Clear The Air Energy Blog Rotating Header Image

July, 2009:

Four New Solar-Powered Ferries Coming to Hong Kong

Matthew McDermott,

image: Solar Sailor Holdings

I have to say that usually when I hear about a solar-powered boat I’m a bit skeptical — often the solar power is just used for lighting or other equipment and not propulsion — but not so with Kong Kong’s four new solar-powered ferries. Solar power will supply three-quarters of their power, with liquid petroleum gas supplying the remainder. Bloomberg has the details:

The boats were purchased by the Hong Kong Jockey Club as part of a $45 million effort towards making the city more sustainable; and will be used to ferry golfers to the Kau Sai Chau Public Golf Course.

Designed by Syndey-based Solar Sailor Holdings Ltd., the ferries will reduce carbon emissions by 50% and save the ferry operators $6 million in fuel costs over their typical 15 year lifespan.

More info on the ferries: Solar Sailor

Huaneng licensing green technology to US firm

Eric Ng, SCMP

China Huaneng Group, the mainland’s largest power producer, has signed the country’s first deal to license technology to the West – to turn coal into synthetic gas, which is then used to generate clean power.

The accord signals that mainland technology has become internationally competitive in a mature segment of the clean coal power industry that has yet to achieve commercialisation, analysts said.

Previously, development of such technology was dominated by large global energy giants such as General Electric and Royal Dutch/Shell. Mainland chemical companies such as China Petroleum & Chemical Corp (Sinopec (SEHK: 0386)) had imported it from Shell to produce chemicals from coal by first turning it into synthetic gas.

The parent of listed Huaneng Power International (SEHK: 0902, announcements, news) ‘s 52 per cent-held Xian Thermal Power Research Institute, co-owned with four other state-owned power generation firms, signed the deal with the United States’ FutureGen in Pennsylvania on July 15.

FutureGen is funded by private and public entities including China Huaneng, with a mandate to build a “near-zero emissions” coal-fired pilot power plant in Illinois at an estimated cost of US$1.5 billion that will capture and store carbon emissions underground.

Under the pact, China Huaneng will allow FutureGen to use its technology to turn coal into synthetic gas for another clean coal power plant in Pennsylvania. Such gas is then purified to extract sulphur dioxide and other impurities before it is burned to generate power by turning a turbine.

“Although the technology to turn coal into synthetic gas has a long history and is a mature one, this is encouraging news for China’s clean coal power generation efforts,” said energy consultancy Songlin Group’s managing director, Zhu Songbin. “China’s manufacturing cost advantage has probably contributed to Huaneng winning the deal.”

Generating power from gas that has been synthesised from coal is more energy-efficient and typically produces 20 per cent less carbon dioxide than conventional pulverised-coal-fired plants.

Combined with carbon capture technology, “near-zero emissions” power generation has been the goal of companies around the world, but high construction costs have held back commercialisation.

China Huaneng’s 51 per cent-owned GreenGen received Beijing’s approval in May to build a 250-megawatt, 2 billion yuan (HK$2.26 billion) pilot clean coal power plant in Tianjin by 2011.

Australian Carbon Trade Scheme

AUSTRALIA, Reuters in Canberra

Australian plans for a sweeping carbon trade scheme opened new divisions within the opposition parties on Friday, boosting hopes Prime Minister Kevin Rudd will win approval for his plan and avoid a possible snap election.

Rudd, who remains well ahead in the polls, could have the option of an early election if laws to set up carbon trading remain stalled in parliament’s upper house Senate, which is poised to reject the plan in a scheduled vote on August 13.

But senior Liberal opposition lawmaker Tony Abbott on Friday called for his conservative party to change policy and pass the carbon trade bills to avoid an early election it could not win.

“As a general rule, oppositions should welcome elections, but this would make it even harder to keep the focus on the Rudd government’s addition to borrowing and spending,” Mr Abbott wrote in the Australian newspaper.

Mr Rudd is due to face the voters in late next year or early 2011, but could call a snap poll early next year if the Senate rejects the carbon trade plan twice. Mr Rudd’s Labor needs seven extra votes to pass laws through the obstructive Senate.

The opposition, which controls the largest Senate voting bloc, is struggling for support in polls and would prefer a late next year election on the issue of government debt and economic management, rather than fight early on climate change.

Based on current opinion polls, Mr Rudd would easily win a second term in office with an increased majority, while the Liberal and National Parties would lose up to 20 seats..

Opposition leader Malcolm Turnbull has raised the possibility of amending and passing the carbon trade laws, although he still wants a final vote postponed until early next year and after December’s global climate change talks in Copenhagen.

The suggestion has angered many of Mr Turnbull’s Liberal colleagues, who want the government plan to be defeated, and the junior opposition National Party, which is implacably opposed to the carbon trade scheme.

Mr Rudd wants the laws passed before the Copenhagen summit, so Australia can go to the global talks with a commitment to cut Greenhouse gas emissions by up to 25 per cent by 2020, based on 2000 levels, if the rest of the world takes similar action.

Gary Cox, vice president of commodities at Newedge Australia, said interest was returning to Australia’s fledgling carbon trading market on raised hopes the parliament would pass the carbon trade legislation.

“We’ve had some Europeans and local people get involved in the CER (Kyoto-backed Certified Emission Reductions) market again for the first time since the scheme was delayed,” said Mr Cox. CERs are traded carbon credits for emission reductions.

The market went dead in May after the government postponed the scheme’s introduction until mid-2011, Mr Cox said, but a fresh trade happened this week when an Australian electricity generator unwound previously purchased December next year CERs.

CERs trade on the European Climate Exchange and imports will be permitted to offset carbon emissions once the Australian scheme is up in running.

Interest was also returning in moribund Australian Emission Units, which are the basic unit of compliance and trade in the planned regime, Mr Cox said. Each unit represents one metric tonne of carbon dioxide equivalent of greenhouse gas emissions.

Finance Minister Lindsay Tanner on Friday talked up the option of an early election on climate change, saying a poll could be inevitable if the Senate was too obstructionist.

“Well if enough things are getting blocked in the Senate that is effectively making it impossible for the Government to get its programme through, or to govern,” Mr Tanner told Australian radio.

The carbon trade scheme will cover 1,000 of Australia’s biggest companies and will put a price on carbon pollution, giving business a financial incentive to curb emissions.

Firm plans to import 200 electric vans

Peter So, SCMP

The world’s largest manufacturer of electric commercial vehicles plans to introduce 200 to the city next year.

An electrically powered van will be sold for about HK$700,000 and a truck for HK$900,000 – about three times the prices of diesel vehicles.

British-based Smith Electric Vehicles is the third manufacturer to announce plans to bring electric vehicles into the city.

Earlier this year, Japanese carmakers Nissan and Mitsubishi promised to introduce electric vehicles for road tests in Hong Kong.

Smith intends to import vans and trucks with payloads ranging from 3.5 to 12 tonnes. Its minibus can carry up to 17 passengers.

Sales director Kevin Harkin said the vehicle batteries would normally need eight hours for a full charge using home-use power sockets.

Speeds can reach 120km/h and the travelling range is about 160 kilometres, depending on whether air conditioning is used.

Mr Harkin said the city would be ideal for introducing the vehicles because the roads were mostly flat.

He noted that the high price tags and doubts about vehicle performance could make businesses hesitate. But the vehicles could cut costs over about five years because of cheaper fuel and lower maintenance fees, he said.

Smith would first target high- profile businesses, he said.

“The businesses normally buy a small volume to start with,” he said, adding that he expected the vehicles to become widely used after businesses saw savings in operational costs.

Financial Secretary John Tsang Chun-wah announced in his budget a five-year extension of the registration-tax waiver for electric vehicles, to March 2014.

A government committee has been set up to study problems relating to their introduction.

Data on vehicle registrations by fuel type

Wind power loses puff in planning

Eric Ng, SCMP

In the last of a two-part series, Eric Ng says infrastructure to tap captured energy is lagging headlong capacity expansion

Across the seemingly endless plains of Inner Mongolia, the changing skyline is something even the fearless medieval Mongol emperor Genghis Khan might be in awe of. Giant wind towers and turbines are being raised across this wild land and many more are eventually expected to dot the northern and western plains, where the nation’s most abundant wind blows.

Standing up to 30 storeys high with blades 40 metres wide, these giant machines are tangible evidence of the mainland’s push to wean itself off polluting fuels such as coal and develop renewable energy.

The National Development and Reform Commission (NDRC), the nation’s top economic policy planner, is expected to soon announce an ambitious plan to lift China’s installed wind power generation capacity to 100,000 megawatts by 2020.

That is more than three times the objective set in 2007, and eight times the 12,200MW capacity reached at the end of last year.

China looks set to overtake Spain this year as the world’s third-largest wind power market by installed capacity and Germany next year as the second largest behind top ranked the United States.

A large part of this growth is being driven by Beijing’s implementation of the Renewable Energy Law in 2006. The statute stipulates that all renewable power output must be bought by the nation’s two regional power distribution monopolies, which are required to provide the necessary power grid connections.

In addition, Beijing has imposed a surcharge on coal-fired electricity consumption to subsidise renewable energy, which is more costly to generate. Beijing believes renewable energy development will not only help control emissions and climate change, but create jobs and combat poverty in remote and undeveloped regions.

The equipment manufacturing, component supply, project development, installation and maintenance involved in each megawatt of wind-farm capacity can employ 15 people for a year, according to the Global Wind Energy Council.

The solar power sector could create 32 jobs for each megawatt of capacity installed, against one job for coal-fired projects, said Jean Francois, an energy equity analyst at Sustainable Asset Management.

The NDRC has planned for giant wind farms with at least 10,000MW of capacity in the Xinjiang Uygur autonomous region, Hebei province, western Jilin province, eastern Inner Mongolia, western Inner Mongolia and Jiangsu province.

Earlier this month, Gansu province near Inner Mongolia said the province would build 20,000MW of wind farms by 2020, exceeding the 18,200MW of the world’s largest hydro power project in the Three Gorges Dam.

However, the world’s fastest-growing wind power market, where capacity has doubled in each of the past four years, is facing infrastructure problems that could hinder its long-term development.

“If you happen to travel in Inner Mongolia, occasionally, you will see some wind blades and towers lying abandoned because of a lack of grid connection,” said Chan Ka-keung, the chief executive of clean energy private equity firm Nature Elements Capital. “You may ask why the developers just put them there. I can tell you it’s because nobody will steal them. They are too heavy.”

According to the China Wind Energy Association, more than 20 per cent of the nation’s installed wind power capacity was not generating any electricity last year. The reason: the plants were not connected to grids and on average three to four months were needed to get them hooked up.

One study by clean energy projects investor and consultancy Azure International found that the utilisation rate of mainland wind farms averaged 23 per cent in 2007, much lower than 34 per cent of projects operating in the United States.

While differences in wind resources could partly explain the disparity, insufficient investment in grid connections also played a part.

“The problem is that the regions where wind resources are the most abundant tend to have the weakest grid infrastructure development,” association president He Dexin said. “Much faster than expected growth in installation in the past two years has created a bottleneck.”

In addition, some wind farms are generating more power than earlier estimated, and their output has been rejected by the local grid companies because of concerns it would overload their systems.

For power distributors there is little incentive to invest in extra grid lines to remote wind farms because while Beijing has subsidised wind power generation, the grid operators are only getting the same tariff as power generated from coal.

Wind farms are generally of smaller generation capacity than coal-fired power plants and are less stable in output since it is subject to variable wind speed. As a result, the return on investment from wind power is lower for grid operators.

London-based Robin Batchelor, who manages BlackRock’s World Energy Fund and New Energy Fund, said: “China has targets for megawatts [capacity] of wind farms but not targets for megawatt-hours [power output]. A significant portion of wind farms that are built are not connected to the grid.”

Since grid companies are wholly state-owned and are not answerable to individual investors, their incentive to link up with wind farms is limited.

Despite the system’s failings, Mr He believes the central government’s new development plan for the sector will be enough to address the issues.

“This problem is not unique to China. It happens overseas too, although not to the same magnitude,” he said. “I believe the NDRC will plan for sufficient infrastructure to be built to cater for the need of its new 2020 target for wind farm development.”

State Grid Corp of China, which operates power grids in all but five southern regions, plans to build 15 ultra-high voltage power transmission corridors by 2020, including connections between wind resource-rich Inner Mongolia and the key consumption region of Beijing-Datang-Tianjin as well as between Ningxia autonomous region just south of Inner Mongolia and east China.

Construction of such super-efficient “power transmission highways” will be complemented by the deployment of “smart grid” technology, which will enhance reliability and efficiency by routing power in more optimal ways to respond to fluctuating demand and diversifying supply sources.

They will provide long-term solutions to ease the grid bottleneck and enhance the competitiveness of clean energy, which will play the role of supplementing mainstay coal-fired power generation during peak usage periods.

However, the inefficiencies will take time to resolve. In addition to a lack of financial incentives for distribution companies, industry executives said another cause of the bottleneck in grid infrastructure was poor planning, exacerbated by a two-tiered project approval system.

Under existing regulations, projects smaller than 50MW only require approval from local governments. The central government, however, tenders concessions for large-scale projects of 100MW or above.

By approving large projects, Beijing hopes to ensure wind farms are built in sites already determined to be suitable, and that economies of scale will drive down operating and equipment costs.

Together with the implementation of local content requirements on equipment, Beijing has been successful in forcing foreign suppliers to build significant production capacity and bring manufacturing know-how and employment to the mainland.

The ultimate goal is to substitute imports of equipment with domestic production and build an industry competitive enough to export.

But Beijing’s adoption of a “lowest power price wins” tendering policy a few years ago has resulted in overly aggressive bidding by state-owned power generation companies eager to meet their renewable energy capacity targets even at the expense of prospective losses on such projects.

This has raised concerns that project developers would be forced to cut corners and make sacrifices on equipment quality.

“The quality of wind turbines are a concern, particularly when more and more projects are built in Inner Mongolia or Gansu where there is extreme weather. There has been little track record on how well domestic turbines will stand extreme weather,” said Mr Chan, a former managing director of renewable energy at Hong Kong utility CLP Holdings (SEHK: 0002).

Beijing’s policy has driven many private companies to negotiate directly with local governments. Many have been “squatting” on “exclusive rights” to develop projects in what they think are the best sites.

Such a mad rush by developers to build projects with local governments has made it hard for the power distributors to project future demand for grid infrastructure.

Disorderly development has meant grid companies cannot plan properly for grid construction, resulting in wasted grid capacity in some areas and shortages in others.

“It is a chicken and egg issue. I think better co-ordination is key, particularly given stimulus packages to boost renewable energy development are being planned by central and local governments,” Mr Chan said.

Mr He said Beijing changed its policy early last year so that new projects were chosen based on a wider ranger of criteria.

“Under the new system, the bid price will only account for a quarter of the assessment. Bidders’ experience, financial strength and the quality of equipment used will constitute the remainder,” he said, adding projects approved by local governments will also need to have their tariffs scrutinised by Beijing.

And further reform is on the way. Li Junfeng, a deputy director-general of the NDRC’s Energy Research Institute, was quoted by Shanghai Securities News as saying that the central government plans to standardise wind power tariffs by regions, so that regions with similar wind resources would be granted similar tariffs.

Mr Liu said such standardisation had already been put in practice in many regions in the past two years, with a tariff of 61 fen per kilowatt-hour in northeast China, 54 fen in eastern Inner Mongolia and 51 fen in western Inner Mongolia.

“The principle is the better the wind resources, the lower the tariffs,” he said.

BOC (SEHK: 3988) International analyst Peter Yao Sheng said in a research note that the development meant the profitability of wind power projects had improved markedly from several years ago.

“Those [tariffs] for large wind farms of over 100MW might gradually approach provincial benchmarks,” he wrote. “This will introduce a more orderly market, and early entrants with large scale project pipelines, such as China Windpower and China Power (SEHK: 2380) New Energy, will reap the benefits as their projects commence operations.”

He added that profits would also be underpinned by improving grid connections and rising income from emissions reduction credits trading as well as lower equipment and financing costs.

Lamma Island power station cleans up its act to meet pollution-reduction targets

Austin Chiu, SCMP

Hongkong Electric (SEHK: 0006) has installed new equipment at its Lamma Island power station, marking the completion of the first phase of a HK$1 billion project aimed at reducing emissions of gases that contribute to smog and acid rain.
The first phase of the project included the installation of a flue-gas desulfurisation system, which cuts sulfur dioxide emissions, and a burner system designed to produce less nitrogen oxides. The new kit is expected to reduce emissions of sulfur dioxide by 45 per cent and of nitrogen oxides by 23 per cent.

Two more desulfurisation systems and another low-nitrogen-oxides burning system are to be installed by April.

The new desulfurisation equipment, using German technology, can remove 92 per cent of the sulfur dioxide content from coal smoke. The low-nitrogen-oxides burner system, from the US, cuts production of the gases by 60 per cent.

The firm also expects to boost the proportion of its power output produced by burning liquefied natural gas to 30 per cent by January, after the conversion of an oil-fired generating unit. It already has one LNG-powered generator.

Burning LNG does not produce sulfur dioxide or respirable suspended particles, so increasing its use would mean lower emissions, said Tso Che-wah, the company’s general manager for projects.

“With the emission-reduction programme, together with our plan to increase gas-fired generation to around 30 per cent, we are confident of achieving the government’s 2010 emissions targets,” Dr Tso said.

The government has set a target of cutting sulfur dioxide emissions by 45 per cent from 1997 levels. It wants to reduce emissions of nitrogen oxide by 20 per cent and of respirable suspended particles and volatile organic compounds both by 55 per cent.

Dr Tso also said the company was working on the environmental- impact assessment for its proposed wind farm off Lamma Island, which would comprise 35 wind turbines with a generating capacity of 100 megawatts. The proposal would be ready for public consultation by the end of the year, he said.

Meanwhile, the Advisory Council on the Environment yesterday approved CLP Power (SEHK: 0002)’s proposal to build a wind farm off Sai Kung on the condition that it increase fisheries resources, maintain close contact with the fishery industry and strengthen environmental monitoring.

Nation builds its biggest wind farm New age dawns for energy output

Shi Jiangtao, SCMP

The nation will break ground on its largest wind farm project in about two weeks in Gansu province in the northwest as part of a major push for renewable energy in the coming decades.

Dubbed “the Three Gorges Dam on the land”, the planned wind power plants in Jiuquan will have an installed capacity by 2020 comparable to the world’s biggest hydropower project on the Yangtze River, Xinhua reported yesterday. It said work would start in mid-July.

As one of seven onshore wind power bases that Beijing is planning, the Gansu project would usher in a new era for the wind power sector and the government’s green energy campaign, analysts said.

The 120 billion yuan (HK$136 billion) project had been approved by the National Development and Reform Commission, Xinhua said. “It will become another landmark project in the development of the western provinces after the Qinghai -Tibet rail link and oil and gas pipelines linking the western and coastal provinces,” Wu Shengxue , deputy head of the Jiuquan Municipal Development and Reform Commission was quoted as saying by Xinhua.

The wind farms were also expected to help ease power shortages in northern and eastern areas, including Beijing and Shanghai, he added.

The total installed capacity of the wind farms is expected to increase from 660MW now to 5,160MW next year, 12,710MW in 2015 and 20,000MW in 2020.

With a designed capacity of 22,500MW, the 185-metre-tall Three Gorges Dam currently has an installed capacity of 18,200MW with six generators still under construction.

Jiang Kejun , director of the National Development and Reform Commission’s Energy Research Institute, said the wind farm project was not expected to beat the dam in terms of power generation capacity because wind power was not as stable as hydropower.

Beijing last month more than doubled its target for wind power capacity by next year from last year’s 12,000MW to some 30,000MW and promised to spend an additional 100 billion yuan in the sector.

The mainland’s installed wind power capacity has roughly doubled in each of the past four years after Beijing ordered power distributors to buy all of the nation’s wind power output, and offered developers tax incentives.

Dr Jiang said China, one of the world’s biggest energy consumers and polluters, had quickened its push for alternative energy to reduce its over-reliance on coal, and curb emissions of greenhouse gases. He said the cost of wind power had been cut significantly in recent years, which made it more competitive compared to coal-fired power generation. “Providing equipment for wind farms also proved to be a good opportunity for the manufacturing sector on the mainland,” he said.

China, ranked fourth in the world in wind power capacity, also plans to build wind power bases in Xinjiang , Hebei , Jilin , Inner Mongolia and Jiangsu to increase wind power capacity to 100,000MW by 2020, accounting for about 10 per cent of the country’s total power generation capacity.

Mainland’s power output up 3.6pc

Reuters in Beijing

Mainland’s power output in June increased 3.6 per cent from a year earlier, state media reported on Friday, the first increase in a non-holiday month since October as hotter weather and reviving economy drove up demand.

Last month’s electricity production was at 309.328 billion kilowatt hours (kWh), in which 241.576 billion kWh were generated by thermal power plants, 62.563 billion kWh by hydropower stations and 5.189 billion kWh by nuclear facilities, all up over 3 per cent from their year-earlier levels, the official Xinhua news agency said.

But output in the first half of this year still declined 2.02 per cent from a year earlier, according to the China Securities Journal, which cited data from the State Grid Corp of China, the country’s main grid operator.

The declines in mainland’s power generation have been narrowing in the past several months after near double-digit falls late last year, as consumption gradually picked up, thanks to Beijing’s economic stimulus policies.

However, the significance of the first monthly output increase was tempered by the fact that hotter-than-usual weather hit some part of mainland in late June, leading to a surge in production late last month.

Power generation in the first 10 days of June fell 1.7 per cent from a year earlier, rose 3.8 per cent in the second 10 days and gained 7 per cent in the final 10 days, the newspaper said.

The National Development and Reform Commission said last week that power output nationwide in June was expected to rise 2.37 per cent from a year earlier.

Investing in Algae Biofuel

Green Chip Stocks