The magazine for energy professionals
December 2021 – open access articles The following articles are taken from Energy World magazine’s December 2021 edition for promotional purposes. For full access to the magazine, become a member of the Energy Institute by visiting www.energyinst.org/join
Renewables and storage
COMMUNITY ENERGY
Solar power to the people
Innovative approaches to purchasing and supplying PV power mean that more communities have access to renewables than ever before. Abigail Williams looks at three schemes from the US and Australia that bring clean energy to lower-income communities.
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o improve sustainability – and provide lowercost energy to residents – a growing number of public authorities, community energy groups and social housing providers are entering into purchasing and supply agreements with solar power companies. So, what are the key benefits of partnerships like this? And, looking ahead, what innovations and trends can we expect in this area in the future? Remote metering credits One project in this area is a recently-announced partnership between Nautilus Solar Energy, the Public Housing Association of Rhode Island (RI) and Veolia North America/Source One to provide solar power to Rhode Island public housing residents in the US. As Alexey Cherniack, Principal Analyst at Veolia explains, the new deal is built upon the creation and purchase of what he describes as Remote Net Metering Credits (RNMCs). As part of this process, nine public housing authorities in Rhode Island use these RNMC instruments to purchase power from Nautilus – with SourceOne/ Veolia North America acting as the buy-side agent that developed the specification, administered the
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California’s Clean Power Alliance is allowing local communities to buy electricity from the 300 MW Desert Quartzite scheme in California Photo: CPA
request for proposal, and brokered the transaction. Under the terms of the agreement, Nautilus will build three new solar projects and, as they generate energy, it will also accrue bill credits with the local utility via Rhode Island (RI) net metering laws. According to Cherniack, these credits will be monetised by assignment to the Public Housing Associations (PHAs), which will effectively purchase them at approximately a 40% discount – meaning they will realise a 40% reduction in their monthly utility invoices. In Cherniack’s view, a key benefit of the deal is that the PHAs will be able to redistribute the money saved through lower operational expenditure into their budgets, which ultimately supports residents. ‘The solar power companies get a reasonably predictable revenue stream for 20 years that is above the wholesale rate they would make by simply selling power to the regional transmission organisation as a merchant plant,’ he says. ‘All stakeholders in RI also get new renewable energy, and the government of RI benefits by not grossly overpaying for solar development, because a large and market-balanced portion of the
payments to the developer ultimately go back to the public sector – that is, the PHAs – rather than staying with the developer,’ Cherniack adds. Regulatory support For Cherniack, the key challenges for PHA work include finding solutions that are very low risk and high reward, managing so many counter-parties, and making sure that the US Department of Housing and Urban Development will approve it. Another important component of the deal was regulatory support for municipal purchasing. According to Cherniack, several net metering laws, including those in in RI, are designed with specific designations or preferential treatment for public entities, and RI specifically includes housing authorities in this category. ‘This is important because PHAs are notoriously risk-averse, slow-moving, and are a difficult segment to bring renewable energy to. The low-income sector is hard to reach but PHAs are and should be an easier way to reach,’ he says. In the long run, although many net metering programmes are approaching their administrative caps, Cherniack argues that the market for net metering can be as
Renewables and storage
big as regional governments want it to be. However, he admits it will probably be uneven across the country based on the development of local regulations. Cherniack adds: ‘We see huge growth potential in renewable energy aggregations and structured retail solutions. There are many companies around that are quite good at bringing new renewable energy to market. The design of innovative retail products so that customers can easily contract for the offtake has been lagging – but it’s a large growth area.’ Combined solar and storage facilities Across the US, California’s Clean Power Alliance (CPA) – a notfor-profit that provides clean electricity to Los Angeles and Ventura counties – has recently inked a power purchase agreement (PPA) for a large-scale combined solar power and storage facility. As Natasha Keefer, Vice President – Power Supply at the CPA, explains, the agreement allows the Alliance to secure all the product attributes of the combined 300 MW Desert Quartzite solar farm and 150 MW/600 MWh lithium-ion battery storage facility, located on unincorporated land in Riverside County, California. This includes energy, renewable energy credits (RECs), ancillary services and resource adequacy for the full term of the 15-year contract. Under the terms of the agreement, CPA will pay for the output of the solar generating portion of the project at a fixed price rate per MWh, and also pay for the use of the storage portion of the project at a monthly fixed-price rate per kWmonth. The project owner, energy company EDF Renewables, is responsible for the construction, financing, ownership, and operation of the facility on CPA’s behalf. Keefer observes that the new agreement will result in a wide range of benefits for the CPA and its local residents – as well as for the solar energy generator. ‘The contracting structure allows the project developer/owner to secure a financeable revenue stream to fund construction and operation of the project while allowing the off-taker – electric utilities and consumers like CPA – to secure a long-term clean energy supply at a fixed rate,’ she says. ‘Long-term PPAs such as those for Desert Quartzite allow CPA and its communities to secure affordable, clean energy resources
To improve sustainability – and provide lower-cost energy to residents – a growing number of public authorities, community energy groups and social housing providers are entering into purchasing and supply agreements with solar power companies
at a low cost – enabling CPA to meet its environmental targets, offer customers competitive rates, and ensure reliability of the grid,’ she adds. However, Keefer also highlights that some challenges are facing renewable energy development. These range from the global supply chain challenges related to the COVID-19 pandemic, rising costs of equipment and construction, to the large amount of interconnection work needed over the next decade to connect clean energy resources on the grid. Under Senate Bill 100, California has also set a state-wide goal of powering all retail electricity sold in California and state agency electricity needs with renewable and zero carbon resources by 2045. It also updates the state’s Renewables Portfolio Standard to ensure that, by 2030, at least 60% of California’s electricity is renewable. ‘While California has already developed a robust market for solar power, this landmark policy will continue to drive the demand for the development of low-cost clean energy resources such as solar,’ says Keefer. She adds: ‘Because of the high penetration of intermittent renewable resources in the state, California is also a leader in energy storage development, which will facilitate the reliable operation of a zero-carbon grid.’ Smart energy for social housing Another interesting initiative in this area is the Smart Energy for Social Housing (SESH) trial in Australia. As part of this scheme, Western Australia’s state-owned electricity generator and retailer, Synergy, is working closely with the Department of Communities (DoC) to deliver an AUS$6mn programme to install solar panels on public housing. As Jason Waters, Chief Executive Officer at Synergy, explains, the SESH pilot has the potential to meaningfully address energy poverty or prevent financial hardship by providing cheaper energy using distributed energy resources such as heat pumps for hot water and solar panels. ‘Synergy is managing the supply and installation of solar panels, recruiting participants and delivering an appropriate tariff. The role of DoC is to identify suitable properties and manage the installation and ongoing maintenance of heat pumps. Partnerships like this one are key to many of the programmes and pilots that Synergy is currently
leading,’ he says. For Waters, a key benefit of the scheme is that participating social housing tenants are eligible for a simple time-of-use tariff – known as Synergy’s Future Communities Plan – giving them access to a discounted rate for electricity use between 9am and 3pm, set at 19 cents/kWh. According to Waters, this will enable tenants to save more if they can shift electricity use to this time. At all other times, tenants will be charged at the standard rate – currently set at 29 cents/kWh. The heat pumps will also allow tenants to make the most of their solar panels when heating their hot water, rather than using electricity from the grid during peak times. In Waters’ view, one of the main challenges faced by SESH project partners has been recruiting enough tenants to participate in the pilot. ‘The success of the pilot relies on taking customers on the journey, educating them on their energy usage and ensuring they remained engaged. This has resulted in a dedicated team being created to educate tenants on energy use to ensure they continue to maximise the benefit of the tariff,’ he says. Another challenge has been securing appropriate sites – particularly since, to be suitable, homes need to be stand-alone dwellings, allow for solar panels on their roofs and have the longevity to support the 15-year life of a standard solar panel system. To date, some 100 tenants have been recruited and 100 solar systems have been installed – with planning underway to progress the next 400. ‘Learnings from this first testing phase will help inform the rollout of the remaining 400 locations,’ says Waters. Community energy Building renewable energy systems is one thing; designing the legal and financial arrangements that allow their use by communities is another. Pilots and trials like these will help energy companies and housing authorities to develop intelligent solutions fit for the fast-changing energy industry. In an economy run on renewable resources, fuel poverty could become a thing of the past. l
Energy World | December 2021 17
Climate change
COP26
Stepping up to the ingenuity challenge
Much has already been written about last month’s COP26 – see our news story on page 5 for one example. Here, freelance writer Nick Cottam concludes that the imagination and expertise of the energy industry will be vital to achieving the changes needed to meet the climate challenge.
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The opening plenary session of COP26 in Glasgow
s the dust settles on COP26 you could say that, amid all the haggling, the false starts, the political posturing and finally that watered down deal, it’s a good time to be in energy. For those starting out on their careers – engineers certainly, but even geologists – you are part of an industry in transition, working as it is to develop an array of new power sources for deployment at scale. How’s that for a challenge? The Glasgow Climate Pact which eventually emerged at the 11th hour from that frenetic summit was a disappointment for many. But let’s be optimistic for a moment. Behind the hard-nosed politics there are more signs of incremental change which call on the capacity for human ingenuity and an acceptance that, in this area at least, we could stand or fall together.
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All options are on the table The ingenuity bit comes in all shapes and sizes, from harnessing the power of the tide, to smallerscale nuclear; from solid-state batteries, to hydrogen buses. Most politicians at COP26 and their delegations understood that all viable zero carbon and low-carbon options have to be on the table if anything close to 1.5°C is to survive – and if a still joined-up global economy is to have any chance of living up to the latest set of nonlegally-binding pledges. While COP26 President Alok Sharma hailed the Glasgow Climate Pact as a ‘historic achievement’, his tears at the end of the conference indicated a sleep-deprived frustration at all the political shenanigans to water down the deal, not least those of India and China over coal. The two countries, he said, would have to ‘explain themselves to developing countries’ who would be most affected by the climate crisis. For its part, China boasted about producing more coal than ever on a single day of the conference, the message being that whatever it does on the road to net zero will be at its own pace. While China and India also came together – along with Russia, another big emitter – in refusing to sign the pledge to cut methane by
30% by 2030, there was some cause for hope that China will put its foot on the gas, so to speak, when it is good and ready. Who knows what will come out of China’s pact with the US to boost climate cooperation over the next decade, but you can bet your international dollar that if there are trading advantages to be had, then China’s decarbonisation plans will move up a few gears. For the moment, China is pledged to net zero by 2060, with no more coal investment overseas and reducing domestic reliance on coal by 2026. China, like other countries can be cagey about decarbonisation plans because it wants to secure competitive advantage – when the time is right. Cutting methane The pledge to cut methane by 30% was undoubtedly a big early headline at COP26, a commitment which, according to Fatih Birol, Executive Director of the International Energy Agency (IEA), would have a similar impact on global warming as switching all the world’s cars, trucks, ships and planes – the entire global transport sector – over to net zero emissions technologies. An IEA report, released in October, showed that rapid steps to tackle methane emissions from oil, gas and coal operations would have immediate impacts because of the potent effect of methane on global warming and the large scope for cost-effective actions. The report set out practical measures that could achieve a 75% cut in methane emissions from global fossil fuel operations by 2030. The IEA was praised at the conference for its work on methane over the last decade or so, not least its regulatory roadmap and toolkit for reducing methane leaks in the oil and gas sector. A shame then that the big three methane emitters didn’t sign this aspect of the deal. Keeping 1.5°C alive The COP devil, as ever, is in the detail and while countries must republish climate action plans by the end of next year, there is growing concern that the 1.5°C temperature rise target is in jeopardy. As Sharma commented with as much optimism as he could muster: ‘We can say with credibility that we have kept 1.5 degrees alive. But its pulse is weak.’ The latest pledges at the conference, the scientists tell us, can
Climate change
get us down from 52.4 to 41.9 Gt of annual greenhouse gas emissions by 2030; but actually we need to be at 26.6 Gt. This of course is about keeping 1.5°C of warming within reach. But if we look at this another way there is some cause for optimism. Before the Paris COP meeting in 2015 the world was on track for 6°C of warming. After Paris that came down to 4°C. The pledges submitted in the run up to Glasgow took that down to 2.7°C and over the fortnight of more summit pledges this fell again to 2.4°C. Some 90% of the world is now covered by net zero targets, representing 80% of global emissions. While 2.4°C is still some way above 1.5°C it still represents significant progress. If all the net zero pledges made this year are enacted, we will be on track for 1.8°C. That probably means not ‘phasing down’ much of the world’s coal production as in the agreement, but agreeing to phasing it out – and with a timescale, certainly among the big emitters. It means cutting back more aggressively on gas and it means making great strides in areas like battery storage and green hydrogen. In other words there needs to be ingenuity with a full frontal attack on the status quo in rich countries, and lots of help with both mitigation and adaptation for some of the poorest (and most vulnerable) nations.
‘We can say with credibility that we have kept 1.5 degrees alive; but its pulse is weak.’ Alok Sharma, COP26 President
Give us the money! This brings us to the thorny issue of finance, which again on the surface looks to show progress but still leaves poor and vulnerable countries claiming that they are being misled and short-changed. The picture of Tuvalu’s Foreign Minister Simon Kofe speaking from a lectern while knee deep in sea water was a good stunt, and it resonates against a backdrop of rising sea levels and drowning land mass. While the conference closed with a deal to increase the money available to help poor countries adapt – from the $100bn originally pledged to $500bn by 2025 – there is still no cast iron guarantee that the full amount will be forthcoming and as yet there is no
‘loss and damage fund’ to compensate nations who have suffered loss as a result of climate change. It looks as if the insurance industry will have to have a hand in this one and it will want underwriting big time. Former Bank of England Governor and UN Special Envoy Mark Carney was very much in evidence on Finance Day of the conference. He declared the $130tn pledge by 450 financial organisations as a watershed moment. Up until now, he said, there had not been enough money in the world to fund transition but this would plug the gap in backing clean technology and directing finance away from fossil fuels. This may be part spin and part wishful thinking in the short term but, if Carney can galvanise finance colleagues into action, he will be doing more than most. Energy innovation Energy sector innovators and specialists might well see this as the moment to get excited. Smallscale nuclear, solid-state batteries, next generation wind turbines and green hydrogen will all help to concentrate clever, creative minds in pursuit of a raft of new zero carbon developments around the world – including those from China and from India, where stateof-the-art and now much more solidly financed solar is waiting in the wings behind coal. Closer to home are the pioneering renewable energy projects going on in places such as the Orkney Islands, highlighted in a climate change TV documentary during the conference. Wind energy around this breezy, most northerly outpost of the UK, we were reminded, was producing enough green energy to power the world’s first hybrid hydrogen ferry. This writer remembers taking the world’s shortest commercial flight a few years back from the tiny island of Papa Westray off Orkney to neighbouring Westray (under two minutes in duration) and we learnt in the film that the first hydrogen aircraft will be operating around Orkney as soon as it gets approval. On that basis, it is reasonable to wonder when we might expect the first long-haul commercial flight powered by hydrogen and how much
renewable energy would be needed to generate enough green hydrogen for the journey? Small-scale energy innovation examples such as those from Orkney help put some of the COP26 challenges in perspective. Renewable electricity can give you green hydrogen but how do you generate enough additional power to make a difference beyond the showcase projects? Similarly with wave and tidal energy. How do you scale up, how quickly, what cost and what are the likely rewards for early pace setters? Hard choices towards transition At best the COP26 deal should accelerate and incentivise transition, providing the right incentives are put in place and nation states back words with actions. With potential energy innovation covering everything from electric vehicles to hydrogen boilers, governments know they have to bite the bullet in persuading people to change lifestyles – certainly in rich countries. Those net zero transport options alluded to by the IEA’s Fatih Birol require people to change lifestyles and governments to support their efforts to do so. Travel less, turn the heating down and eat less meat were among the activist messages that resonated around COP26, and it was perhaps no surprise that temperatures around the Glasgow conference venue were cooled significantly during what were often fraught final negotiations. Like the proverbial church wedding, COP26 – yes, the 26th meeting of this kind – produced a public commitment, albeit not out-and-out love and affection, among the parties. We have to believe the world will transition and decarbonise to survive and ingenuity, certainly in the energy sector, will play an important part in this process. l Photos: UNclimatechange
Energy Institute in Glasgow The EI put the diverse workforce of the future centre-stage at COP26, promoting the POWERful Women initiative in the UK Presidency Pavilion in the Blue Zone with a discussion aimed
at inspiring similar collaboration on gender diversity on the international stage. It also screened its new documentary, ‘The challenge of our time’, alongside the event. See p14 for more.
Energy World | December 2021 21
Energy World
The end of an era T his is the final issue of Energy World magazine. It was first published in 1973 by the Institute of Fuel, which was established in 1927 and which morphed into to the Institute of Energy in 1978. More recently, in 2003, the Institutes of Energy and Petroleum merged to form the Energy Institute, which continued to publish both Energy World and Petroleum Review magazines – until now, even if the magazines have been delivered online for the last 12 months. I trust you saw EI Chief Executive Nick Wayth’s announcement on page 4 about the new online magazine – New Energy World – that we will launch in March. To be published weekly, this will cover the whole energy scene and be organised around news, comment and feature articles as previously. But more often and hence more up-to-date. Before the launch of New Energy World, for the first two months of next year, we will continue to publish regular news updates and occasional opinion articles on the EI website. So that’s the future but let’s not, on this occasion, ignore the past and the way Energy World has reported on the ever-changing
world of energy for the last 48 years. I have picked out a few of the more striking front covers from the EW archive, and taken a look inside to see what was topical then. Energy World’s early focus on the efficient use of fuel in the UK gradually expanded also to include energy policy and the growth of renewable energy, expanding its geographical coverage to the whole world. And it still covers energy – and now carbon – management best practice. Overall, the magazine covers a huge subject area, while its sister publication, Petroleum Review, also closing this month, takes care of international oil and gas industry matters. My involvement with Energy World started back in 1997, when the magazine was still published from Devonshire Street by the Institute of Energy. Louise Hunnybun, Marc Height and Jennifer Johnson all played significant editorial roles as well – Marc clocking up a whole decade with the magazine until 2018. From that first cover – I’m not sure who chose the shocking pink – from 1973, please take a look again at the front covers shown here, and join me in saying goodbye to the magazine. l
A little bit of history – Steve Hodgson looks back at some of the highlights of nearly a half-century of Energy World magazine.
June 1997– the world’s first tidal current energy turbine, rated at 15 kW, being tested in Scotland Also – renewables predicted to contribute half of European electricity by 2030; National Power joins clean coal study; and decommissioning Britain’s oldest Magnox nuclear power plant.
March 2000 – researchers at Culham say that nuclear fusion can fill the approaching ‘energy gap’ Also – two-thirds of UK deep coal mines face closure within a year; gas-fuelled microturbines may join a distributed power revolution; and new hydropower schemes for Scotland.
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Energy World
September 2006 – human-powered treadle-pump for irrigation project in India wins a sustainable energy award Also – global growth in oil and gas slows down; UK government energy review aims to cut energy use and promote low-carbon energy; and how to connect onshore wind farms to the power grid.
November 2009 – this 800 kW high-voltage direct current (HVDC) transformer is being built for use in China Also – time to introduce smart grid technology; wind turbine blade manufacturing is on the horizon for the UK; and plans to build a ‘supergrid’ to export power from the Sahara desert to European consumers.
April 2014 – the world’s largest concentrating solar energy plant (390 MW) opens in California Also – Europe loses ground to Asia in new solar PV plants; two UK projects plan carbon capture and storage (CCS) under the North Sea; and growth in demand-side energy management practices.
September 2015 – Energy World visits the 175-turbine London Array offshore wind farm Also – President Obama announces a clean power plan for the US; UK renewable energy subsidies are to be reduced; and the first Japanese reactor returns to service following the 2011 tsunami disaster.
Energy World | December 2021 23
Fossil fuels
ECONOMICS
‘Zombie’ assets in the fossil fuel pipeline Bhupender Yadav, asked conference attendees. In countries with fast-growing populations, like China and India, it’s true that unmet energy demand could hinder economic growth. But is coal truly the most cost-effective way to bring power to the people? An increasing body of research suggests that it may be financially risky to tie plans for universal energy access to coal expansion.
What happens if coal plants or offshore oil platforms are built, but never used? Jennifer Johnson looks at a new type of stranded asset risk.
C
oal was not consigned to history at the recent COP26 conference in Glasgow, much to the chagrin of environmental campaigners. At the last minute – as negotiations on a new climate deal were drawing to a close – representatives from China and India lobbied to weaken promises on the most polluting fossil fuel. As a result, signatories to the global pact have now vowed to ‘phase down’ coal use, rather than phase it out entirely. The change was further supported by South Africa, Nigeria and Iran. ‘China and India will have to explain themselves and what they did to the most climate-vulnerable countries in the world,’ said the COP26 President, Alok Sharma, of the successful lobbying effort. Though the human health impacts of coal combustion are well documented in both countries, their politicians have long argued that coal power is necessary to build a thriving, modern economy. ‘How can anyone expect that developing countries can make promises about phasing out coal and fossil fuel subsidies when developing countries have still to deal with their development agendas and poverty eradication,’ India’s Environment Minister,
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Some 27 GW of pre-permit and permitted new coal power plant proposals are now superfluous to India’s requirements Photo: Shutterstock
The problem of stranded assets is not unique to the coal sector – cheap renewables and climate targets are also a threat to the economic viability of some oil and gas projects
Zombie plants Analysis published in September by the think tank Ember and the NGO Climate Risk Horizons showed that 27 GW of prepermit and permitted new coal power plant proposals are now superfluous to India’s requirements. If built, the facilities could end up as ‘zombie’ plants – assets that would be neither dead (shuttered) nor alive (operational). Instead of pursuing new coal projects, Ember argues that policymakers should install a ‘more flexible, cheaper option’ in the form of renewables and battery storage capacity. The surplus coal plants would require $33bn in investment – committing consumers to expensive tariffs and jeopardising renewable energy targets by adding to the system’s overcapacity. ‘The 27 GW of new coal being proposed… represents a significant threat to the Indian economy, not just in terms of misallocation of scarce capital, but also due to the lock in effect of expensive electricity and ancillary impacts on the renewable energy industry,’ explained Ashish Fernandes, CEO of Climate Risk Horizons. ‘This must be avoided especially as the Indian financial sector is yet to recover from the non-performing asset crisis created by excessive coal construction in the last decade.’ Save by switching In China, the world’s largest consumer of coal, the economic outlook for new coal plants is very much the same. In fact, research by the think tank TransitionZero claims China can save up to $1.6tn over 20 years by switching from coal to renewables. This is purely because renewables are now so much cheaper to operate than coal-fired power stations. TransitionZero has also reported that it is now cheaper to build new
renewable energy capacity than continue to operate coal plants in the vast majority of cases worldwide. In 2020, 22% of operating coal capacity globally may have cost more to operate than building new wind or solar facilities. This year’s global energy crisis has intensified this dynamic to the extent that 64% of coal capacity could cost more to operate than new renewables in 2021. These conclusions are broadly consistent with those of other organisations. For instance, analysis from the financial research group Carbon Tracker found that new renewables beat 77% of operating coal units on cost today. It predicts this figure will rise to 98% by 2026 and 99% by 2030 ‘based on current pollution regulations and climate policies’ when comparing the levelised cost of new renewables to the long-run marginal cost of existing coal units. Carbon lock-in The problem of stranded assets is not unique to the coal sector – it’s just most visible there (for the time being). Cheap renewables and climate targets are also a threat to the economic viability of some oil and gas projects, Scotland’s proposed Cambo oil field among them. According to Carbon Tracker’s modelling, Cambo has a breakeven oil price significantly higher than the marginal oil price under the IEA’s Sustainable Development Scenario (which assumes warming will reach 1.65°C). Put another way, the organisation says the project is only financially viable if the world fails to limit global temperature rise to well below 2°C. ‘The world has a great many existing oil projects that are lower cost and lower risk than Cambo and that are ahead in the financial pecking order,’ said Carbon Tracker founder Mark Campanale. ‘The IEA has said that no new oil, coal or gas is needed in a 1.5°C scenario and Cambo is blatantly one of those projects.’ Whether financial arguments will ultimately steer governments away from their fossil fuel commitments remains to be seen. The threat of undead assets might be scary in principle – but some policymakers seem determined to stand their ground. l
