of finance, and they have done
so using a method called asset finance, for
utility-scale projects greater than 1 MW,
and which comprises either debt or equity.
Small-scale distributed capacity, for example rooftop solar installations of 1 MW or
less, account for about a third of investments – which is significant, considering
the small size of each generation unit. The
smallest source of finance comes from the
public markets (IPOs) and venture capital/private equity (PE/VE), accounting for
only a fraction of investments.
Enter new investors
Recent years have seen the rise of institutional investors taking stakes in projects
previously sponsored by utilities and
banks. These large pension funds and
insurance companies manage money on
long-term time horizons in order to provide pension annuities and life insurance.
Renewable energy projects also have horizons of 25–30 years – a perfect match.
Moreover, institutional investors are often
mandated to invest in liquid low-risk government bonds, and renewable electricity
generation is seen both as lower risk and
Energy World
December 2013
inflation protected (being linked to electricity prices), thereby providing higher
yields than government bonds. Large
insurers such as Legal & General, Allianz,
and Munich Re participated at the conference, as they look to increase their
investment into renewable generation
over the next decade.
China has a growing prominence as an
equipment manufacturer to the global
renewable industry, increasingly providing
Chinese manufactured parts and project
finance to projects at unbeatable interest
rates. The low cost parts, together with
low rate finance, enables rates of return
unmatchable by European project
financing.
What factors drive investment?
Factors that drive investments are both
monetary (such as global interest rates)
and political (such as targets to lower pollution and the quest for energy security),
and sometimes these cross-over in the
form of government subsidies.
• Global interest rates – quantitative
easing has resulted in the yields
on government bonds falling.
Institutional investors have been hard
hit with low-yielding investments,
and have therefore looked to renewable energy investments as higher
yielding investments.
• The impact of electricity prices on revenues – as determined by substitutes
such as fluctuating gas prices, suppliers fixing the retail price, and also
subsidies in the form of support
mechanisms such as power purchase
agreements (PPAs), feed-in tariffs
(FiTs), contract for differences (CfDs),
renewables obligation certificates
(ROCs).
• Internal rates of return on projects –
depending on plant efficiency,
economies of scale, cost of capital and
grid connectivity issues.
• Balance sheet constraints of utilities –
utilities have developed the largest
proportion of renewable energy, and
decommissioning of nuclear and
coal-fired plants now severely
decreases revenue and assets. At the
same time, they are required to provide stand-by capacity for electricity
generation.
The investment landscape has
changed
Some European governments have proven
themselves unreliable sponsors of renewable energy, having made retroactive
changes to support schemes. Investors will
look at individual countries’ ability to
manage their budgets and debt, and the
risk this poses to renewable sponsorship.
In Europe, continuous changes to support
mechanisms mean that discovering the
price of electricity has been challenging at
best and, at worst, will drive up the price
of risk.
The renewable sector as a whole is still
being undercut by generous subsidies to
both the fossil and nuclear industries, as
witnessed most recently with the UK
granting the Hinkley Point nuclear reactor
a guaranteed 35-year ‘subsidy’ – 20 years
longer than the 15 years for wind.
Offshore wind development is an
emerging technology, therefore costlier
than the more mature onshore wind and
solar generation. Construction and operational risks are high, and in today’s world
where banks have a lower propensity to
lend, support from government-backed
organisations is crucial in terms of providing early stage loans, guarantees and
insurance. These quasi-government credit
agencies, such as the EIB, KfW, CDB, and
Chinas’ SINOSURE, play an indispensible
role in reducing cost of capital at the construction stage, typically with four-year
repayment periods. Commercial banks
then provide loans over the proceeding
15-year period.
These loans can be bundled into a special purpose company which issues bonds
– this step is crucial to enable institutional
investors to invest, as they often are not
mandated to invest in loans, but are mandated to purchase bonds.
Going forward
So, the continuous change in government
support certainly hampers investment into
renewables. Despite this, development
banks are paving the way and even
increasing their activity. Offshore wind
generation has seen commitment from
countries such as the UK, Germany
(needing alternatives to nuclear and
dependence on eastern gas), and China.
Could utilities and institutional investors
eventually directly co-invest in developing
physical assets? There needs to be a meeting of minds: utilities are accustomed to
owning and operating assets, whereas
investors are accustomed to divesting
assets. In the meantime, development
banks are providing early stage finance
and guarantees; banks are structuring
loans into bonds, and institutional
investors are including renewables in their
investment strategies. Hopefully, energy
will be provided for us all, and will grow
our pensions for retirement.
●
Theresa Ruhayel writes on energy and
financing issues.
35
CALENDAR
2–6 December 2013
ISO 50001 Lead auditor training
course (Swindon)
Contact: EI Professional Development
team – Charlotte Belson
t: +44 (0)20 7467 7183
e: [email protected]
3 December 2013
Matching oil supply and demand:
Rising to the challenge (London)
Contact: EI Events team –
Rebecca Richardson
t: +44 (0)20 7467 7174
e: [email protected]
9–13 December 2013
ISO 50001 Lead auditor training
course (London)
Contact: EI Professional Development
team – Charlotte Belson
t: +44 (0)20 7467 7183
e: [email protected]
10 December 2013
Pelamis – moving wave energy
from demonstration to
commercialisation (London)
Contact: EI Events team –
Laura Viscione
t: +44 (0)20 7467 7105
e: [email protected]
8–9 January 2014
How to improve the energy
performance of your
organisation (Reading)
Contact: EI Professional Development
team – Charlotte Belson
t: +44 (0)20 7467 7183
e: [email protected]
16 January 2014
Lean, green and mean – meeting
energy efficiency targets
(London)
Contact: EI Events team –
Rebecca Richardson
t: +44 (0)20 7467 7174
e: [email protected]
31 January 2014
Energy Systems Conference –
deadline closes for call for
abstracts
Held jointly by the EI and Elsevier
www.energysystemsconference.com
4 February 2014
How to improve the energy
performance of your
organisation (Nottingham)
Contact: EI Professional Development
team – Charlotte Belson
t: +44 (0)20 7467 7183
e: [email protected]
17–19 February 2014
International
Petroleum Week
(London)
Conference sessions
G
G
G
G
G
G
Roundtable sessions
G
G
G
G
Contact: EI Membership team –
Andy Lewis
t: +44 (0)20 7467 7162
e: [email protected]
10–14 February 2014
ISO 50001 Lead auditor training
course (London)
Contact: EI Professional Development
team – Charlotte Belson
t: +44 (0)20 7467 7183
e: [email protected]
16–17 December 2013
ISO 50001 Lead auditor training
course (Manchester)
11–12 February 2014
ISO 50001 Lead auditor training
course (London)
Contact: EI Professional Development
team – Charlotte Belson
t: +44 (0)20 7467 7183
e: [email protected]
Contact: EI Professional Development
team – Charlotte Belson
t: +44 (0)20 7467 7183
e: [email protected]
Carbon capture and storage: the
role of enhanced oil recovery
Raising the talent of your workforce: the global skills gap
Iraq and Kurdistan oil and gas
sector and its impact on global
markets
Exploration activities and recent
discoveries
in
the
Eastern
Mediterranean
Social events
G
G
11 December 2013
EI Membership workshop (London)
Global energy outlook: future
growth scenarios
Oil and gas development projects
in Russia, CIS and the Arctic
Capitalising on Africa’s expanding
oil and gas industry
Mapping the future investment in
the Asia-Pacific oil and gas region
Challenges and opportunities in
global oil and gas project finance
Are we heading for a golden age
for gas?
G
Drinks reception
Lunch with Guest of Honour – Bob
Keiller FEI, CEO, Wood Group
Dinner with Guest of Honour –
Chris Finlayson, CEO, BG Group
Contact: EI Events team –
Sheetal Ruparelia
e: [email protected]
www.energyinst.org/ip-week
For more information, please go to www.energyinst.org/events
36
Energy World
December 2013
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