INTERVIEW

The ever-escalating cost of not pursuing CCS

Global policy makers need to get to grips with the positive implications of embracing carbon capture and storage (CCS) technology, or else pay an unnecessarily expensive price in order to achieve carbon emission reduction targets.

Brad Page

That is according to the chief executive of Global CCS Insitute, Brad Page (pictured), who spoke to Power Engineering International about the reasons why the world needs to accelerate its thinking when it comes to CCS.

In a roster of rationale he presents for encouraging investment in CCS, perhaps the most pressing argument is the sheer expense that the world will incur if it does not pursue the sensible course of action carbon capture promises to deliver.

According to the International Energy Agency, in order for the Earth to meet its most optimistic 2oC increase scenario, about $2.6trn needs to be invested in CCS. If the world does not come around to CCS at the rate it needs to, or if the technology is just blatantly ignored, “then in fact you double the investment required to curb emissions in the power sector by the equivalent amount – so in effect you will have to spend a total in excess of $5trn to deal with the same level of emissions using other technologies if you don’t use CCS,” according to Canberra-based Page.

He will reinforce the point at the upcoming World Energy Congress in Daegu, South Korea, and also wants to dispel some unsubstantiated opinions on CCS as well as highlight potentially harmful beliefs about renewable power’s capacity to cope with the emission challenge.

“From our perspective we need to help people to appreciate just how real CCS is as a technology and the progress being made. We have a whole lot more to do if it’s going to fulfil its rightful place in reducing emissions and we need to reverse some of this false claim that the world can go forward without fossil fuels; that’s not going to happen. If we are going to keep it to 2 degrees we need CCS.”

Page believes some of the rhetoric from the green movement is not to the world’s advantage, particularly the charge that it is an unproven technology. There are already eight current projects, storing 23 million tonnes of CO2 every year. On top of that there are nine under construction so by 2015 the world is on track to have 17 projects in operation. It is not enough though, and Page says that is down to what he calls a failure of “policy parity”.

“The observation we would make is that if you look at the International Energy Agency’s projections about the role CCS needs to play we need multiples of those numbers over the course of those 20 years, and those numbers aren’t going to come forward unless the policy settings are supportive of them.

“We need to re-visit once again the balance of policy measure that is going to be in place if we want to see CCS really thrive. In a number of countries there remain regulatory uncertainties, especially around long-term liability for storage of CO2. A number of these legal and regulatory issues have been dealt with in various jurisdictions but there remains more to be resolved here and these tend to have a chilling effect on projects.”

The policy parity issue manifests itself when governments take a technology-specific approach and subsidise as is the case with solar photovoltaics which is much more expensive than CCS at volume.

They may also incline towards excluding CCS and rewarding offshore wind. All the studies Page has seen demonstrate once again how much more expensive offshore wind is in comparison. “What we are saying is that we are not in any way negative about those technologies. It’s not a competition – if we are going to get to meet the 2 degrees objective at the least cost we are going to need every technology that they put on the plan.”

“We will not achieve the least cost outcome if we continue to play favourites around all of the technologies. So if we have policy parity what you get are a lot more opportunities for CCS than you have today.”

The CCS advocate lauds the example provided by the UK, as one the rest of the world would do well to follow. The UK is neutral about what is within its energy supply needs that delivers reliability along with reduced emissions. He thinks others ought to follow suit.

“The UK has got it from a policy perspective. They understand the point. They have policy settings through contracts for difference that don’t discriminate between CCS and renewables, which is a good move forward. I think others will watch the UK’s experience and see it’s a sensible approach and we’ll probably see more of that in coming years.”

The role of China as a potential engine for the development of the technology cannot, of course, be ignored, as the Asian powerhouse will need to develop its emission reduction portfolio in tandem with the massive fossil fuel resource which will continue to power its advancement in the coming decades.

The country’s 12th Five-Year plan nominated CCS as a technology of priority and while the Global CCS Institute will present a clearer picture at Daegu, for now they can say that while there were three large-scale integrated projects at various stages of development 12 months ago, that figure has now risen to 12, and is growing.

“China is now ranked third in the world for the total number of large-scale integrated projects at various stages of planning so I think China is the fastest emerging economy in terms of CCS and is well poised with the extent of its coal resource and coal-based industry to develop and adopt CCS technology and is making positive plans to do so.”

The rationale for CCS remains sound but for now Page and others must continue to persuade and compel if it is to overcome barriers faced by emerging technologies, which might just see the planet meet the immense carbon reduction challenge in a timely and cost-effective way.

International

Gas and coal will still top renewables in 2030 says report

Global renewable capacity

Global renewable capacity is estimated to reach 2055 GW in 2030 but thermal energy will still be the dominant power generation source, according to a new report.

The analysis states that although countries are shifting towards renewable resources, thermal capacity is expected to increase from current levels of 3628 GW to 5833 GW by 2030.

Last year, coal accounted for around 70 per cent of India’s power generation, while in China the figure was 78 per cent.

The report, by research firm GlobalData, also states that the global surge in gas production – particularly shale gas – has served to keep power producers and governments looking at gas rather than renewables in the long term.

According to the study, natural gas capacity is expected to rise from approximately 1416 GW in 2012 to 1861 GW in 2020.

Sayani Roy Nath, GlobalData’s power analyst, said: “The increasing use of gas as a source of power generation has positively affected the power sector worldwide.

“This discovery has not only helped reduce the import dependency of various countries, but also promoted project finance. This is thanks to countries shifting away from coal towards natural gas, and therefore requiring financing to support the development of natural gas-fired power plants.”

He added that in order to transmit the energy produced, countries are also investing in smart grid technologies.

“Because of the growth of renewable sources in the power mix and the existing concerns regarding energy efficiency, there is an urgent need to update the aging infrastructure and introduce efficient integration of power demand and supply.”

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EUROPE

London Array sells transmission assets for £459m in landmark deal

London Array

In a landmark deal worth £459m ($725m), the owners of UK-based London Array – the biggest offshore wind farm in the world – have agreed to sell off its transmission assets.

Blue Transmission London Array was selected as the preferred bidder for London Array’s offshore transmission licence a year ago by UK energy regulator Ofgem following a tender process.

It will buy all of the wind farm’s substations and cable assets in the biggest deal yet under the UK’s Offshore Transmission Owner (OFTO) regime. Half of the debt funding for the purchase was provided by the European Investment Bank.

Blue Transmission London Array is a consortium of Barclays Infrastructure Fund Management and and a UK subsidiary of Mitsubishi Corp.

Ofgem chairman Lord Mogg said the sale was “a significant milestone”. He added: “This competitive approach is also benefitting energy consumers. Running this link will cost consumers a quarter less than previous projects.”

He said the financial support of the European Investment Bank was “a further endorsement of the competitive approach that is delivering offshore transmission investment”.

Jonathan Taylor, European Investment Bank vice-president for the UK, said: “Investment in transmission projects is essential to link sources of renewable energy to the national grid.”

Located off the east coast of England, London Array is owned by Dong Energy, E.ON and Masdar and was opened this summer. by Prime Minister David Cameron.

Its 175 Siemens 3.6 MW turbines have a combined capacity of 630 MW.

Hitachi Lithuanian energy deal to target nuclear, CHP and smart grid

Hitachi Lithuanian

Hitachi has signed a deal to collaborate with Lithuanian energy company Lietuvos Energija to “achieve energy security in the Baltic region”.

The two companies will work together on a range of energy projects, including nuclear, combined heat and power systems and the development of a smart grid.

Lietuvos Energija has overall jurisdiction over energy in Lithuania. Its chief executive Daulius Misiunas said: “We are drawing up this new energy policy in order to achieve energy security. We welcome this opportunity to adopt cutting-edge technology from Japan for use in energy.”

Hitachi executive vice-president Koji Tanaka (pictured) said the company would bring its nuclear expertise to Lithuania and added: “If there are other opportunities to broaden our contributions in the Baltic region we are in a fantastic position to help through our experience and innovative technology across the entire Hitachi group.”

Hitachi has identified Central and Eastern Europe as a key region where it is seeking to expand its operations and as such opened an office in Lithuania last year.

Billions of smart grid investment threatened by Germany’s meter opposition

Germany could derail €33bn ($44bn) of smart grid investment if it maintains its opposition to smart meters and refuses to implement them.

That is the conclusion of a new report by analysts at consultancy Frost & Sullivan which examines the impact of Germany’s stance on smart metering.

Frost & Sullivan energy analyst Neha Vikash said: “The EU Energy Efficiency Directive mandates for 80 per cent of households in Europe to have smart metering by 2020. The exception to the directive is if a country can prove that smart metering would not pass a cost benefit analysis.”

Last month such a report, carried out by external consultants, was published by Germany’s Economy Ministry, and it has made for uncomfortable reading by those in the smart meter industry, as it concluded that smart meters would be too expensive to deliver economic benefits.

“The report has shocked the industry and could have major ramifications,” said Vikash, although she added, “it should be pointed out that the report could still be rejected by the German government.”

Germany has 48 million meters, with around 90 per cent being electromechanical which can have a working life of anywhere from 20-40 years. Frost & Sullivan calculated that replacing them over a period of five-to-seven years would generate an estimated €6bn ($8bn) revenues for smart meter and communications manufacturers.

This amount does not include the estimated €7.5bn that would be spent on supporting infrastructure, project management and installation.

“If Germany instead decides to install smart meters only when existing meters need replacing, this would be a massive blow to the industry,” said Vikash.

And she added that the situation for meter manufacturers could worsen if other countries follow Germany’s lead.

Warning for renewables industry over supply chain investments

Supply chain investments that are critical for the growth of the UK’s renewable energy industry are at risk because of hit-and-miss government policies, according to a new report.

The study says the government could do more to “narrow the scope of debate about the technology mix beyond 2020” and calls for it to work with industry and academia to establish “low regrets levels of deployment and to ensure policies are in place to incentivise investments”.

The report has been compiled by think-tank Carbon Connect and presents over 30 findings drawn from a year-long, independent inquiry into the UK power sector.

The inquiry is the second in a cross-party series called Future Electricity – the first report on fossil fuels was published earlier this year and the next will focus on nuclear power.

The report was launched in Westminster by former energy minister Charles Hendry, who said the UK renewables sector was “not in a good place” and “a phenomenal amount of investment” was need to rectify this.

He added that “so often, the debate on renewables is characterised by a lack of facts”, a point backed up by UK Energy Secretary Ed Davey, who said: “We need to see a more mature debate on renewables and energy generally.”

The report states that is the government must do more to “provide the longer term clarity that could secure supply chain investments to give the UK a head-start in the global race”.

It warns that these investments “could be missed, delayed or more expensive if there insufficient confidence about long-term demand for key technologies such as offshore wind”.

And it added that “work by government to help incentivise these investments” was vital to “help mitigate against high costs if new nuclear or carbon capture and storage development fails or is delayed”.

The report states that the UK has massive renewables resources but “only a small fraction is currently harnessed” – 11.3 per cent of Britain’s total electricity supply last year.

The government wants to lift this to 30 per cent by 2030 and the report states that while the UK is on track for this target, achieving it is contingent on “planning consents for offshore wind, the success of biomass conversions and technology cost reductions for offshore wind and solar PV”.

Whether these cost reductions can be achieved is dependant on supply chain investment and the report says this is critical, as “offshore wind is likely to be the only renewable technology that can de deployed at sufficient scale should other low carbon technologies not deliver as expected”.

Davey pointed to the recent openings of offshore projects London Array and Greater Gabbard as a sign of “how well placed the UK is for offshore wind”, but the fear is that there is not enough investor confidence to sustain their momentum to 2020 and beyond.

The report also looks at the sustainability of electricity from biomass and concludes that bioenergy overall could provide up to 10 per cent of energy and reduce the cost of cutting carbon by £44bn ($70bn) per year in 2050.

Renewable industry urges EU to set 2030 targets

Renewable industry

A collective of 61 major energy players including Vestas, Gamesa and Alstom have urged the European Commission to set a binding European renewable energy target, warning that without one future investments will be at risk.

The companies – joined by trade groups such as RenewableUK and the European Wind Energy Association – sent a letter to EU Climate Commissioner Connie Hedegaard (pictured), Energy Commissioner Guenther Oettinger and President of the European Parliament Martin Schulz. Other firms that signed the letter included Dong Energy, Acciona and Enercon.

While the collective acknowledges the work the EU has done to set targets for 2020, it warns that 2030 is “already at our doorstep”. In its letter it states: “Given the long investment cycles in the energy sector and the fact that investment decisions in the EU’s liberalised energy markets strongly depend on reliability, certainty about the regulatory framework of the next 17 years is needed.”

The letter adds that the group believes “that a new climate and energy framework for 2030 needs to be based on mutually reinforcing tools and targets, including a legally binding target for renewable energy, and urge all policy makers to support a strong and ambitious regulatory framework for the years to come”.

Japan’s last nuclear reactor temporarily shuts, raising supply concerns

Japan's last nuclear reactor

Japan’s only operating nuclear reactor has been shutdown for maintenance, prompting concerns about the reliability of power supplies over the approaching winter period.

In a statement, Kansai Electric Power Company confirmed that it had halted the Number 4 reactor at its Ohi plant , leaving the country nuclear free for the first time since July 2012.

Ohi’s Number 3 reactor was idled earlier in September.

The Ohi reactors were the only ones to restart after the March 2011 Fukushima disaster.

Prior to the Fukushima accident, Japan generated 30 per cent of its electricity from nuclear; now all 50 of its reactors lie idle.

The reactors will have to pass new safety standards before being restarted.

Makoto Yagi, chairman of the Federation of Electric Power Companies of Japan, warns that Japan may not have enough capacity in winter without nuclear power.

The shutdown is expected to leave utilities with little choice but to increase the use of expensive fuel oil to ensure electricity supply.

The reactors at Ohi (pictued left) were restarted in July last year after closing in March 2012.

Under Japanese regulations, reactors have to undergo maintenance at least once every 13 months.

ASIA

MHI’s M701F4 gas turbine heads to Uzbekistan

Mitsubishi Heavy Industries (MHI) has received an order from Daewoo International Corporation of Korea for two sets of an M701F4 gas turbine and generator to be installed at two new units at the existing Talimarjan thermal power plant in Uzbekistan.

The project’s engineering, procurement and construction contractor is Hyundai Engineering & Construction of Korea and the customer is SJSC Uzbekenergo.

The two combined-cycle gas turbine plants are slated to enter commercial operation in 2016.

Each plant will consist of a 320 MW class M701F4 gas turbine (pictured), a steam turbine, a heat recovery steam generator and a generator.

MHI will manufacture and supply the gas turbines, and Mitsubishi Electric Corporation will provide the generators. The Talimarjan TPP expansion project will be co-financed by the Japan International Cooperation Agency and the Asian Development Bank. SJSC Uzbekenergo holds a key position in the nation’s power industry, having a total power generation capacity of 12 400 MW.

European bank lends $53m to India for renewable projects

The European Investment Bank has signed a €40m ($53m) long-term loan deal to fund renewable energy projects in India.

The money is the first instalment of an €80m loan to India’s SREI Infrastructure Finance Limited, which will deploy the funds to various projects built by mostly by private sector companies. The projects are set to include wind, solar and hydropower schemes as well as high-efficiency cogeneration.

The investments are designed to help wean itself off thermal power and onto environmentally sustainable resources.

SREI will on-lend the funds to final beneficiaries and identify and pre-select the projects. The EIB will then perform due diligence to ensure that all projects are economically and financially viable, technically appropriate and in compliance with the bank’s environmental and social requirements.

LATIN AMERICA

Brazilian national power tender receives 784 applications

Brazilian national power

The Brazilian energy planning agency has registered over 19.4 GW in power projects for the country’s upcoming A-3 national tender.

Empresa de Pesquisa Energetica (EPE) will hold the tender on 18th November, once applications are reviewed.

The projects registered include 629 wind projects (15.04 GW), 119 solar plants
(3.02 GW), 17 hydro power plants (340 MW), two biogas power plants (39 MW), 15 biomass plants (504 MW) and two natural-gas fired power plants (469 MW).

A-3/2013, which is the first auction in the country’s regulated market to accept solar and waste-to-energy projects, requires developers to complete the projects by 1 January 2016.

Along with this, the federal auction also requires developers to ensure transmission lines for their projects are also in place by the same date. EPE president Mauricio Tolmasquim said the solar industry, which has seen a fall in PV panel prices, could gain space on the Brazilian grid.

SunEdison secures funding for 100 MW PV farm in Chile

SunEdison

SunEdison Incorporated of the US has been awarded close to $213m in project financing to help build what is expected to be Latin America’s largest solar photovoltaic power plant.

The Overseas Private Investment Corporation, the US government’s development finance institution, provided a $147.5m loan, while IFC, a member of the World Bank Group, gave $65m of debt.

According to Lilian Alves, an analyst for Bloomberg New Energy Finance based in Sau Paulo, Brazil, the financing package
is the largest for a solar park in Latin
America and demonstrates a growing confidence among investors for these types of projects.

Construction of the 100 MW Amanecer Solar CAP project started last month near the city of Copiapo in Chile’sAtacama region, and is expected to be completed in the first quarter of next year.

Siemens wins contract to deliver 580 MW gas power plant

Siemens

Siemens Energy is to construct the 580 MW Guillermo Brown gas-fired power plant in Argentina after winning the $800m order.

The customer is Fideicomiso Central Termoelectrica Guillermo Brown and the core of the new power plant will consist of two SGT5-4000F gas turbines.

The order includes a ten year service maintenance contract. Siemens will deliver two SGT5-4000F gas turbines and two SGen5-1000A generators in a simple cycle configuration. Siemens is also delivering the infrastructure works at the port to offload fuel, high-voltage transmission lines, switchyard, and fuel pipe lines for the power plant.

Middle East

Exelon, Westinghouse and Toshiba sign Saudi nuclear agreement

Westinghouse, Exelon Nuclear Partners and Toshiba have signed up to a memorandum of understanding designed to build co-operation around developing nuclear power plants in the Kingdom of Saudi Arabia.

Saudi Arabia recently announced plans to build as many as 16 reactors over the next two decades and international vendors have since been positioning themselves to win a piece of the $80bn it’s estimated the Saudi nuclear fleet would cost.

The memorandum of understanding between Exelon, Toshiba and Westinghouse paves the way for a joint proposal from the companies.

Under it, Exelon would handle operations and associated services, while Toshiba and Westinghouse offer their advanced reactor designs, according to a Westinghouse release.

The MOU announced this week also allows the companies to promote the Westinghouse AP-1000 pressurized water reactor.

“We are excited to join a team that gives us an opportunity to provide our cutting-edge technology and innovative passive safety systems,” said Danny Roderick, Westinghouse president. “We are confident this project will go well, as we already have a deep working relationship with Toshiba and with Exelon, which is a long-standing business partner.”

North America

US power industry suffering ‘wrenching disruption and stress’

The American electricity industry is in the midst of “wrenching disruption and sustained” stress thanks to the country’s reliance on gas, said a leading figure in the US power market.

Richard Myers, vice-president of policy development at the US Nuclear Energy Institute, said the ‘dash for gas’ in the US – on the back of the shale boom – had turned the country’s energy focus too far in favour of gas.

“Fuel and technology diversity serves as a hedge against supply disruption and that diversity is at serious risk,” he told the World Nuclear Association’s Annual Symposium in London.

He said since 1996 there had been a significant drop in the number of new coal and nuclear plants in the US while gas projects had rocketed: “There is something seriously wrong with this picture,” he added.

He said that while the US gas resource base was undeniably huge, the country did not have the means to put in place the necessary infrastructure to access it to secure a steady supply.

Mitsubishi joins forces with developer in North America

Mitsubishi Power Systems Americas Incorporated and NTE Development have agreed to collaborate on selected power generation projects across North America.

Under the agreement, NTE Development’s portfolio of development projects in the US and Canada will utilise Mitsubishi Power Systems Americas’ advanced combustion-based generating equipment, technology and services.

“This collaboration with MPSA gives NTE Development access to Mitsubishi’s strong portfolio of electric generation technologies, allowing us to provide our customers with reliable, clean and efficient energy for
decades to come,” said Seth Shortlidge, president and chief executive of NTE Development.

NTE Development is a subsidiary of NTE Energy and is focused on developing and acquiring power generation and transmission projects in the US, as well as internationally.

Mitsubishi Power Systems Americas has bases in Orlando, Savannah and Houston.

Africa

Ghana to benefit from new 360 MW CCPP

Norway’s Jacobsen Elektro Holding is to construct a 360 MW combined-cycle power plant (CCPP) in Ghana, representing a welcome addition the country’s generating capacity.

Jacobsen Jelco Ghana Limited, which is a wholesale supplier of electricity and a subsidiary of Jacobsen, will build the thermal plant at Aboadze in the western region of the country.

Jacobsen Elektro Holding specialises in the construction and operation of infrastructure in developing countries, primarily Africa and Asia, and is also buiolding a 100 MW gas plant in Tanzania.

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