PEi: What was your motivation in founding Econcern?
Dr. Ad van Wijk, Chairman, Econcern
van Wijk: I was one of the founders in 1984, nearly 25 years ago. By that time we had had the first two oil crises and the [global think tank] Club of Rome’s report, which explored the consequences of the population growth and finite resources. There was also at that time the environmental problem of acid rain due to the high levels of NOx and SOx in the air.
In the Netherlands we had a nuclear debate and it was decided that it was not desirable to build so many nuclear power stations to meet our needs. I thought, ‘Couldn’t we do this another way?’ So, although there was very little interest at that time, we decided to examine ways that renewable energy could revolutionize the electricity system as a whole.
PEi: Is there an energy crisis?
van Wijk: Unlike oil, renewable energy sources are growing. Every hour we get more energy from the sun that the whole world can consume in a year. There is no energy crisis. The problem is the way we consume energy.
The first thing [to do] is look at how we use energy. For the most part energy companies are not concerned in how we use energy once they sell it to us – energy efficiency, overall, is just two per cent worldwide. By looking to renewables, you see that it has a natural advantage: it is everywhere around us; the sun, heat, wind, biomass.
The disadvantage is that it is dispersed and not easy to transport like barrels of oil. So Econcern is finding more efficient ways of using it.
PEi: What is the purpose of Econcern?
van Wijk: Although we harness solar, wind and heat ultimately we do only one thing: sustainable energy. There is no one magic solution. We look at each problem separately and provide the best energy service for that situation.
Econcern essentially combines renewable energy and energy efficiency services. Energy services are the starting point of new thinking about how we can provide a sustainable energy supply for everyone. It is not all about a fancy new way of generating electricity, but how you use existing resources.
PEi: Please explain how you do this.
van Wijk: Think of your doorbell on your house. It is always on and always using electricity, on average approximately 50 kWh a year. Within the European Union (EU) alone, 200 million doorbells are consuming around ten billion kWh/year, equivalent to two large coal fired power plants of 600 MW running full time. You would need a lot of friends to make use of all that electricity!
The classical renewable way is to erect a large solar module on your roof and generate the power for your doorbell that way. What we say is to ‘think differently’. Place a thumbnail-sized solar cell on your doorbell, which stores a small amount of power in a capacitor. When the button is pressed, the capacitor switches on the transformer (which has been switched off) and rings the bell, thus saving 50 kWh/year for the doorbell and, of course, ten billion kWh in the EU.
We also look at ways of saving energy for agriculture. In the Netherlands we have a lot of greenhouses, which essentially are solar collectors. In summer the greenhouses are collecting so much heat we are forced to open the windows and the heat is lost, but in winter we use gas or electricity to keep the greenhouse lost.
Opening the windows also allows the escape of moisture and CO2, which tomato farmers use to grow their plants. At the same time you allow insects in, which spread diseases and call for the use of pesticides.
What we do here is to collect the heat, store it underground in a natural underground aquifer and use it in winter. The farmer can now close the windows, which saves around 50 per cent of water usage, the cost of pesticides is minimalized, his crop of tomatoes or flowers is boosted by around 25 per cent and he can heat his greenhouse in winter at a fraction of the cost. He can also control the climate of his greenhouse and thus adjust his crop to suit demand.
Thirdly, we look at the cooling and heating of buildings. Some 25 per cent of energy worldwide is used in controlling the temperature of buildings - in summer it’s too hot, in winter it’s too cold. Essentially that is not a problem of energy production but one of storage. If you can store the cold of winter and use it in summer and vice versa, we have solved this problem.
In the Caribbean islands, however, it is hot all year round, so our heat storage system does not apply. Here, and in Singapore or Hong Kong, 50 per cent of energy requirement is for air conditioning. Electricity is used to cool water of 6-7 ºC, which is pumped thorough the buildings.
Again, we could use solve this problem in a classical renewable way i.e. erect a wind turbine and produce electricity. We say that the renewable resource is already there the ocean; at a depth of 700 m, we have a renewable supply of water at a temperature of 6 ºC. We do not pump it up because of the problem of pressure; we use a siphon to flow the water through pipes to a heat exchanger – a very simple and very cost-effective system.
Wave Rotor is capable of converting wave energy directly into power without the need of intermediate transmission steps.
PEi: Is there a fundamental clash between Econcern’s goal of energy efficiency and that of utilities and their shareholders, which seek to sell as much as possible?
van Wijk: There are fundamentally different ways of looking at the energy system. Utilities, of course, are intrinsically not interested in saving energy or having a more energy efficient system as they will sell less electricity.
On the other hand, using the example of our air conditioning system in the Caribbean, we also provide a commodity cooling. At first, we tried to sell the cooling to the hotels, but even after five years we could not get the permits to do it. Why not? Because the state-owned utility, which supplies the hotel with the electricity would have sold less electricity and paid a smaller dividend to the government.
So, we sold cooling to the state utility. They put a higher margin on it than the electricity sold to the hotel, and were able to pay a dividend to the government. In the end we got our permits – problem solved and the hotel’s cooling costs were still much lower than before. In the future we will have to make more combinations with utilities such as this to create a different market.
PEi: The CEO of National Grid, Steve Holliday, wants a fundamental shift in the quantitative way utilities earn revenue from selling electricity to encourage energy efficiency. Do you believe this is possible?
van Wijk: Utilities actually make a very low margin from selling electricity as a commodity to consumers. If you look at the business model of the energy service provider that is behind the meter you will see their margins are much higher, so a combination of the two is desirable.
This can be applied to renewable energy. Using the greenhouse scenario as an example, the energy provider loses the sale of gas to heat the greenhouse. The major drawback with renewable energy is the high upfront investment costs. The farmer is unable to make the investment, but the energy company can. So we sell the system to the energy provider and the farmer then buys from them the ‘climate’, the temperature, the humidity, and the CO2 concentration in the air.
This is changing the business model of energy supply. You will have utilities that are able to adapt and those that cannot. Utilities with a high carbon footprint will have more costs and may go out of business. You will see more companies with a zero carbon footprint like us will be more competitive.
Econcern’s biogas project in Honduras consists of an anaerobic treatment plant with two covered lagoons. The biogas is captured and used to generate electricity.
PEi: Do you see a change in thinking from large power providers as a new generation of younger blood enters the boardrooms?
van Wijk: Yes and no. The younger people coming in are very concerned about the environment, the higher prices of energy globally and the problems of supply. They are not stuck in the old monopolistic ways of thinking about how utilities used to sell electricity. However, most of them are still thinking about the energy system in the traditional ways. It will take more energy companies with business models like Econcern who will compete with them to concentrate their minds.
PEi: What is Econcern doing at the domestic level i.e. housing?
van Wijk: We now have a lot of requests for carbon-neutral and energy-neutral real estate developments. These are energy systems that sometimes take energy from the grid but sell it at other times, so over the course of the year the net energy use from the grid is zero. We put structures in place such as an aquifer in the ground for heating and cooling, solar panels and small wind turbines on the roof.
The investment in the building is split from the installation of the energy system, and the companies that rent the office space buy their electricity from a dedicated independent power producer. This means that the costs of the renewable energy installation fall not on the owner of the building but on this energy company.
PEi: Do you believe that there will be one dominant source of renewable electricity in the foreseeable future?
van Wijk: No. Each problem demands a different solution. In the Caribbean, for cooling, we would use cold water from the ocean. For agriculture we would use an aquifer. For electricity in Southern Italy we use solar power on rooftops. The resource is different all over the world, so the solutions are different. Think of systems not of technology.
PEi: Material costs of building offshore wide farms have soared. Margins have plummeted. Shell has pulled out of the London Array project. As a major wind farm developer, is Econcern worried by these developments?
van Wijk: We make very healthy margins and profits from offshore wind farms. Shell said that it pulled out of London Array because of rising costs and falling profit margins. But, to me, that’s a strange decision. Yes, costs have risen in the past year. Steel prices, copper prices, longer lead times for wind turbines and so forth. On the other hand, the price of oil has soared. Even with the credit crunch and higher interest rates, the project is more feasible, more economic than two years ago. I don’t see Shell’s argument.
PEi: So offshore wind farms will remain competitive?
van Wijk: Yes, but we need a level playing field. It is not a fair market in comparison to fossil fuel generation. There are three factors. Firstly, we have to pay for the grid connection. Normally the grid operator would pay, but they represent one-third of the costs of the wind farm.
Secondly, we have to compete with coal, oil and gas fired power plants, which were given their carbon permits for free. We produce no carbon from wind, but that’s not reflected in the price of electricity. It’s easily worth 2-3 euro cents per kWh extra.
Lastly, we have different conditions imposed on us than, say, coal fired plants. In order to gain planning permission for our Q7 offshore wind farm in the Netherlands, we had the condition to demolish it after 20 years and return the sea to its original condition. For this we had to place a €15 million deposit in the bank account of the Dutch government. No other power plant has a 20-year condition. It seems unfair to us.
Yet with all these things we are already competitive. The future developments in wind turbine technology bode well. Our Diawind 5.3 MW dedicated offshore wind turbine, which utilizes direct drive and lowers the top head mast by a factor of two. This lowers the turbine costs, the foundations costs, the grid connection costs in a considerable way. So we are competitive already and it will be more so in the future through research & development.
Econcern’s energy efficient Closed Greenhouse technology allows farmers to control the environment to their needs
PEi: Can the European Union possibly meet its targets for renewable energy generation?
van Wijk: In the 1980s and 1900s we developed many scenarios for the integration of wind power and energy efficiency. The reality has always exceeded the most optimistic scenarios.
We are at a tipping point. High oil prices and energy security are serious problems. We can produce more energy from the North Sea than we can consume in Europe. That’s our own resource you don’t have to go to Saudi Arabia or Russia. It’s not about 20 per cent, we’ll go even higher. There are billions of euros available.
The only thing that is limiting goals is a shortage of skilled people. We have to train and educate in a range of skills and technologies that are not traditionally taught in colleges and universities. It is a real challenge.