Also in this issue: Winter fuel poverty in a COVID-19 world
Tackling unreliable electricity in Sub-Saharan Africa
Sustainable development and achieving global energy goals
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October 2020
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Contents Contents Front cover Buildings use lots Front cover of energy in their Buildings use lots construction, of energy in their operation and construction, disposal - all of operation these mustand be disposal to - all of reduced meet these must be net zero targets. reduced See pageto 14meet net zero targets. onwards. See page 14 onwards. Photo: Shutterstock
Email Editor e: eworld@energyinst.org Steve Hodgson t/f: +44 (0)1298 77601 t: +44 (0)1298 77601 Editor stevehodgson@btinternet.com e: shodgson@energyinst.org Steve Hodgson t: +44 (0)1298 Deputy Editor Assistant Editor77601 e: shodgson@energyinst.org Jennifer Johnson t: +44 (0)20 7467 7152 Assistant Editor e: jjohnson@energyinst.org Jennifer Johnson
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News & regulars News & regulars 2 From the editor 2 3
From the editor International update
3 7
International update Viewpoint
7 8
Viewpoint UK update
8 EI UKnews update 12 12 EI news See also online… Innovation towards net zero
See also online…
Visit: bit.ly/PROct_Innovation Innovation towards net zero
Visit: bit.ly/PROct_Innovation Features Features Features Energy in buildings
Printed by Geerings Print Ltd The inksby used in Energy World Printed Geerings Print Ltd are made from renewable raw materials. They are free of both mineral oil and cobalt. The inks used in Energy World are made
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61 New Cavendish Chief Executive Street, London Louise Kingham OBE FEI W1G 7AR, UK 61 New Cavendish Chief Executive Street, Kingham OBE FEI 61 NewLondon Cavendish Louise Chief Executive W1G 7AR, UK Street,ofLondon Terms control: EnergyLouise World isKingham circulatedOBE freeFEI W1G 7AR,toUK of charge all paid-up members of the Energy
Institute. To libraries, organisations and persons Terms of control: Energy World is circulated not in membership, it is available on a singlefree of charge to all of subscription of paid-up £245 formembers 11 issues in the Energy UK free and Terms of control: Energy World is circulated Institute. To organisations persons £385 for overseas subscribers. Single issue for of charge to libraries, all paid-up members ofand the Energy not membership, is available onand a single UK –in£25, overseas –it£35 Institute. To libraries, organisations persons subscription of £245it–for 11 issues in the UK and Agency Commission 10%. ISSN 0307-7942. not in membership, is available on a single £385 forInstitute overseas subscribers. Single issue Energy Registered Charity subscription of £190 for 11 issues inNo.1097899, the UKfor and UK – £25, overseassubscribers. – £35 London 61 New Street, W1G 7AR, UK. £300 forCavendish overseas Single issue £18. Agency Commission – 10%. ISSN 0307-7942. Agency Commission – 10%. ISSN 0020-3076. Energy Institute Registered © Energy Institute 2020. TheCharity EnergyNo.1097899, Institute as a Energy Institute Registered Charity No.1097899, 61 Cavendish Street, London W1G 7AR, body is not responsible either for the statements 61 New New Cavendish Street, London W1G 7AR, UK. UK. made or opinions expressed in these pages. Unless © The Institute as specifically stated, 2020. the magazine is not a partner © Energy Energy Institute Institute 2014. The Energy Energy Institute as a a body not statements with, agent of, or in anyeither other for waythe affiliated with body is is not responsible responsible either for the statements made opinions expressed in Unless any ofor the advertisers in the publication, norThose does made or opinions expressed in these these pages. pages. specifically stated, the magazine is notadvertisers aadvertised partner it endorse any ofto the products of events such readers wishing attend future with, agentinserts of,check or inincluded any other waythe affiliated or with magazine. areexternal advised to with the contacts in thewith any of readers the advertisers in publication, nor does Those wishing tothe attend future organisation listed closer to the date, inevents case of it endorse any the products ofwith suchthe advertisers advertised areorof advised to check contacts late changes cancellations. To view the full or external inserts included with in the organisation listed closer tothe themagazine. date, in case conditions of this disclaimer, visit Those to attend To future of latereaders changeswishing or cancellations. viewevents the full http://tinyurl.com/pdq4w7d advertised of arethis advised to check with the contacts conditions disclaimer, visit in the organisation listed closer to the date, in case http://tinyurl.com/pdq4w7d of late changes or cancellations. To view the full conditions of this disclaimer, visit http://tinyurl.com/pdq4w7d
14 Six steps to zero-carbon buildings Energy in buildings Dinesh Mattu 14 Six steps to zero-carbon buildings Dinesh Mattufor net zero buildings 18 The quest Beverley Quinn
18 The quest for net zero buildings Beverley Quinn 20 Bringing embodied carbon upfront World Green Building Council
20 Bringing embodied carbon upfront Worldpoverty Green Building Council 22 Fuel in a COVID-19 world Matt Copeland
22 Fuel poverty in a COVID-19 world Matt Copeland 24 New scheme the latest of many to create green homes 24 New scheme the latest of many to Andrew Mourant create green homes Andrew Mourant Sustainable development 26 Addressing unreliable electricity in Sustainable development Sub-Saharan Africa 26 Addressing unreliable electricity in Simon Trace Sub-Saharan Africa Simon Trace
October 2020 October 2020 IN THIS ISSUE… IN THIS ISSUE… Buildings consume more than one-third of
total end-use energy and cause a fifth of Buildings consume more than one-third of total greenhouse gas emissions worldwide. total end-use and cause fifth of Achieving net energy zero emissions byamid-century total greenhouse gas emissions – as so many governments have worldwide. committed Achieving zero emissions mid-century to doing – net is contingent uponby making the – as so many governments have committed built environment more efficient. Our to doing – is this contingent upon at making first feature month looks energythe built environment more Our in buildings, with its firstefficient. article (page firstlaying feature this month looks at energy 14) out a roadmap for zero-carbon in buildings, with its first article (page buildings in the UK. 14)The laying out athat roadmap articles followfor onzero-carbon pages 18 and buildings theissue UK. of ‘lifecycle’ carbon 20 addressinthe The articles thatwhich follow onembodied pages 18 and emissions – those are in 20building’s address the issue ofemitted ‘lifecycle’ a fabric and ascarbon it’s taken emissions those which are embodied in down. The –feature finishes with two pieces a building’s fabric and emitted as it’s taken on the UK’s notoriously leaky housing stock. down.we The feature withNational two pieces First, hear fromfinishes the charity on the UK’s notoriously leaky housing stock. Energy Action on the issue of fuel poverty First, hearof from the charity National in thewe winter COVID-19. Finally, we look Energy on the of fuel poverty at how Action successive UKissue government policies in theattempted winter of COVID-19. we look have to improveFinally, the thermal at how successive UK government policies performance of homes. have attempted to improve the the thermal Our second feature explores performance of development of homes. sustainable energy overseas. second explores the WeOur start with afeature story on how the countries development ofAfrica sustainable energy overseas. of Sub-Saharan are addressing issues We start with a reliability. story on how the countries with electricity Articles on Africa’s of Sub-Saharan are addressing issues energy financingAfrica ecosystem and India’s with electricity reliability. Articles onaAfrica’s journey away from coal follow. And piece energy financing ecosystem andfor India’s on Japan’s growing enthusiasm biomass journey away completes thefrom issue.coal follow. And a piece on Japan’s growing enthusiasm for biomass completes the issue.
28 Africa's best chance? Michelle Meineke
28 Africa's best chance? Michelle Meineke 30 The battle for India's coal Jennifer Johnson
30 The battle for India's coal Jennifer Johnson 32 Sustainable development – reaching global energy goals 32 Sustainable development – reaching David Appleyard global energy goals David Appleyard 34 Japan becoming an international biomass energy hub 34 Japan becoming an international Kathryn Wortley biomass energy hub Kathryn Wortley
Opinion
FROM THE EDITOR
Time to build on the electricity system transformation M any of us are a little short of optimism right now, so I was interested to see Dr Fatih Birol writing recently that, despite the grim twins of a global pandemic and a brutal economic crisis, he is optimistic about the speed of the global shift towards cleaner energy. The Director of the Paris-based International Energy Agency (IEA) sees encouraging trends with the potential to prevent the worst ravages of climate change. Birol says that ongoing falls in costs means that solar power continues to lead renewables to new heights right across the globe, with the potential for offshore wind to be another key source of clean power in many regions. Meanwhile, innovation around other clean energy technologies – batteries, hydrogen etc – is gathering steam. Equally importantly, he suggests that currently low interest rates – likely to remain low as long as the COVID crisis continues – are facilitating investment in wind, solar, electric vehicles etc. And, both governments and companies are stepping up to throw their weight behind the energy transition – often motivated not only by the need to tackle climate change, but also to be at the forefront of the industries of the future. However, a new report, also from the IEA: Energy Technology Perspectives 2020, takes a different tack – suggesting that the major gains made in transforming the electricity sector will only get the world one-third of the way to net zero emissions. Completing the journey will require developing and
Steve Hodgson, Editor
The views and opinions expressed in this article are those of the editor only and are not necessarily given or endorsed by or on behalf of the Energy Institute.
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If you missed the note on the contents page of this issue – Energy World has gone flipbook. From this issue onwards you can see the magazine online in a new, easy-to-view page-turning format at bit.ly/EWmag_home. It’s the best of both worlds – see the magazine online and turn the pages with a click. Also, for this month only, we’ve made the magazine free for everyone to read. Naturally, our sister magazine, Petroleum Review, has gone the same way.
• Integrating offshore energy systems to secure a low carbon future • Portfolio realignment key to decarbonising global energy systems • Decommissioning deferral doldrums
o t zer to ne issions oad em The r greenhouse gas
due.
peak loads. The answer lies in understanding the amazing machine that a large-scale power system is – in which anyone can flip a switch and reasonably expect to receive any amount of power at any time of day, wherever they are. Without giving notice to anyone. There isn’t enough renewable generation capacity connected to the system to meet peak loads today – not by a long way. In the UK, gas is still the most important generation contributor and, sometimes, even coal gets called back into the game. The use of coal will no doubt come to an end when still more renewables and – crucially – considerably more storage capacity is available. It’s only a couple of years ago that we started to notice days without a coal-fired contribution to UK electricity. Today it’s news that someone has started-up a coal power station, at least in the summer months.
In this month’s Petroleum Review:
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deploying cleaner technologies for use in the transport, buildings and industrial sectors on a massive scale. Much less progress has been made in these sectors, which together account for 55% of today’s carbon dioxide emissions. Led by several European countries, the transformation of electricity systems has indeed been dramatic. What we in the UK generated overwhelmingly from coal and a small but consistent nuclear component just three decades ago, we now generate largely from gas and renewables (with a roughly similar nuclear contribution). And, the key to decarbonising the transport, buildings and industrial sectors is, of course, a much greater use of new, cleaner electricity, says the IEA report – to power vehicles, recycle metals and heat buildings. On top of this, the problem of what the IEA calls long-lasting energy assets – typically coal power plants, steel mills and cement kilns built recently in Asia – must be managed to incorporate new, cleaner technologies such as hydrogen and carbon capture. Talking of coal, why have we begun burning coal again for power generation in the UK recently, in the late summer? After a nearly two-month period without burning coal, a tiny amount of coal-fired power generation appeared in the mix in mid-August, according to the websites that track such matters. Then, later in August and for three days in September, up to 2 GW of coal-fired generation was used to help meet daytime
of the
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InternationalUpdate
BP forecasts terminal decline in oil demand Oil major quietly admits that the global demand for oil may never recover to pre-pandemic heights
T
he 2020 edition of the BP Energy Outlook – delayed by six months to reflect the impacts of COVID-19 – is focused around three main scenarios: ‘Rapid’, ‘Net Zero’ and ‘Business-asUsual’ (BAU). In all three scenarios, global energy demand grows, driven by increasing prosperity and living standards in the emerging world. In all three cases, oil demand is predicted to fall over the next 30 years as renewables and electrification both rise. Primary energy demand plateaus in the second half of the period in Rapid and Net Zero, as improvements in energy efficiency accelerate. In BAU, demand continues to grow throughout, reaching around 25% higher by 2050. The transition to a lower carbon energy system results in a more diverse energy mix, as all three scenarios see a decline in the share of the global energy system for hydrocarbons and a corresponding increase in renewable e nergy as the world electrifies. The scale of the shift varies significantly across the scenarios, with the share of hydrocarbons in primary energy declining from around 85% in 2018 to between 65–20% by 2050 and renewable energy rising to 20–60%. The scenarios all see oil demand fall over the next 30 years – 10%
lower by 2050 in BAU, around 55% lower in Rapid and 80% lower in Net Zero. In BAU, demand plateaus in the early 2020s and in both Rapid and Net Zero oil demand never fully recovers from the fall caused by COVID-19. The decline in oil demand is driven by the increasing efficiency and electrification of road transportation. In all three scenarios the use of oil in transport peaks in the mid-to-late 2020s. The share of oil in meeting transport demand falls from over 90% in 2018 to around 80% by 2050 in BAU, but to 40% in Rapid and to just 20% i n Net Zero. Meanwhile, global demand for gas varies significantly across the scenarios. It peaks in the mid2030s in Rapid and in the mid2020s in Net Zero, and by 2050 is broadly similar to 2018 and around a third lower, respectively. In BAU, gas demand increases throughout the next 30 years to be around a third higher by 2050. The company foresees two roles for gas in accelerating the energy transition. In developing economies, it could support a shift away from coal in places where renewables cannot expand sufficiently. It could also be combined with carbon capture, use and storage (CCUS) infrastructure as a source of near-zero carbon
The decline in oil demand is driven by the increasing efficiency and electrification of road transportation – in all three of BP’s scenarios the use of oil in transport peaks in the mid-tolate 2020s
power. Gas combined with CCUS accounts for between 8–10% of primary energy by 2050 in Rapid and Net Zero. Renewables are the fastest growing source of energy over the next 30 years in all the scenarios, growing from around 5% of primary energy in 2018 to 60% by 2050 in Net Zero, 45% in Rapid and 20% in BAU. Wind and solar power dominate this growth, underpinned by continuing falls in development costs. As the energy system progressively decarbonises, BP foresees increasing roles for both hydrogen and bioenergy. Use of hydrogen increases in the second half of the Outlook in Rapid and Net Zero, particularly in activities which are harder or more costly to electrify. By 2050, hydrogen accounts for around 7% of final energy consumption (excluding non-combusted) in Rapid and 16% in Net Zero. The scenarios show that achieving a rapid and sustained fall in carbon emissions is likely to require a series of policy measures, led by a s ignificant increase in carbon prices. Delaying these policies measures and societal shifts may significantly increase the scale of the challenge and lead to significant additional economic costs and disruption.
Net zero pledges
Tech giants doubling down on clean energy commitments Google has become the latest in a growing line of tech giants to make a major clean energy pledge when it announced in late September that it would run all of its offices and data centres on carbon-free energy by 2030. At present, the company purchases renewable energy credits equal to its total global energy usage, but some of its datacentres still run on fossil fuels. According to Reuters, renewables made up 61% of Google’s global hourly electricity usage last year, though the figures varied widely between locations. Solar and onshore wind fulfilled 96% of the needs of a data centre in Oklahoma, while a Singapore facility relied on gas for a similar proportion of its power. According to a blog post by CEO Sundar Pichai, Google is now ‘the first major company
to make a commitment to operate on 24/7 carbon-free energy in all our datacenters and campuses worldwide’. However, it will continue to offset carbon emissions unrelated to electricity use, such as from employee travel. Last year, over 2,000 Google employees wrote a letter to the company’s chief financial officer demanding that executives commit to zero-carbon power within the next decade. They also demanded that the search engine end its contracts with fossil fuel companies and stop funding politicians and think tanks that oppose global climate action. Google’s clean energy pledge follows a similarly ambitious announcement from Microsoft earlier this year. The Seattleheadquartered firm plans to use as-yet
underdeveloped carbon capture technologies to remove all of the CO2 it has ever released into the atmosphere by 2050. It also promised to become ‘carbon negative’ in its operations by 2030. In September, the social media giant Facebook also revealed a new goal of achieving net zero emissions by 2030 from its whole value chain — including ‘suppliers and other factors such as employee commuting and business travel.’ This will be achieved through the use of offset credits and carbon capture technologies. Facebook’s announcement was met with scepticism from environment campaigners, who have claimed that the company still permits the free spread of climate disinformation across its social network. Energy World | October 2020 3
InternationalUpdate
Two-thirds of new generation capacity came from wind and solar last year Renewables still don’t compete with fossils in terms of overall generation – but achieved record capacity additions in 2019
L
ast year wind and solar PV accounted for the majority of the world’s new power generation for the first time in history. According to BloombergNEF (BNEF)’s Power Transition Trends 2020 report, PV was by far the top performer in 2019 with a total of 118 GW installed. The report underlines the fact that solar has made significant capacity leaps in the last decade – from 44 GW in 2010 to 651 GW as of the end of last year. Solar has also surpassed wind (644 GW) to become the fourth largest source of power on a capacity basis, behind coal (2,089 GW), gas (1,812 GW), and hydro (1,160 GW). However, BNEF analysts found that, on a generation basis, solar’s contributions are considerably smaller when compared to fossil fuels. In 2019, solar accounted for 2.7% of electricity generated worldwide, up from 0.16% a decade
ago. Yet while there are more coal plants online today than a decade ago, the report found that these plants are now running less frequently. From 2018 to 2019, power produced from coal dropped 3% – marking the first fall in coal generation since 2014–15. However, over 113 GW of net coal retirements in developed nations during the 2010s did not offset the 691 GW flood of net new coal in emerging markets. ‘Wealthier countries are moving quickly to mothball older, largely inefficient coal plants because they can’t compete with new gas or renewables projects,’ explains Ethan Zindler, Head of Americas at BNEF. ‘However, in less developed nations, particularly in south and southeast Asia, new, more efficient coal plants continue to come on line – often with financial support from Chinese and Japanese lenders.’
Solar has surpassed wind (644 GW) to become the fourth largest source of power on a capacity basis, behind coal (2,089 GW), gas (1,812 GW), and hydro (1,160 GW)
During the first half of the decade, wind and solar development was largely concentrated in higher-income nations, though this trend has begun to reverse in recent years. In a group that includes nearly all OECD nations, wind and solar have accounted for the majority of new capacity built each year since 2011. Among a group of non-OECD nations plus Chile, Colombia, Mexico and Turkey, wind and solar have accounted for the majority of annual build each year since 2016. ‘Sharp declines in solar equipment costs, namely the modules that go on rooftops and in fields, have made this technology widely available for homes, businesses and grids,’ said Luiza Demôro, BNEF Analyst and lead author of the study. ‘PV is now truly ubiquitous and a worldwide phenomenon.’
Decarbonising power
EU must reduce fossil electricity imports – Eurelectric As much as 80% of the EU’s electricity could be fossil-free by 2030 – if all barriers to the investment and rollout of renewables are removed. This is the conclusion of the annual Power Barometer report produced by Eurelectric, the association that represents the Europen electricity industry. The prediction comes as CO2 emissions from the power sector continued to fall even faster than forecast, partially thanks to the accelerated phase-out of coal. The report notes that renewables accounted for 20% of the EU’s electricity mix in 2010, and reached 34% last year. Two-thirds of the electricity generated in the first half of this year was carbonfree, according to Eurelectric. Renewables covered 40% of the mix, while fossil fuel generation dropped by 18%. However, the association was quick to note that even greater acceleration is needed to meet Europe’s 2030 greenhouse gas reduction targets. Specifically, the pace of deploying wind and solar capacities must double in the coming decade. Restrictions imposed in the wake of COVID-19 have recently delayed many of Europe’s clean power projects, according 4 Energy World | October 2020
to the Barometer, and permitting procedures are further slowing progress. Eurelectric has urged EU policymakers to examine and remove barriers that exist at both the national and international level. It also called for measures to speed up electrification, including the rapid rollout of EV charging infrastructure. At present, the EU has some 250,000 vehicle charging points – and this figure needs to grow to at least 1mn by 2025, Eurelectric has said. Finally, the organisation stressed that the EU must take steps to avoid unfair competition and imports of unabated coal-fired electricity from neighbouring non-member states. The Power Barometer documents a steep and sudden growth, from 3 TWh to over 20 TWh of electricity imported annually from outside the EU in the past five years. Due to less stringent climate regulations, the average CO2 intensity of this imported electricity is two to three times higher than that produced in Europe. In September, the European Commission proposed raising the 2030 greenhouse gas emission reduction target, including emissions and removals, to at least 55% compared to 1990. The current target is 40%.
Hydroelectric-solar microgrid for Patagonia A run-of-the-river hydroelectric power station, solar PV installation and battery storage system have been combined to provide facilities in Chile’s remote Patagonia National Park. The park – considered to be one of the most important conservation initiatives in the world – is located far from the nearest public utility grid. The power requirements of its facilities have to date been provided by expensive and polluting diesel generators To achieve a total output of 115 kW peak, two hydraulic turbines were combined with a solar system, both with AC coupling. The lithium-ion battery storage units have a capacity of 144 kWh. In winter and spring, the Patagonian rivers are filled with heavy rainfall and snowmelt from the Andes mountains. The site’s two microturbines convert the energy from the water into electricity. In summer, the water level in the rivers drops significantly and the required electricity is then supplied by the photovoltaic installation. Photo: SyR Energía
InternationalUpdate
Global nuclear generation climbs steadily, mainly in Asia China dominates recent growth in nuclear power capacity around the world, as Europe and North America stall
G
lobal nuclear power generation reached a near-record high in 2019, with output reaching 2,657 TWh, according to the World Nuclear Association Performance Report 2020, published by the industry’s trade association. The total, which has climbed steadily for the last eight years and is now second to the 2006 peak of 2,661 TWh, is enough to meet more than 10% of the world’s electricity demand. However, given stalled progress towards new nuclear generation in Europe and North America, the industry says that action is needed now to kick-start more new nuclear construction projects. Growth was strong in Asia, where nuclear generation rose by 17% in 2019, says the report. Indeed, China has more than tripled nuclear generation in six years, from 105 TWh in 2013 to 330 TWh in 2019 and is now responsible for more than half of nuclear generation in Asia. But, while the performance of the world’s operating reactors continued to improve, the pace of new nuclear start-ups needs to increase to meet the nuclear
industry’s ‘Harmony’ goal for the future, says the World Nuclear Association (WNA). Six reactors, with a combined capacity of 5.2 GW, started supplying electricity in 2019, against an industry target of 10 GW per year. Agneta Rising, Director General of WNA said: ‘Globally there are more than 100 nuclear new build projects that are ready to begin. Each would generate thousands of jobs during construction and hundreds of jobs for 60 years or more of operation. They would help contribute to economic recovery plans and deliver the clean and reliable electricity needed to meet sustainable development goals.’ Four large PWR reactors started up in 2019, one in South Korea, one in Russia and two in China, says the WNA. In addition, two small reactors stated up on the world’s first purpose-built floating nuclear plants, harboured at Pevek on the northeast Russian coast. Nuclear generation fell fractionally in North America and in West and Central Europe, but rose in Africa, Asia, South America and East Europe and Russia.
Unit 1 of the Barakah nuclear plant was connected to the grid in August this year and has begun supplying electricity to the UAE Photo: Emirates Nuclear Energy Corporation
Nuclear generation fell fractionally in North America and in West and Central Europe, but rose in Africa, Asia, South America and East Europe and Russia
Thirteen reactors shut down in 2019, four in Japan that had not generated since the Fukushima disaster in 2011, with three shut down due to phase-out policies in South Korea, Germany and Taiwan. Construction started on five reactors in 2019, two in China and one each in Iran, Russia and the UK, says the WNA. The average global capacity factor for reactors generating electricity in 2019 rose from 79.8% to 82.5% and more than two-thirds of the world’s reactors achieved a capacity factor greater than 80%, says the report, maintaining the improvement there has been since the 1970s, when fewer than 30% achieved this level of performance. Not reported in the WNA report was the start-up of Unit 1 of the Barakah nuclear power plant in Abu Dhabi – a first for the Arab world. Unit 1 was connected to the grid in August this year and has begun supplying electricity to the UAE. The South Korean-supplied APR1400 is expected to enter full commercial operation later this year. The Abu Dhabi Transmission and Despatch Company (Transco) has built 950 km of 400 kV overhead lines to connect the Barakah plant to the Abu Dhabi electricity grid. Last, Finnish electricity supplier Teollisuuden Voima Oyj (TVO) has been told by the Areva-Siemens consortium that is building the much-delayed Olkiluoto 3 nuclear power plant that regular electricity production will now start in February 2022. According to the new schedule, fuel will be loaded into the reactor in March 2021 and the unit will be connected to the grid in October of the same year.
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InternationalUpdate
First nacelle for French Atlantic wind farm The first nacelle for France’s future Saint-Nazaire wind farm has been produced at the Montoir-de-Bretagne production site. This nacelle, which contains the generator, is the first in a series of Haliade 150-6 MW wind turbines, produced for the Saint-Nazaire project, to be assembled by GE Renewable Energy. This wind farm, which has already been under construction for one year, will comprise 80 wind turbines spaced 1 km apart and located 12 to 20 km off the Atlantic coast of France. When it goes operational in 2022, it will produce enough power to supply 20% of the electricity consumption of the Loire-Atlantique region. Installation at sea will begin in 2021 with anchoring of the foundations and burying the inter-turbine cables. Then, the electric substation will be installed in the sea during the summer. In spring 2022, the first wind turbines could be installed offshore and progressively commissioned, says GE. Photo: GE Renewable Energy
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Opinion
VIEWPOINT
Energy access – a race to transform our world F ive years since world leaders pledged energy access for all by 2030, this target – the seventh of the United Nations’ Sustainable Development Goals – seems more ambitious than ever. Around 860mn people still do not have electricity, while 3bn cannot cook safely, relying instead on polluting stoves and open fires that bring deadly health risks. The clock is ticking. Since grid connections will never reach isolated rural communities, the answer is a dramatic scaling up of off-grid, renewable energy. But off-grid solutions are not getting the backing they need. A recent study of the countries that are home to 80% of people without sustainable and modern energy found that investment in off-grid solutions and mini-grids accounted for just 1.2% of finance for electricity. We are not on course for universal energy access by 2030 – yet thanks to extraordinary frontline innovators, there is still hope. Here are my top reasons for optimism – and pessimism – as we embark on a crucial climate decade. Three reasons to cheer Bold national plans Governments must create ambitious, nationwide energy access plans – drawing on the resources of both the public and private sectors, and working with off-grid and on-grid solutions. These will almost certainly need subsidies in some form to connect the most isolated and marginalised. Without support, the free market will not serve the worst off – that’s why in wealthy countries the grid has been treated as a national asset, subsidised to reach the more isolated. The Government of Togo is blazing a trail with a national plan combining on and off-grid energy with subsidies for the poorest households. It also delivers jobs and training, with a particular drive to include women engineers. Meanwhile, through the use of donor funds to encourage the
involvement of the private sector, the Beyond the Grid Fund for Zambia has connected almost 1mn people in just a couple of years, with a second phase rolling the model out to Liberia, Mozambique and Burkina Faso.
Harriet Lamb is the CEO of Ashden, whose mission is to accelerate transformative climate solutions and build a more just world, ashden.org
Communities take the initiative At the other end of the spectrum, community energy initiatives offer grounds for optimism with exciting advances in technology and business models. These can take root in even the toughest environments – in conflict-hit Yemen, community-owned solar microgrids have created badly needed energy and incomes. In Bangladesh, community company Solshare helps villagers trade excess energy from their solar home systems, so even those unable to afford solar panels have access to electricity. Community energy is flexible, responsive to local needs, and boosts local economies, keeping money circulating locally. Connected thinking Optimists among us can also see how energy access will accelerate when embedded within efforts to reach other goals – such as better education, health, livelihoods, or gender equality. Many pioneers are embracing this ethos. For example, India’s Karuna Trust includes clean energy in its rural health clinics, using solar energy to power mobile clinics and IT systems, and making sure clinical staff can keep equipment in good working order – a recurring challenge to the growth of off-grid solutions.
The views and opinions expressed in this article are strictly those of the author only and are not necessarily given or endorsed by or on behalf of the Energy Institute.
Two reasons to weep Coronavirus pushes companies to the brink The pandemic has dealt a huge blow to energy access, with smaller enterprises founded in developing countries and less connected to sources of finance at greatest risk. Off the radar, these enterprises play a crucial role in the energy ecosystem – ironically, they are needed now more than ever, as their deep community links allow
them to adapt and meet local needs in times of emergency. While investors and funders have responded to the pandemic, they have targeted their support at existing portfolios. This leaves young enterprises and organisations, those without current backing, in danger – and suggests even the most promising new innovation will struggle to grow in the immediate future. Power for all? The sustainable energy sector is often driven by good intentions. But these alone do not erase injustice and inequality. As we build the energy systems of tomorrow, we are in real danger of mirroring the unequal power structures of the past. The warning signs are there – since 2010, the world’s ten largest solar home system providers (which operate in developing countries but are overwhelmingly run by Europeans and North Americans) have attracted two-thirds of total investment into the energy access sector. Organisations like Ashden, that urge the world to back accessible energy solutions, must also walk the walk on diversity and inclusion. There are many ways we can act – from stepping up efforts to back local organisations, through to proactively ensuring diversity on boards and event panels and among our staff. Towards tomorrow Whether the state of energy access fills you with hope or despair, it is time to up our game and back what we know works: solutions that genuinely empower, that bring radical progress, and that support systemic – rather than incremental – change. l
Energy World | October 2020 7
UKUpdate
Government cuts its estimates of costs of renewable electricity National Infrastructure Commission reaches the same conclusion and raises its target for renewables
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he government has officially recognised recent and dramatic falls in the cost of generating electricity from renewable sources – particularly wind and solar – in updated estimates of the ‘levelised cost of electricity’ (LCOE). Published by the Department for Business, Energy and Industrial Strategy (BEIS) in late August, Electricity Generation Costs 2020 is expected to underpin the upcoming energy white paper and thus be influential for energy policymaking for the future. The LCOE is the discounted lifetime cost of building and operating a generation asset, expressed as a cost per unit of electricity generated (£/MWh), says BEIS. It covers all relevant costs faced by the generator, including pre-development, capital, operating, fuel and financing costs. The main intention of the metric is to provide a convenient ‘rule-of-thumb’ comparison between different generating technologies. The analysis of costs carried by BEIS incorporates recent data from the renewables industry, consultants and project developers, together with new information on capital costs and likely operating lifetimes of the different generation technologies. The most striking result is that BEIS has again slashed its estimates for the LCOE of wind and solar power, according to analysis of the BEIS data by the CarbonBrief website. For example, in 2013, the
government estimated that an offshore wind farm opening in 2025 would generate electricity for £140/MWh. By 2016, this had been revised down to £107/MWh. The latest estimate puts the cost at £57/MWh, a further 47% reduction, says CarbonBrief. The new estimates include similarly dramatic reductions for onshore wind and solar, with levelised costs in 2025 now thought to be up to 50% lower than those expected by the 2013 government report. The reasons for the renewable cost reductions are well documented, adds CarbonBrief. They include technological learning in the industry – with larger, more efficient manufacturing plants for solar and larger turbines for wind – but also operational experience, longer project lifetimes and cheaper finance. Meanwhile, new research carried out by Aurora Energy for the National Infrastructure Commission (NIC) shows how sharp falls in the cost of renewable generation mean that Britain should aim for renewables to meet two-thirds of its electricity needs by 2030. The report also suggests that this can be delivered at the same overall cost as meeting only half of total demand by that date. The Commission has updated its recommended target for deployment of renewables from 50% to 65% by 2030. The Commission’s report notes
that government has made some positive commitments on renewables deployment recently, including setting a goal to deliver 40 GW of offshore wind power by 2030. The Commission welcomes these steps and recommends that a refreshed pipeline of contracts for difference (CfD) auctions should be set out to accelerate more offshore and onshore wind, and solar power projects. Commenting on the report, trade association RenewableUK’s Head of Policy and Regulation Rebecca Williams said: ‘We welcome the NIC’s call for annual auctions for contracts to generate renewable power, but the most important step that government could take would be to lift the cap on the amount of new renewable energy capacity we can procure in each auction. This would allow us to maximise the benefits of cheap renewable power for consumers, cutting bills.’ •
The new estimates include similarly dramatic reductions for onshore wind and solar, with levelised costs in 2025 now thought to be up to 50% lower than those expected by the 2013 government report
A new wind power record was set on Wednesday 26 August when wind was generating nearly 60% of Britain’s electricity as the UK was experiencing high winds from storm Francis. National Grid ESO confirmed that at 01.30 on that day, wind met 59.9% of the total power demand of 24 GW. The rest of the power mix was made up of gas (19%), nuclear (15%), biomass (3.1%), imports (2.5%) and hydro/others (0.7%).
Wave and wind power device to be built in Wales Following a successful crowdfunding campaign and obtaining funding from the Welsh European Funding Office (WEFO), Marine Power Systems (MPS) is set to build its first commercial demonstrator device in Wales. Swansea-based MPS reached a £1.5mn crowdfunding target just two weeks after launching, and then moved into overfunding, now at over £2mn. It has also obtained support from WEFO, with £13mn of EU funding. MPS has developed what it calls a revolutionary, flexible technology that can be configured to harness wind power, wave power or combined wind and wave energy at grid scale – pictured. This approach has been patented by the company. Photo: MPS
8 Energy World | October 2020
UKUpdate
Electricity system
Reduced loads have helped electricity system balancing costs to soar One side-effect of the low overall demand for electricity and high levels of renewable generation seen in the electricity system this summer has been a steep rise in the cost of keeping that system balanced. Actions taken by National Grid takes to manage the system have typically been around 5% of generation costs over the last decade, says Dr Ian Staffell, writing in Electricity Insights Quarterly, but this share has risen over the last two years and, in the first half of 2020, reached 20% of generation costs. At the start of the decade, balancing added about £1/MWh to the cost of electricity, says Staffell, but in the second quarter of this year it surpassed £5/MWh for the first time. This is partly because keeping the power system stable requires more intervention than previously, he explains. National Grid is having to order more wind farms to reduce their output, and the system operator has also contracted to reduce the output from the
Sizewell B nuclear reactor at times of system stress. A second reason for the price rise is that National Grid’s costs of balancing are passed on to generators and consumers. As demand had fallen by a sixth since the beginning of the coronavirus pandemic, the increased costs are being shared by a smaller group of generators. For a quarter of a century, the electricity demand in GB ranged from 19 to 58 GW, says Electricity Insights Quarterly, but demand minus the variable output of wind and solar farms never fell below 14 GW. However, in each month from April to June this year, this ‘net demand’ fell below 7 GW. While it is COVID-19 that has brought this phenomenon forward, the new pattern is teaching us lessons for the long-term about how to run a leaner and highly-renewable electricity system, concludes Staffell.
Electricity transmission
New HVDC interconnector to link Shetland to UK grid
HVDC technology will be used to connect Shetland to the UK power system Photo: Hitachi ABB Power grids
Hitachi ABB Power Grids has won an order from Scottish and Southern Electricity Networks (SSEN) Transmission to enable what is said to be Europe’s first multi-terminal high-voltage direct current (HVDC) interconnection. The link, which will connect Shetland to the UK transmission system for the first time, will help transmit wind power generated on the islands and enhance security of power supply. Hitachi ABB says it will deliver and commission an HVDC system, facilitating a multi-terminal link and providing flexibility to transfer power in multiple directions, based on supply and demand, with minimal power losses. The system will convert the harnessed wind power from AC to DC at an HVDC converter station. This power will then be transmitted
via underground and subsea cables to an HVDC switching station at Caithness, in the north of Scotland. It will then be transferred via the Caithness Moray HVDC link, before being converted back to AC for onward transmission to meet electricity demand in the north of Scotland and beyond. The HVDC connection will play a key role in the development of Shetland’s renewable energy potential by connecting it to what will be the UK’s largest onshore windfarm. Scheduled for completion in 2024, the system is enabled for future connections and integration of more renewables, says the company. Hitachi ABB Power Grids pioneered HVDC technology more than 65 years ago and has delivered more than half of the world’s HVDC projects, says the company.
Energy World | October 2020 9
UKUpdate
Orbital ends prototype tidal turbine test programme Orbital Marine Power has decommissioned its prototype 2 MW SR2000 floating tidal turbine, with heavy lift specialists Mammoet managing the tandem lift of the 516-tonne structure out of the water and onto the Blyth quayside. Orbital says it is reclaiming key components of the turbine to carry out inspections, with the remainder of the structure to be dismantled for recycling and disposal. The final phase of the successful test programme saw over 3 GWh of electricity generated by the SR2000 at the European Marine Energy Centre (EMEC) in Orkney. Orbital is now in the process of manufacturing a new 2 MW O2 turbine to replace the SR2000 at EMEC early next year. The new device should enable a 35% improvement in yield, says the company. Photo: Orbital Marine Power
Nuclear power
Hitachi pulls out of the Wylfa nuclear power station project Japan’s Hitachi is to end its involvement in the Horizon Project to develop a nuclear power station at Wylfa Newydd in Anglesey, NorthWest Wales, having first suspended its work on the project in January 2019 to give time for the UK government to decide on a financing structure. The company says it made this new decision given that 20 months have passed since the suspension, and the investment environment has become increasingly severe due to the impact of COVID-19. Hitachi says it will coordinate with the government and relevant organisations regarding its cooperation as the owner of reactor design licence and the handling of the planned construction sites and other matters. Reacting to the news, Tom Greatrex, Chief Executive of the Nuclear Industry Association, expressed his disappointment, adding that ‘the government can secure the economic and environmental opportunities [of new nuclear plants] for future generations by setting out a clear pathway for new nuclear power in forthcoming policy announcements.’ The GMB Union also pointed to a failure by government to support this and other proposed nuclear plants. National Secretary Justin Bowden said: ‘This utterly predictable announcement from Hitachi is outcome of successive government failures to act decisively around new nuclear, and in particular how it is financed. The fanciful experiment of trying to get foreign companies or governments to fund our future energy needs leaves most ordinary citizens in this Offshore wind cables are connected to landfall Offshore wind power developer Ørsted has conducted a cable pull in at Lincolnshire’s Horseshoe Point beach. The operation saw 2.4 km of a total 39 km of cable being installed towards the landfall, in preparation for Ørsted’s latest and largest offshore wind farm. Boskalis’ CLV Ndurance (pictured) sailed from Norway to Horseshoe Point for the operation. Currently under construction and anticipated to be complete in 2022, Hornsea Two will be the biggest offshore wind farm in the world, says Ørsted. With its 165 wind turbines, each rated at 8 MW, Hornsea Two will generate 1.4 GW of power. Photo: Ørsted
10 Energy World | October 2020
country bewildered.’ Another trade union, Unite, said that the government should unveil its long-awaited energy White Paper urgently to allay fears about the future of the UK’s nuclear industry. The Horizon announcement came a fortnight after Britain’s nuclear power industry set out a new framework to cut the cost of building new power stations in the UK. In a report: Nuclear New Build Cost Reduction, a cross-industry team, working as part of the government-backed Nuclear Sector Deal, set out a series of measures to reduce risk and bring down costs by 30% by 2030. Sections include rigorous pre-construction planning, with simplicity of design and construction methodology; repeating designs across multiple stations; and building-up and transferring a skilled and experienced workforce to new projects. The report also identifies how a new financing model that controls construction risk would bring down consumer costs by mobilising a wider pool of investors and cutting the cost of capital. Meanwhile, EDF has announced that, following approval from the UK nuclear regulator, Hunterston B in North Ayrshire, Scotland, is to restart generating electricity – but will move to the decommissioning phase by January 2022. The twin advanced gas-cooled reactor (AGR) unit power station began generating power in 1976, but was taken off-line in 2018 after cracks were found in the graphite bricks that form the reactor core, reports NucNet.
UKUpdate
Employment
UK needs regional plans made with workers – TUC A new report: Voice and place: how to plan fair and successful paths to net zero emissions from the TUC sets out the potential for a ‘place-based’ strategy, with direct input from workers, to reach net zero carbon emissions. The report is based on research in five UK nations and regions that draws on the expertise of local union representatives on the challenges and opportunities in their area. The results are presented as a series of case studies for Northern England, North West England, the Midlands, Wales, and Yorkshire and Humberside, with recommendations for regional and national policy. While each case study reveals specific opportunities and challenges, the TUC says that the findings collectively demonstrate the importance of: •
Placed-based strategy – plans must be tailored for regional industry and geography and different needs and strengths. For example, the North East seaboard is suitable for carbon capture and storage, while the North West has a history of nuclear power and a suitably skilled nuclear workforce.
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Workers voice – workers had no say in the transition from traditional industry to services in the 1980s, which led to long-term unemployment and poor-quality jobs. That mistake must not be made again and companies should make transition agreements with unions covering job security, re-training and the protection of term and conditions.
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Regional recovery and transition panels – the UK needs a social partnership approach to reaching net zero and recovering from the pandemic. Regional panels should be established in tandem with a UK national council for recovery and transition.
TUC General Secretary Frances O’Grady said: ‘If workers have a genuine say, plans can be agreed with government and business that provide job security, and protect job quality. That’s going to win community backing too, so progress will be both fairer and faster.’ Meanwhile, around 30,000 new jobs could be created, along with wider economic benefits, if substantial investment in upgrading the energy network is made to enable the transition to electric vehicles across the UK, according to a new study carried out by the University of Strathclyde’s Centre for Energy Policy, supported by SP Energy Networks. The two organisations examined the wider impacts of the extended and substantial investment in network upgrades required to enable 99% electric vehicle (EV) uptake by 2050 in the UK – concluding that the transition could deliver an additional 30,000 full-time equivalent roles across the UK. The majority of jobs created would be in the network, construction and service sector supply chains. Many would be related to EV manufacturing, from developers of bodywork to delivery drivers for the companies producing EV parts.
Scotland’s first e-cargo bike delivery service Scotland’s first integrated e-cargo bike delivery and food waste service, SoulRiders, has been launched, thanks to an award of £140,000 from SP Energy Networks’ Green Economy Fund. The new e-bikes will provide a solution to many traffic and pollution issues in Glasgow by reducing the number of delivery vehicles on the streets. SP Energy Networks’ £20mn Green Economy Fund supports Glasgow’s mission to become the UK’s first net zero emissions city by 2030. The fund also aims to improve air quality across the country and deliver a better future, quicker for all. Photo: SP Energy Networks
New gas network for Liverpool district heating scheme A gas network construction project that is fundamental to a £1bn regeneration scheme in Liverpool has been completed ahead of schedule, despite the coronavirus lockdown. Energy Assets Utilities (EAU) designed and completed the gas works for the Paddington Village Energy Centre and District Energy Scheme on behalf of Liverpool City Council’s main contractor Morgan Sindall. Network design approval was received at the end of January and construction started over weekends in February, in line with Liverpool Council’s traffic management requirements – then came lockdown. It wasn’t until late April that work resumed under strict operating conditions, including regular temperature checks, social distancing, PPE and limited site access. Yet, by June, the complex design and construction programme, which included navigating a dual carriageway four-way junction, had successfully delivered a gas network comprising 160 m of low-pressure pipe to supply the district energy scheme. Photo: EAU
Energy World | October 2020 11
EI News
Record interest in EI Awards
Maria McKavanagh, CEO of Verv, accepts her EI Young Energy Professional Award at the 2019 EI Awards Ceremony
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record 162 entries have been received for the Energy Institute (EI) Awards 2020, from projects and individuals as far flung as the US, UAE, Singapore and Nigeria. This year also brings three new award categories – Low Carbon; Access to Energy; and Talent, Development and Learning – to help accommodate the wide-ranging entries the EI has received in past years. This is the 21st year of the Awards, which are recognised as one of the energy industry’s most prestigious competitions.
Showcasing the most ground-breaking work in the energy sector, they provide a platform for the industry to celebrate those businesses and individuals who innovate, communicate and drive up the standards of professionalism. And for the first time, the ceremony this year is free to attend as an online event, so put on your glad rags, fire up your laptop and join us on the 26 November to celebrate the best there is in the world of energy. Register at energy-inst.org/ei-awards-booking-link
EI Library Members once again can access hard copy items held in our London Library collection. Although the Library continues to be closed to the public it is now being staffed from Tuesday to Thursday each week. This means that our Library team are able to loan hard copy items by post on request. As always, the entire Library catalogue, including online and physical resources, can be searched and either accessed or requested through the EI Knowledge Service website at knowledge.energyinst.org
Member update: renewals If you are an EI member you should be receiving annual renewal information in the next few days. In the renewal notice, Louise Kingham OBE FEI talks about the last few months and the EI’s concentration on services to support members during the COVID-19 pandemic. Membership subscriptions are frozen for 2021 and there is also news of some new services and initiatives to expect over the coming year. As with last year, members who pay by Direct Debit will receive an email rather than a letter, but you can read a copy of Louise’s message at energy-inst.org/Louiserenewals. If you are a UK taxpayer and pay your own fees you may be able to Gift Aid your membership subscription –it helps us do more with your money at no cost to you, and you can sign up online. More information is at energy-inst.org/manage-your-membership
12 Energy World | October 2020
Deceased members The EI is sad to report the deaths of the following EI members: Born Mr P A Bense CEng FEI 1905 Dr M Bosio CEng FEI 1922 Dr J R V Brooks CBE MEI 1938 Mr H W Dean FEI 1928 Mr C G Faultless MEI 1938 Mr D Ford MEI 1931 Mr P R Johnson MEI 1945 Mr J P Lauder CEng FEI 1917 Mr G Lonie CEng FEI 1929 Mr G R Loram FEI 1927 Mr W A Mellor CEng MEI 1923 Eur Ing D H Napier CEng FEI 1923 Mr M G Nash CEng MEI 1923 Mr K R Parker CEng FEI 1933 Mr L F Riley CEng FEI 1929 Mr F D Routledge FEI 1937 Mr I Taylor FEI Mr P J Watson FEI 1928 Mr J Williamson FEI 1931
EINews
EI in Westminster and Whitehall
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upporting the quality of energy policymaking is a central part of the EI’s social purpose and, in the UK, September saw external engagement by EI Fellows with policymakers in both Parliament and the civil service. At a special meeting of the Parliamentary Group on Energy Studies entitled ‘Success at COP26 starts at home: leading by example on net zero’, the EI convened an expert panel to present the findings of this year’s Energy Barometer. EI Chief Executive Louise Kingham was joined by Steve Holliday FREng FEI, President of the EI, and Professor Robert Gross FEI, EI Council Member and Director of the UK Energy Research Centre. Kingham urged parliamentarians to listen to the views of energy
professionals: ‘They’re engineers, technicians, scientists and economists, driven by the evidence and the practicalities of what it takes to keep the electrons and molecules flowing to our homes, businesses and vehicles. They know what they’re talking about, and they’re also the people we’re looking to to deliver net zero.’ Holliday made a powerful connection between what happens at home in the UK and next year’s climate talks in Glasgow: ‘Without immediate domestic policy steps from ministers, the UK’s international credibility is on the line. Orchestrating the international "race to zero" will call for every bit of credibility we can muster.’ And Professor Gross made the Barometer’s central case for enduring
action on energy efficiency: ‘It’s singled out as the biggest missed opportunity of the past decade and is consistently seen as the best measure to meet the shortfall in the fifth carbon budget. Retrofitting our existing housing stock would have big economic, social and environmental co-benefits as part of a resilient recovery from the pandemic.’ Steve Holliday separately joined Lord Deben, Chair of the Committee on Climate Change, and Alice Barrs, Head of UK Political Affairs at RWE, to speak to the All Party Parliamentary Group on Energy Costs, discussing the question, ‘Delivering net zero by 2050: Does government have an effective plan?’. Meanwhile another expert panel of EI Fellows was lined up to provide complimentary training for policy officials new to energy in the Department for Business, Energy and Industrial Strategy (BEIS). The ‘Energy Fundamentals’ course has been developed by the EI to provide an introduction to the basic concepts and interconnections within the energy system between heat, transport and electricity. The sessions always generate much interest and interesting questions from new joiners in the department. In the hot seats on this fourth occasion were Dr Joanne Wade OBE FEI of the Association of Decentralised Energy, Professor Matthew Leach FEI of Surrey University, Philip New FEI of the Energy Systems Catapult and Prof Peter Taylor FEI of Leeds University. You can watch recordings of the two parliamentary sessions at https://bit.ly/2ZBQNDD
Energy Efficiency and Heat conferences back
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he COVID-19 pandemic may continue to prevent face-to-face events taking place, but it’s been full steam ahead over the past month for the EI’s conference programme, with the return of two regular fixtures. The Energy Efficiency conference was back, bringing together the EI’s community of energy management practitioners with key figures working on policy and delivery in this vital field. Speakers discussing ‘the road to net zero’ came from diverse organisations including BEIS, Ofgem, IBM, Co-op, National Grid, Ørsted, Rolls-Royce,
Nestlé, Lightsource BP and Keltbray. And Heat and Decentralised Energy 2020 was held in collaboration with the Association for Decentralised Energy. The event focused on ‘levelling up with local energy’, with participants from central and local government, industry and civil society discussing the sector’s benefits to both decarbonisation and localised jobs, skills and industrial strategy. Meanwhile, the busy programme of free EI LIVE webinars continues apace. In September, Past EI President Professor Jim Skea CBE FRSA FEI was joined by Andy
Samuel, CEO of the Oil and Gas Authority to discuss ‘the new context for energy in Scotland’. A special event took the Generation 2050 initiative to Climate Week NYC 2020, seeing young energy innovators and entrepreneurs from around the world discussing how tomorrow’s energy leaders are shaping up. And a webinar held in collaboration with IBM drew together expert views from across the world of energy on business continuity during COVID-19 and beyond. Forthcoming free EI LIVE webinars are at energy-inst.org/EI-LIVE Energy World | October 2020 13
Energy in buildings
HEAT DECARBONISATION
Six steps to zero carbon buildings UK policymakers know when the country’s building stock should reach net zero emissions – but the pathway to reaching that target is far from clear. Dinesh Mattu from the Energy Systems Catapult sets out one possible roadmap.
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ast summer, the UK set into law its pioneering target to reach net zero greenhouse gas emissions by 2050, marking an unprecedented step towards ending Britain’s contribution to climate change. The next few decades will require substantial changes in almost every aspect of our lives, including the way in which we build, manage and heat our homes. Since then, the COVID-19 pandemic has taken centre stage and (perhaps) accelerated change in many of our lives. For now, the recovery from the pandemic will dominate policy thinking, but it is more important than ever to think about how we move towards a more sustainable, decarbonised future. A green recovery from coronavirus provides a platform to get on the front foot of the UK’s heat
decarbonisation challenge, so we welcome the Chancellor’s recent £2bn funding incentive through the Green Homes Grant. However, that is just a start – we still have an enormous task at hand to make all 24mn UK homes net zero by 2050. How big is the challenge? Heating is one of the UK’s biggest sources of carbon emissions, with heating of space and water in homes accounting for around 15% of total greenhouse gas emissions. Almost 90% of people use gas boilers to heat their homes. They are familiar, easy to install and crucially – cheap – for many British households, and current incentives to switch to alternative heating systems are weak. The market for low-carbon technologies is underdeveloped, the skills to build
Figure 1. Consumer choice in 2020 – air source heat pumps versus gas boilers * Homes are assumed to have a normal level of insulation, the gas boiler (23 kWth) has a mean efficiency of 0.92, and the ASHP (6 kWth) has a mean seasonal performance factor of 3 ** We have assumed that for households in 2020 the effective carbon price for electricity is £48/tCO2e and gas is £1/ tCO2e. Therefore, for the purposes of this comparison we have increased the effective carbon price of gas to equal electricity.
14 Energy World | October 2020
and manage these systems are not widespread, and high upfront costs remain a big block for many property owners. Our current approach to energy pricing also tilts the market in favour of gas over electricity for home heating. Gas bills do not include any tax on the associated carbon emissions. In contrast, electricity bills do include a carbon tax and the costs of subsidies for low-carbon electricity are also layered on top of that. This market distortion discourages consumers from switching away from gas and sends the wrong kind of signals for investment by innovators in developing low-carbon alternatives to natural gas – such as heat pumps, district heating and hydrogen boilers. The result is that these low-carbon alternatives remain outside the mainstream. Figure 1 compares annual energy and total lifetime costs of heating a typical UK semi-detached home. Without the Renewable Heat Incentive (RHI) and an effective carbon price added to gas, the lifetime costs of an air source heat pump remain much higher than those for electricity, supporting the argument for reduced capital costs. The state of play The RHI was introduced to promote the use of renewable heat. For households, the scheme rewards uptake of specific lowcarbon heating technologies (such as solar, biomass and heat pumps) by making quarterly payments for heat generation. Take-up has been slower than expected and largely dominated by biomass boilers, with further concerns around cost and compliance. At an individual level, the RHI has been effective at what it set out to do, in being a technologyspecific scheme which rewards consumers for generating renewable heat. But broadening the appeal of low-carbon heating to stimulate larger-scale uptake is largely reliant on desirability and affordability. This in turn requires local coordination of investment in upgrading energy infrastructure and buildings. Relying exclusively on individual subsidies to drive the low-carbon heat transition risks missing opportunities to coordinate action across local areas. We also need innovation to make low-carbon options attractive for consumers, raising questions and opportunities for business
Energy in buildings
network companies are central to the heat decarbonisation journey. And with an ever-increasing focus on the whole energy system, network activities and plans need to be well aligned with national objectives. Energy Systems Catapult has been working with Ofgem to advise and support the future development of consistent, robust and transparent local area energy plans. The use of Local Area Energy Planning (as set out in Step 2) has been put forward as a possible model to guide strategic investment for electricity distribution networks (DNOs) as part of the RIIO2 price control framework.
Figure 2. Potential timetable for six steps to decarbonise buildings
models, markets, consumer offerings and policy design. So, what’s the solution? Decarbonising our buildings will require a long-term strategy. The Energy Systems Catapult has laid out a proposed framework in its Six Steps to Zero Carbon Buildings. The steps aim to create a mix of new planning processes, standards, obligations, subsidies and market incentives that can combine to drive action throughout the supply chain. Step 1 Regionally-led strategic investment can begin to develop currently immature supply chains and develop the right kind of skills to manage low-carbon solutions. Place-based programmes could hold the key to building up demand and driving long term market competitiveness for lowcarbon solutions by region or area. Coordinated investment can be targeted by local or regional ‘places’ to scale-up programmes for energy efficiency measures, building fabric improvements (retrofits), lowcarbon heating technologies and skills development. Driving early deployment at scale would involve a mix of public investment coordinated by local authorities (eg from post-Brexit regional ‘prosperity’ funds) as well as private sector partners and contributions from existing funding programmes. Regionally, as supply chains build and low-carbon skills development become standard, technology specific incentives such as the RHI could be gradually phased out with focus instead turning to private markets to drive uptake, allowing time for innovators to adapt and develop their business models.
Step 4 Akin to an MOT required for car owners, minimum performance standards could be placed on Step 2 building owners, and phased By using robust data analysis to create integrated local energy plans, in to address building carbon performance. By harnessing decarbonisation can be driven through coordinated investment in digitalisation, new methods of energy infrastructure from a whole measurement can be introduced systems perspective, including low- over time for more accurate reporting of carbon emissions. carbon heat. Placing an obligation on Local Area Energy Planning property owners to take (LAEP) developed by Energy responsibility for their building’s Systems Catapult is an approach to analysing cost-effective, low-carbon carbon performance could prove an effective way to address heat solutions for a local area and its decarbonisation. By introducing a energy systems. By using a minimum standard – phased in data-driven, spatial and with plenty of notice – markets for collaborative process, the planning for cities, regions and towns can be building efficiency improvements and innovative business models in viewed through a lens which looks the space could help tip the balance at the energy system as a whole, rather than on an individual vector in favour of low-carbon choices. There is also an opportunity basis. with the nationwide rollout of With such a wide variation in building stock in the UK, the mix of smart meters to calculate a more accurate measurement of carbon appropriate solutions for emissions from a building. An decarbonisation will vary significantly from place to place, so update to the Energy Performance Certificate (EPC) with an emphasis factors including building stock, on environmental impact could be density, and local energy network one viable method of doing so, with configurations would need to be extra steps within the wider considered for each area. Our pilots in Bridgend, Bury and framework to support those who are at highest risk of fuel poverty. Newcastle have shown that engaging with local communities and embedding local economic and Step 5 A new carbon credits scheme linked social priorities is key. If to building carbon performance coordinated correctly, these could help shift the energy considerations can help deliver the consumption balance in favour aims and ambitions of local of low-carbon options, whereby authorities. consumers are rewarded based on their level of building emissions. Step 3 As it currently stands, consumer Network companies are a awareness of the relationship key component of the heat between carbon emissions and decarbonisation story, so net zero their heating systems is relatively and low-carbon technologies need low, with half of people unaware be at the forefront of future plans. that their gas boiler contributes to Ofgem’s RIIO2 framework can integrate local energy plans to drive climate change. In practice, heating whole-system decarbonisation and systems are generally only replaced once an existing one breaks down. coordinate investment. Quite often, given the overriding As infrastructure providers, Energy World | October 2020 15
Energy in buildings
urgency in these situations, low-carbon options are generally not favoured as a viable replacement. Twinned with the fact that the alternative low-carbon heating market is largely underdeveloped, with high capital costs to bear for expensive technologies, this often leaves very little incentive for consumers to move away from the gas boiler. Step 5 proposes the creation of an incentive for consumers to be rewarded through their energy bills when they make low-carbon choices with a carbon credits scheme. This is achievable either through low-carbon heating upgrades or energy efficiency measures. Smart meter data could work in conjunction with Step 4, with suppliers measuring actual usage against a carbon performance benchmark which tightens over time. When a property’s emissions fall below or above that benchmark, the property owner is then given a respective bill reduction or surcharge. Step 6 Helping people to afford the upfront cost of low-carbon solutions will be key to heat decarbonisation. The Green
Finance Taskforce showed how new long-term low-carbon finance products can help this through green mortgage-style offerings or an adapted Green Deal style regime. Deep retrofit is likely to remain a significant expenditure for many, even with technology specific incentives such as the RHI in place. As well as public funds in the forms of grants and loans, private markets could develop a range of green finance products and drive competitiveness to enhance affordability. Such products could have long payback periods and sit with the building owner or occupant at the point of purchase. Markets would need to be regulated, with products adhering to quality control standards and tradespeople accredited by the relevant trade bodies. Quality assurance would need to play a central role in any future system of green financing and could perhaps be stimulated at least in the initial stages by government. These approaches can reduce lender risk without distorting competition and also be bundled with added value and services, as new energy-as-a-service or subscription propositions.
No single measure or party can decarbonise buildings alone – a range of parties need to be obligated and incentivised by different policies in order for UK properties to transition away from gas and towards lowcarbon alternatives
Range of parties and policies No single measure or party can decarbonise buildings alone. A range of parties need to be obligated and incentivised by different policies in order for UK properties to transition away from gas and towards low-carbon alternatives. Policy needs to make heat decarbonisation a shared responsibility of all relevant actors, with incentives across vectors to make these options more attractive. The COVID-19 recovery provides a chance to prioritise measures such as building fabric efficiency improvements and heating system developments to address the carbon performance of all buildings. Recovery policies need to drive restructuring and innovation in markets and address the issue on a whole-systems basis – by local area and by stakeholder. The six steps are an essential pathway to ensure a collective approach and avoid unnecessary cost. l Dinesh Mattu is an Energy Policy Adviser at the Energy Systems Catapult.
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Energy in buildings
NET ZERO
The quest for net zero buildings
Every building uses energy – to heat it or keep it cool, to keep lights and appliances running. But rarely do we think about the energy that goes into a building’s construction and end-of-life teardown. Beverley Quinn looks at why this must change.
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ccording to the World Business Council for Sustainable Development, buildings consume more than onethird of total end-use energy and cause a fifth of total greenhouse gas emissions. Consequently, market demand is driving energyefficient construction projects. At the same time, building price premiums, regulations and government incentives are spurring on energy-efficient and sustainable retrofits of existing properties. The perception of energy-efficient buildings as a business opportunity is growing. To realise these benefits, building investors and developers need to integrate energy efficiency and emissions reductions into new buildings from the design phase. While building owners who want to make utility cost savings in existing properties must make them more energy efficient and consider implementing other sustainability features. When it comes to office buildings, the UK’s Carbon Trust estimates that around 75% of an industrial unit’s heat is lost 18 Energy World | October 2020
through the building fabric. According to a report from the Building Efficiency Initiative, Driving Transformation to Energy Efficient Buildings, each $1 spent on energy efficiency avoids more than $2, on average, in energy supply investments. Improved buildings reportedly have other positive impacts, too. The UK Green Building Council (UKGBC) reports that office workers in high performing, green-certified buildings have a 61% better cognitive function. Carbon in construction Net zero carbon buildings are, of course, the ultimate goal. The UKGBC's Net Zero Carbon Buildings: A Framework Definition offers guidance to the industry on how to achieve carbon neutrality in two phases – construction and operation. The carbon impacts related to the production and construction stages of a building are significant, in some cases accounting for half of a building’s whole life carbon impact. Therefore, it only makes sense for developers to ensure a building is
Buildings consume more than one-third of total enduse energy Photo: TÜV SÜD
carbon neutral when it’s operational, too. To determine the building’s environmental impact and drive carbon reductions, a whole life carbon assessment should be undertaken and disclosed for all construction projects. The reporting of in-use embodied carbon impacts in a building’s lifecycle is challenging. However, a modelled assessment of impacts should be undertaken in line with the Royal Institution of Chartered Surveyors’ professional standard, Whole-life carbon assessment for the built environment. The first assessment should take place as early as concept design, or Stage 2 in the Royal Institute of British Architects (RIBA) Plan of Work. As a minimum, it should be completed before technical design (RIBA Stage 4). This ensures the assessment has the greatest potential to drive carbon reduction in all future stages. A further assessment should be undertaken at practical completion (end of RIBA Stage 5), which should measure the as-built outcome, in place of modelled assumptions. This final assessment will subsequently be used to determine the extent of carbon impacts that must be offset to achieve net zero carbon for construction. Buildings aiming to achieve net zero carbon for construction should therefore address all embodied impacts from the building’s production and construction stages, up to practical completion. The carbon to be offset should be determined through the whole-life carbon assessment and undertaken at completion. CO2 can be offset by either a one-off payment at building completion or through net export of onsite renewable energy on an annual basis. Where onsite renewable generation is used as a carbon offset, the achievement of net zero for operational energy should take precedence. Once net zero carbon for operational energy has been achieved, any surplus carbon credits from exporting onsite renewable energy can be used to offset embodied impacts. Assessments and related carbon offsetting should be audited by a third-party. Operational energy In operational terms, a net zero carbon building is highly energy efficient and powered either by onsite renewables or clean power
Energy in buildings
that has been sourced offsite. The energy used in the operation of existing buildings represents the most significant carbon impact, contributing 30% of the UK’s total emissions in 2017. The scope of net zero carbon for operational energy should be defined as: ‘all areas under operational control that have been used to demonstrate a net zero carbon balance.’ The energy scope should also be disclosed to allow comparability between buildings. The use of onsite fossil fuel generation is currently permitted under the framework for net zero carbon operational energy. This is in recognition of the prevalence of gas heating for existing building stock, as well as uncertainty about the use of the gas grid for future low-carbon heating. Investing in energy efficiency and demand reduction is the most cost-effective way to minimise the new infrastructure that will be required to achieve a zero carbon energy system. Buildings should target reductions in energy demand and consumption to reduce the amount of total electricity supplied, from both the grid and renewable energy sources. By quantifying the extent to which renewable energy offsets are being used to achieve a net zero carbon building, the market will be empowered to appreciate the building’s autonomy in achieving net zero. The building should report annual carbon impacts as total (tCO2e) and in terms of intensity (kgCO2e/m2). The building is considered to be net zero carbon for operational energy when its total annual net CO2 emissions equal zero and these calculations have been audited by a third party. The approach used to reduce energy demand and consumption will vary between buildings, but considerations may include: •
•
•
Building fabric and passive design – reducing the overall energy required to operate the building. Improvements include efficient fabric and shading, natural daylighting, natural ventilation and appropriate sizing of building systems to limit overengineering. Systems energy efficiency – using highly energy efficient building systems across HVAC, lighting, vertical transport etc. Energy management – implementing smart energy/ building management systems. Improvements include energy
that the emissions associated with the embodied and operational impacts over the life of the building, including its disposal, are zero or negative.’ Net zero whole-life standards would ensure that a lifecycle approach is taken to make informed decisions about building design and operation. This would encourage design for flexibility, adaptation and deconstruction to minimise end-of-life impacts and enable a circular economy within the built environment. However, this approach is not currently covered by the UKGBC’s framework due to the limitations in reporting carbon from the maintenance, repair, refurbishment and end-of-life stages of a building’s lifecycle.
The perception of energyefficient buildings as a business opportunity is growing Photo: TÜV SÜD
The energy used in the operation of existing buildings represents the most significant carbon impact, contributing 30% of the UK’s total emissions in 2017
auditing, managing occupant behaviour, managing peak loads, adjusting HVAC temperature set points, achieving ISO 50001 accreditation. Factors contributing to the wellbeing of occupants – including indoor air quality and daylight – should be considered alongside energy savings. In the UK, building stock appears to suffer from a ‘performance gap’ where modelled building energy performance does not equate to actual in-use performance. However, the reality is that the results from the calculations carried out to comply with Sections 6.1 and 6.9 of the Building Standards Technical Handbook, should not be viewed as an ‘in use’ prediction. This is because the mandatory standards do not allow an operational energy setup. A building’s in-use energy should therefore be calculated separately during the design stages and measured and reported on an annual basis to accurately address its carbon impacts. Yearly reporting takes into consideration seasonal variations and provides a standard and easily comparable measures between buildings. The building’s annual energy use should be reported as a total (kWh) and in terms of intensity (kWh/m2). Whole-life carbon reduction In the future, some buildings could have what’s known as a ‘whole-life’ zero carbon impact. This means
The future is onsite While the World Green Building Council is dedicated to supporting market transformation towards 100% net zero carbon buildings by 2050, it does recognise that, in many situations, net zero energy buildings are not feasible. In order to achieve Paris-compliant levels of global emissions reductions, it’s more appropriate to encourage energy efficiency improvements and the sourcing of renewable energy. Regardless of the stage of the project, our clients now typically ask for operational energy and carbon calculations to be carried out to assess where their buildings sit in relation to a net zero carbon future. Although for many, the building designs are progressed too far and sometimes already under construction, so cannot be further enhanced. However, it gives them a starting point if net zero is a future aspiration as it indicates their future energy usage. Going forward, UKGBC’s report states that onsite renewable energy sources should be prioritised. This means that the UK must increase its total supply of renewable electricity whilst simultaneously reducing demand on the electricity grid. A building powered from onsite renewable energy sources achieves these aims. This approach also helps to support a decentralised energy system, which would see a reduction in transmission losses, making the system more efficient than the one we rely on today. ● Beverly Quinn is an Environmental Engineer at TÜV SÜD, an international building services engineering consultancy, tuvsud.com
Energy World | October 2020 19
Energy in buildings
EMBODIED CARBON
Bringing embodied carbon upfront In a new report, the World Green Building Council explains why a whole life vision is needed for buildings to meet the Paris Agreement goals.
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t has been almost five years since The Paris Agreement at COP21 and two years since the landmark 2018 special report from the UN Intergovernmental Panel on Climate Change (IPCC), urging that we take drastic measures to prevent the worst impacts of the climate crisis. The climate science is indisputable, we must halve emissions every decade to reach net zero by 2050. The imperative to meet this challenge has been amplified across all sectors and stakeholders in 2020. With the devastating economic impacts of COVID-19, some necessary stimulus packages are rightly pursuing a green recovery to provide jobs, economic benefits and improve resilience. With buildings currently responsible for 39% of energyrelated global carbon emissions, decarbonising the sector is one of the most cost-effective ways to mitigate the worst effects of climate breakdown. As the world’s population approaches 10bn, the global building stock is expected to double in size by 2060. To sustain this growth and urbanisation while meeting net zero targets by mid-century, we must ensure decarbonisation efforts address the whole lifecycle of our built environment – meaning our buildings and infrastructure. This means not only the emissions released during operation – which can be reduced through improving energy efficiency, generating and/or procuring renewable energy – but also during the manufacturing and transportation of materials, construction processes and end of life phases. These emissions, or embodied carbon, have historically been overlooked, but contribute to around 11% of all energy-related global carbon emissions for buildings and
20 Energy World | October 2020
With buildings currently responsible for 39% of energyrelated global carbon emissions, decarbonising the sector is one of the most cost-effective ways to mitigate the worst effects of climate breakdown
even more if infrastructure is included. Carbon emissions released before a building or piece of infrastructure is used, or upfront carbon, will be responsible for half of the entire carbon footprint of new construction between now and 2050. As operational carbon is reduced, embodied carbon will continue to grow in importance as a proportion of total emissions. While we must continue to address operational carbon, we must now rapidly increase efforts to tackle embodied carbon emissions at a global scale too.
and increasingly standardised process for measurement – a Lifecycle Assessment (LCA). LCA is the globally accepted method for evaluating and communicating a wide range of environmental impacts across the whole lifecycle of a material, product or building. For manufacturers, using an LCA approach for their products or materials helps to improve manufacturing, transportation and end of life treatment. The results are often communicated in the form of Environmental Product Declarations, used to certify the carbon and environmental impact of their products, and inform Radical value chain collaboration product specifications. In September 2019, the World For developers, designers and Green Building Council (WorldGBC) building owners, pursuing an LCA launched Bringing Embodied Carbon approach during early stage project Upfront, which called for radical planning, provides the greatest cross sector collaboration to address opportunity for emissions savings. these emissions (See box). It can determine the optimum The report sets out a universal material selection and construction definition of embodied carbon, best processes to stay within a project’s practice principles to reduce carbon budget. emissions, actions that must be A range of software tools are taken by all stakeholders across the now available to calculate the LCA value chain, and our vision for a of a project, which seek to remove whole lifecycle approach to achieve some of the prohibitive financial full decarbonisation of the buildings and technical constraints. One and construction sector. prominent tool is One Click LCA In the document, we set out a Planetary, launched by Bionova in vision that by 2030, all new May in partnership with several buildings, infrastructure and organisations, including 15 Green renovations will have at least 40% Building Councils. less embodied carbon with significant upfront carbon Increased ambition reduction, and all new buildings We are seeing more ambition and must be net zero operational carbon. action to address embodied carbon Furthermore, by 2050, new in-line with the calls that were laid buildings, infrastructure and out within our report. Drivers from renovations will have net zero actors across the value chain will embodied carbon, and all buildings, be crucial to removing barriers and including existing buildings, must accelerating market transformation. be net zero operational carbon. NGOs, networks and researchers These ambitions rely on radical are acting as catalysts for whole collaboration, clear demand-side value chain collaboration. For signals, policy roadmaps, financial instance, the London Energy investment and supply chain Transformation Initiative, a solutions to create industry network of over 1,000 built confidence and facilitate the environment professionals in the systemic change needed. UK, produced the Embodied Carbon Primer to support project teams to Measuring and verifying design buildings that deliver You can’t manage what you can’t ambitious carbon reductions. measure. This is particularly Some governments are also true for embodied carbon. leading from the front, setting Luckily, there is a well-known embodied carbon reduction targets
Energy in buildings
Embodied carbon hotspots A key finding of the report is the lack of awareness within industry about embodied carbon, where it occurs and its impact. To achieve sector decarbonisation goals, we must identify hotspot sources responsible for high embodied carbon emissions across the lifecycle of a project. Some common hotspots are: •
Type and volume of structure installed – building elements such as foundations, frames and other forms of superstructure often represent the biggest contribution to embodied carbon, sometimes up to 80%.
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Materials used and their associated carbon intensity from manufacturing processes – the upfront carbon emissions from materials and products are significantly greater than all other stages of a building’s lifecycle. The most carbon intensive materials used in buildings are concrete, steel and aluminium. These sectors are responsible for approximately 22% of global energy-related carbon emissions.
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Processes by which these materials are applied, maintained, removed and treated at the end of life – the application of a material across its lifecycle will have an important impact on the amount of embodied carbon that is emitted.
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The modes and distances by which materials are transported – as well as the construction processes and associated emissions from equipment used onsite.
and leveraging their large procurement power. Announced in March, the European Commission’s Green Deal has incorporated recommendations advocated by WorldGBC, and is essential to achieve a sustainable built environment as part of the EU’s Circular Economy Action Plan. It includes setting requirements for whole life carbon, and integrating these into green public procurement and sustainable finance policy. Vancouver City Council aims to reduce embodied emissions by 40% by 2030, as part of the City’s declaration of a climate emergency. The council believes the ambitious target will encourage innovation in construction materials, design and engineering, while positioning local industries as leaders in low carbon construction. Meanwhile, manufacturers increasingly drive the embodied carbon transition by signalling the delivery of products to help meet decarbonisation targets. In May 2020, Cembureau, the European Cement Association, published its new Carbon Neutrality Roadmap, setting out its ambition to reach net zero emissions by 2050. Through reducing CO2 emissions at each stage of the value chain – clinker,
cement, concrete, construction and (re)carbonation – the roadmap sets the role of technology as well as making political and technical recommendations. Responsible Steel – the steel industry’s first global, multistakeholder standard and certification programme – is now working to develop further requirements for the responsible sourcing of input materials and for greenhouse gas emissions in their certification. All these initiatives signal market willingness to take responsibility for the emissions that our sector is responsible for, and the roadmaps demonstrate that technological advancement is underway. However, to enable the scaling up of these solutions, we must unlock the full potential of demand side actors, such as policy and finance, in order to drive uptake, enable collaboration, innovation and bring net zero solutions to the mainstream. ●
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Energy in buildings
FUEL POVERTY
Fuel poverty in a COVID-19 world Even in normal times, not everyone can afford to heat their home properly, and the pandemic is only making matters worse. The coming winter will be crucial, writes Matt Copeland from fuel poverty charity National Energy Action.
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he world has been rocked by coronavirus and the associated social distancing measures required to keep it at bay. It has affected almost all aspects on all of our lives. One area that has gained little attention has been the way it has impacted on the way we use energy, and what that means for us. There has been even less coverage on what it means for households that are considered fuel poor. Fuel poverty is where a person is living on a lower income in a home which cannot be kept warm at reasonable cost. Across the UK, the different nations use varying metrics to estimate the number of households living in fuel poverty, but generally they consider incomes and energy costs. Across the UK, and using these measures, more than 3.3mn households live in fuel poverty. Although this number has generally been falling, progress has recently been slow, with no governments-funded measures in England to improve the situation. Over the last six months, we at National Energy Action (NEA) have been working to understand this through our Fuel Poverty Monitor, which this year explores the impact of the crisis on fuel poor households. There are a few things to consider in all of this. First, how the energy market reacted at a time when our lives were all so different. Second, how this affected people at the time. And last, what it all means going into this winter, when a heating season could coincide with further lockdowns. Utilities through the lockdown Before the full extent of the lockdown had been announced, The Department for Business,
22 Energy World | October 2020
Energy and Industrial Strategy (BEIS) worked hard with all energy suppliers to come to an agreement as to how they would treat their customers throughout the crisis. This agreement required all suppliers to:
told to ask their supplier for help, without clarity from their supplier as to whether their situation should result in a call. Because of the call centre difficulties, suppliers used digital communication channels as much as possible. This is where almost all information about support was available (and this was not limited to suppliers, but governments, regulators, and other industries). Around 20% of households in the UK have trouble using the internet. And those without digital literacy were already more likely to be unable to afford to pay their energy bills.
Supporting the vulnerable Support agencies, such as NEA, also had issues with helping people. Whilst obtaining consent • support customers who are to act on behalf of a customer is impacted financially as a direct, usually easy, it suddenly becomes or indirect, result of COVID-19; legally difficult when being in the same room as the client is not • support prepayment meter customers directly or indirectly possible. We found that those who could not speak English as a first impacted by COVID-19 to stay language had extra difficulties on supply; and accessing support, and a reduction • make available information, in translation facilities made it advice, and guidance on harder for us to help them. available support. More generally, it is much more difficult to help someone in need, Additionally, Ofgem, released if you cannot meet them face to letters clarifying its expectations of face, form a bond, and convince suppliers and networks during the them that they can be helped. This crisis. This included putting a stop is an experience that has been to disconnections and treating shared by many charitable customer debt in a fair manner. organisations over the lockdown All of this meant extra period. protection for all energy This is not to say that the consumers, and there were good energy market became results. Some suppliers took steps dysfunctional during lockdown, or to make sure that their suppliers didn’t play their part. prepayment customers didn’t run They were under severe stress in a out of credit, by giving them situation that for most was enhanced automatic top ups when unpredictable. However, we can their meter ran out. Some sent take learnings from this period to prepayment cards through the try and prepare for an entirely post. Some stopped the collection predictable second wave this of debt. In fact most suppliers took winter. action to help their customers The implications of future through the difficult period. lockdowns could be severe. The However, the nature of the link between living in a cold home broad supplier agreement with and the respiratory conditions that BEIS, coupled with the impact that make COVID-19 more deadly are coronavirus had on suppliers’ clear. And even before the crisis, on operations, meant that gaps in average 10,000 people each winter provision began to emerge. die from living in a cold home. The high-level agreement, Getting it right this winter is dealing in principles not incredibly important, arguably prescription, meant a divergence in more than previous winters. available support between Adding to the problem is the suppliers. This created a lottery as amount of energy that we use to what support was available for when locked down at home. each household. Some suppliers Analysis by the Energy and found it difficult to move their call Climate Intelligence Unit (ECIU) centre operations to homehas demonstrated that, were the working. They asked only for coronavirus lockdown to be emergency calls without saying continued or re-imposed during what this meant. This led to a winter months, families in cold, situation where people were being leaky homes would face heating •
identify and prioritise customers at risk;
Energy in buildings
bills elevated on average to £124 per month, compared with £76 per month for those in well-insulated homes. And disposable income has reduced for many. Research from the Policy Institute at Kings College London estimated that ‘3 in 10 have experienced a reduction in their income as a result of coronavirus.’ This winter, therefore, it is likely that fuel poor households will find it harder to heat their homes, and it is likely that this will have a larger impact than in previous years. And this is before we consider the fact that many households will be starting winter with energy debt accumulated during the first lockdown.
The link between living in a cold home and the respiratory conditions that make Covid-19 more deadly are clear – and even before the crisis, on average 10,000 people each winter die from living in a cold home
Lessons for the winter It is not, however, all doom and gloom. In his ‘Plan for Jobs’, the Chancellor of the Exchequer announced a new Green Homes Grant scheme, which we now know contains £1bn of public funding to improve the energy efficiency of fuel poor households, and another £1bn for the wider population. This is the first central government funding for energy efficiency in years, and is desperately needed to kick start progress in addressing fuel poverty.
Out of the billion pounds that addresses fuel poverty, half will come in the form of a voucher scheme, which will require the installation of either insulation measures or low carbon heating. Promisingly, the other half will be filtered through local authorities, which are judged to be well placed to ensure that the money is well spent. However, this is just a start. The Committee on Fuel Poverty estimates that several billions more will be needed, in England alone, to fully address the problem. Considering all of this, we need to learn the lessons of the first lockdown and make sure we get it right. NEA has compiled a list of what needs to be done in the event of a second lockdown in our Fuel Poverty Monitor. This includes •
urgently bringing forward new regulation to ensure that debt repayment plans are fair, and based on a customers’ ability to pay;
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ensuring that energy suppliers are well set up for operating during a lockdown period, including being able to identify their most indebted customers, who might be in a group that is medically vulnerable to the virus; and
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for the newly announced Green Homes Grant to be a success in providing crucial insulation improvements to fuel poor households before winter bites.
Government must also urgently give clarity on the future of the Warm Home Discount scheme, which provides crucial funding for organisations to help fuel poor and vulnerable energy customers with energy debt. The coming winter will undoubtedly be difficult in a number of ways. But, if we take just a few steps now, it can be a just little bit easier for everyone. ● Matt Copeland is the Policy Manager with National Energy Action.
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02/04/2020 16:11:52
Energy in buildings
FABRIC
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nother year; another scheme to try and remedy the chronic problem of poor insulation in UK houses. It comes in the shape of the £2bn Green Homes Grant, offering vouchers up to £5,000 to help homeowners upgrade their properties. The high proportion of homes that leak heat and incur high energy bills seems to be a peculiarly British problem. Over the last decade the proportion of households in fuel poverty has consistently been 10–12%. Why volume builders were not forced to build better insulated properties long ago is an enduring topic of conjecture. It means the country is forever playing catch-up, and the business of retrofit is inevitably expensive and disruptive. Government approaches have generally been piecemeal and stop-start. Take Warm Front, launched in 2000 to help households grappling with fuel poverty. The scheme offered grants up to £3,500 to cover energy efficient home heating and loft insulation. But, by the end of 2009, the financially-constrained Labour government announced plans to cut funding from £369mn to £195mn in 2010. The coalition government then reduced Warm Front’s budget to £110mn in 2011–12. Eligibility criteria were tightened to target only the most vulnerable households and those living in the most poorly heated and insulated homes. By then, however, another scheme was in the mix, the Community Energy Saving Programme (CESP). This ran from Many UK homes continue to perform October 2009 to December 2012 – poorly in terms of keeping heat in, its aim to reduce carbon emissions. The onus fell on gas and electricity despite a series of government and suppliers and power generators to utility-supported programmes, over deliver energy saving measures for domestic consumers in specified the years, to improve things. Andrew low income areas. Mourant reports. Most CESP projects were achieved through partnerships with ‘The majority… were hard-to-treat social housing providers or direct and may not have received promotion to private households. measures under a less targeted CESP incentivised energy scheme,’ it concluded. companies to install particular measures, such as solid wall insulation; also to carry out as Green Deal remedy much activity as possible in each As CESP faded away, in came the house treated, and in every target ill-fated Green Deal, the coalition area. government’s attempt to remedy Although energy companies fell the problem. This was an insulate 15% short of the government target, now, pay later scheme, the money the scheme had gathered recouped via a levy on household momentum towards its end. electricity bills. It soon unravelled. According to energy regulator A finance company provided Ofgem, the programme benefited up-front funding but at interest 154,000 homes in low income areas. Image: Shutterstock rates of almost 7%. Critics feared
New scheme the latest of many to create green homes
24 Energy World | October 2020
that lower income households risked being saddled with high interest debt that would wipe out any savings they might make. Green Deal was further undermined by a grassroots problem. It was to rely on an army of energy assessors, many providing home energy performance certificates (EPCs). Their job was to give impartial advice about what work was needed. Yet, having invested in costly training to become assessors, large numbers could only find work through intermediary companies, many linked to estate agents, and received shockingly low fees for their work. Moreover, assessors wanting to retain a licence to work faced sitting an exam at their own expense. It was not an appealing prospect. There was a dramatic fall in numbers of people insulating their homes from 2012–13 for, as the flaw-ridden Green Deal had been ushered in, the government finally axed Warm Front. In 2013, with Green Deal floundering, government tried a new tack, the Energy Company Obligation (ECO). This obliged major gas and electricity suppliers – British Gas, EDF Energy, E.ON, npower, Scottish Power and SSE – to help households with measures such as insulating lofts, cavity walls and solid walls, and boiler replacement or repair. ECO for low-income homes In its current form, due to run until 2022, ECO is focusing on low-income households – in total, 6.5mn are eligible. The aim is to make energy-saving improvements to 900,000 homes. Gas and electricity companies with more than 200,000 customers are automatically required to deliver ECO. Each must contribute to a quota of improvements, based on its market share. Yet, in 2017, ECO’s budget was halved, to £640mn, from its original £1.3bn. According to the National Insulation Association (NIA), ECO has failed to deliver the scale of change needed. NIA claims that because the ECO budget is paid for by a levy on customer bills, energy suppliers are under pressure to deliver upgrades cheaply to avoid an increase in costs; and that houses in need of costly improvements are being neglected. Three years ago, as part of its Clean Growth Strategy, the government announced plans to improve the energy performance of UK homes and bring them up to a
Energy in buildings
Standard Assessment Procedure A standard assessment procedure (SAP) for the energy rating of houses was first adopted within government building regulations in 1994. The most recent update was in 2012. SAP covers matters such as energy consumption per unit floor area and energy cost rating adjusted for floor area (expressed on a scale of 1 to 100 – a lower rating indicates higher running costs and carbon dioxide emissions). Rules have evolved to make new homes more thermally efficient, though some vary across individual countries of the UK. Standards set by UK government building regulations of 2010 focusing on fuel and power conservation, and tweaked at intervals since, address the insulation value of a building’s various elements; allowable area of windows, doors etc; air permeability; boiler efficiency and much else. Before construction begins, a design stage calculation must be issued to the Building Control Body (BCB) setting out the Target Emission Rate (TER), Dwellings Emissions Rate (DER) – which should be in line with that of comparable buildings, and a specification for the proposed building. Once a house is completed, a report must be issued to BCB showing that requirements have been met, along with changes (if any) to the spec, and an energy performance certificate (EPC). These calculations require a test to be carried out to prove that the building will not leak air (and so heat) through its fabric. ‘C’ rating by 2035. A priority is getting fuel poor and privately rented homes to that level by 2030. Yet these ambitions carried an equivocal tone – in summarising the scheme, the phrase: ‘where practical, cost-effective and affordable’ recurred. As for social housing, there was merely intent to ‘consult on how [it] can meet similar standards over this period.’ It’s hard to escape the sense that the neediest households and properties could slip through the net, yet social housing comprises 17% of the UK’s housing stock, and half has an EPC rating of ‘D’ or worse. Green Homes Grant But the landscape is changing: the government has committed to net zero carbon emissions by 2050; and COVID-19 has thrust a new emphasis on creating green jobs. Due to go live this month, Green Homes Grant entails government funding up to two-thirds of the cost of home improvements for over 600,000 homes, covering insulation (solid wall, underfloor, cavity wall or roof) and heat pumps. Within the deal, £500mn will be earmarked for low-income, fuel poor households, including those in rented accommodation. A further £50mn will pilot innovative approaches to
Green Deal critics feared that lower income households risked being saddled with high interest debt that would wipe out any savings they might make
retrofitting social housing. Householders will be able to claim vouchers worth up to £5,000 and those on low incomes can receive vouchers covering 100% of the expense, up to £10,000. They will have to apply online for a specific improvement, get a quote from a listed supplier and have this approved beforehand. Vouchers can also be used for improved, thermally efficient glazing and upgrades to energy efficient doors. Builders, plumbers, and other tradespeople across England will need a government seal of approval to provide their services, which means registering for TrustMark or the Microgeneration Certification Scheme accreditation. Yet missing from all of this is any requirement on builders to provide high standard insulation from the outset. Tory MP Sir Geoffrey Clifton-Brown is trying to rectify things. In June his private members bill had a first reading in the Commons, with the aim of compelling developers to meet minimum insulation standards in all new-build homes. Clifton-Brown told MPs that the Clean Growth Strategy needs to be much more ambitious, ‘which is why this bill will legislate for all new homes to reach that level (C rating) now. It is far cheaper to build [insulation] into new homes than to retrofit… it’s shocking to read accounts of people living in new homes who report that they are cold and draughty,’ he said. But with Clifton-Brown’s bill not due its second reading until March 2021, no one should expect progress rapid progress. Significant funding Energy industry bodies and others have been picking over the pros and cons of the Green Homes Grant. Julie Hirigoyen, Chief Executive of the UK Green Building Council, welcomed ‘the first significant pot of funding for energy efficiency in five years’ but says there is: ‘much more to do if this is to be the start of genuinely building back better and not a rerun of past missteps.’ ‘It’s crucial that government avoids falling foul of the mistakes made by previous schemes. This means ensuring all measures and installers under the scheme are properly accredited and deliver real improvements,’ she added. But Hirigoyen feels social housing has been sold short; that the £50mn allocation is ‘a drop in the ocean.’ Moreover, there was a missed opportunity to offer targeted tax cuts that could support decarbonising the built
environment. ‘We still need incentives to drive demand for energy efficiency retrofit in the ‘able to pay’ market,’ she says. ‘These should include financing options to suit the needs of all households and tenures.’ The Royal Institute of British Architects (RIBA) also has mixed feelings about the Green Homes Grant. ‘We’ve long called for use of a TrustMark to ensure homeowners are using accredited tradespeople, and for a simple energy advice service,’ said RIBA President, Alan Jones. ‘But it’s very disappointing there is no requirement to compare energy pre and post retrofit to help ensure value for money and energy savings. The government needs to set out a national strategy with adequate funding to retrofit homes which require upgrading.’ The NIA has called for a street-by-street approach to insulation retrofit involving local authorities and Department of Business Energy and Industrial Strategy (BEIS)-funded local energy hubs. Their role would be to work with councils, local electricity providers and community energy groups on a variety of schemes. NIA argues councils are best placed to identify the least energy efficient homes. Such an approach would allow for a focus on specific property archetypes in clusters. ‘It will enable contractors to better plan works, avoid unnecessary disruption, and capitalise on the cost-effectiveness of upgrading multiple homes at the same time. If fuel poor and able-to-pay properties are on the same street, it makes sense to upgrade both at the same time,’ says the NIA. In Scandinavia, where insulation is vital, deaths from the cold are much lower than in Britain. Thirty years ago, Germany devised the Passivhaus Standard, designed to make homes ultra-insulated (an average depth of 300 mm), airtight, with triple-glazing, mechanical ventilation and a heat recovery system. While a smattering of British homes have been built to this template, the UK remains blighted by some of the worst insulated homes in Europe. That sorry fact continues to nag like an icy draught creeping in through an ill-fitting door. l
Energy World | October 2020 25
Sustainable development
ENERGY ACCESS
Addressing unreliable electricity in Sub-Saharan Africa Energy investment plans in the developing world often focus on increasing access to electricity. However, in many Sub-Saharan African countries the problem is low system reliability, reports Simon Trace.
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or utilities operating in developing countries, it can be difficult to improve reliability. They face many challenges, including limited financial resources for infrastructure upgrades – due to low revenue collection rates and tariffs being set below cost-recovery levels – and a lack of data to help them understand reliability issues. Of the 840mn people across the world who do not have access to electricity, close to 600mn of them live in Sub-Saharan Africa. Several countries in the region have made progress in expanding electricity access in recent years – but increasing electrification is only part of the picture. In parts of Sub-Saharan Africa that are already connected to the grid – such as urban areas, where access rates can be over 75% – the quality of the service is often low and unreliable. In fact, fewer than half (43%) of Africans enjoy a reliable supply of electricity. Homes and businesses suffer unplanned, unpredictable power outages, as well as scheduled and controlled electricity shutdowns (load shedding), where power is deliberately rationed to relieve pressure on the system and prevent complete collapse. These problems can last for hours, sometimes days, and can be
26 Energy World | October 2020
frequent. It has, for example, been shown that about 60% of urban households in Ethiopia and 77% in Rwanda experience four to 14 power outages per week. And, according to 2018 World Bank Enterprise Surveys data, in a typical month, firms in SubSaharan Africa experienced nine power outages. Load shedding is very much a reality for many Sub-Saharan African households and businesses, especially those in South Africa, Zimbabwe and Zambia. In recent times, load shedding has been a daily occurrence for South Africans. The impact of unreliable electricity A lack of access to reliable electricity affects health, education and wellbeing, but also has an impact on people’s livelihoods and countries’ economic growth. In fact, economic losses due to power interruptions are estimated to cost between 1% and 5% of the GDP of countries across Sub-Saharan Africa. Frequent or long-lasting power outages and voltage fluctuations can supress investment in income-generating electrical appliances – such as refrigerators, sewing machines and production machinery – and can lower output from existing ones. This reduces productivity and profitability while
Engineers discuss blueprints at a power plant in Cape Town, South Africa Photo: EEG
also hindering entrepreneurship and job creation. World Bank Enterprise Surveys for Ethiopia (2015) and Sierra Leone (2017) each found that a third of firms saw electricity reliability as a major constraint. For some businesses, spending money on backup generators, an expensive alternative to grid electricity, becomes a necessity. Unreliable power can also affect employment opportunities. The impact of living in a Sub-Saharan African community with an unreliable electricity supply is estimated to reduce the probability of employment by 35% or more. It also inhibits the participation of women and youth in the workforce by making domestic chores more labour-intensive. The relationship between reliable electricity and economic wellbeing has been further highlighted during the COVID-19 pandemic. Countries with reliable electricity supplies have, at least to some extent, been able to maintain key supply chains and communication and IT services, so that parts of their economies can continue to function despite the social distancing and stay-at-home measures. Reliable electricity has also enabled people to work at home where feasible, protecting businesses, jobs and economies to some degree.
Sustainable development
While it’s clear that reliability is fundamental to increasing electricity access, utilities operating in developing countries can find it difficult to make improvements. Reliability issues are typically related to the capacity and quality of electricity systems. They can, for example, be a result of insufficient electricity generation (the installed generation in most Sub-Saharan African countries is below the total potential electricity demand), ageing equipment and network fragility (leading to breakdowns on transmission and distribution lines, and in transformers), or maintenance requirements. However, utilities in SubSaharan Africa have limited financial resources available to maintain and upgrade ageing infrastructure, repair breakdowns and invest in new equipment. As well as having limited access to affordable capital, funds are restricted because of low revenue collection rates and tariffs being set below cost-recovery levels.
Fewer than half of Africans enjoy a reliable supply of electricity – homes and businesses suffer unplanned, unpredictable power outages, as well as scheduled and controlled electricity shutdowns
Revenue collection Revenue collection is constrained because of inaccurate meter readings and estimated billing practices, as well as non-payment of bills when consumers cannot afford to pay for their electricity. And during the COVID-19 pandemic, when lockdown restrictions are likely to have reduced people’s ability to pay their bills, utilities’ cash flows would have been further affected. Some governments put short-term relief measures, such as subsidies or extending payment deadlines, in place so consumers could continue to have access to electricity. But unless compensated, this will have directly impacted utilities’ revenues. Electricity theft, through meter tampering or directly tapping into electricity lines, is another issue. In many developing countries, electricity theft is highly political, reflecting the often-prevailing view that energy is a right, rather than a private good, and legal penalties are not enforced. If electricity is unreliable, and the utility is seen to be delivering a poor service, consumers can often feel justified in making incomplete payments, or not paying for their electricity at all. If utilities could deliver high-capacity, reliable electricity, it would boost the ability and willingness to pay for consumption. One study in Ghana found that firms would be willing
to pay 13% more for uninterrupted electricity access. However, utilities often become trapped in a cycle of low payment leading to restricted and low-quality supply. A potential solution to breaking this cycle is currently being investigated through an EEGfunded research project. Jameel Poverty Action Lab (J-PAL) is evaluating whether advanced metering infrastructure (AMI) smart meters with prepayment can improve cost recovery, and thereby energy reliability and access. AMI technology can enable utilities to directly observe consumption in close to real time and can help them to detect theft and remotely disconnect non-paying consumers or transfer them to pre-payment. The system also encourages accurate metering and billing. Tariffs In many Sub-Saharan African countries, electricity tariffs tend to be set below cost-recovery levels. In Nigeria, for example, revenue currently covers approximately only 35% of total distribution company costs. It has been suggested that tariff revenues are not enough to cover operating expenses in 20 of the 39 electricity sectors in Sub-Saharan Africa. Therefore, cost recovery could potentially be improved through tariff reform. In February 2020, it was reported that Southern African electricity users will pay more under plans by regional energy regulators to let their utilities charge tariffs that reflect costs and create funds to increase power generation. Some Sub-Saharan African countries have already embarked on tariff reform – including Ethiopia, Zimbabwe, Zambia and South Africa. In Ethiopia, the reform involves a minor price increase for the first 12 months, followed by a steeper increase for the following three years. Customers consuming fewer than 50 kWh of electricity per month will see no change in electricity prices, and households or firms consuming more electricity will experience higher costs per kWh. An EEG project, led by Ethiopia’s Policy Studies Institute, is evaluating the impact of the first phase on the demand for electricity among household and commercial consumers, as well as on the broader economy. Grid performance Another issue utilities face is a lack of accurate information about grid performance. Implementing measurement and data collection
tools – such as sensors and smart meters – costs money, making it difficult for under-resourced utilities to obtain a clear picture about system outages. Utilities will largely rely on very low-quality information, and many won’t know there has been an outage unless a customer reports it. Even when one is reported, the utility may not know when it started or how long it lasted, how many customers were affected, or what remedy may be needed. Therefore, important operational and investment decisions are being made by utilities and governments without them knowing the frequency, duration and geographic extent of reliability issues. In response, a team from the University of California, Berkeley, has developed and deployed a suite of low-cost remote sensing devices to measure power outages, voltage fluctuations and frequency instabilities across households and businesses in Accra, Ghana, as part of a project part-funded by EEG. The technology is generating detailed reliability data and is much more accurate than existing systems. The improved information will help utilities to assess the extent of outages quickly and accurately, so they can send repair teams to where they are most needed to better prioritise limited resources. With a little more analysis, the data may also help utilities to carry out better preventative maintenance. The project team is also using the data to develop rigorous measures of the socioeconomic impacts of poor reliability and voltage fluctuations. Electricity access remains a fundamental issue for developing countries, but attention also needs to be paid to reliability of supply and utility operations. While there is growing interest in the quality of on-grid electricity, the scope of the problem is not well understood, and few studies have analysed the causes and consequences of outages, or the ways in which policy makers can address them, meaning there are many knowledge gaps. Several EEG research projects are investigating ways to improve the reliability of electricity systems in developing countries. l Simon Trace is Programme Director of the Energy and Economic Growth (EEG) applied research programme, funded by the UK’s Foreign, Commonwealth & Development Office (FCDO), energyeconomicgrowth.org
Energy World | October 2020 27
Sustainable development
RENEWABLE FINANCE
Africa’s best chance? Renewables could finally overhaul Africa’s energy economics, giving it more global clout than ever. But only if the financial ecosystem is reinforced – and fast. Michelle Meineke reports.
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t’s a stark paradox. Home to the world’s fastest growing population and the world’s richest solar resources, Africa still has 600mn people without access to electricity. The continent has only installed 5 GW of solar PV – less than 1% of the global total. And that’s not to mention the largely untapped potential of wind, hydro and geothermal resources across the world’s second-largest continent. But incentives to bolster renewable energy are quickly mounting (see box: Pressure points). ‘The vast reduction in the cost of renewables has opened the door to more distributed energy resources. I liken renewable energy to the mobile phone market. Statistics show that more Africans use smart mobile payment applications than western nations,’ says Mohammed Atif, Market Area Manager of the Middle East and Africa for DNV GL. ‘When Africa advanced its communications, it did not follow the traditional path, a large and interconnected network with a national telecom operator. Instead, it went straight to mobile. Now, I see Africa leapfrogging in the renewables market and creating a unique market, as it has done with communications.’ Data echoes this bullish sentiment. In 2018, approximately $2.8bn was spent on renewable projects in sub-Saharan Africa (excluding South Africa) – a regional record and $600mn more than the previous year, according to research firm BNEF. In 2021, some 1.2 GW of PV is expected to come online outside of South Africa, which is twice the amount commissioned in 2018. And record-low tariffs for sizeable solar projects in the neighbouring Middle East are also helping drive state and private interest. Building momentum Each African nation has its own low carbon growth plan, as you’d expect on a continent of 2,000 languages and 1.2bn people. ‘Of the 54 countries in Africa, I think that around 30 have declared a plan for renewables in their
28 Energy World | October 2020
energy mix,’ says Chris Chijiutomi, Director and Head of Infrastructure Equity at CDC Group, a UK government-owned development finance institution. ‘There is real traction taking place in some ten countries. Many have had plans for renewables long before the Paris Agreement emissions target of net zero by 2050.’ The firm aims to invest $2bn in African businesses over the next two years. In late 2018, ACWA Power brought its 150 MW Noor III central tower plant online in Morocco, with nearly eight hours of storage capacity. It is the world’s largest operational concentrated solar power (CSP) tower plant and was only the second to integrate molten salt storage technology at the time. It will help diversify Morocco’s energy mix, which previously relied on imported fuels to meet 97% of demand. To the south, in Senegal, is West Africa’s first utility scale wind farm, the Parc Eolien Taiba N’Diaye (PETN) project. Last December, the 159 MW project was connected to the national electricity grid for the
In 2018, approximately $2.8bn was spent on renewable projects in subSaharan Africa (excluding South Africa) – a regional record. Photo: CDC Group
first time. It will boost Senegal’s generation capacity by 15% on completion this year, according to energy firm Lekela. To the east, Egypt’s Benban Solar Park is among the largest in the world, with the $2.1bn installation currently supplying nearly 1.5 GW to the national power grid. The continent’s east is also home to Africa’s largest wind farm, the Lake Turkana Wind Power project in Kenya. Officially inaugurated last year, the 365 turbines generate 310 MW. Meanwhile, South Africa, the continent’s second-biggest economy has spent the last decade developing successful solar projects and renewable supply chains. Rwanda is also making good progress in strengthening its foothold in the green energy market. Nigeria, the continent’s biggest economy and home to nearly 200mn people, is just beginning its journey. But the OPEC member provides the biggest untapped opportunity for renewables in Africa, based on the size of its power deficit relative to its
Sustainable development
‘Infrastructure funding is not for the faint hearted – you need to be a long-term investor willing to provide long-term capital, while working longterm with governments and multiple stakeholders’ Chris Chijiutomi, CDC Group
population, as well as its abundance of natural solar and hydro resources. There’s a lot of work to do. Nigeria aims to have a 20% (unconditional) to 45% (conditional) reduction in greenhouse gas emissions by 2030 compared to the business-as-usual scenario. At the same time, the country wants to increase its oil production to 2.5m b/d and become a net exporter by 2020. It also aims to end gas flaring in nine years. Narrowing the chasm Despite being home to 17% of the world’s population, Africa accounts for just 4% of global power supply investment. Achieving reliable electricity supply for all would require an almost fourfold increase, to around $120bn a year up to 2040, according to research from the International Energy Agency (IEA). The good news is that investors are keen on Africa, as illustrated by the 30-plus companies from 12 nations that participated in Egypt’s Benban project – Spain’s Acciona, UAE-based Alcazar Energy, Italy’s Enerray, France’s Total Eren and EDF and China’s Chint Solar were among them. They just need some reassurance. ‘Investors need a stronger regulatory and legal framework to promote investment and the flow of capital,’ explains Chijiutomi. ‘Investors are used to making a call on risks that they can manage. They need to know the ground rules. Understandably, these differ across the continent. Some markets – such as South Africa, Tunisia, Egypt and Morocco – have created regulatory and legal frameworks. They have a clear roadmap and an accountable regulatory body, and they engage the private sector via some unbundling in their electricity markets.’ Greater clarity is also needed in the procurement process, especially when it comes to counterparties’ solvency and the future role of subsidies. Sometimes, when a company digs
deeper in the electricity chain, it finds that tariffs are not as cost reflective as required. This risks making the sector financially unsustainable, thus weakening investors’ confidence – never a good sign for a developing market. Continuity in governance is also critical. ‘When a new administration comes in, they sometimes go back to check the transparency and financial validity of a project, and so on. That takes time and before you know it, the election cycle comes around again, with little implementation achieved,’ says Chijiutomi. ‘I was personally involved in developing a utility scale solar renewable project in northern Nigeria in 2012. This project, along with others, had agreements and initial approvals with government. It is still not implemented.’ Generally, investments must flow towards improving grid arrangements, for both large and smaller entities, as well as deepening trade connections. Even the countries that have progressed the fastest now need to modernise their grids to sustain the scale of renewable power required to hit national energy targets. Improving the environmental, social and corporate governance of private entities – ie in mining, one of Africa’s biggest industries – would also accelerate progress. Opinions are mixed on the value of foreign influences in Africa’s energy market. Many stakeholders in Africa’s energy market believe China’s financial and technological support is pivotal to the continent’s lowcarbon growth. Others argue that it’s time to ease dependence on foreign crutches. ‘Africa should focus on strengthening its own cross-border coordination and grow the African Union,’ DNV GL’s Atif says. ‘The best outcome for the continent is for the renewables market not to be dominated by foreign influences, but to evolve into a global influencer.’ l
Pressure points Africa faces a very tall order. To start with, its population is booming. One in two people added to the world population between today and 2040 will be African, likely exacerbating the fortunes of the 416mn people already living in poverty. Of course, this translates into an energy-hungry continent. Africa’s projected growth in oil demand is higher than that of China and second only to India. And it’s also tipped to be the third-largest source of global gas demand growth – a very expensive position to be in. Add to this that electricity demand in Africa is 700 TWh, with the North African economies and South Africa accounting for more than 70% of the total. Yet it is the other sub-Saharan African countries that will see the fastest growth to 2040. Electricity demand more than doubles in the IEA’s Stated Policies Scenario to over 1,600 TWh in 2040. Finally, consider that Africa – highly vulnerable to a changing climate – has also pledged to support the Paris Agreement, a herculean task even for regions with stable energy economics. Renewables represent the main relief switch in this pressure cooker. But nations must hurry. In the IEA’s Africa Case, solar PV deployment reaches 320 GW in 2040, overtaking hydropower and natural gas to become the largest electricity source in Africa in terms of installed capacity. But – and this is a big but – this would mean an astonishing rate of progress in less than two decades. While perhaps radical, it’s very necessary. Potentially, 90% of the global population without access to electricity and almost 50% without access to clean cooking could be living on the African continent by 2040.
Impact of COVID-19? Looking at sub-Saharan Africa alone, the economic and social impacts of the pandemic are immense. The World Bank warns that the impact will cost the region $37–$79b in output losses in 2020, weakening supply chains and exacerbating regulatory uncertainty. Economic growth is expected to contract from 2.4% in 2019 to between -2 and -5% in 2020 – triggering the region’s first recession in 25 years. The good news is that political momentum appears on track,
especially as the deployment of renewables is central to the African Union’s Agenda 2063 and the UN Agenda 2030 on Sustainable Development. 'It is now even more urgent to fast track energy access efforts. It is time to use Africa’s enormous renewable energy resources for the benefit of the African people in response to the coronavirus pandemic,' says Dr Amani Abou-Zeid, Commissioner for Infrastructure and Energy of the African Union Commission.
Energy World | October 2020 29
Sustainable development
INDIA
The battle for India’s coal India is home to some of the world’s most ambitious renewable energy targets, and its clean energy sector is expanding faster than almost any other. But will this be enough to curb the rise of coal? Jennifer Johnson looks at the data.
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he question of whether it’s possible to grow an economy while reducing carbon emissions will be one of the most important of the 21st century. It underscores every conversation about sustainable development, a concept that was defined in 1987 as: 'development that meets the needs of the present without compromising the ability of future generations to meet their own needs’. The needs of the present are both clear and contradictory. Some 940mn people, or 13% of the global population, do not have access to electricity. Last year, around 64% of the planet’s electricity came from fossil fuels – the combustion of which emits greenhouse gases that must be curtailed for vast swathes of the planet to remain habitable. Supplying the requisite quantity of fossil energy today could destabilise the biosphere for future generations. But it doesn’t have to be this way – so long as the world’s largest and fastest-growing economies aggressively pursue a shift away from fossil fuels to renewables.
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In absolute terms, China, the United States and India emit the largest quantities of CO2 annually, in that order. However, global emissions rankings change significantly when population size is considered. In per capita terms, India only comes in 158th, with an average of 1.7 tonnes of carbon output per person. Meanwhile, China takes 47th place with 7.5 tonnes and the US ranks 11th with 16.5 tonnes. The high-carbon lifestyles of people in wealthy nations are largely to blame for these uneven contributions to global carbon concentrations. Improving living standards for the world’s poorest is a humanitarian priority, as is reducing emissions. Humanity has proven that it can do the former, though little progress has been made when it comes to the latter. And there are few countries attempting to do both things on so large a scale as India. An aerial view of a solar installation in the south Indian state of Tamil Nadu. Photo: Shutterstock
Last call for coal Last year, India’s spending on solar energy was greater than its spending on coal-fired power for
the very first time. The country of 1.4bn people has also made significant progress towards universal electricity access, though 5% of its population, some 64mn people, are without power today. International diplomats have urged the country to commit decisively to renewable energy as it strives to recover from the economic blow dealt by the COVID-19 pandemic. India’s government, however, appears to be more interested in cementing its energy independence via the exploitation of local fossil resources. In June, India’s Prime Minister, Narendra Modi, launched an auction of 41 domestic coal mines to private investors via videolink. Modi promised that India had learned valuable lessons about self reliance from the pandemic and would move to reduce its dependence on imported coal. ‘For decades, the country’s coal sector was entangled in a web of captive and non-captive coal mines,’ he told his virtual audience. ‘It was excluded from competition, and there was a big problem of transparency.’
Sustainable development
Modi’s proposed solution? Open up the coal sector, still dominated by the state-owned producer Coal India Limited, to private capital and invest $6.5bn in new coal infrastructure. Some commentators have dismissed the auction as a last-ditch attempt by the government to keep the coal industry afloat, despite its diminishing returns. The sector’s cash flow problems were well known long before a nationwide COVID-19 lockdown sent India’s energy demand tumbling by nearly one third. Growth in coal plant capacity had outstripped growth in power demand in the past few years, while cheap and plentiful renewables gradually began to displace some coal-fired generation. According to a 2019 report from the Brookings Institution, a Washington DC-based think tank, coal plants already accounted for a significant portion of financially-distressed assets for the Indian banking sector. The falling cost of renewables means it’s now reliably cheaper to generate power with wind or solar than new coal power stations. India’s commitment to the most polluting fossil fuel is largely a function of political ideology, rather than economic necessity. Now, the sector’s uncertain future looks likely to deter new investors. Bidders in Modi’s June auction have since asked for more time to survey the listed assets – citing cash flow difficulties arising from the pandemic. Financiers now have until this month to make a decision on their involvement. At the same time, India is coming under pressure from the United Nations to chart a course away from coal. In a recent video lecture, the agency’s Secretary-General, Antonio Guterres, said that 50% of the country’s coal fleet will be uncompetitive by 2022, and this figure could rise to 85% by 2025. ‘The advantages of India’s renewable energy resources are plain to see,’ Guterres said. ‘They are low-cost, protected from volatile commodities markets, and offer three times the job potential of fossil fuel power plants. And they can improve air quality at a time when our cities are literally choking.’ In theory, coal produced domestically (rather than imported from overseas) would be cheaper for utilities to source and burn en masse. However, lower prices and increased local availability do not guarantee there will be an uptick
Last year, India’s spending on solar energy was greater than its spending on coal-fired power for the very first time – the country of 1.4bn people has also made significant progress towards universal electricity access
in coal generation, especially given that power prices are expected to rise as plants retrofit in line with new emissions rules. India’s emission restrictions for its new coal power installations are among the strictest in the world, but enforcement has been notoriously weak. Utilities won a five-year extension on a December 2017 deadline for pollution compliance following an extensive industry lobbying campaign. But earlier this year it appeared that regulators were poised to crack down on rulebreakers. India’s federal pollution regulator warned in January that 14 coal power generation plants – which together account for over 7% of the country’s coal-fired capacity – could be shuttered and penalised for failing to restrict their emissions of toxic sulphur oxides (SOx). As of February, more than half of the plants ordered to install SOx-reducing equipment were set to miss their deadlines for compliance. Only weeks later, IQAir AirVisual’s 2019 World Air Quality Report revealed that 21 of the world’s 30 cities with the worst air pollution are in India. Remarkable renewables growth At first glance, India appears to be following a familiar script that has played out around the world. Its vested fossil fuel interests have been intermittently challenged by regulators and climate-conscious politicians – with a modest (if slow) degree of success. However, this narrative isn’t strictly accurate. For all its apparent devotion to coal, the country has also made remarkable progress in rolling out renewables. It achieved a target of installing 20 GW of solar power by 2022 four years ahead of schedule in January 2018. The government is now targeting 175 GW of renewable capacity by the year 2022 and 450 GW by 2030. The country has also been an active participant in UN climate talks and ratified the Paris Agreement in 2016. Analysis has shown that India’s plans for adhering to the agreement are within the range of what is a ‘2°C compatible’ share of global effort. Projections compiled by Climate Action Tracker, a research organisation, have found that India’s share of non-fossil power generation capacity will reach 60–65% in 2030 – corresponding to a 40–43% share of electricity generation. If the country abandoned plans to build new coal-fired power plants it could become one of few nations on Earth with a ‘1.5°C
compatible’ rating. At present, India has roughly 200 GW of coal-fired capacity, and this could rise to 300 GW in the next few years if all planned projects come to fruition. However, coal’s share of the total energy mix is expected to fall as more renewables come on stream. The country’s Central Electricity Authority recently predicted that coal would account for around 33% of installed capacity by March 2030 – down from 55% today. BloombergNEF (BNEF)’s Climatescope Emerging Market Outlook last year named India the most attractive emerging market for clean energy investment. Analysts said the nation’s ‘aggressive policy framework and copious capacity expansions’ propelled it into the top spot from second place in 2018. Despite the positive indicators, BNEF has also stipulated that renewables must be associated with large-scale energy storage to displace coal more widely going forward. The organisation expects that new onshore wind and new solar, combined with battery storage, will out-compete new coal plants in terms of levelised cost by 2023 and 2029 respectively. On this basis, it appears India’s coal age could be over before it fully began. Acting on ambition Ultimately, political will is the key determining factor in a country’s decarbonisation trajectory. Countries with governments that remain committed to reducing emissions – regardless of party and personnel shifts – stand the best chance of achieving their targets. In its first Nationally Determined Contribution, the formal climate plan submitted to the UN ahead of the Paris talks in 2015, India criticised the ‘tepid and inadequate’ response of developed countries to climate change. ‘India, even though not a part of the problem, has been an active and constructive participant in the search for solutions,’ the document reads. Five years on, this sentiment very much rings true – despite the country’s renewed enthusiasm for domestic coal mining. The poor economics of coal generation could very well stop any would-be boom in its tracks. In the next decade or so, India just might become proof that sustainable development is possible. l
Energy World | October 2020 31
Sustainable development
2030 TARGETS
Sustainable development – reaching global energy goals O ver the last decade, the number of people worldwide without access to electricity fell from 1.2bn in 2010 to some 789mn in 2018, as deployment of affordable on and off-grid electrification technologies have accelerated. Renewable energy developments have been instrumental in achieving this progress, with at least 136mn people receiving basic electricity services via off-grid renewables. However, according to the latest annual analysis of progress from IRENA, the International Renewable Energy Agency, focused attention is still needed to improve clean energy access for all of the world’s people and meet the UN’s sustainable development goals as they relate to energy. Currently, UN figures indicate that while recent years have seen rapid growth, some 13% of the global population still lack access to modern electricity and around 3bn people still rely on wood, coal, charcoal or animal waste for cooking and heating. Furthermore, the global population without access to clean cooking solutions has remained largely unchanged since 2010. Indeed, IRENA notes that the rate of increase in access to clean cooking has even decelerated since 2012, falling behind population growth in some countries. As Jonathan Cohen, Partner and Head of Energy at law firm Howard Kennedy, explains: ‘Progress is being made, but in light of the current macroeconomic downturn we should be doing even more as people actually have less access to basic services like electricity at the moment.’ Access to sustainable energy for all Sustainable Development Goal 7: Access to clean energy for all, is broken down into four basic elements including access to modern energy, renewables deployment, energy efficiency and access to finance. A new tracking indicator was also introduced this year. It is clear that the promise of ensuring universal access to 32 Energy World | October 2020
The UN’s Sustainable Development Goal 7 aims to deliver affordable and clean energy for all by 2030. While access to electricity in developing nations has begun to accelerate, there is still much work to be done in the coming decade if SDG7 is to be met. David Appleyard reports.
sustainable energy is becoming more likely but the report notes that unless efforts are stepped up significantly, an estimated 620mn people will still be left without access to electricity in 2030, with sub-Saharan Africa a region of particular concern. IRENA also highlights the impact of the COVID-19 global pandemic as a negative influence that could even push that number higher. The renewables contribution to total final energy consumption has risen from 16.3% in 2010 to reach 17.3% in 2017 but the pace of change is slowing rather than accelerating. The renewables share grew by just 0.1% between 2016 and 2017, for example. In addition, while renewables in the electricity system are becoming more prevalent, their role in the heating and transportation sectors remains far below that required if the UN goal is to be met. Cohen points to the need to enact suitable policy and develop appropriate legal structures if developing nations are to embrace new energy technologies. He says: ‘It’s really all about the government or sponsors coming up with policies that will incentivise or even oblige people or organisations to, for example, develop renewable energy. What we are seeing is governments not being quick enough to do that and come up with a set of reforms such as establishing firm dates for progress milestones.’ While many developing nations contrast with the UK, European neighbours and the USA in establishing renewable energy, climate change or net zero targets, Cohen notes that global governments can clearly do more to
incentivise the different elements of the sector to come together. ‘Developing countries clearly acknowledge they need to move quickly towards this energy transition, and they are starting to do that, but they are quite behind some of the countries in Europe, Asia and the Americas,’ Cohen says. ‘There are a number of reasons for that. One is that some are focused on other structural or systemic issues that they have to deal with, for example the lack of actual infrastructure like a transmission grid. It will always be a challenging to develop an effective renewable energy programme when they haven’t got the existing infrastructure in place that is needed to support it,’ added Cohen. Reviving progress on energy efficiency Another of the SDG7 targets is a goal to double the rate of energy efficiency improvement from the 1.3% seen between 1990 and 2000. According to the IRENA analysis global primary energy intensity – defined as total primary energy supply per unit of GDP – reached 5.0 MJ/$ in 2017. This is equivalent to a 1.7% rate of improvement from 2016 and is the lowest since 2010. Estimated figures for 2018 are even worse, at 1.3%, while figures for 2019 show that reaching 2%. Even so, IRENA points out this figure is below the required 2.6% annual improvement rate for 2010–2030. Consequently, they note, achieving the SDG7 goal will require an energy intensity improvement rate of at least 3% per year from now through to 2030, something IRENA describes as ‘a challenging proposition.’ Nonetheless, the agency believes this 3% target is possible, ‘given substantial investment in costeffective energy efficiency improvements on a systematic scale.’ Echoing Cohen’s comments, IRENA says the slowdown in the improvement rate for energy intensity and the pressing need to expand energy access all point to the need for urgent action by governments. For instance, it points
Sustainable development
to the progress countries like Japan are making in decoupling their economy from energy use as lower energy-intensive sectors such as services grow to dominate the economy at the expense of energyintensive manufacturing and industrial enterprises. The emergence of digital technologies is also highlighted as a trend that is reshaping the energy landscape and improving energy efficiency as data collection and analysis help to optimise the energy system. Investing in clean energy Total financial flows to developing countries in support of renewable energy reached $21.4bn in 2017. This is double the level seen in 2010 and although this is a promising increase, IRENA figures indicate that in 2017 only 12% of financial flows reached the least-developed countries. While the ability of different nations to invest in clean energy development varies considerably, it is clear that the least developed nations are furthest from reaching their SDG7 targets and that increased efforts are needed to ensure finance is available in the nations most in need. Cohen emphasises the vital
importance of finance in meeting sustainable development goals, saying: ‘A key element is the requirement for financing and the government or the sponsoring authority having a set of clear policy guidelines that establish procedures and rules to reassure the commercial and financial entities. It means they effectively make investments safer. When you have the right policies, money flows more easily and projects are more bankable.’ He highlights the role of NGOs and multi-lateral agencies in pump-priming this kind of investment. For example, the International Finance Corporation (IFC), an arm of the World Bank, has developed a new, standardised approach to renewable energy procurement and financing that could accelerate uptake in developing economies by making procuring solar through independent power producers easier and more affordable. A one-stop-shop process, the model includes a standardised tendering process, competitive financing and insurance, risk management and credit enhancement tools. A single mandate signed by a government
Key findings of the Tracking SDG7: Energy Progress Report for 2020 Illustration: IRENA
The promise of ensuring universal access to sustainable energy is becoming more likely but the report notes that unless efforts are stepped up significantly, an estimated 620mn people will still be left without access to electricity in 2030
can include all or part of the technical, financing and guarantee products that these institutions provide, the IFC says, adding that such an approach de-risks projects, which delivers lower tariffs. As Cohen says: ‘Entities such as NGOs and multi-lateral agencies such as the World Bank, European Investment Bank, the IFC and so forth all have a big role to play. They have very comprehensive renewable energy targets and renewable energy programmes. It’s those organisations, working alongside governments, that are needed to stimulate the framework by which these projects can be delivered.’ Costing SDG7 Perhaps the most surprising outcome of the IRENA analysis is that the generally slowing progress on SDG7 goals comes in the context of a rapid decline in the cost of renewables. Another recent report from IRENA details how renewables are increasingly cheaper than any new capacity based on fossil fuels. Renewable Power Generation Costs in 2019 records that more than half of all the new renewable capacity added in 2019 delivered lower energy costs that even the cheapest new coal-fired plants. The report adds that, by replacing the costliest 500 GW of coal with solar PV and onshore wind next year, some $23bn would be saved on power system costs annually. At the same time, global carbon emissions would be cut by around 5%. As IRENA Director-General Francesco La Camera says in a statement: ‘Renewable investments are stable, cost-effective and attractive, offering consistent and predictable returns while delivering benefits to the wider economy.’ Cohen adds: ‘You have significant economic market drivers for clean energy and renewables which are cheaper than the alternatives now. From a financing perspective, this may make such projects easier and if the governments of individual countries can establish a friendly regulatory environment that acts a double success by significantly reducing the financial risks.’ Certainly, many developing nations are starting to address the challenges of currency risk, potential government appropriation, corruption and so on. These measures may not necessarily go far enough right now, but they are establishing an adequate financial and structural environment to develop renewable energy and, ultimately, reach the SDG7 energy goals over the coming decade. l Energy World | October 2020 33
Renewables
Japan becoming an international biomass energy hub Growth in the use of renewables, particularly biomass, is one of the effects of the 2011 earthquake and tsunami in Japan that also dealt a blow to the country’s nuclear power industry. Kathryn Wortley reports from Tokyo.
J
apan is set to surpass its renewable energy targets well before its 2030 deadline, aided by a booming biomass sector benefiting from favourable government programmes and private sector investment. Of Japan’s total generated electricity expected in 2030, the Japanese government pledged that 22–24% of it would be sourced from renewable energy, of which 3.7% to 4.6% would come from biomass. And, according to energy experts, the country’s blossoming biomass market and industry is making a major contribution towards those targets. Japan’s total generated electric power from biomass reached 2.3% of overall output in the 2018–19 fiscal year, boosting the country’s share of electric power produced by renewables to 16.9%, according to the Ministry of Economy, Trade and Industry (METI). With biomass’ share of total generated electric power forecast to hit 2.8% by the end of fiscal 2020 and capacity for biomass ‘well over what is needed for the 2030 target,’ the total power generated by renewables could reach the lower end of the 2030 target range (22%) as early as the mid-2020s, according to the Institute of Energy Economics, Japan (IEEJ). In calendar year 2019, Japan’s biomass power generation capacity, encouraged by a feed-in tariff (FiT) scheme reached 2.1 GW, an increase of 39% year-on-year, according to METI. The number of biomass plants and projects under development increased by 73 over the period, to reach 411. Post-2011 energy policy The rapid growth is due to the seeds of a basic energy policy penned in the wake of the Great East Japan Earthquake and Tsunami of 2011. This outlined a 34 Energy World | October 2020
need for greater self-sufficiency, economic efficiency and environmental responsibility following the destruction of a large swathe of northern Honshu and widespread disruptions to the region’s power supply. This, along with the associated accident at Fukushima Daiichi Nuclear Power Plant, prompting its collapse, as well as the shutdown of the country’s nuclear power plants and a drop in consumer confidence in nuclear power, encouraged the Japanese government to review its renewable energy policy. Indeed, as an immediate response to the crisis, Japan used reserve power plants – liquified natural gas (LNG), coal and oil – and boosted energy conservation efforts before introducing a system of FiTs in July 2012 to accelerate green energy growth. In woody biomass, FiTs depend on plant capacity and fuel type. Since 2012, plants of more than 2 MW that are powered by forestry thinning output have received the highest FiT for a term of 20 years, at Y32/kWh, followed by plants of
Wood chips from domestic forests are the main fuel for small woody biomass projects in Japan Photo: Pixabay
more than 2 MW that use roundwood, at Y24/kWh, and plants using construction debris, at Y13/kWh. In 2015 and 2016, new FiTs for smaller plants were introduced, namely Y40/kWh for plants up to 2 MW powered by forest thinning, and Y24/kWh for plants up to 2 MW using roundwood, again with a term of 20 years. Annette Bossler, managing director of USA-based Main(e) International Consulting and Senior Market Intelligence Expert at FutureMetrics, said the high FiTs introduced for small biomass power generation plants are designed to promote rural economic development. Demand for small volumes of woody biomass from local sources drives forest management and conservation, helping protect nearby settlements from natural disasters like landslides while creating employment, she noted. Fuel of choice Indeed, domestic, easily attainable biomass is the fuel of choice for many plants and projects in Japan, a country that is 67% forested, according to non-profit Japan for Sustainability. With such natural resources available to vast areas of the country, Japan’s national and local governments have heavily promoted biomass, including through the launch of ‘Biomass Towns’ that act as best practice examples utilising this form of renewable energy for power and heat, as well as fertiliser. One is Shimokawa, in northern Hokkaido, (Japan’s northernmost main island) where about 90% of the municipality is forested. Before the introduction of biomass, the town relied on fossil fuels for heating during local snowy winters. With support from the public and private sector, Shimokawa now operates renewable forestry management based on the principle of not cutting faster than growth and replanting after cutting, which creates a steady supply of woody biomass chips. These are used to fire boilers that heat about 40% of local facilities, including hot springs, day-care centres and public housing. In Tokyo, the metropolitan government switched from fossil fuel to biomass energy in July 2019 to supply its two administrative buildings with 80% of their electricity needs. The 30 GWh of biomass energy consumed annually is supplied by Hitachi Zosen, which buys energy
Renewables
Japan is set to surpass its renewable energy targets well before its 2030 deadline, aided by a booming biomass sector benefiting from favourable government programmes and private sector investment
produced by waste power incineration plants within and outside the capital, as part of Tokyo’s efforts to achieve net zero carbon dioxide emissions by 2050. Local schemes More businesses are also thinking locally. Ricoh is among the firms in Japan adopting the use of biomass in its operations. At its Eco Business Development Centre, in Shizuoka Prefecture, woody biomass fuels the entire air conditioning and hot water systems, reducing annual kerosene consumption. With support from the municipal government, the centre sources its woody biomass from a local forestry business that processes timber from forest thinning efforts into woodchips. According to Ricoh’s spokesperson Kotaro Honda, the adoption of biomass for energy, which began at the centre in 2016, presented an opportunity for the firm to help prevent natural disasters through forest maintenance, stimulate local economies and reduce carbon dioxide emissions. ‘As we move
towards a more sustainable society, we are glad to have been able to implement this sustainable biomass system,’ he told Energy World. Also, in recent years, Japan's biomass plants have increasingly been established near paper mills or lumber yards whose by-products are an easily attainable source of fuel, said Bossler. The heat produced can be used in paper manufacturing. Biomass imports up Large-scale biomass suppliers have been taking advantage of this rapid market growth. Tokyo-based Eco Green Co, which supplies wood chips to biomass power plants is, for example, planning to triple capacity by 2030 to produce 600,000 tonnes of wood chips per year. Biomass imports into Japan have also been increasing rapidly to accommodate larger plants. In 2018, imports of palm kernel shells reached 1.3mn tonnes, up from 760,000 tonnes in 2016, according to FutureMetrics. Similarly, wood pellet imports rose from 347,000 tonnes in 2016 to 1.1mn tonnes in 2018. Facing supply challenges, power
producers have even asked the ministry of economy, trade and industry to accept other solid biomass as acceptable fuel, such as rice husks. With more 75 MW plants scheduled to open, including Kanda Biomass, in Tokyo, in 2021; as well as Tsuda Biomass, on Shikoku island; Omaezaki Biomass, south-central Honshu, and Ishinomaki Biomass, northern Honshu, all in 2023; Japan’s biomass market shows no sign of slowing down. Indeed, Bossler said more than 9mn tonnes of wood pellets might have to be imported to Japan annually by 2025 to meet demand. But, with greater imports comes the need for improving logistics, to transport palm kernel shells and wood pellets to biomass plants. Importing ports are concentrated in eastern Tohoku (north-east Honshu), Osaka and Fukuoka, presenting the need for storing and transporting wood pellets to avoid spoilage. l
Heavily forested Yakushima
Yakushima island Photo: Calderwood Images / Dermot Killoran
As an island nation, with a forested area twice that of the world’s average by proportion, Japan's potential for further development of domestic biomass is high, but fragmented land ownership is hampering progress. Of Japan’s some 25mn ha of forest, 29% is controlled by the government agencies, 55% is privately owned and 16% is held by municipalities, prefectures and other public entities, according to the Ministry for Agriculture, Forestry and Fisheries. This woody bounty is not necessarily easily accessible, however, as the projected imports indicate. One example of the challenges of converting Japan forests into reliable biomass supplies is Yakushima, a heavily forested island in Kagoshima Prefecture, on the southern tip of Kyushu, Japan’s southernmost main island. Home to an annual 50 m of rainfall at the coasts and 100 m of rainfall in its mountainous centre, Yakushima’s electricity is powered entirely by renewable energy. Huge waterfalls and dams on the island create hydroelectricity on a grid that is owned by the municipality.
Yakushima is also one of the Japanese government’s designated Biomass Towns, with the municipality collecting organic household and business waste, which is turned into fertiliser and purchased by local farmers. However, regarding biomass energy, progress is less strong. Yakushima works under the policy that for every ten trees, three should be cut down to improve the condition and longevity of the forest, said Koji Kihara, a spokesperson in the Tourism and Town Development Department at the Yakushima local government office. But for decades, these trees lay where they were cut until a local biomass initiative was introduced in 2007. And even after that, uptake has been slow. Only small areas of forest are owned by local people (others are owned by the municipality or are UNESCO World Heritage Sites) which limits profitability and accessibility respectively, and the island is rapidly ageing, with few younger people to do heavy forestry work. With the island’s domestic and business electricity needs covered by hydroelectricity, the market for biomass is also small, with most demand for kerosene-run hot water boilers. ‘We have no large companies. And smaller companies are reluctant to move ahead without evidence of success,’ said Kihara. To help incentivise the development of biomass for fuel on the island, the local government is working to demonstrate a successful model and educate people about the process. In the short term, the Covid-19 pandemic is exacerbating the difficulties of developing a vibrant biomass sector. Due to huge reliance on tourism, the island is feeling the strain and the economy is stagnating without visitors. However, in the longer-term, Yakushima’s passion for renewables could signal that it will ultimately develop more biomass energy on a sustainable basis. Yakushima municipal and Kagoshima prefectural governments have, for example, teamed up with local businesses to push electric car uptake, introducing charging sites and purchase incentives. Such enthusiasm for biomass here and across Japan is likely to ensure this country will continue to move away from fossil fuels and nuclear to embrace green energy.
Energy World | October 2020 35
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