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21 January 2021

The world of renewables this week

Wind turbine orders across Europe hit 15 GW in 2020, according to WindEurope, with sales rising 74% against 2019. Of this figure, 8.2 GW of orders were attributed to onshore wind – a 13% increase – while offshore wind grew six-fold to reach 6.4 GW. The UK ordered the most capacity (4.4 GW), followed by the Netherlands (2.4 GW) and Sweden (1.4 GW), as part of 104 orders coming from 19 different countries across the continent.

China’s rise in coal output through 2020 undermines its recent pledge to reach net zero emissions by 2060. The country, which is the largest consumer of coal, produced 3.84 billion tons from its mines in 2020, up 4% from 2019. This marks the nation’s highest output since 2015, and a trend which is edging towards 2013’s record values of nearly 4 billion tons, which prompted officials in Beijing to axe excessive mining capacity in the name of climate action. However, with a surge of industrial demand and a reduction of coal imports into China, Beijing has called for a boost in output to ensure energy security in the wake of Covid-19 and to limit prices spiking due to a shortage in domestic supply; the country’s coal mining sector was one of the first to rebound after national lockdowns, suppressing coal prices that were the highest they had been since 2011. Sadly, this trend looks set to continue. The early days of 2021 have already seen China’s energy administration approve six coal mining projects, with a combined production capacity of 15.3 million tons.

The International Energy Agency (IEA) may be starting to reevaluate its purpose, with plans to publish its first roadmap to Net Zero by 2050, which would finally align its analysis and guidance with the Paris Agreement. Having been established in the wake of the 1973 oil crisis, the organization has continuously underestimated the growth of renewable technologies and remained ignorant to the terminal decay of fossil fuels. However, as the company notes, at the end of 2021, national pledges will account for a reduction of 60% of global energy-related emissions, which has clearly boosted the IEA’s optimism that net zero by 2050 is within the realm of possibility. Early statements suggest that the upcoming report will include targets to increase the sales of electric vehicles from 3% of the market to over 50% by 2030, while also expanding the production of low carbon hydrogen from 450,000 tons to 40 million tons and boosting clean energy investment from $380 billion to $1.6 trillion. However, given its history of pandering to the ambitions of oil majors, it is likely that the IEA will give carbon capture technologies a sizable role in its pathways to net zero.

Portugal will be coal-free by November this year, after its penultimate coal power station – EDP’s 1,296 MW Sines plant – was closed last Thursday. This occurred two years ahead of the plans that EDP announced in July last year, and ten years ahead of its scheduled retirement in 2030. This leaves the country with just the 628 MW Pego plant in operation, which is set for retirement in November, making Portugal the fourth European country to completely eliminate coal for its electricity production – following Belgium (2016), Austria (2020) and Sweden (2020). Five other European countries are expected add to this in the next five years, with scheduled coal phase outs, including: France (2022), Slovakia (2023), the UK (2024), Ireland (2025) and Italy (2025).

General Electric has entered a legal clash with Siemens Energy, filing a $1 billion lawsuit alleging that the latter had stolen trade secrets to rig bids worth $340 million for gas turbine contracts to US utility Dominion Energy. From May 2019, GE claims that a Dominion employee had leaked details of its bids to its turbine-maker rival, including technical specifications, pricing and maintenance plans, giving Siemens a “blueprint” to win the contract for Dominion’s Peakers Project, as well as eight other turbine contracts over recent months. The litigation is the latest legal battle involving the corporate rivals, which have squared off in several patent-infringement lawsuits, as recently as last year.

The UK’s new secretary for business, energy and industrial strategy (BEIS), Kwasi Kwarteng, used donations from fossil fuel investors as part of his campaign in the country’s general election in 2019, according to the Guardian. As much as £16,000 was received by Kwarteng from parties with a direct interest in fossil fuels, with an additional £4,500 coming with those who advise investors on the trading of fossil fuels.

China Energy Construction Planning & Design Group has signed an investment and development framework agreement with the local government of Bayingoling, a Mongolian region within Xinjiang, for an 8 GW renewable energy megacomplex. The project will include wind, solar, thermal energy storage, battery energy storage, and auxiliary natural gas. ‘Thermal Storage’ implies the presence of concentrated solar for its long-duration storage capability, even if much of the solar capacity is photovoltaic. At 8 GW, this is one of China’s largest such hybrid megacomplexes – most are 2 GW scale. The project is expected to cost $5.42 billion.

French oil and gas major Total has acquired a 20% stake in India’s Adani Green Energy, a major national solar developer whose sister company Adani Solar is a multi-GW manufacturer set to increase its capacity. The Indian government has taken to linking project tenders to a manufacturing development requirement in an effort to create its own up-to-date manufacturing industry. Total is aiming for 2050 net-zero and 35 GW green energy in 2025; Adani may make a major contribution to that given its current holdings of 14.6 GW and its plans to reach 25 GW in 2025.

The International Energy Agency has commented on Japan’s outwardly disappointing solar auctions, which didn’t allocate full capacity. IRENA said it wasn’t as bad as it appeared, with much of the low performance due to land and grid connection constraints. On the plus side, the too-high prices dropped in later auctions, and aren’t that much higher than Japan’s general high cost of electricity. Another cause for optimism was rising participation by small, newcomer developers. Japanese solar installations mostly use domestically-produced modules, which are expensive.

GlobalData reported last week that Saudi Arabia installed no new solar in 2020, and that this was caused by tariff renegotiations trying to emulate the neighboring UAE’s record low prices. While competitive bidding accounts for 30% of the planned development in the country, the rest will be handled by the nation’s Private Investment Fund (PIF) which will seek to match the bidding process’ prices. Despite this interruption, additional GW-scale projects are being planned, with this week seeing a promise from the Energy Ministry that it would soon issue a tender for a 600 MW tranche of a 2.6 GW project near Mecca.

Bloomberg’s New Energy Finance analyst Jenny Chase has predicted between 151 GW and 194 GW of solar development this year. That would be in line with a solar industry that grew stronger right through the pandemic, China’s manufacturing upgrades and expansions, and our own estimate for 2020, which is 140.2 GW.

It’s time Moodys and other credit agencies factored in climate risk and took a long hard look at themselves. It has just upgraded the long-term rating of Enel to “Baa1” from “Baa2.” Moderate risk, medium grade and with some speculative risks. Like people can live without electricity, as transport, space heating, steel making and cement all consider making themselves MORE reliant on electricity. However for Exxon Mobil, a company whose assets risk all being stranded in the rush to leave oil, is rated at Aa1 and was only cut from the top ranking Aaa in April last year. Why is the largest electricity operator in the world outranked by an oil company with the worse management and poorest strategy and massive write downs? Wake up Moody’s, Coffee’s on.

NextEra Energy paints itself greener than green as one of the lowest emissions utility powerhouses in the US. This week it closed subsidiary, Florida Power and Light’s (FPL) last coal plant in Indiantown – Hoorah. But it will replace it with a gas turbine – a very shortsighted move. FPL talks about 99% targets for “clean energy”, but includes natural gas plants among these. With 15 CC units, two fossil steam units (which it will close down in around a year) and four plain old gas turbines and 9 simple-cycle combustion turbines FPL is all about gas to power, most of which are old and dirty. A number of US universities have proven that gas is as dirty as coal, due to the escaped and flared gases that happen prior to utilities receiving the gas. Yes it will build lots solar panels, but most of these gas anachronisms will run for another ten years.

Reuters reports that the European Commission EVP Frans Timmermans told an online event this week that the EU will have its Carbon border tax proposal ready around June of this year. To us at Rethink, Carbon Border taxes are essential to adjust global attitudes towards climate change and Timmermans clearly agrees. He said, “It’s a matter of survival of our industry. So if others will not move in the same direction, we will have to protect the European Union against distortion of competition and against the risk of carbon leakage.” If the EU levied carbon taxes on internal businesses, and that was reflected in their pricing, then without a Border Tax, China would lap up all their business, both here and abroad. The detail will be really important, so not only should all the carbon that went into making a product count, but also the carbon that is spent getting it here. That would be a great leveler for manufacturing businesses undermined by foreign low wages. Expect it to be contentious either way when it comes.

The Switch has partnered with Finland’s Yaskawa Environmental Energy to develop what it calls a permanent magnet propulsion system for superyachts – which will work in artic conditions – which it calls the Poseidon Power range. Superyacht builders can still opt to use diesel with electric or go fully electric – so either low or no emissions propulsion. The big appeal apparently is that is runs noiselessly, rather than vibrating the entire craft. This is important so that artic marine life are not disturbed. Apparently lots of superyacht owners want to go places that are quiet, which can mean entering hostile environments like the artic.

At the final meeting of the US Federal Energy Regulatory Commission presided over by Trump appointee James Danly, there were some policy reversals. The New York ISO will not be forced to adopt a Minimum Offer Price Rule identical to the one which wreaked havoc in the PJM market. That ruling forced renewable projects which benefitted from subsidies to bid high on contracts, starving them of business. Gas turbine owners wanted NY to follow suit, but an existing republican commissioner, Neil Chatterjee voted with the two democrat members, as he did on a number of gas pipeline issues. A new chairman will be selected by the new President within 30 days.

Nel has officially released its latest line of PEM electrolyzers; the MC250 and MC500. The containerized systems will have respective capacities of 1.25 MW and 2.5 MW, in modular platforms that can be stacked for greater volumes of production.