|The efficiency and effectiveness of onshore wind is constantly improving
Thirty years ago, the first 1 MW solar power station came online in California. Now you can pick up solar panels from Ikea in the UK.
The first high-power silicon solar cell, developed in 1954, had a maximum efficiency of 6 per cent – today, typical efficiency levels are 15 per cent and rising, while the average panel cost is falling.
Such innovation has been the cornerstone of the renewables sector, covering both the adaptation and improvement of existing technologies and the introduction of more disruptive technologies that have greater potential to shake up the sector.
Surging electricity demand and energy security concerns, the impact of climate change and the increasing competitiveness of renewables continue to put an increasing focus on renewable energy as a critical component in the overall energy mix.
But this focus cannot just be on one or two technologies. As the shining beacon that is grid parity comes into view for an increasing number of renewables projects, we must not be complacent.
More mature technologies should not cannibalise support available for emerging technologies, while austerity measures and a focus on affordability should drive innovation in cost reduction rather than simply favour the cheapest technologies. Indeed, the increasing trend for government-led auctions has created greater competitiveness across renewable sectors, but care must be taken to ensure that the need to foster promising emerging technologies is not ignored.
Preparing the way
Innovation is of course largely driven by scientists, researchers, engineers and entrepreneurs. But we must always keep an eye on the future, aware of how the economics of today impact the energy solutions of tomorrow. Governments must create policy environments that achieve the right balance of affordability and certainty, investors need to better understand the risks and rewards in this ever-changing sector, and energy generators must find ways to adapt as new technologies disrupt the global energy mix. Increased engagement by, and with, large corporates can also foster innovation and introduce new capital flows. Innovation driven by the need to drive down costs must be supported by operational synergies, efficient tax structuring and cost-effective financing.
The disruption timeline
So, which new technologies are already creating waves, and which are still up in the air? While the success of emerging technologies can be somewhat unpredictable given ever-changing policy and investment climates, the following sections provide a sample of the key technological innovations that could be disruptive in the short, medium and long term as commercial scale is achieved.
Even space is apparently no longer off-limits, with ex-NASA scientist John Mankins seeking $15–20 billion to fund a project that would use mirrors in space to concentrate solar energy onto panels and then beam the electricity down to earth using microwaves.
So, whether it is looking up at the sky or down at the sea, we must all start preparing for the elements to change.
|Riding waves of potential: Investment and deployment of tidal devices is expected to accelerate
Tidal power is generated by exploiting variances between high and low tides via strategically placed barrages or by capturing the kinetic energy of the current.
While construction costs are still relatively high, regular lunar cycles make tidal energy far more predictable than other renewable sources. Four tidal range plants totaling 517 MW were fully operational at the end of 2012. Tidal stream is further behind, but prototypes already in the testing phase include technologies from Openhydro, Hammerfest Strøm and Hydra Tidal.
Such progress points to commercial deployment as early as 2015, although there is still heavy reliance on government support until economies of scale can drive down costs. The UK is offering 5 ROCs/MWh for projects under 30 MW, while France has launched a tender for 80 MW of tidal capacity.
With estimated global tidal power potential of around 3 TW, investment and deployment of this highly predictable energy source is expected to accelerate.
Concentrated solar power (CSP) is unlikely to experience a technology revolution in the next few years, but it can make the most of what it already has. Surging energy demand and the increasing use of competitive capacity tenders, such as those in South Africa and pending in Saudi Arabia, have renewed interest in its potential and called for greater scale, improved efficiencies and more cost-effective materials to help reduce costs.
In the short term, advancements such as molten salt heat transfer fluid, more reflective mirrors and multi-tower fields will help drive the cost of CSP down by an expected 10–20 per cent by 2015 and 30–50 per cent by 2020.
Global installed CSP capacity totaled just 2.8 GW at the end of 2012 compared with 100 GW of solar PV. But the potential for cost reductions, combined with the ability to integrate thermal energy storage and provide baseload electricity through hybrid gas turbines, means technology improvements could significantly increase the pace of deployment.
Despite being one of the most mature renewable energy technologies, innovation continues to improve the efficiency and cost-effectiveness of onshore wind installations.
Design advances, such as a switch from steel to concrete, could make it possible to erect 100-metre towers to take advantage of stronger, steadier winds, boosting output by up to 14 per cent compared with today’s 80-metre towers.
Lighter blades made from carbon fibre or advanced fabric could begin spinning at lower wind speeds, and a step up in blade length from 103 metres to 120 metres could increase output by up to 15 per cent. There are more dramatic modifications in the pipeline too. In August, Irish firm Airsynergy launched a turbine with an innovative ‘shroud’ system around the blades, which the company claims could double the annual power of an equivalent conventional turbine.
Floating offshore wind turbines will be critical in exploiting high-wind sites farther from shore or where deep coastal water makes near-shore fixed turbines unfeasible, as is the case in emerging offshore markets such as Japan, Norway and the US. The ability to assemble floating installations in port to be towed out to site gives these turbines significant advantage over fixed-base turbines in deep water, although they will still need to contend with the technical challenges of operating in a more hostile marine environment.
Getting the right turbine size, substructure design, grid connection and control systems to generate reliable energy far from shore will require years of innovation and testing, but various prototype designs are currently under development, including tension-leg platforms, spar buoys and semi-submersible floating platforms, all tethered via cables to the seabed. Tests on Statoil’s Hywind, the world’s first full-scale floating wind turbine, have been ongoing off Norway since 2009, while other designs have been developed by Principle Power, Maruben and Dutch developer Blue H.
Most traditional solar cells are manufactured from silicon or copper compounds, while organic solar PV (OPV) cells use organic (carbon-based) molecules. These cells have the potential for very low production costs and are much thinner than conventional PV cells.
Combined with a high optical absorption coefficient, this makes them light, flexible, translucent and sensitive to low light levels.
These factors mean OPV applications will be critical in supporting localised solar power, benefiting not only emerging markets with poor grid infrastructure, but also the increasing need to integrate energy into everyday applications such as backpacks, laptops, cars and mobile phones.
Currently, the market only has a few manufacturers and with technology IP well-protected. The main challenge with OPV has been the low efficiency levels, but January 2013 saw Heliatek announce record efficiency levels of 12 per cent, compared with an average of 15 per cent for traditional solar cells, suggesting commercial deployment is a matter of when, not if.
Energy storage solutions that capture excess energy efficiently to be used on demand will be a key enabler in exploiting the full potential of renewable energy resources given often high intermittency levels. Storage technologies close to commercialisation include:
- Flow batteries: these are rechargeable fuel cells in which an electrolyte flows through an electrochemical cell, converting chemical energy into electricity. An additional electrolyte is stored externally in tanks, and is pumped through the cell to recharge the battery.
- Liquid metal batteries: a molten-salt electrolyte is sandwiched between two liquid metal electrodes, and the difference in composition between the two liquid metals gives rise to a voltage.
Looking further ahead, compressed air has greater potential for large-scale application. Excess energy generation is used to compress air into underground reservoirs, the release of which drives a generator to produce electricity as required. Developers are currently exploring ways to reduce inefficient heat loss that currently necessitates the use of natural gas later in the process.
|Innovation continues in onshore wind
Ocean thermal energy conversion (OTEC) technology has significant potential to provide non-intermittent power to regions where temperature differences between warmer surface water and cooler deep water exceed 20ºC. The warmer water converts a fluid with a low boiling point into steam, which drives a turbine to produce electricity.
The steam is recondensed using cold water from the deep ocean so that the cycle can be repeated.
The temperature difference restricts OTEC feasibility to tropical and equatorial oceans, although this still covers more than 100 countries and territories, and could represent at least 150 GW of power capacity in regions where domestic energy sources are scarce.
The market is dominated by a few players, including France’s DCNS and US-based Lockheed Martin. The costs associated with scaling up are uncertain given the relatively low energy yield, temperature constraints and expensive deepwater pipes, but innovations such as more efficient heat exchangers and improved pipe manufacturing are starting to mitigate some of the risks.
Innovation will continue to improve the performance and cost-effectiveness of solar technologies, but given its relative maturity, it is more likely that the long term will bring disruptive application rather than disruptive technology.
|Moment in the sun: Solar is enjoying renewed interest in its potential.
Transparent OPV cells – still in their relative infancy given the technical challenge of the inverse relationship between electricity conversion efficiency and the level of transparency – could dramatically expand application potential; MIT researchers project that coated windows could provide more than a quarter of a skyscraper’s energy needs without changing its look.
Meanwhile, solar-powered aircraft may offer a cost-effective way to carry sensors, cameras and lightweight cargo to support military, communication and aerospace applications. In May, Swiss firm Solar Impulse set a new record for a manned flight of over 26 hours of flying without fuel, with the unmanned record at two weeks. The current fragility of these vehicles and the inability to carry more than one pilot means that it will still be decades before commercial application really takes off, but the endurance potential remains staggering.
Geothermal energy harnesses the heat of the earth’s core to convert water into steam, which powers a turbine. It provides consistent baseload power and can also be cheaper than other forms of energy in some situations.
However, long lead times for development and the risks (and costs) associated with exploration and drilling activities present critical challenges to exploiting the 70 GW to 140 GW of potential geothermal energy globally, compared with just 10 GW currently.
Innovations that reveal subsurface temperatures without drilling are therefore key. Progress is being made in the development of seismic profiling technology and the use of innovative airborne exploration methods by Lockheed Martin and others. But these are currently nowhere near able to compensate for physical drilling; therefore, in the short to medium term, the sector will also need to look to the oil and gas industry to exploit synergies and implement more cost-effective techniques.
Cat O’Donovan is Energy & Environment executive at EY. For more information, visit www.ey.com.
Renewable finance: Rise of the IPO
Last year saw a resurgence in renewable energy IPOs, with public offerings coming at the fastest rate since 2010, writes Ben Warren.
Ironically, for a sector that has seemed so risky for so long to stock markets, the fuel driving many of these IPOs is the promise of reliable income. Renewable energy companies went public in the UK, the US, Brazil, New Zealand and Canada, with the total raised in excess of $4 billion.
It all started in March with Greencoat UK Wind’s public offering, which raised £260 million ($415 million) on the London Stock Exchange and in many ways typified the majority of 2013’s renewable energy IPOs. Greencoat is a renewable infrastructure fund that sought to raise money to buy renewable generation assets. Greencoat’s pledge of 6 per cent returns looked very attractive to institutional investors at a time when UK gilts were below the 2.5 per cent mark – and to retail investors, faced with bank returns that were not much better.
Two similar London-based renewable energy infrastructure IPOs followed in July: Bluefield Solar Income Fund raised £130 million with its offer of 4 per cent, rising to an inflation-protected 7 per cent in the year after launch, and The Renewables Infrastructure Group saw its IPO raise £300 million with a 6 per cent dividend. October saw asset manager Foresight Group raise £150 million for its solar power investments fund, less than the targeted £200 million but also with a 6 per cent return.
The same approach has been used in New Zealand, where the partial float of Mighty River Power, with its predicted 6–7 per cent return, raised NZ$1.7 billion ($1.4 billion). In the US, Pattern Energy Group raised $352 million (the country’s first wind IPO) and promised investors a 6.25 per cent return, while NRG Yield’s $431 million IPO in July made it one of the top 20 IPOs worldwide in the third quarter of the year.
These IPOs have a very different flavour from the aggressive growth propositions put to markets in early flotations of renewable energy firms, which largely ended in tears as clean energy stocks lost 46 per cent of their value across 2011–12 and reached a nadir of 78 per cent below 2007’s pre-crash values. The enthusiasm with which these IPOs have been greeted is remarkable, and it seems that investors’ appetites for steady returns in an era of record-low interest rates outweighs desires for high-risk/high-reward stocks.
Ben Warren is Global Cleantech Transactions leader, as well as UK Environment Finance leader at EY. For more informaiton, visit www.ey.com..
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