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  • Welsh construction centre leads field in sustainability

    The new £3.1 million Construction and Sustainable Energy Centre at Pembroke College, Haverfordwest, opened in June by environment minister Jane Davidson, is an object lesson in reconciliation and symbiosis. Dedicated to learning the tools of a traditionally environmentally unfriendly trade, it is nevertheless one of the most sustainable buildings of its kind in the UK, an object lesson in and of itself, and a blueprint for a greener construction industry.

    The second phase of a £30 million redevelopment currently ongoing at the college, the Construction Centre looks to all intents and purposes like any other modern college outbuilding: unassuming and functional. If you didn’t know you were entering the first further education building in the UK to have won a BREEAM (Building Research Establishment Environmental Assessment Method) rating of Excellent, in 2008, you probably wouldn’t think twice about it.

    The build is certainly traditional enough, with its steel frame and cavity construction infill, but the feel of the building is different. For a start it’s open and airy, the perfect learning environment. It has a sophisticated daylight-linked lighting control, so lights turns themselves on and off according to motion sensors, become dimmer and brighter according to how much sun there is or how close to windows they are. Urinals are waterless, while flush toilets use rainwater topped up with mains water when necessary. It has good thermal properties, with 100mm of wall insulation, 150mm in the roof and 150mm in the floors, and well-aired, high-ceilinged rooms, so it’s warm in the winter, cool in the summer. Energy consumption is so low that solar panels are not required other than to heat tap water.

    Outside is a silo for holding up to 17 tonnes of wood pellets, which are fed into a 300kW wood-fired boiler with the capacity to heat the Construction Centre, the next-door Innovation Centre and, when it’s constructed, the new Engineering Centre – phase three in the redevelopment plan. The potash produced once the pellets are burned is used as fertiliser on the college’s flowerbeds.

    The building was designed specifically to accommodate carpentry and brickwork students, and the green innovations they see all around them are part of the message that is gradually seeping into the industry: that sustainability in the way we build, teach and live is the way forward. The lessons they learn here will inform a new generation of more environment-conscious architects, carpenters and construction workers.

    The repercussions of the building are being felt already. Most building projects are sustainable only while on the architect’s drawing board, but construction company Dawnus was expected by BREEAM to monitor site management procedures, water and electricity usage, recycling and waste management procedures and recycling of waste… It was a steep learning curve that paid off with the Excellent rating, and now the company has trained up its own BREEAM assessor for future projects.

    ‘A lot of contractors might have said that BREEAM was a waste of time, whereas Dawnus had a much more positive outlook,’ says Paul Bullock of Bullock Consulting Ltd, who advised on the mechanical and electrical side of the project. ‘They can see it’s the future, it’s a case of sink or swim, and what they’ve created is a blueprint for future buildings.’

    ‘It only took six months to build and was a masterclass for our construction students in how to get something done quickly, and done well,’ agrees Pembroke College’s Laurence Rook. ‘Everyone is really pleased with the result.’

    Seventy per cent of the building’s funding came courtesy of a capital grant from the Welsh Assembly Government. The Department for Business Enterprise and Regulatory Reform’s low-carbon building programme helped pay for the renewable technologies.

    ‘This building represents the next step in education thinking, the realisation of a vision for our environment and our young people,’ said environment minister Jane Davidson AM, opening the building in June. ‘This building is exciting in that it shows the direction we are travelling. It is energy efficient, relies on biomass heating and reuses rainwater. In other words it is sustainable and represents the future of new buildings across Wales.’

    ‘It’s a real live building and the data generated from it is available for comparative analysis and benchmarking, so we can talk the talk and walk the walk,’ says Paul Robinson, head of school for construction, environment and design. ‘Most newbuild construction campuses in Wales and beyond will probably be modelled on this in the future. Whether in terms of BREEAM ratings or financial incentives, there’s real value in being sustainable. We can show the builders of the future that this is sustainable technology is in action.’

     

  • Governments failure to acknowledge oil supply crunch risks conflict and threatens the climate

     

     

    Governments and multi-lateral agencies have failed to recognise the imminence and scale of the global oil supply crunch, and most of them remain completely unprepared for its consequences. The report calls for governments to officially acknowledge the crunch and to shift urgently into safe sustainable energy alternatives.

    “The world’s governments have been asleep at the wheel. Their collective failure to recognise the imminent end of the oil age means we have lost a decade in which action could have been taken to develop alternatives and avert the worst outcomes of a dramatic drop off in the supply of oil,” said Simon Taylor,  Director of Global Witness. “Recognition of the oil supply crunch would have injected a sense of urgency and increased ambition for safer emissions reduction targets, both of which are sorely missing in the lead up to Copenhagen.”

    For most of the past decade, the International Energy Agency (IEA) held an over-confident view about future oil production.  But starting in 2007 and most dramatically in 2008, its position began to shift, when it projected a near 50% decline in conventional oil production by 2020 and a significant potential gap between supply and demand by 2015. [2] These factors should have rung alarm bells, yet the apparent lack of government response has been astonishing. 

    The report argues that it was a long-overdue breakthrough for the IEA to acknowledge the imminence of an oil supply crunch. But their suggested remedy of investment of over a billion dollars every day to 2030 is highly unlikely to bridge the supply-demand gap. [3] Massive investment cannot change the underlying fundamentals which clearly indicate a need to move away from oil.  Global Witness blames governments for not facing up to these factors and recommends that rather than spending increasingly large sums of money chasing increasingly hard to reach oil, the world should be investing in safe and sustainable alternatives.

    “A world without enough oil is unlikely to be a peaceful place. Our near-total dependence on oil for food production and transport mean that decreasing availability of oil is likely to lead to food shortages and increased geopolitical tension. It threatens the nascent global governance reform agenda and could cause major international conflict over resources. The poorest will be pushed to the back of the queue and inequality will grow, which in turn will feed social unrest,” said Charmian Gooch, Director of Global Witness.

    / Ends

    Contacts: Simon Taylor: +44 7957 142 121; Charmian Gooch: +44 20 7492 5878, or +44 7841 423 098; Amy Barry: +44 20 7492 5858 or +44 7980 664 397

    Download the report

    Notes:

  • Biomethane as an energy carrier

     

    Even though most of our natural gas is now fossil fuel, a doubling of efficiency would be just as effective as achieving 50% renewable power as far as global warming is concerned. We can simultaneously work on greening our gas supply by feeding more and more biomethane into the pipeline.  In Germany 22 billion kWh of biogas were produced in 2007. That’s a six-fold increase from 1999, driven partly by feed-in tariffs. About half of that biomethane was from landfill and sewage gas and the other half was from commercial and agricultural biomass plants. Renewable biogas is produced by natural processes of anaerobic digestion or gasification then cleaned up for sale to the gas pipeline. Sweden already gets 25% of their energy from biogas.

    Energy storage is another big advantage of gas. Both the gas and the electricity grids need energy storage to take up the slack between production and consumption. Gas storage is cheap because it can simply be pumped into depleted gas wells and salt caverns. We are already storing 4.1 Tcf of gas in the US. At 85% efficiency that gas could produce 1,180 gigawatt-hours of useful power on demand. A very cheap battery!  The smart electrical grid is all about making supply match demand because electrical storage is so expensive.

    Though the U.S. power grid uses significant hydro power and other renewables, CO2 emissions are still almost twice as much per kilowatt-hour as a 60% efficient natural gas fuel cell. In 2007 the U.S. power grid emitted 605 grams/kWh. The fuel cell emits only 340 grams. EIA data makes it easy to track the effects of our attempts to green the electric grid: In 1996 we emitted 627 grams of CO2 per kWh and by 2007 this was reduced to 605 grams. That’s a 2-gram per year decrease. If we continue at that rate, it will take 139 years to equal what we can do now with a fuel cell. Recent years show even less progress. There was no improvement between 2006 and 2007. Plugging into the grid is, unfortunately, a bit like plugging into a lump of coal.

    People have already begun selling renewable gas into the pipeline.  Landfills, manure piles and sewage plants that used to release significant amounts of methane into the atmosphere are now selling it as green gas. Biomass and garbage can also be gasified to add to the supply. The energy balance of Grass Biomethane production is 50% better than annual crops now used. When biogas is captured instead of releasing it to the atmosphere we get a double bonus. Methane is 72 times worse than CO2 as a cause of global warming in a 20-year time frame. You may have heard 25 times, but that’s based on a 100-year time frame. Methane only persists about 8 years. Also, when manure piles are covered, N²O, which is 289 times worse than CO², can also be captured. Coal mines emit almost a trillion cubic feet of methane into the atmosphere every year.

    In Cincinnati, Ohio, the 230-acre Rumpke landfill has been capped and the gas is cleaned and delivered to the pipeline to provide enough gas for 25,000 Duke Energy customers. China has an estimated 31 million biogas digesters mostly on small farms. They produce in total about 9 Gigawatts of renewable energy which is mostly used locally. Germany, Denmark, Sweden, Finland and now Ontario, Canada have feed-in tarrifs to encourage production of biogas. In Germany small farms can receive up to 25 cents per kWh for biopower. In the US, bills like SB306 that support biogas production, are still stuck in committee.

    Increased system efficiency means we will need less of these renewable sources to do the job. If we’re going to gasify biomass, it is more efficient to upgrade the gas and send it through the gas grid to customer CHP units than to generate electricity less efficiently and send it over less efficient, more expensive power lines to the customer. Until we get more efficient electrical generators, generation should always be done where the waste heat can be put to good use.

    Electric cars would be twice as efficient if they fueled up with natural gas and used a fuel cell to recharge a small battery. Like a hybrid with a natural gas fuel cell range extender. The expense and weight of a large battery is eliminated and the energy can be stored in a much lighter and cheaper tank. Refuelling can be much faster and could even be done at home from your natural gas connection. New, low pressure, adsorption tanks make this easy because they only require 500 psi of pressure. Recharging is a problem with batteries.  A 110v, 20A household plug can only supply 2.2 kW, which means that 10 hours of home charging will only take you 10 x 2.2 x 4 mi/kW = 88 miles. Natural gas refueling infrastructure is in place in much of the world to refuel five million vehicles worldwide.

    We already have prototype hydrogen cars that work on a similar principle but hydrogen has virtually no refueling infrastructure. Hydrogen is very expensive to produce, store and transport. Its tiny molecules find the smallest leaks and fly into space. They embrittle pipeline metals by nestling into the metal matrix. Storage is extremely inefficient, requiring extremely high pressure tanks or cryonic vessels. One giant hydrogen delivery truck can service about ten customers.  Methane has one carbon atom that holds four hydrogen atoms in a tight formation making containment and dense storage easy. A gallon of liquid methane actually holds 2.5 times as much hydrogen as a gallon of liquid hydrogen!

    “No carbon emissions” sounded like a great idea but 95% of our hydrogen is made from natural gas and that process emits about 30% more CO² than if we simply burned the methane. Yes, you can make hydrogen from water with electricity (at about 70% efficiency.) But you can also make carbon-negative methane from CO² and hydrogen. When you burn it, the net result is carbon neutral. The “carbon-free” cleanness of hydrogen is an illusion. Building a hydrogen infrastructure now would be folly. Biomethane can do the job now and will be cleaner and cheaper.

  • Is the German Renewable Energy Industry in Jeopardy?

    Is the German Renewable Energy Industry in Jeopardy?

    by John Blau, European Contributor
    Berlin, Germany [RenewableEnergyWorld.com]

    Germany’s newly elected government could hinder the expansion of renewable energy in the country with its plans to extend the lifetime of nuclear reactors, warns the German Renewable Energy Federation (Bundesverband Erneuerbare Energie – BEE).

    “There has to be a commitment to a sustainable energy strategy.”

    — Claudia Kemfert, Energy Expert, German Institute of Economic Research

    “A lifetime extension of the nuclear plants would slow, if not completely halt, the expansion of renewable energy in Germany,” said BEE spokesman Daniel Kluge. “There’s a simple reason for this: We have more and more renewable energy companies generating and delivering more and more electricity. So letting nuclear reactors stay on the grid longer will only lead to congestion, with too many companies generating too much electricity.” Kluge and others in the industry worry that renewable energy upstarts could be the ones bumped aside.

    Not only an overabundance of electricity could undermine the growth of renewable energy, according to BEE, but also the investment strategies of Germany’s big energy companies, which, if given a choice between investing in next-generation green technologies or generating still more profits from amortized nuclear plants, could favor the latter.

    Big German energy companies, such as E.ON and RWE, have been investing in wind turbines, most recently in huge offshore wind parks, but have been less enthusiastic about solar energy. Currently, renewable energy accounts for around 15 percent of the electricity generated in Germany, with more than 50 percent still coming from coal.

    If the country’s energy giants are allowed to keep their amortized nuclear plants on the grid longer, they stand to make big profits. The state bank WestLB estimates that E.ON, for instance, could earn an extra €8.6 billion [US $12.6 billion] if its reactors were extended an additional eight years. Germany still has 17 nuclear reactors delivering power to its nationwide electricity grid. Several of them are scheduled to be shut down over the next few years.

    German energy utilities have long voiced their opposition to a law, passed in 2002 under former Social Democratic (SPD) Chancellor Gerhard Schröder, that ended the construction of new nuclear power plants and required all plants to be shut down by the early 2020s.

    Last Tuesday, Jürgen Grossman, chief executive officer of RWE, called for extending reactor lifetimes. “I think one should use (energy) facilities as long as they are safe,” he said on the German public television station ARD.  “Nuclear energy is part of…an energy mix. I think it is necessary to talk about extending the lifetimes of all reactors.”

    Those remarks came just two days after the general election, which ended a complex coalition government of liberals and conservatives and gave right-of-center Chancellor Angela Merkel an additional four years to govern. RWE is a member of Germany’s Big Four energy producers, including E.ON, EnBW and Vattenfall, all known supporters of the Christian Democratic Union (CDU), its sister party the Christian Social Union (CSU) and their preferred coalition partner, the equally pro-business Federal Democratic Party (FDP).

    In the run-up to the election, the parties made their position clear on nuclear energy: It is — and will remain for some time — an essential part of a balanced energy mix. In a television interview following the election, Chancellor Merkel referred to nuclear energy as “a transition technology,” which Germany will require for “a certain time.” Rumors floating around Berlin put the nuclear lifetime extension at between eight and 10 years.

    While most renewable energy companies in Germany are worried about the impact of an extension, some energy experts believe it could benefit the sector. One way, according to Claudia Kemfert, an energy expert at the German Institute of Economic Research (Deutsches Institut für Wirtschaftsforschung – DIW), would be for a chunk of the additional profits to go into a special fund or foundation that, in turn, would allocate money to areas such as energy research and infrastructure expansion. Kemfert warns that an extension of the lifetime for nuclear energy “must be connected to certain conditions” such as a fund and how it is allocated. “There has to be a commitment to a sustainable energy strategy,” she said.

    Not everyone buys that argument, however. In particular, BEE points out that Germany’s big electricity producers and grid operators are mandated by law to invest in maintaining and expanding infrastructure. “They already collect enough money for their infrastructure obligations,” Kluge said. “And they don’t even spend all of that.”

    Kluge argues that Germany’s renewable energy sector doesn’t need additional money but rather a continued commitment to the country’s Renewable Energy Law (Erneuerbare-Energien-Gesetz or EEG). Under the EEG, grid operators must pay a government-set feed-in tariff to companies supplying energy to the grid from renewable sources.

    Kluge believes that while the government will look closely at the tariffs for wind, solar and other renewable energy sources, and make necessary changes based on market developments, it plans no substantial changes. German lawmakers across the board, he adds, view renewable energy not only as a means to reduce the country’s reliance on foreign oil and, ultimately, nuclear power, but also as a job machine. Today, more than 280,000 people are employed in the sector. Earlier this year, outgoing SPD Environment Minister Sigmar Gabriel predicted the sector could have as many as 500,000 by 2020.

    “I don’t expect the government to change the Renewable Energy Law,” DIW’s Kemfert said. “The only issue that is really disputed is the feed-in tariff for solar, which many argue is too high. I can imagine the new government will seek a market-oriented feed-in tariff.”

    John Blau is a U.S. journalist based in Germany. He specializes in business, technology and environmental reporting and also produces extensive industry research. John has written extensively about environmental issues in Germany.

  • Offshore Wind: Time for a Market Take-off?

    October 8, 2009

    Offshore Wind: Time for a Market Take-off?

    Offshore wind activity is experiencing significant growth now in terms of capacity installed. However, the industry is struggling with the costs of development, which have more doubled in 5 years.
    by Steve Kopits and Adam Westwood
    London, UK [RenewableEnergyWorld.com]

    The offshore wind market is finding its feet across the globe, with major projects completed and under construction in the UK, swiftly gathering momentum for renewables under the Obama administration in the United States, increasing focus and investment in China, and new projects planned in Germany, Belgium and other European countries.

    From virtually nothing in 2000, the industry today can boast 1.5 GW of installed offshore wind capacity, of which 334 MW – more than one fifth – was installed in 2008 alone, see Figure 1, (below). An additional 1.5 GW is currently under construction, and Douglas-Westwood forecasts more than 5 GW will be in the water by 2012.

    Figure 1. Graph shows the installed capacity per country per year since 1990

    Offshore in Europe

    The United Kingdom, in particular, has assumed the mantle of leadership in the industry. With seven operating wind power plants sporting 530 MW of capacity, the UK leads the industry by far. And that gap will grow. The UK has six projects totalling 1.2 GW under construction, and looks to add another 900 MW by 2012.

    The offshore industry can trace its lineage to the Danes, for it was Denmark which first championed offshore wind in scale. From 2001–2003, Denmark built 500 MW of offshore wind with its groundbreaking Horns Rev and Nysted projects. After taking a pause to gain experience in the operation and integration of wind power into its energy portfolio, the Danes will be back from 2009, and we expect them to add nearly 1 GW of capacity by 2012.

    Germany looks to move from a testing and field trial phase to construction of operating wind farms in the next few years. From 2004–2008, the country installed only three offshore turbines — all near shore. These include a 4.5-MW prototype turbine at Ems Emden in 2004 and a 5-MW turbine installed at Hooksiel in 2008. But Germany is moving past the prototype stage, and its first significant project, the 60-MW Alpha Ventus wind farm, is currently under construction and is expected to be operational by the end of 2009. Germany is will continue to become a key player, and is expected to install 1.4 GW by 2012, second only to the UK globally. Table 1 (below) shows all operational offshore wind farms commissioned by June of 2009.

    The US and China

    In the United States, the Obama administration has breathed life into the offshore wind industry. During the Bush administration, access to offshore lands was precluded by an inter-agency dispute. This current administration intervened to resolve the conflict, with the Minerals and Mining Service (MMS) awarded jurisdiction to lease the outer continental shelf for offshore wind where much of US offshore wind is slated. The agency opened its doors to receive applications at the end of June.

    China starts from far back, but is coming on strong. The country excels in low cost manufacturing, and the potential for foundation, turbine and component export beckon. The potential US market alone could exceed US$10 billion (€7 billion) in the next decade, and Chinese steel is being used for foundations for the Greater Gabbard project off the UK.

    China installed its first offshore wind project in 2007, a modest 1.5-MW facility placed by the China National Offshore Oil Corp (CNOOC) on one of its oil platforms. In April 2009, installation work began at the 102 MW Shanghai Donghai Bridge project in the East China Sea, the country’s first commercial offshore wind farm. The project will be powered by thirty-four 3-MW Sinovel turbines installed on gravity-based foundations, with the turbines to be erected as a complete unit in a one-lift installation — similar to the Beatrice Demonstration project off Scotland. The project costs are expected to be around $340 million (€240 million) and final commissioning is expected in 2010. Development in China is moving quickly and the country is expected to become a major offshore player within the next decade.

    The Role of Government

    Development of the offshore wind industry at the national level is generally incremental, starting with one or just a few prototype turbines, migrating to pre-commercial-scale farms typically of 10–60 MW, on to small commercial-scale projects generally in the 150-MW range, and finally arriving at full commercial-scale projects of several hundred megawatts. The London Array, long-struggling but with improving prospects, could be the first project in the gigawatt range — the first 630-MW phase should be complete by 2013. This national learning curve typically requires five years or more, and the role of the government is both critical and changes over time. There is no better example than the United Kingdom.

    The UK has awarded offshore wind projects in a rounds-based system. Britain’s first licensing round took place in 2002 and its third round was launched in 2008. These rounds have seen progressively more self-confident government involvement, with the government assuming a greater proportion of upfront expense, effort and risk over time. In the early stages of national development, most of the upfront commitment falls to the project developer, which must choose the site, perform resource measurement, environmental studies, address multiple stakeholder concerns (aviation, shipping and military issues, for example), secure permits and interconnect rights to the transmission grid, and absorb related costs and investment of time. This creates a high barrier to entry as developers face multiple rounds of expense and risk over many years without certainty the project will ultimately succeed. For example, in the US, Cape Wind is generally regarded as an object of wonder in the industry.

    In Britain, over time, the government and the Crown Estate (which is responsible for coastal waters and the sea bed) has taken an ever increasing role, zoning the offshore area, performing meteorological assessments and environmental impact studies and requiring priority interconnection from utilities. This makes sense in many regards.

    Zoning is difficult to achieve on a plot-by-plot basis, as it often reflects broader issues such as shipping lanes, fishing grounds or migratory bird’s paths that are not easily managed outside a regional context. For example, fishermen may cede a portion of their grounds if compensated elsewhere, something that no individual developer can grant.

    Further, by absorbing the cost of the meteorological studies, the government can assume the risk of early investment without incurring a loss of time waiting for other studies and stakeholders issues to be resolved. Similarly, environmental issues are often best considered regionally, as migratory birds are best studied over a path rather over a specific site.

    In many ways, the US is now grappling with issues Britain faced in Round 1. While the MMS has gained authority to lease the outer continental shelf for up to 25 years, most other costs remain the domain of the developer. This includes the acquisition of a short-term lease for and the costs associated with meteorological studies, as well as costs associated with environmental impact studies. This last point rankles the offshore wind community, as the MMS covers these same costs for the oil and gas industry. Under the Obama administration, offshore wind may expect, at a minimum, non-discriminatory treatment over time.

    The United States is also peculiar in that offshore wind is, for practical purposes, run by the individual states and not on the federal level. Therefore, government support can vary enormously by jurisdiction. For example, the state of New Jersey provided grants to three developers to cover the cost of installing meteorological towers, thereby assuming significant upfront costs.

    Rhode Island, motivated to avoid the strife of Cape Wind in neighbouring Massachusetts, has embarked on an extensive effort to zone its entire coastal waters, including federal waters. Delaware has directed its Delmarva Power, the leading utility in Delaware, to sign a power purchase agreement with Blue Water Wind, an offshore wind developer.

    In sum, the development environment can vary materially from state to state. Some states with limited population or financial resources, for example Maine, would prefer that offshore wind be handled either federally or regionally. How this question will be resolved is unclear, but the answer will be decisive for the development of offshore wind in the United States.

    Government Support

    Subsidies are integral to offshore wind. The capital costs associated with an offshore wind project are twice those of onshore wind, and ongoing operations and maintenance costs are estimated to be some 3–5 times that of land-based farms. Offshore wind is an expensive business, and increasingly so. In the UK £1.2 million/MW ($1.94 million/MW) has been installed on the first UK projects, to over £2.5 million/MW ($4 million/MW) on projects under construction, with costs for projects under tender soaring to between £3–£3.5 million ($4.8–$5.7 million/MW) in some recent cases.

    To make the numbers work, the government must help. In almost every case of successful development, the form of assistance has been a feed-in tariff. Feed-in tariffs, or ‘market mechanisms’ as they are rather euphemistically called, are payments for power generated at much higher than market rates and are usually guaranteed through the foreseeable project financing associated with a wind farm, generally 15–25 years.

    In an ideal case, these tariffs provide a predictable revenue stream to the project adequate to cover debt service, operations and maintenance, with enough left over to insure that the equity holders have an ongoing interest in the successful and professional management of the project.

    Sometimes such tariffs are granted directly, as in Germany. Sometimes they are granted de facto through the use of renewable energy credits trading under one of many similar names, such as renewable obligation certificates, for example. Such tariffs are widely accepted in Europe but considered anathema in the United States, perhaps because they seem to lack sufficient commitment to competition. But that is, in the end, what financiers want. As one leading renewables banker stated, ‘We’ll consider anything, but at the end of the day, we’re pretty much looking for a feed-in tariff.’

    Sometimes such tariffs are disguised as renewables credits. For example, this same banker noted that New Jersey’s OREC’s (Offshore Renewable Energy Credits), once one wades through the convoluted legal language, largely act as a feed-in tariff.

    Offshore credits are generally worth more than standard renewables credits, usually 50%-100% more. For example, in April 2009 the UK government announced that it was increasing its renewable energy credit (a renewables obligation certificate (ROC) in the UK) banding for offshore wind projects to 2 ROCs for every MWh of electricity produced, up from 1.5 previously. This applies to projects that reach financial closure within the budget year 2009–2010, and falls back to 1.5 ROCs after 2011.

    Enhanced ROC values have had the effect of pushing forward some projects such as the London Array, which was struggling with high capital costs. There is some concern, however, that these measures will reduce investor confidence in the long term due to uncertainty over potential future fluctuations to the mechanism.

    Government support can come in other forms as well. In the UK (as elsewhere), the Renewables Obligation requires power suppliers to derive a specified proportion of the electricity they supply to their customers from renewables. This started at 3% in 2003, rising gradually to 10% by 2010, and targeted at 15% by 2015.

    The cost to consumers will be limited by a price cap and the obligation is guaranteed in law until 2027. Price caps in retail electricity are nothing new. Retail power prices feature among the most regulated — and politicized — prices in the world. Notwithstanding, price caps shift the cost of subsidized power to the equity holders of utilities and have been linked to utility bankruptcies in the past. While caps may be expedient measures for securing political support for offshore wind, they risk poisoning the well and creating management and investor resistance to utility-supported wind projects.

    Of course, offshore wind is also financed through investment and production tax credits in the United States and other countries. The lustre of such schemes fades during recession, but they may be expected to play a role in the future as the economy recovers.

    The Supply Chain

    Like offshore oil and gas, offshore wind requires an extensive dockside supply chain, including blade manufacture, foundation and cable fabrication, and port and vessel capabilities. Offshore wind farm components are often best manufactured at the quayside and, of course, require offshore installation using specialized vessels, crew and technicians.

    Ongoing operations and maintenance also require onshore support facilities and vessels. Dockside facilities are generally of sufficient scale to serve more than a single project, and indeed, serve as a continuing basis for a regional industry. Therefore, where the supply base is established can have long-lasting implications.

    For example, even as Britain serves as the poster child for the development of offshore wind, so it serves as a negative example regarding the capture of the economic benefits of offshore wind. Up to 75% of the levelized costs of an offshore wind farm represent support from taxpayers or ratepayers in some form. For a gigawatt-scale project, such public support can literally be measured in the billions of dollars.

    Capturing a reasonable proportion of these benefits is a legitimate goal of government. Nevertheless, the nature of the industry in northern Europe has thwarted Britain’s quest to do so. Our analysis suggests that Britain is capturing only 10% of the levelized cost of its offshore projects, with the bulk of expenditure ending up in Germany and Denmark. Britain, as a practical matter, was late to the game.

    In the United States, the offshore wind industry looks to be centered in the Northeast coastal states, broadly speaking from Washington DC to Boston, Massachusetts, and possibly on to Maine. Only this region has the combination of major load centres, the income and willingness to commit substantial funding to renewables, a lack of other renewables and excellent shallow to mid-depth water offshore wind resources. However, this region has no material offshore supply chain.

    The offshore supply chain for the United States is concentrated almost exclusively around the oil and gas business in the Gulf of Mexico. Therefore, the Northeast’s supply chain will have to be developed literally from scratch, and this process has begun. For example, Deepwater Wind management has stated that the company envisions using Quonset, Rhode Island to stage projects for Rhode Island, New Jersey and New York, building Rhode Island a renewable energy industry which will power the state for years. So the carve-up is underway. Within a year, the deals will have been struck and the benefits largely allocated.

    Offshore wind faces many challenges, both in costs and logistics. But in Europe — and in particular, in Britain — the industry has taken hold and is consolidating its role in the UK’s energy portfolio. The United States comes from far back, but anticipates exciting times ahead.

    Steven Kopits manages the New York office of Douglas-Westwood and covers the offshore wind industr. Adam Westwood is responsible for Douglas-Westwood Ltd’s renewable energy work.

  • Supergrid for renewables: Coloring the US Grid Green

    October 6, 2009

    Supergrid for Renewables: Coloring the US Grid Green

    Modernizing the US grid is a mammoth task, one that is spurring new lines of thought about generation and transmission resources.
    by Elisa Wood, Correspondent
    Virginia, United States [RenewableEnergyWorld.com]

    Renegades, some may call them, but people have lived off-grid for decades by relying exclusively on solar panels for electricity. Disconnected from their local utility, they have no central back-up and no reliability. Most solar electric users are less extreme. They remain connected to the utility and use a combination of solar and grid power.

    Furthermore, while GridSolar’s concept is novel, it appears to hold public appeal. A poll commissioned by GridSolar of 500 Maine residents in April found nearly two to one approval for using solar panels for reliability rather than transmission lines.

    Now, a Maine, US energy company has proposed a third and unique kind of relationship between solar energy system owners and the conventional electric grid. It is neither on-grid nor off-grid; instead solar energy becomes the grid.

    GridSolar has taken the unusual step of proposing a solar photovoltaic project not as generation, but as transmission. The company has asked state regulators to approve 800 MW of solar capacity as an alternative to a US $1.5 billion high-voltage transmission line the local utility, Central Maine Power, wants to build. Describing itself as a smart grid alternative, GridSolar appears to be the first solar project in the US designed specifically to meet transmission needs.

    But solar is not the only non-traditional approach to transmission springing up as the US grapples with how to expand and modernize its 340,000 km of high voltage lines into a national transmission superhighway. Like GridSolar, many of these innovations are offered under the umbrella of ‘smart grid’, a broad term often used to describe bringing digital technology, the grid and distributed technologies together. This effort has become so large that its market could rival in scope the development of the internet, according to technology giant Cisco.

    In addition to spurring technological innovation, the transmission overhaul is driving the power industry to develop fresh ideas about how to finance and regulate high voltage transmission lines, in an effort to make them less costly and easier to site.

    Transmission Effort Receives Low Grade

    Transmission is the topic of the day in the US because the grid system is ageing, out of date and incapable of supporting the nation’s renewable energy goals. The American Society of Engineers estimates that it will need $1.5 trillion in new investment by 2030.

    Lack of transmission is the biggest barrier to the US target of making wind power produce 20% of power supply by 2030, according to the US Department of Energy. And the nation is not doing so well in overcoming that barrier. In fact, the American Wind Energy Association (AWEA) gave the effort a low grade, C minus, in its July 2009 ‘20% Wind Report Card’. Indeed, the report found ‘very little progress on reforming policies for planning, paying for, and permitting transmission.’ While a few regions ‘have made very modest progress’, others are moving in the wrong direction.

    Meanwhile, less wind is coming online. The US reported 8500 MW of wind installations in 2008, but expects to add only 5000 MW in 2009. The economy is largely to blame, but lack of transmission is stalling projects too, according to AWEA. The lines are necessary because areas ideal for wind tend to be remote from population centres.

    ‘Wind farm installations were very strong in 2008, and remain somewhat strong in 2009 compared to historical levels, especially in light of the difficult environment facing the US economy. However, if installation rates do not revert quickly to back to 2008 levels, the US could fall behind the trajectory to its goal in the early part of the next decade’, the report card concludes.

    Wind isn’t the only renewable energy resource that needs better transmission. Seven states in the Southwest could generate 6800 GW of solar energy, according to the Solar Energy Industries Association. The push is on to build large-scale concentrated solar power in the deserts of these states. But transmission lines from the deserts to cities have reached capacity, according to testimony made before Congress by Rhone Resch, Solar Energy Industries Association (SEIA) president and chief executive officer.

    What’s holding up the transmission superhighway? Firstly, widespread disagreement exists on how to pay for the undertaking. Further, Americans are notorious for not wanting lines built in their backyards and dispute exists over just how much the federal government should step in and tell locals what to do.

    Building Giraffe Farms

    President Barack Obama wants to make renewable energy contribute 25% of US electric supply by 2025, while the US currently gets around 3% of its power from non-hydroelectric renewables. Richard Silkman, GridSolar’s co-founder posits: ‘If we need renewables and we need transmission, why not make them one and the same?’ His series of 2.5-MW solar installations would be built in lieu of what would be one of the largest transmission projects yet to be constructed in Maine.

    Since Central Maine Power’s line would largely address peak demand, GridSolar’s option is better and cheaper at about $4500/kW installed, according to Silkman, a long-time energy consultant and founding partner in the project together with Mark Isaacson, a developer of hydroelectric and wind projects. On days when the sun isn’t shining, and the state needs peak power, batteries or small, fossil-fuelled distributed generators would act as backup.

    Solar can be added in stages where needed, as peak load grows, preventing an over-build of capacity, a likely outcome should Maine go forward with the transmission line, Silkman says. After all, by 2017, Maine will need the utility’s transmission network for reliability only 850 hours of the year — less than 10% of all hours, Silkman calculates. With solar, it would be easy to avoid overbuilding, since panels can be installed incrementally when and if required. Transmission, however, is built to serve future peak demand, before its known if the demand will materialize.

    As if defining solar as transmission is not unusual enough, GridSolar pushed its out-of-the-box thinking even further. Since utilities are the typical US builders of transmission, GridSolar decided to become a utility, or at least try. The company applied to Maine regulators for a certificate that would allow GridSolar to operate as a utility and earn a guaranteed rate of return on its capital investment; an assurance likely to hold appeal to investors.

    ‘We thought that was the cleanest, clearest way to proceed. We are blazing new ground here. This is not something people are doing on a daily basis around the country. We needed to secure financing. Our feeling was that if it was as cleanly structured as possible — and looks just like a utility — financing would be easy,’ Silkman says. The Portland Press Herald reports that a decision isn’t expected until next year.  

    Under GridSolar’s design, solar energy produces a dynamic similar to load shedding. ‘By meeting increased loadings with distributed generation in the same region, power flows over the bulk power system remain unchanged — just as if no additional load was placed on the grid. And, with no additional obligations placed on the bulk power system, the power system will continue to meet North American Electric Reliability Corporation (NERC) reliability standards, thereby mitigating the need for massive investments in that system. In this sense, distributed solar generation represents a substitute for investments in transmission’, the company wrote in a May 2009 filing to the Maine Public Utilities Commission (PUC).

    Solar is the only generation source uniquely suited to meet transmission needs he argues, noting that thermal generation works best when built on a large scale and connected to distribution networks; combustion turbines might work on a small scale, but are noisy and polluting and therefore are not suitable close to load centres; wind turbines typically need remote locations and do not lend themselves to serving peak load; and fuel cells could work, but are expensive.

    Furthermore, while GridSolar’s concept is novel, it appears to hold public appeal. A poll commissioned by GridSolar of 500 Maine residents in April found nearly two to one approval for using solar panels for reliability rather than transmission lines.

    But not everyone thinks the idea is workable. Central Maine Power, NextEra Energy (previously FPL Energy) and Independent Energy Producers of Maine (IEPM) all have filed opposition to GridSolar’s application to become a utility and define solar as transmission.

    ‘With apologies to Gertrude Stein, the simple response to GridSolar’s petition is this: generation is generation is generation is generation’, said Central Maine Power, which is owned by a subsidiary of Iberdrola.

    Distributed generation cannot be transmission ‘without beggaring the laws of logic and physics … the mere fact that generation can under some circumstances perform a similar ‘reliability function’ as transmission does not extinguish the distinctions between them’, the utility went on to say in a briefing before the Maine PUC. If GridSolar is allowed to become a utility, and it receives a guaranteed rate of return, it will create an unfair playing field for other generation projects with similar system impacts, which ‘must stand or fall based on their own economics’, Central Maine Power adds.

    NextEra Energy and IEPM make a similar argument to the commission: ‘GridSolar seeks to have its cake and eat it too by obtaining treatment as a transmission and distribution utility while retaining the benefits of a generation facility.’

    The project’s problems don’t stop there. The way the New England region pays for transmission leaves little room for a solar-as-transmission option. ISO New England, the regional grid operator, socializes costs among the six New England states for transmission lines that provide reliability. States with the highest load pay the most. Maine is a rural, sparsely populated state with little electric load. Thus, it would end up paying very little for the Central Maine Power line – about 8%, according to Silkman’s calculations.

    GridSolar has yet to apply for similar treatment, but learned during informal talks with the grid operator that it’s unlikely to qualify for New England-wide socialization of its costs. ‘To them the world is black and white. You are either transmission or you are generation’, Silkman says. Thus, the transmission line enjoys a financial incentive, not available to the solar project. It will be difficult for state decision-makers to turn down the transmission project, he says, given that 92% of its cost will be paid by other states, while Maine will get the jobs.

    ‘If every school district in Maine could have a giraffe farm with someone else paying 92% of its costs, every school district in Maine would have a giraffe farm. Nobody would have any incentive to say no’, he says, adding: ‘This is the world we have created with this transmission/generation dichotomy.’

    Knowing his idea will not be an easy sell at the state level, Silkman says he may eventually turn to the Federal Energy Regulatory Commission for a ruling. For now, he is spreading his message in various public venues around New England. ‘We’re seeing an enormous amount of interest. People are fascinated by the concept because it is bringing this whole smart grid notion to them in a way that makes economic and physical sense’, he says.

    Rethinking Policy

    While it remains to be seen whether the US Northeast will accept solar as transmission, the region is clearly primed for transmission alternatives. Its leaders have expressed concern that a national transmission superhighway may foist Midwestern wind upon the region, bumping aside the Northeast’s own prospects of renewable energy development.

    Indeed, eleven East Coast governors, most from the Northeast, sent a letter in May to Congressional leaders to ‘express our concern about the significant risks posed that we believe could jeopardize our states’ efforts to develop wind resources and inject federal jurisdiction into an area traditionally handled by states and regions.’

    The governors object to paying for a national transmission highway that delivers power from the Great Plains to the East Coast. The East Coast has wealthy renewable resources of its own, particularly offshore wind, they argue. ‘The waters adjacent to the East Coast hold potential for developing some of the most robust wind energy resources in the world — enough wind potential to meet total US electricity demand, as Interior Secretary Ken Salazar has recently pointed out’, the letter says. The governors called for a transmission network of their own, a backbone to interconnect offshore wind to population centres on the East Coast.

    So far, however, the region has been slow to develop either wind farms or transmission of its own to accommodate renewable energy. In fact, the Northeast accounts for the lowest amount of the 292 GW of wind power planned in the nation’s organized markets — about 14 GW or 5%, according to a report by Ryan Wiser and Mark Bolinger of the Lawrence Berkeley National Laboratory: ‘2008 Wind Technologies Market Report’, issued in July 2009 by the Department of Energy. The delay has been caused, in part, by internal dispute among the New England states about how to pay for transmission.

    Typically the states within ISO New England share costs based on their electric load for any transmission projects deemed necessary for reliability. Dispute arose when a project was proposed not for reliability, but to accommodate wind power.

    Out of the argument came a new financing concept being pushed by Northeast Utilities, a Connecticut-based utility. Jim Muntz, the utility’s president of transmission calls it a ‘beneficiary pays, not everyone pays’ model. States agree to pay for the transmission only if they want the renewable energy delivered by projects built to accompany the line.

    This approach not only frees states from paying for transmission they do not want, but it also guarantees the transmission delivers green energy, and not some other form of power. No such warranty exists for the proposed national transmission corridor, which in fact could ultimately deliver coal-fired generation to New England, Muntz says.

    New Englanders aren’t the only ones worried they may foot the bill for a green transmission superhighway, only to discover brown energy sources crowding the lanes. In Minnesota, similar fears played out recently over three high-voltage transmission lines, known as CapX2020. The three lines, over 600 miles (960 km) in all, were proposed in 2005 by several power companies, including Great River Energy and Xcel Energy’s Northern States Power. In May, CapX2020 won an important certificate of need from the Minnesota Public Utilities Commission (PUC).

    While the project has support from several stakeholders, it also has its share of critics. The North American Water Office and the Institute for Local Self Reliance, groups that back community-based renewables, argue that the CapX2020 represents investment in an outmoded electric model. The groups recommended the state explore small distributed generators to meet growing demand for electricity, rather than ship power over transmission lines from large plants. Meanwhile, environmental groups, renewable advocates and local landowners sent up warnings that nothing would prevent non-renewable power from gobbling up CapX2020’s transmission capacity, displacing wind power. They asked state regulators to require that the transmission owners build or contract for renewable power to fully subscribe the new lines’ capacity.

    In its decision, the PUC rejected the idea of using smart grid/distributed generation instead of transmission, saying it could ‘alleviate the stresses on the existing system temporarily. But none of these strategies ultimately displace the need for new transmission facilities.’ In addition, ‘no party proposed an actual plan’ for a smart grid/distributed energy alternative, according to the state Administrative Law Judge.

    The PUC took to heart concerns that non-renewable generation could block wind power on the lines and designated that one of the lines, the 240 mile (384 km) Brookings Project, be dedicated to renewable energy.

    Beth Soholt, director of Wind on the Wires, one of the groups that pushed for guaranteeing line access for renewable energy, called the PUC’s decision ‘forward looking.’ The commission ‘understood the importance — at least for the Brookings line — of providing as much certainty as possible that renewables would use the new capacity on the transmission lines’, she said.

    Another transmission innovation gaining popularity is the competitive renewable energy zone, or CREZ. The zones are designated for wind development and offer a co-ordinated plan to build an accompanying transmission superhighway. The notion emerged several years ago in Texas, where the first CREZ is expected to pave the way for $4.93 billion of transmission construction to accommodate 11,550 MW of new wind projects.

    The Wiser/Bolinger wind market report describes about a dozen CREZ models or related innovations emerging in various areas of the US, including California and Colorado. The report finds that federal, state, and regional entities are making progress that will ‘ease the transmission barrier for wind over time.’

    ‘Nearly twenty large transmission projects in the central and western US that may carry significant amounts of wind generation are in various stages of development. Though not all of these projects will proceed to commercial operation, those that do may provide development opportunities for thousands of megawatts of new wind projects from 2013 onward’, says the report.

    But timing remains a problem. Developers can build wind projects quickly, while transmission often takes many years to site, particularly when opposed by local citizens. T. Boone Pickens, former oilman turned wind energy advocate, recently fell victim to transmission scarcity. Pickens put on hold plans for his proposed 4-GW wind farm in Texas, instead opting to build several smaller projects in various locations. Pickens blamed the project cancellation on both the financial crisis and lack of transmission for his mega project.

    So, for some, answers may come too slowly. But innovation appears on the way. The shape of the new US grid has yet to emerge. It is clear, though, that colouring the grid green means weaving resources and policy into new lines of thought. Transmission may look more like generation in the new grid; funding may take new forms; planning may twist and turn in unexpected directions. The grid is big with room aplenty for invention.

    Elisa Wood is the US correspondent for Renewable Energy World magazine.