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Winds of change? Why offshore wind might be the next big thing

Falling costs and rising acceptance are promising signs, but the industry needs to keep improving.

http://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/winds-of-change-why-offshore-wind-might-be-the-next-big-thing

The landscapes of Rembrandt glow with the great painter’s rendering of light. And they are distinctive for another reason: windmills are everywhere. As far back as the 13th century, the Dutch used windmills to drain their land and power their economy. And now, 800 years later, the Netherlands is again in the vanguard of what could be the next big thing, not only in wind power but also in the global energy system as a whole: offshore wind.

In December, the Netherlands approved a bid for its cheapest offshore project yet—€54.50 per megawatt-hour, for a site about 15 miles off the coast. Just five months before, the winning bid for the same site was €72.70. Denmark has gone even further, with an auction in November 2016 seeing a then record-winning bid of €49.90 per megawatt-hour, half the level of 2014.

Europe, which has provided considerable economic and regulatory support, accounts for more than 90 percent of global capacity. As a result, Europe now has a maturing supply chain, a high level of expertise, and strong competition; it is possible that offshore wind could be competitive with other sources within a decade. By 2026, the Dutch government expects that its offshore auctions will feature no subsidies at all. But it might be even sooner: in the April 2017 German auction, the average winning bid for the projects was far below expectations, and even less than the Danish record set only six months before. Some of the bids were won at the wholesale electricity price, meaning no subsidy is required.

Prices and costs

The industry still has a way to go compared with current costs: the levelized cost of electricity (or LCOE, a metric that incorporates total lifetime costs and expected production) for an offshore park installed in 2016 is expected to be €120 to €130 per megawatt-hour, about 40 percent more than onshore wind in comparable regions and 20 percent more than solar photovoltaics (PVs). Conventional sources, such as coal and gas, are currently even cheaper in many locations.

The technology thus still comes at a premium. Costs are higher because building at sea requires more materials for foundations and piles, while rough weather conditions make installation and maintenance expensive. Offshore wind parks also require expensive connectors to the inland transmission network.

While prices for all renewables will continue to drop, offshore wind is at an earlier stage of development, so its prices can be expected to fall further, faster, thus improving its competitive position. According to McKinsey research, when different wind farms are made comparable by normalizing for water depth, site preparation, subsidies, and other factors, this is already happening (exhibit).

PNG_Insights_Winds-of-change_ex1

One caveat: these are prices, not actual costs. Until the parks are actually built and running, it is impossible to know if they can be profitable at these prices. But companies would not be competing so fiercely—the Dutch auction saw 38 bids—if they didn’t think they could be.

Offshore wind has a number of advantages that can help to compensate for its higher costs. Specifically, it can be sited near densely populated coastal areas, where land can be costly, and its higher wind speeds produce more power per unit of capacity. Offshore also complements solar PV, because it produces well in winter when load is highest, creating a stable production profile, day in and day out, throughout the year. Offshore wind produces at 35 to 55 percent of capacity, versus 10 to 20 percent in the Northern Hemisphere for solar PV. Finally, the not-in-my-backyard (NIMBY) effect is considerably less when the nearest turbine is miles away at sea. However, when offshore parks are not placed far enough offshore, NIMBY can become an issue, with complaints of visual or horizon pollution.

Factors outside the industry’s control, including low interest rates and low steel prices, have played a major role in cutting costs. But so has better technology, especially the trends toward larger turbines and greater durability. Larger turbines harvest more of the wind, which make them more efficient. For many years, 3- to 4-megawatt turbines were standard; now 8- to 10-megawatt models are common, and by 2024, 13- to 15-megawatt models will likely hit the market. This reduces the cost per megawatt. Even as turbines have become larger, they have also become better. In the 1990s, the expected lifetime of offshore wind parks was only 15 years; now it is closer to 25 years, and new sites project an operational lifetime of 30 years.

One final piece of good news: as investors get more comfortable with offshore wind, financing risk premiums will come down.

Room for improvement

The offshore wind industry is still in the process of growing up and becoming more professional. There are a limited number of fit-for-purpose suppliers and vessels, for example, and owners, contractors, and subcontractors are still learning how to work together. There aren’t that many industry professionals who are experienced at completing offshore wind projects, and as parks get bigger, the need for such expertise is greater.

Scale itself will help. With more offshore farms being built, the economics of scale are beginning to emerge, in both logistics and along the supply chain, including such things as sharing crew transfer vessels, helicopters, and coordinating jack-up barges across assets and operators for major component replacements.

For offshore wind to fulfill its considerable potential, it needs to raise its game everywhere. The most promising opportunities are in design, procurement, and execution; operations; and innovative financing.

Engineering, procurement, and construction

Value-focused design involves working with all stakeholders, internal and external, to systematically identify technical improvements and value-creation opportunities. For example, the developer and supplier can get together to define the minimum technical solutions, ruthlessly eliminating high-cost, low-value specifications. Design optimization is another possibility. The standardization of components and designs across a single offshore wind site, or a fleet of them, reduces the costs of construction, installation, follow-up engineering, and debugging. Manufacturers can then use modular techniques to adapt to specific situations in a cost-efficient way.

Contracting and procurement could add up to 5 to 10 percent in cost savings. Contracting strategy begins with understanding exactly what is expected of the contractor with respect to technical delivery and added value, the complexity of engineering, and fit with the design requirements. Based on a rigorous risk assessment, the developer seeks the best delivery model and pricing structure and optimizes the contract terms to be consistent with this strategy. By brainstorming with the candidate contractors, then assessing their risk profiles, one onshore wind company saved at least 15 percent on the final proposals.

Applying procurement-excellence tools, such as clean-sheet costing, and creating a clear “package procurement” road map, can help to find the right price for the right product. At several companies, this rigorous purchasing approach has translated into 15 to 20 percent price reductions in the procurement of turbines.

By their nature, offshore wind platforms are costly to build, so improving project execution offers another avenue to cut costs, by 3 to 5 percent. Integrated performance management ensures that data is collected and shared throughout the project—from the owner to all the suppliers and all the subcontractors. Lean construction comprises a set of principles, operating practices, and methods that improve execution while minimizing waste. In offshore wind, examples include reducing delays in preparing foundations and increasing standardization in the assembly of components.

Operations and maintenance

Offshore wind developers vary widely in their operations and maintenance performance. The best drive down costs while maintaining high availability and safety standards; the rest tend to focus on availability and do not pay enough attention to costs. We estimate that for many projects, improved operations could translate into savings of as much as €10 per megawatt-hour in LCOE. Improved operations start with the relentless application of advanced analytics to improve predictive maintenance, condition monitoring, and component replacement.

Second, operators should establish flexible work contracts for offshore sites that are difficult to access, share technicians across sites, and find the right balance between internal and external technicians to contain labor costs while maintaining quality. Size and proximity to other parks does matter. Building new vessel-logistics concepts such as service-operation vessels, and sharing technicians and fleet with other sites (as done in the offshore oil and gas sector) adds a third opportunity to reduce costs.

Financing

McKinsey analysis shows that a one-percentage-point decrease in the cost of capital brings a 5 to 10 percent improvement in LCOE for renewables. To realize this advantage requires investors having a thorough understanding of the real risk profile that offshore wind assets have compared with other renewable or infrastructure assets.

Another way to reduce financing costs is to make the sector more attractive to a broader group of investors. Offshore wind investments are relatively “chunky,” requiring hundreds of millions of euros per park, and “illiquid,” meaning they are difficult to sell without incurring high transaction costs. To overcome these challenges, other asset classes have devised alternative structures, such as publicly traded or private YieldCos; these have had their challenges but can still be attractive. The industry could also consider new structures, combining features such as publicly listed versus private structures, single asset versus broader portfolios, and single-technology focus versus cross technology.

Reasons for optimism

The world’s first wind farm began operating in 1991: the Vindeby project featured 0.45-megawatt turbines. As of 2017, there is more than 14 gigawatts of cumulative installed capacity worldwide.

Other markets have taken note of Europe’s progress and are putting into place supportive regulation. China has made offshore wind part of its five-year energy plan. Korea, Poland, Taiwan, and a number of other countries are also considering offshore wind as part of their future energy mix. For example, a major project off the northeast coast of the United States is in the works.

Although in some areas of the world the LCOE of offshore wind may never become at par with, say, solar PV, the value it can bring—as less-intermittent baseload power generation near urban demand centers, offsetting supply deficits from solar PV in winter—can make it a valuable addition to the energy mix.

These brighter prospects have also led to increased interest from oil and gas companies, which are increasing their exposure to the sector. Offshore is a natural fit with their expertise in engineering and in executing complex energy projects in offshore locations.

Offshore’s considerable potential would be further enhanced if floating wind platforms could become cost competitive. Fixed-foundation wind parks have to be sited in relatively shallow waters; floating ones could be placed in deeper areas, farther from land, and could open additional markets. There is considerable research going on, with the first floating wind farm being built off the coast of Scotland.

Fast growth, increased investment, bigger parks, falling costs, and new technologies and markets: these are the trends that are defining the offshore sector. Put it all together, and it is fair to conclude that the wind is at the industry’s back.

About the author(s)

Arnout de Pee is a partner in McKinsey’s Amsterdam office, Florian Küster is a consultant in the Hamburg office, and Andreas Schlosser is an associate partner in the Munich office.

The authors wish to thank Nikki Oude Elferink, Marte Guldemond, Jan Koeleman, Florian Kühn, Johannes Lüneborg, Nico Schnackenberg, and Marco Weber for their contributions to this article.

China’s premier unveils smog-busting plan to ‘make skies blue again’

Li Keqiang promises to intensify battle against air pollution as he unveils series of measures at annual people’s congress

The Chinese premier, Li Keqiang, has promised to step up his country’s battle against deadly smog, telling an annual political congress: “We will make our skies blue again.”

China’s cities have become synonymous with choking air pollution in recent years, which is blamed for up to 1 million premature deaths a year.

Speaking at the opening of the national people’s congress in Beijing on Sunday, Li admitted his country was facing a grave environmental crisis that had left Chinese citizens desperately hoping for relief.

Li unveiled a series of smog-busting measures including cutting coal use, upgrading coal-fired power plants, slashing vehicle emissions, encouraging the use of clean-energy cars and punishing government officials who ignore environmental crimes or air pollution. “Key sources” of industrial pollutants would be placed under 24-hour online monitoring in an effort to cut emissions.

The premier vowed that levels of PM2.5 would fall “markedly” over the coming year but did not cite a specific target.

“Tackling smog is down to every last one of us, and success depends on action and commitment. As long as the whole of our society keeps trying we will have more and more blue skies with each passing year,” he said.

PM2.5 is a tiny airborne particulate that has been linked to lung cancer, asthma and heart disease.

Despite his buoyant message, Li’s language was more cautious than three years ago when he used the same opening speech to “resolutely declare war on pollution” and warn that smog was “nature’s red light warning against inefficient and blind development”.

There has been public frustration – and protest – against Beijing’s failure to achieve results in its quest to clean up the environment. Tens of thousands of “smog refugees” reportedly fled China’s pollution-stricken north last December as a result of the country’s latest pollution “red alert”.

Wei Song, a Chinese opera singer who attended Li’s speech, said it was inhuman to “achieve development goals by sacrificing the environment” and called for tougher measures against polluters.

“The government should increase the penalties in order to bankrupt the people and the companies responsible. Otherwise, if the punishment is just a little scratch, they will carry on polluting,” said Wei, one of China’s “three tenors”.

Zhang Bawu, a senior Communist party official from Ningxia province, defended China’s “much improved” record on the environment.

He claimed the number of smoggy days in Beijing was now falling thanks to government efforts and he said his province, which is building what could become the biggest solar farm on Earth, was also doing its bit.

Ningxia’s frontline role in a Chinese wind and solar revolution meant 40% of its energy now came from renewable sources, Zhang said.

Additional reporting by Wang Zhen

Stellar Energy Defends Plasma Gasification Waste to Energy Plan for Bahamas

Steve Gill, Board Advisor the firm planning a plasma gasification waste to energy plant for the Bahamas, Stellar Energy, has responnded to recent criticism of the plans by the Waste Resources Development Group (WRDG).

https://waste-management-world.com/a/stellar-energy-defends-plasma-gasification-waste-to-energy-plan-for-bahamas

Stellar Energy remains committed to the provision of a world class waste management, remediation and clean energy production facility for the Bahamas. Stellar has worked tirelessly for over 6 years at its cost in advancing the project.

It is with disappointment that we are seen as an easy target by some local entities with a vested interest in the current practice, which has resulted in an unmanaged toxic waste dump that continues to have a significant, negative effect on this beautiful island; notably hazardous leachate that breaches the water table and noxious fires, both underground and open air.

The need to ameliorate this situation is plain to see, with the added benefit of a continuous supply of clean, renewable energy at less than half the current cost to Bahamian inhabitants. WRDG (which consists of consortia of small waste handlers and processors) is quick to point out their concerns over one of the proposed technologies-Gasplasma®.

When processing over 1000tpd of highly organic waste the only proven technology with long run time history is mass burn incineration, one can only imagine the furore that would have occurred if this solution had been proposed by Stellar for this project, as well as public outcry. Stellar looked for a new technology with significant risk mitigation, via the combination of two proven (at scale) technologies; gasification and DC Plasma Arc.

Our chosen technology provider, Advanced Plasma Power’s CEO Rolf Stein, supports rebuttal of these allegations made by the projects detractors. He said ‘The Gasplasma technology is based on two long proven technologies (fluidised bed gasification and plasma furnace) deployed in multiple locations around the world.

The Gasplasma technology brings benefits of efficiency and environmental improvement in the generation of power, the reduction in hazardous waste and lower water consumption compared to other waste to energy solutions. Confidence in the technology has been demonstrated by the recent investment by National Grid (UK) in a Gasplasma based project in the UK which is under construction.

Our work with Stellar and the EPC partner to date indicates that the proposed solution will not only deliver renewable power but provide a controlled and substantially more environmentally improved situation than the status quo’

To further mitigate any residual risk Stellar had ensured the whole project was underwritten with a comprehensive process guarantee by one of the world’s eminent and most experienced EPC contractors.

WRDG voice concerns about the proposed cost; again we feel the need to bring balance here. The $650mio figure was a first estimate that was subject to review following 3 separate FEL studies; waste characterisation, landfill study and resultant plant configuration.

Stellar undertook the first of these studies at its own cost, the results of which already bought the indicative capex down some $200 mio to $450mio. Stellar remains very confident that the last two studies would bring the cost down even further to meet its aim of sub $350mio. The irony here is that all costs of this project were to be borne by Stellar, not the Bahamas government or any allied body, public or private.

Again unfounded allegation of significant tipping fee increases are without foundation as Stellar’s business model is based on current pricing. The project bankability is underpinned by a PPA, like all energy projects of this kind in order to make the project fundable. The proposed PPA would have seen prices for clean, continual power brought down by more than 50%, so where we ask is the downside?

As a further commitment to the island and the legacy this project would bring is that Stellar had committed at its cost, to provide a “Centre of Excellence” whereby local labour would have been trained to world class standards and independently certified with NEBOSH/IOSH qualifications to allow maximum local labour content in the construction and operational phases.

To date we have seen no such offering in any shape of form from any of these detractors, in particular WRDG or their intent to work together for the common good.

Towards a new European mindset on waste-to-energy?

The European Commission released on 26 January the Communication on the Role of Waste-to-Energy in a Circular Economy. Although non-binding, the communication analyses the current role of waste-to-energy and gives guidance on Member States on how to cope with the problems this generates.

https://www.zerowasteeurope.eu/2017/01/towards-a-new-european-mindset-on-waste-to-energy/

From Zero Waste Europe’s point of view, the Commission has positively changed its position from promoting incineration to acknowledging the problems related to overcapacities, distortive economic incentives and the risk that a very quick phasing out of landfills shifts waste from these to incinerators and not to prevention, reuse and recycling.

In this regard, the Commission advises those Member States heavily relying on landfills to focus on separate collection, on increasing recycling capacity and on diverting bio-waste from landfills. It insists that in case these Member States want to obtain energy from waste, they are recommended to recycle bio-waste through anaerobic digestion. In addition, they are called on taking into account the commitments and objectives for next 20-30 years (separate collection and recycling targets) and carefully assess the evolution expected for mixed waste when planning infrastructures, so as to avoid regrettable investments (i.e. redundant incinerators).

When it comes to those Member States heavily relying on incineration, the Commission calls on them to raise taxes on waste-to-energy, phase out public support schemes, decommission old facilities and establish a moratorium on new ones. The case on defunding waste-to-energy has been extended to all Member States, so as not to distort the waste hierarchy. In this sense, the Commission acknowledges that the waste operations delivering the highest reduction of GHG emissions are prevention, reuse and recycling and are the ones to be promoted, something Eunomia’s report for Zero Waste Europe of 2015 already showed.

Zero Waste Europe welcomes this call, but would have expected the Commission to show this ambition when last November proposed a revision of the Renewable Energy Directive that is the one opening the door for renewable energy subsidies for incineration. ZWE expects MEPs and national governments to take note of this communication when reviewing the Directive and bring coherence between EU legislation.

ZWE notes, however, that the text still considers that waste incineration has a role within a circular economy, which is a conceptual contradiction because if material loops are effectively closed there is nothing left to burn. A more accurate approach would be to say that the capacity of waste to energy incineration is to be used in the transition period to a circular economy but once proper material and value preservation policies are successfully implemented burning waste will be redundant.

Finally ZWE’s warns about the Commission current double standards with its approach to waste to energy (WtE) in Europe and its support to WtE in the rest of the world, particularly in the Global South where we have seen successful recycling programs having been dismantled to feed the European funded incineration plants.

Nevertheless, this communication seems a change in the mindset of the European Commission and a positive step to phase out environmentally harmful subsidies and move towards zero waste.

Brussels urges countries to stop funding incineration

The European Commission has urged member states to gradually phase out public funding for energy recovery from mixed waste in new non-binding guidelines on waste-to-energy.

Mixed waste used as feedstock in waste-to-energy processes is expected to fall due to higher recycling targets, currently being discussed by the EU institutions, as well as separate collection obligations, the document says. This type of waste accounts for just over half of all waste converted into energy in the EU.

The Commission notes that experience in some member states has indicated a real risk of stranded assets, particularly in incineration. Member states with little incineration capacity and high reliance on landfilling should prioritise new recycling capacity and develop anaerobic digestion to treat biodegradable waste, it says.

Countries with high incineration capacity should ban new facilities while decommissioning old, less efficient ones, the document states. They are also advised to introduce higher incineration taxes for inefficient processes and phase out support schemes.

Presenting the guidelines on Thursday, Commission vice president Frans Timmermans said that creating a market for incineration should be avoided “as much as possible”. “It’s unavoidable for a small part, but only at a stage where recycling is no longer possible – and certainly should not be done before that,” he argued.

The document stresses the importance of the priority order set in the waste hierarchy in ensuring that waste-to-energy capacity does not generate stranded assets.

The Commission seeks to clarify how the hierarchy applies to various waste-to-energy processes, noting that they rank differently in terms of their sustainability.

Anaerobic digestion counts as recycling in the waste hierarchy, which is half-way up the ranking just behind prevention and preparing for reuse, according to the guidelines. Just below, they place waste incineration and co-incineration operators with a high level of energy recovery under ‘other recovery’, together with reprocessed waste used as fuel.

Only waste incineration and co-incineration with limited energy recovery are classed as disposal, the bottom category of the hierarchy, along with gas from landfills. Incineration, co-incineration in kilns and anaerobic digestion provide around 1.5% of the EU’s total final energy consumption.

However, the guidance leaves member states the opportunity to depart from the priority order if they can justify why this achieves “the best environmental outcome”. Potential reasons outlined include technical feasibility, economic viability and environmental protection.

Green group Zero Waste Europe said the recommendations provide clarity on how to implement the waste hierarchy. But it regretted that the Commission had not included its call to phase out subsidies for waste-to-energy in its proposal for a revised Renewable Energy Directive from last November, calling on MEPs and member states to do so during the legislative process.

Additional reporting by José Rojo

susanna.ala-kurikka@haymarket.com

The role of waste-to-energy in the circular economy

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Hong Kong government aims to slash carbon emissions with 2030 action plan

While government hopes to reduce total emissions by 26-36 per cent, some critics say the plans lack conviction

Annual carbon emissions could be slashed from around six tonnes per person to between 3.3 and 3.8 tonnes by 2030, according to the government’s latest climate change action plan.

But a think tank and green group believe the plan lacks hard targets for renewables and the ambition to phase out coal in the fuel mix.

The target, which will translate to an absolute carbon emission reduction of 26 to 36 per cent and reduction of 65 to 70 per cent in carbon emissions per GDP from 2005, will use a cleaner, less coal-intensive fuel mix and more energy efficient buildings and transport.

Renewable energy would also be applied on a “wider and larger scale”, it said.

Measures to incentivise private investment in renewables could be introduced in the post-2018 regulatory framework with power companies, which is being negotiated, the plan says.

Government departments are looking at installing floating photovoltaic systems on reservoirs, with two expected to be completed at Shek Pik and Plover Cove this year, and on slopes, such as at the old Anderson Quarry.

The Environment Bureau however stressed that the city did not have favourable conditions for large-scale commercial use and as such, did not set any concrete targets for 2030.

Also missing were hard targets for reducing energy use in the private buildings sector. Secretary for the Environment Wong Kam-sing said a consensus had been reached for the building sector to voluntarily reduce electricity consumption on an “ongoing” basis, with details still to be finalised.

“Overall we would like to make it a kind of pattern similar to the Paris agreement,” he said, referring to the land climate accord, which requires each individual country to work toward its own nationally-determined contributions to curb global warming and report back every five years.

Maura Wong, CEO of think tank Civic Exchange believed the plan lacked commitment. “We still don’t know by 2030 whether we will be coal-free and what the mix will be between natural gas and nuclear,” she said. “They need to be ambitious enough to set a clear date of when they will completely phase out coal.”

WWF-Hong Kong’s conservation director Gavin Edwards said: “We welcome the government’s openness to 3 to 4 per cent renewable energy, but believe that it should be a formal target and … more ambitious with at least 5 per cent renewables by 2030.
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Source URL: http://www.scmp.com/news/hong-kong/health-environment/article/2064045/hong-kong-government-aims-slash-carbon-emissions

How China has embraced renewable energy and Hong Kong hasn’t, and what’s behind city’s green power inertia

Summer 2016 saw record heat, and health problems from air pollution are rising, yet green energy projects have been shelved or denied funding; electricity firms lack incentives to go green, WWF says

Professor Johnny Chan Chun-leung is one of Hong Kong’s most eminent climate and energy scientists, and he is a very frustrated man. This month Beijing announced it would invest 2.5 trillion yuan (HK$2.8 trillion) in renewable energy technology by 2020 to establish the nation as world leader in sustainable and clean energy, and create 13 million jobs. Meanwhile, Chan and other respected scientists in Hong Kong are struggling to obtain financial support for their green energy projects.

Whereas China embraces wind, tide, solar and wave energy as essential tools to tackle climate change and its acute air pollution, attitudes in Hong Kong appear as fossilised as the fuel that provides 78 per cent of its energy needs.

Chan, chair professor of atmospheric science at the City University of Hong Kong’s School of Energy and Environment, outlined details of an innovative tidal turbine project at a conference on renewable energy last week, organised by the city’s Business Environment Council. Chan’s team has developed a system that can generate electricity even in low tidal streams, typical of the seas around Hong Kong. Though it is early days, trials staged at the Gold Coast Marina in the city’s Tuen Mun district produced encouraging results.

He now needs funding to scale it up, with a view to offering the city a viable green energy alternative, but his application to the Environment and Conservation Fund for HK$2 million was rejected. “The ECF told me today that I ‘did not demonstrate the merits and contributions of the proposed study to environmental protection’,” he says. “How ridiculous.”

It is not an isolated incident. Others complain privately that Hong Kong funding bodies are “overly risk averse” and are rarely enthusiastic about funding green energy research and development.

“I believe more can be done to promote local funding for R&D for all renewable energy components,” says Dr Walid Daoud, a solar energy expert from City University and another speaker at the council’s conference. Many believe these difficulties are just one symptom of a wider malaise when it comes to supporting green energy in Hong Kong.

“Hong Kong performs badly in overall carbon emissions and renewable energy,” says Cheung Chi-wah, senior head of climate and footprint programmes at environmental campaign group WWF-Hong Kong. He notes that the city’s emissions of greenhouse gases responsible for global warming have been rising steadily and are 23 per cent above their level in 2002. That was the same year the Hong Kong government published its first study of renewable energy, compiled by the Electrical and Mechanical Services Department. The report estimated that 17 per cent of Hong Kong’s energy needs could be supplied by solar power alone.

It also made a key primary recommendation that the government should set targets for renewable energy’s contribution to demand of 1 per cent, 2 per cent and 3 per cent for 2012, 2017 and 2022, respectively. Nearly 15 years later, with electricity consumption rising about 5 per cent a year, the city recording record-breaking temperatures last summer, and health problems due to worsening air pollution growing, very little has been achieved. Instead of the proposed 2 per cent target for 2017, the latest data shows that the proportion of energy used in the city that is produced by renewable means is still less than 1 per cent – far from the 17 per cent potential – and the targets have not even been implemented.

Indeed, by 2012 only 2.2 megawatts of solar photovoltaic panels, capable of meeting 0.01 per cent of Hong Kong’s energy needs, had been installed.

Hong Kong is also one of the few advanced cities in the world with no feed-in tariff scheme, or “net metering system”, in place. This means that, rather than small-scale green energy producers being paid for contributing any excess energy to the grid, they can only donate it.

Energy consultant Mike Thomas, of the Lantau Group, another speaker at the council’s event, thinks it is unhelpful to compare China and Hong Kong in terms of being “behind or ahead” because of the vast differences in the two economies’ scale, resources and political systems. He also believes Hong Kong is taking the right steps by implementing the government’s new fuel mix for energy supply by 2020, which consists of about 50 per cent natural gas, around 25 per cent nuclear power and more use of renewable energy sources. Natural gas is still a fossil fuel, but 30 per cent to 50 per cent cleaner than coal in terms of emissions.

“It is true that there is very little renewable energy, strictly speaking, but given the rabid debate about the use of green space for housing, I’m not sure that converting the hillsides to solar panels would appeal either,” he says. The issue of “low energy density” (the relatively high land area needed to produce 1 kilowatt of renewable electricity) is often cited by opponents of renewable energy in Hong Kong, which, including its 263 islands, has a land area of just 1,104 sq km.

Douad calculates the city would need to cover 20 per cent of its surface area with 10 per cent efficient solar panels to meet its energy needs, yet he remains a firm advocate of solar power.

“The 20 per cent is for the actual lateral 2D land use. However, we could also consider the vertical 3D of the urban landscape, using building walls as well as rooftops, sun-exposed roads and highways, sound barriers and water reservoirs,” he says.

While delegates at the council’s conference earnestly discuss the possibilities of using renewable energy locally, most leading cities have already embraced renewables and the smart grid – the use of digital technology to improve reliability, resiliency, flexibility, and efficiency – and have coherent policies in place to foster them.

Singapore is ramping up the use of solar panels through initiatives such as SolarNova, a government-led programme, and investing in green energy research via The Energy Research Institute. The city state is already seeing positive results. Figures for 2014 show that green energy sources contributed 3.7 per cent of total energy consumption (up from 2.4 per cent in 2005) and analysts expect that figure to top 5 per cent by 2020.

Hong Kong does have small-scale solar schemes designed for local consumption, and some government buildings generate solar power, but its approach to solar energy is piecemeal.

CLP Power, one of the city’s two electricity suppliers, commissioned its award-winning renewable energy power plant on Town Island in Sai Kung in January 2010, comprising wind turbines and solar panels, to supply the needs of the island’s drug rehabilitation centre, and says it has connected about 250 small-scale local schemes.

The other supplier, Hongkong Electric, says about 70 local use renewable systems have been connected to its grid over the past 10 years. It also operates a 1MW solar plant and the only wind turbine connected to Hong Kong’s power grid.

It might be imagined that geographical restrictions and a scarcity of available land would make harnessing offshore wind, wave and tidal power – as Chan proposes – more attractive, but there is little sign of progress on any of these. Detailed proposals from the electricity companies to build offshore wind farms were awarded environmental permits, but both schemes were shelved in 2013 and mysteriously disappeared from the local energy agenda.

“We are in the process of collecting wind, wave and other environmental data, along with a review of the engineering design, to complete the feasibility study,” a CLP spokesman says of its plan.

Hongkong Electric’s proposed wind farm in waters off Lamma Island was to supply 1.5 per cent of its total output. Asked about the proposal, a company spokesman says “field wind measurement has been going on since 2012”.

Cheung says no one in the industry understands why the company needs to collect five years of wind data. He suspects the real reason for offshore wind power being dropped is that the schemes of control both power companies have negotiated with the government, which regulate their profits on operations and investment, do not offer enough financial sweeteners for either company to proceed.

The current schemes of control are due to expire by end of 2018, and the government is negotiating terms with the companies to renew them. Cheung thinks it’s “a perfect time for the government to show its determination by introducing significant targets and incentives for energy consumption reduction and [renewable energy] development”.

One of the thorny issues that will need to be ironed out is tariffs. Hong Kong has some of the cheapest and most reliable power in the world (electricity costs about half what it does in New York). Although it is widely believed that greater use of green energy is essential, there is less agreement on who will pay for the higher prices or pick up the bill for integration of an intermittent power source to the grid.

While energy costs account for only 1.6 per cent of the average Hong Kong household’s budget, there is little commercial incentive for change and little political appetite for heaping extra costs on hard-pressed families.

There is more hope than expectation that Chief Executive Leung Chun-ying will use his final policy address to announce Hong Kong will follow Beijing’s lead and reveal a bold new policy for renewable energy with defined targets, a credible strategy to achieve them, and support for home-grown innovations such as Chan’s.
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Source URL: http://www.scmp.com/lifestyle/article/2062467/how-china-has-embraced-renewable-energy-and-hong-kong-hasnt-and-whats

Costa Rica Ran Almost Entirely on Renewable Energy in 2016

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Costa Rica ended 2016 on a particularly green note.

The Central American nation ran entirely on renewable energy for more than 250 days last year, the country’s power operator announced.

Renewables supplied about 98.1 percent of Costa Rica’s electricity for the year, the Costa Rican Electricity Institute (ICE) said in mid-December. Fossil fuels provided the remaining 1.9 percent.

The country of 4.9 million people gets most of its electricity from large hydropower facilities, which are fed by multiple rivers and heavy seasonal rains.

Geothermal plants and wind turbines are also prominent sources of power, while biomass and solar power provide a tiny but growing share of electricity.

A few diesel-burning power plants round out the electricity mix, but Costa Rica has barely used them in the last two years.

The country enjoyed a 110-day stretch of carbon-free electricity from June 17 through Oct. 6, when the power company briefly turned on its fossil fuel plants. After that blip, Costa Rica resumed its run of consecutive, fossil fuel-free days, a spokesman for ICE told Mashable on Dec. 13.

In 2015, Costa Rica used 98.9 percent renewable energy, slightly more than 2016’s expected total.

Compared to larger, more industrialized countries, Costa Rica seems like a verdant gem amid a pile of black coal rocks.

But Costa Rica’s smaller economy and natural resources give it an advantage over an energy-hungry powerhouse like the United States.

Costa Rica’s population, for instance, is roughly 65 times smaller than the U.S.’s. It also generates about 373 times less electricity than the United States does, according to national energy data from both countries.

Given its huge energy appetite, the U.S. faces a bigger challenge in greening the electric grid.

Nearly 15 percent of the U.S. electricity supply for January-October 2016 came from hydropower, wind, solar and other renewable sources, the U.S. Energy Information Administration reported on Dec. 23.

Coal and natural gas together accounted for nearly two-thirds of U.S. electricity generation over that period. Nuclear power provided the remaining 19 percent.

For Costa Rica, the clean energy success story is likely to continue into 2017.

ICE’s president Carlos Manuel Obregón said the power company expects renewable power generation to stay “stable” this year, thanks in part to the nation’s four new wind farms and favorable hydro-meteorological conditions, which are projected near the nation’s hydropower plants.

It’s Official: Solar Energy Cheaper Than Fossil Fuels

http://readersupportednews.org/news-section2/318-66/41073-its-official-solar-energy-cheaper-than-fossil-fuels

enewable energy has reached an important milestone. The World Economic Forum (WEF) has determined that in many parts of the world, solar energy is now the same price or even cheaper than fossil fuels for the first time.

In a handbook released this month, the WEF observed how the price of renewable technologies, particularly solar, has declined to unprecedented lows.

While the average global LCOE [levelized cost of electricity] for coal and natural gas is around $100 per megawatt-hour, the price for solar has plummeted from $600 a decade ago to $300 only five years later, and now close to or below $100 for utility-scale photovoltaic. For wind, the LCOE is around $50.

According to the WEF, more than 30 countries have already reached grid parity—even without subsidies. (“Grid parity” is the point when an alternative energy source, say solar, can generate power at a LCOE that’s equal or even less than the price of traditional grid power.)

“It is relevant to note that the mentioned evolution, market share gain and continued potential for renewable energy do not hinge on a subsidy advantage,” the report added. “In fact, according to [International Energy Agency], fossil-fuel consumption has received $493 billion in subsidies in 2014, more than four times the value of subsidies to renewable energy.”

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The WEF highlighted how the unsubsidized LCOE for utility-scale solar photovoltaic—which was not competitive even five years ago—has declined at a 20 percent compounded annual rate, “making it not only viable but also more attractive than coal in a wide range of countries.”

Countries that have already reached grid parity include Chile, Mexico, Brazil and Australia with many more countries also on the same track. The WEF projects that two thirds of the world will reach grid parity in the next couple of years, and by 2020, solar photovoltaic energy is projected to have a lower LCOE than coal or natural gas-fired generation throughout the world.

“Renewable energy has reached a tipping point,” Michael Drexler, who leads infrastructure and development investing at the WEF, told Quartz. “It is not only a commercially viable option, but an outright compelling investment opportunity with long-term, stable, inflation-protected returns.”

The report follows a recent analysis from the IEA which revealed that total clean power capacity increased by 153 gigawatts, overtaking coal for the first time. To illustrate, about 500,000 solar panels installed were installed around the world every day.