NewEnergyNews

NewEnergyNews

Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

The challenge: To make every day Earth Day.

YESTERDAY

  • THE STUDY: U.S. WIND RIGHT NOW
  • QUICK NEWS, August 26: CLIMATE MODELS PROVE RIGHT AGAIN; ABOUT INVESTING IN SOLAR; GM VS TESLA IN THE 200 MILE RACE

    THE DAY BEFORE

  • THE STUDY: NEW CALMER WINDS AHEAD FOR EUROPE
  • QUICK NEWS, August 25: JULY’S U.S. ENERGY BUILD WAS ALL NEW ENERGY; CLIMATE CHANGE FOR ENERGY INVESTORS; WIND CAN GROW FASTER THAN NUCLEAR
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    THE DAY BEFORE THE DAY BEFORE

  • Weekend Video: New Thoughts About New Energy For A New Climate
  • Weekend Video: Carbon
  • Weekend Video: Why Utilities Struggle With New Energy
  • THE DAY BEFORE THAT

  • FRIDAY WORLD HEADLINE-WHY DENIERS’ BRAINS REJECT CLIMATE CHANGE
  • FRIDAY WORLD HEADLINE-CHINESE TO HELP SAUDIS GO NEW ENERGY BY 2032
  • FRIDAY WORLD HEADLINE-BUILDING EFFICIENCY TO BOOM IN EUROPE
  • FRIDAY WORLD HEADLINE-GEOTHERMAL SEEKS CARIBBEAN BREAKTHROUGH
  • AND THE DAY BEFORE THAT

    THINGS-TO-THINK-ABOUT THURSDAY, August 21:

  • TTTA Thursday-THE RISKIEST ENERGY PLAYS IN THE WORLD
  • TTTA Thursday-FACTS ON BIRDS AND SOLAR POWER
  • TTTA Thursday-WIND PRICES AT ALL TIME LOWS
  • TTTA Thursday-PRICES DROPPING ON GREEN BUILDING
  • THE LAST DAY UP HERE

  • THE STUDY: IMPORTS, EXPORTS AND NEW ENERGY
  • QUICK NEWS, August 20: COURTS DISMISS 98% OF WIND HEALTH COMPLAINTS; TURNING OLD CAR BATTERIES INTO NEW SOLAR PANELS; OCEAN ENERGY PIONEERS
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    Anne B. Butterfield of Daily Camera and Huffington Post, is a biweekly contributor to NewEnergyNews

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT)

    November 26, 2013 (Huffington Post via NewEnergyNews)

    Everywhere we turn, environmental news is filled with horrid developments and glimpses of irreversible tipping points.

    Just a handful of examples are breathtaking: Scientists have dared to pinpoint the years at which locations around the world may reach runaway heat, and in the northern hemisphere it's well in sight for our children: 2047. Survivors of Superstorm Sandy are packing up as costs of repair and insurance go out of reach, one threat that climate science has long predicted. Or we could simply talk about the plight of bees and the potential impact on food supplies. Surprising no one who explores the Pacific Ocean, sailor Ivan MacFadyen described long a journey dubbed The Ocean is Broken, in which he saw vast expanses of trash and almost no wildlife save for a whale struggling a with giant tumor on its head, evoking the tons of radioactive water coming daily from Fukushima's lamed nuclear power center. Rampaging fishing methods and ocean acidification are now reported as causing the overpopulation of jellyfish that have jammed the intakes of nuclear plants around the world. Yet the shutting down of nuclear plants is a trifling setback compared with the doom that can result in coming days at Fukushima in the delicate job to extract bent and spent fuel rods from a ruined storage tank, a project dubbed "radioactive pick up sticks."

    With all these horrors to ponder you wouldn't expect to hear that you should also worry about the United States running out of coal. But you would be wrong, says Leslie Glustrom, founder and research director for Clean Energy Action. Her contention is that we've passed the peak in our nation's legendary supply of coal that powers over one-third of our grid capacity. This grim news is faithfully spelled out in three reports, with the complete story told in Warning: Faulty Reporting of US Coal Reserves (pdf). (Disclosure: I serve on CEA's board and have known the author for years.)

    Glustrom's research presents a sea change in how we should understand our energy challenges, or experience grim consequences. It's not only about toxic and heat-trapping emissions anymore; it's also about having enough energy generation to run big cities and regions that now rely on coal. Glustrom worries openly about how commerce will go on in many regions in 2025 if they don't plan their energy futures right.

    2013-11-05-FigureES4_FULL.jpgclick to enlarge

    Scrutinizing data for prices on delivered coal nationwide, Glustrom's new report establishes that coal's price has risen nearly 8 percent annually for eight years, roughly doubling, due mostly to thinner, deeper coal seams plus costlier diesel transport expenses. Higher coal prices in a time of "cheap" natural gas and affordable renewables means coal companies are lamed by low or no profits, as they hold debt levels that dwarf their market value and carry very high interest rates.

    2013-11-05-Table_ES2_FULL.jpgclick to enlarge

    2013-11-05-Figure_ES2_FULL.jpg

    One leading coal company, Patriot, filed for bankruptcy last year; many others are also struggling under bankruptcy watch and not eager to upgrade equipment for the tougher mining ahead. Add to this the bizarre event this fall of a coal lease failing to sell in Wyoming's Powder River Basin, the "Fort Knox" of the nation's coal supply, with some pundits agreeing this portends a tightening of the nation's coal supply, not to mention the array of researchers cited in the report. Indeed, at the mid point of 2013, only 488 millions tons of coal were produced in the U.S.; unless a major catch up happens by year-end, 2013 may be as low in production as 1993.

    Coal may exist in large quantities geologically, but economically, it's getting out of reach, as confirmed by US Geological Survey in studies indicating that less than 20 percent of US coal formations are economically recoverable, as explored in the CEA report. To Glustrom, that number plus others translate to 10 to 20 years more of burning coal in the US. It takes capital, accessible coal with good heat content and favorable market conditions to assure that mining companies will stay in business. She has observed a classic disconnect between camps of professionals in which geologists tend to assume money is "infinite" and financial analysts tend to assume that available coal is "infinite." Both biases are faulty and together they court disaster, and "it is only by combining thoughtful estimates of available coal and available money that our country can come to a realistic estimate of the amount of US coal that can be mined at a profit." This brings us back to her main and rather simple point: "If the companies cannot make a profit by mining coal they won't be mining for long."

    No one is more emphatic than Glustrom herself that she cannot predict the future, but she presents trend lines that are robust and confirmed assertively by the editorial board at West Virginia Gazette:

    Although Clean Energy Action is a "green" nonprofit opposed to fossil fuels, this study contains many hard economic facts. As we've said before, West Virginia's leaders should lower their protests about pollution controls, and instead launch intelligent planning for the profound shift that is occurring in the Mountain State's economy.

    The report "Warning, Faulty Reporting of US Coal Reserves" and its companion reports belong in the hands of energy and climate policy makers, investors, bankers, and rate payer watchdog groups, so that states can plan for, rather than react to, a future with sea change risk factors.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    It bears mentioning that even China is enacting a "peak coal" mentality, with Shanghai declaring that it will completely ban coal burning in 2017 with intent to close down hundreds of coal burning boilers and industrial furnaces, or shifting them to clean energy by 2015. And Citi Research, in "The Unimaginable: Peak Coal in China," took a look at all forms of energy production in China and figured that demand for coal will flatten or peak by 2020 and those "coal exporting countries that have been counting on strong future coal demand could be most at risk." Include US coal producers in that group of exporters.

    Our world is undergoing many sorts of change and upheaval. We in the industrialized world have spent about a century dismissing ocean trash, overfishing, pesticides, nuclear hazard, and oil and coal burning with a shrug of, "Hey it's fine, nature can manage it." Now we're surrounded by impacts of industrial-grade consumption, including depletion of critical resources and tipping points of many kinds. It is not enough to think of only ourselves and plan for strictly our own survival or convenience. The threat to animals everywhere, indeed to whole systems of the living, is the grief-filled backdrop of our times. It's "all hands on deck" at this point of human voyaging, and in our nation's capital, we certainly don't have that. Towns, states and regions need to plan fiercely and follow through. And a fine example is Boulder Colorado's recent victory to keep on track for clean energy by separating from its electric utility that makes 59 percent of its power from coal.

    Clean Energy Action is disseminating "Warning: Faulty Reporting of US Coal Reserves" for free to all manner of relevant professionals who should be concerned about long range trends which now include the supply risks of coal, and is supporting that outreach through a fundraising campaign.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    Author's note: Want to support my work? Please "fan" me at Huffpost Denver, here (http://www.huffingtonpost.com/anne-butterfield). Thanks.

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    Anne's previous NewEnergyNews columns:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns

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    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

    email: herman@NewEnergyNews.net

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    Your intrepid reporter

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      A tip of the NewEnergyNews cap to Phillip Garcia for crucial assistance in the design implementation of this site. Thanks, Phillip.

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    Pay a visit to the HARRY BOYKOFF page at Basketball Reference, sponsored by NewEnergyNews and Oil In Their Blood.

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  • Wednesday, August 27, 2014

    TODAY’S STUDY: THE RISKIEST ENERGY IN THE WORLD

    Oil & Gas Majors: Fact Sheets

    August 2014 (Carbon Tracker Initiative)

    Executive Summary

    Overview: Key Points

    1. The oil & gas sector is currently facing pressure from investors to focus on capital discipline, and several majors have stated that their capex will either fall or stay flat over the coming years.

    2. In order to sustain shareholder returns, companies should focus on low cost projects, deferring or cancelling projects with high breakeven costs. Capital could be redeployed to share buybacks or increased dividends.

    3. This process has already started, particularly in the Canadian oil sands sector. The majors’ portfolios include several significant arctic and deep water/ultra-deep water projects which could prove low return assets in a low-demand scenario. Deferral or cancellation of these might protect shareholder returns.

    4. Collectively, the majors have a potential capital spend of $548bn over the period 2014-2025 on projects that require a market price of at least $95/bbl for sanction (34% of total capex on all their projects).

    5. $357bn of this is on high cost projects that are yet to be developed. Such projects are candidates for deferral or cancellation.

    6. Investors may wish to push companies for more detailed disclosure of project level economics, and challenge developments that carry an undue risk of wasting capital and destroying value.

    Introduction

    CTI has demonstrated in its research the mismatch between continuing growth in oil demand and reducing carbon emissions to limit global warming. Our most recent research with ETA to produce the carbon cost supply curve for oil indicates that there is significant potential production that could be considered both high cost and in excess of a carbon budget. We have focused our research on undeveloped projects that, allowing for a $15/bbl contingency, would need a $95/bbl market price or above to be sanctioned (i.e. a market price required for sanction of $95/bbl is equivalent to a project breakeven price of $80/bbl), as they are the marginal barrels that could be exposed to a lower demand and price scenario in the future.

    This note examines the seven largest publicly listed oil companies’ potential future project portfolios looking at production and capex using Rystad Energy’s UCube Upstream database (as at July 2014). “Capex” and “production” in this note (amongst other terms) are thus based on Rystad’s analysis and expectations of the company’s potential projects. The companies’ planned or realised capex and production may differ from these projections. Where possible we have sought to verify the status of the projects at the time of writing. A $15/bbl premium has been included in the required market prices for sanction of oil sands projects to account for additional transport costs. Individual company portfolios and exposure to high-risk projects are contained in the individual company factsheets which accompany this summary comparison.

    Projects Shelved

    There have been some recent examples of projects being put on ice by the majors. In the oil sands in 2014, Total and Suncor have shelved the $11bn Joslyn project1 and Shell put on hold its Pierre River project2 . Deepwater projects have also been deferred with BP not proceeding with its Mad Dog extension in the Gulf of Mexico3 , and Chevron reviewing its $10bn Rosebank project in the North Sea4. In the Arctic, Statoil and Eni have deferred a decision on the $15.5bn Johan Castberg project5.

    Some companies are therefore already starting to demonstrate greater capital discipline amidst falling group returns. This is becoming increasingly necessary as near term cash flows are not sufficient to maintain both dividends and capital expenditure plans. In the short-term companies have squared the circle by selling assets or adding debt. Cutting capital spend should improve corporate cash flow statements as could new cash flow from new projects. But with some companies continuing to sanction projects at the high end of the cost curve, hence increasing operational gearing, shareholder value could be put at risk should demand and hence oil prices be lower than the majors anticipate.

    Potential Production

    • Shell has one of the highest proportions of high-cost potential production, with 45% requiring a market price of $75/bbl and 30% requiring at least $95/bbl, although ConocoPhillips has the highest cost production profile with 56% and 36% respectively.

    • Eni and BP have the portfolios with the lowest oil market price requirements, 30% and 40% of which respectively requiring above $75/bbl and 15% and 21% of which respectively requiring at least $95/bbl.

    Potential Capex

    • Turning to capital spend in the nearer term (2014-2025) Total and ExxonMobil’s capital budgets have some of the highest oil price requirements, with 60% and 68% respectively on potential projects requiring a market price of at least $75/bbl for sanction and 40% and 39% requiring at least $95/bbl (including a $15/bbl contingency allowance).

    • Shell is not dissimilar with 65% of its potential capex requiring a market price over $75/bbl and 37% over $95/bbl.

    • BP and Eni again have the lowest proportion of high-price requirements, with 25% and 28% on projects that need a market price of at least $95/bbl for sanction, although Eni and ConocoPhillips have the least exposure to projects that would be need at least $75/bbl with 54% and 59%.

    • Looking at just undeveloped projects, 27% of Total’s and 26% of Shell’s capex in this category requires a market price of $95/bbl+.

    • By contrast, only 17% of ConocoPhillips’s potential capex budget is on high-cost projects that are as yet undeveloped. BP and Exxon have the second lowest exposure with with 20% of their capex in this category.

    • “Undeveloped” in this sense comprises fields where a discovery has been made (“discovery”) and where no discovery has been made (“undiscovered”)

    • Oil sands projects account for 27% and 26% of Shell and ConocoPhillips’s high-cost potential development spend.

    • Capital spend on undeveloped, high-break even projects is heavily biased towards the unconventional category, with just 14% of overall potential spend on conventional projects.

    • BP and Total have particularly high exposure to deep water developments, with deep water and ultra-deep water in aggregate representing 78% and 73% of potential high cost spend respectively.

    • ConocoPhillips is heavily biased towards arctic projects proportionately, which represent 24% of potential spend compared to an average of 5% amongst the other majors.

    Cancellation Candidates

    Focusing on individual projects for each company, there are a number of undeveloped, high-cost projects which are prime candidates for cancellation…The top twenty largest projects which represent high-risk, high-cost options for the oil majors…are primarily a mix of Alberta oil sands and deep water projects in the Atlantic, which would represent $91 billion of capital (over the period 2014-25). This capital could instead be returned to shareholders rather than being put at risk in projects that are already high cost and low return. Such projects have high operational gearing, putting shareholder returns at risk in a low oil price environment.

    Key Questions

    As well as specific questions on high cost projects and risk concentration identified for each company, investors should continue to push for disclosure on the following issues across the sector:

    1. How does continuing dependence on oil fit with the imperative to tackle climate change recognised by most oil companies?

    2. How would a range of oil prices impact your project economics and hence future earnings?

    3. How does the current strategy of reinvesting revenues in high cost oil projects deliver shareholder value in a low demand, low price scenario?

    QUICK NEWS, August 27: VERIZON’S $40MIL SOLAR BUY; WIND PRICES HIT RECORD LOWS; NUKE INSPECTOR SAYS DIABLO CYN IS UNSAFE

    VERIZON’S $40MIL SOLAR BUY Verizon Announces $40 Million Solar Energy Investment

    Kiley Kroh, August 25, 2014 (Climate Progress)

    “…Verizon Wireless Inc. [the biggest U.S. wireless carrier] will invest $40 million into 10.2 megawatts (MW) of solar power…at eight Verizon network facilities in California, Maryland, Massachusetts, New Jersey, and New York…[They] will nearly double the amount of power the company derives from solar energy…[Solar is] a key component of the company’s sustainability plan…[according to the company, and] the steadily declining cost of solar power made it a smart financial move…Rhone Resch, president of the Solar Energy Industries Association (SEIA), said the latest move by Verizon puts the company at the top of U.S. telecom companies investing in solar power…[and by year’s end] Verizon will be among the top 20 of all companies nationwide [in number of solar installations and solar generating capacity]…Last year, Verizon announced a $100 million investment in a combination of solar panels and fuel cell technology, a decision it predicted would not only lower utility bills and emissions but also improve the reliability of its operations…” click here for more

    WIND PRICES HIT RECORD LOWS How Low Can Wind Energy Go? 2.5¢ Per Kilowatt-Hour Is Just The Beginning

    Tina Casey, August 23, 2014 (Clean Technica)

    “…[A] new Department of Energy report on the US wind energy market…came up [with a new low] average cost for wind energy…[But the] 2013 Wind Technologies Market Report repeatedly cautions that the 2013 sample size is small compared to previous annual wind energy reports...[T]he 2014 sample will be much larger, at 16 projects totaling more than 2 GW (gigawatts)…Power purchase agreements (PPAs) are quickly becoming the financing deal of choice for wind as well as solar power. The report notes that PPAs for wind energy reached a new low on 2013, pegging the figure at $25 per MWh or 2.5¢ per kWh…[M]ost of the projects in the sample are located in the…high-quality wind interior, where costs are lower…[but] the latest generation of wind turbines is on a technology trend that enables a continued decline [in PPA price], even in less than optimal wind areas…[T]he report is confident that wind PPAs will give natural gas a run for the money over the next 25 years, at least in the Interior…[and] beat the pants off other fossil fuels in some regions…” click here for more

    NUKE INSPECTOR SAYS DIABLO CYN IS UNSAFE Hearings planned after call for nuke-plant closure

    Michael R. Blood, August 25, 2014 AP via Yahoo News

    A verified confidential filing with the Nuclear Regulatory Commission by former Diablo Canyon Nuclear Power Plant on-site inspector Michael Peck, a PHD in nuclear engineering and senior NRC instructor, recommends shutting down the California plant until its two reactors can be shown capable of withstanding earthquake forces unanticipated when the facility was built, a recommendation made more central by the recent magnitude-6 earthquake in Northern California. Pacific Gas and Electric Co., which owns and operates Diablo Canyon, argues the 1,122 megawatt unit 1, which went online in 1985, and the 1,118 megawatt unit two, which went online in 1986, have had thorough NRC analysis and are "seismically safe" since being retrofitted during construction in the 1970s. Environmentalists argue its 50-mile proximity to a half million people requires higher standards and Peck cited PG&E 2011 research that determined any of three nearby faults is capable of producing significantly more “peak ground acceleration” than was expected in the 1970s. Senate Environment and Public Works Committee Chair Barbara Boxer (D-CA), a supporter of the NRC’s directive to U.S. nuclear plants to reevaluate seismic risks by March 2015 since the 2011 magnitude-9 earthquake and tsunami caused a meltdown at Japan’s Fukushima Daiichi plant, will hold hearings on why Peck’s July 2013 filing has gone unanswered. click here for more

    Tuesday, August 26, 2014

    TODAY’S STUDY: U.S. WIND RIGHT NOW

    2013 Wind Technologies Market Report

    Ryan Wiser, Mark Bolinger, et al, August 18, 2014 (Lawrence Berkeley National Laboratory)

    Executive Summary

    Annual wind power capacity additions in the United States were modest in 2013, but all signals point to more-robust growth in 2014 and 2015. With the industry’s primary federal support—the production tax credit (PTC)—only available for projects that had begun construction by the end of 2013, the next couple years will see those projects commissioned. Near-term wind additions will also be driven by recent improvements in the cost and performance of wind power technologies. At the same time, the prospects for growth beyond 2015 are uncertain. The PTC has expired, and its renewal remains in question. Continued low natural gas prices, modest electricity demand growth, and limited near-term demand from state renewables portfolio standards (RPS) have also put a damper on industry growth expectations. These trends, in combination with increasingly global supply chains, continue to impact domestic manufacturing of wind equipment. What they mean for wind power additions through the end of the decade and beyond will be dictated in part by future natural gas prices, fossil plant retirements, and policy decisions. At the same time, recent declines in wind energy costs and prices and the potential for continued technological advancements have boosted future growth prospects.

    Key findings from this year’s Wind Technologies Market Report include:

    Installation Trends

    • Wind power additions stalled in 2013, with only 1,087 MW of new capacity added in the United States and $1.8 billion invested. Wind power installations in 2013 were just 8% of those seen in the record year of 2012. Cumulative wind power capacity grew by less than 2% in 2013, bringing the total to 61 GW.

    • Wind power represented 7% of U.S. electric-generating capacity additions in 2013. Overall, wind power ranked fourth in 2013 as a source of new generation capacity, standing in stark contrast to 2012 when it represented the largest source of new capacity in the United States. The 2013 result is also a notable departure from the six years preceding 2013 during which wind constituted between 25% and 43% of capacity additions in each year. Since 2007, wind power has represented 33% of all U.S. capacity additions, and an even larger fraction of new generation capacity in the Interior (54%) and Great Lakes (48%) regions. Its contribution to generation capacity growth over that period is somewhat smaller in the West and Northeast (both 29%), and considerably less in the Southeast (2%).

    • The United States fell to sixth place in annual wind additions in 2013, and was well behind the market leaders in wind energy penetration. After leading the world in annual wind power additions from 2005 through 2008, and then narrowly regaining the lead in 2012, in 2013 the United States represented only 3% of global additions. In terms of cumulative capacity, the United States remained the second leading market. A number of countries are beginning to achieve high levels of wind penetration: end-of-2013 installed wind power is estimated to supply the equivalent of 34% of Denmark’s electricity demand and approximately 20% of Spain, Portugal and Ireland’s demand. In the United States, the wind power capacity installed by the end of 2013 is estimated, in an average year, to equate to nearly 4.5% of electricity demand.

    • California installed the most capacity in 2013 with 269 MW, while nine states exceed 12% wind energy penetration. New large-scale wind turbines were installed in thirteen states, and Puerto Rico, in 2013. On a cumulative basis, Texas remained the clear leader. Notably, the wind power capacity installed in Iowa and South Dakota supplied 27% and 26%, respectively, of all in-state electricity generation in 2013, with Kansas close behind at more than 19%. In six other states wind supplied between 12% and 17% of all in-state electricity generation in 2013.

    • No commercial offshore turbines have been commissioned in the United States, but offshore project and policy developments continued in 2013. At the end of 2013, global offshore wind capacity stood at roughly 6.8 GW, with Europe being the primary locus of activity. No commercial offshore projects have been installed in the United States, and the emergence of a U.S. market faces both challenges and opportunities. Strides continued to be made in the federal arena in 2013, both through the U.S. Department of the Interior’s responsibilities with regulatory approvals (the first competitive leases were issued in 2013) and the U.S. Department of Energy’s (DOE’s) investments in offshore wind energy research and development, including funding for demonstration projects. Navigant, meanwhile, has identified 14 projects totaling approximately 4.9 GW that are somewhat more advanced in the development process. Two of these have signed power purchase agreements (PPAs), and both sought to commence construction in 2013 in order to qualify for the federal tax credits.

    • Data from interconnection queues demonstrate that a substantial amount of wind power capacity is under consideration. At the end of 2013, there were 114 GW of wind power capacity within the transmission interconnection queues reviewed for this report. 95% of this capacity is planned for Texas, the Midwest, Southwest Power Pool, PJM Interconnection, the Northwest, the Mountain region, and California. Wind power represented 36% of all generating capacity within these queues at the end of 2013, higher than all other generating sources except natural gas. In 2013, 21 GW of gross wind power capacity entered the interconnection queues, compared to 42 GW of natural gas and 11 GW of solar. Of note is that the absolute amount of wind, coal, and nuclear power in the sampled interconnection queues has generally declined in recent years, whereas natural gas and solar capacity has increased.

    Industry Trends

    • GE captured 90% U.S. market share in a slow 2013. Siemens came in a distant second, with 8% of the 2013 buildout. Globally, Vestas recaptured the mantle of top supplier, while GE dropped to the fifth spot. Chinese turbine manufacturers continue to occupy positions of prominence in the global ratings, with eight of the top 15 spots. To date, however, their growth has been based almost entirely on sales to the Chinese market; Sany was the only Chinese manufacturer to install turbines (just 8 MW) in the United States in 2013.

    • The manufacturing supply chain experienced substantial growing pains. With recent cost-cutting moves, the profitability of turbine suppliers rebounded in 2013, after a number of years in decline. Five of the 10 turbine suppliers with the largest share of the U.S. market had one or more domestic manufacturing facilities at the end of 2013. Nine years earlier there was only one active utility-scale turbine manufacturer assembling nacelles in the United States. Domestic nacelle assembly capability stood at roughly 10 GW in 2013, and the United States also had the capability of producing approximately 7 GW of blades and 8 GW of towers annually. Despite the significant growth in the domestic supply chain over the last decade, prospects for further expansion have dimmed. More domestic wind manufacturing facilities closed in 2013 than opened. Additionally, the entire wind energy sector employed 50,500 full-time workers in the United States at the end of 2013, a deep reduction from the 80,700 jobs reported for 2012. With significant wind installations expected in 2014 and 2015, turbine orders have now rebounded. But, with uncertain demand after 2015, manufacturers have been hesitant to commit additional resources to the U.S. market.

    • Despite challenges, a growing percentage of the equipment used in U.S. wind power projects has been sourced domestically since 2006-2007. Trade data show that growth in installed wind power capacity has outpaced growth in selected, tracked wind equipment imports since 2006-2007. As a result, a decreasing percentage of the equipment (in dollar- value terms) used in wind power projects has been imported, when focusing on selected trade categories. When presented as a fraction of total equipment-related wind turbine costs, the combined import share of wind equipment tracked by trade codes (i.e., blades, towers, generators, gearboxes, and wind-powered generating sets) is estimated to have declined from nearly 80% in 2006–2007 to approximately 30% in 2012–2013; the overall import fraction is considerably higher when considering equipment not tracked in wind-specific trade codes. Domestic content has increased and is relatively high for blades, towers, and nacelle assembly; domestic content is considerably lower for much of the equipment internal to the nacelle. Exports of wind-powered generating sets from the United States have increased, rising from $16 million in 2007 to $422 million in 2013.

    • The project finance environment held steady in 2013. In a relatively lackluster year for project finance, both tax equity yields and debt interest rates were essentially unchanged in 2013. Financing activity is likely to pick up in 2014 based on the number of projects with signed power purchase agreements that will need to achieve commercial operations in 2014 and 2015 in order to stay within the PTC safe harbor guidelines provided by the IRS. Investors seem confident that sufficient capital will be available to finance this expansion. Perhaps the most notable development in 2013 (and persisting into 2014) is that several large project sponsors—including NRG, Pattern, and most recently NextEra—spun off so-called “yieldcos” as a way to raise capital from public equity markets. These “yieldcos” hold a subset of each sponsor’s operating projects, and pay out the majority of cash revenue from long-term electricity sales.

    • Independent power producers own 95% of the new wind capacity installed in 2013. Moreover, on a cumulative basis considering all wind installed in the United States by the end of 2013, independent power producers (IPPs) own 83% of wind power capacity, while utilities own 15%, with the final 2% owned by entities that are neither IPPs nor utilities (e.g., towns, schools, commercial customers, farmers).

    • Long-term contracted sales to utilities remained the most common off-take arrangement, but merchant projects may be regaining some favor, at least in Texas. Electric utilities continued to be the dominant off-takers of wind power in 2013, either owning (4%) or buying (70%) power from 74% of the new capacity installed last year. Merchant/quasi-merchant projects accounted for another 25%, and that share may increase in the next two years as wind energy prices have declined to levels competitive with wholesale market price expectations in some regions, most projects currently under construction will come online this year or next in order to stay within the IRS safe harbor with respect to the PTC, and wind power purchase agreements remain in short supply. On a cumulative basis, utilities own (15%) or buy (54%) power from 69% of all wind power capacity in the United States, with merchant/quasi-merchant projects accounting for 23% and competitive power marketers 8%.

    Technology Trends

    • Turbine nameplate capacity, hub height, and rotor diameter have all increased significantly over the long term. The average nameplate capacity of newly installed wind turbines in the United States in 2013 was 1.87 MW, up 162% since 1998–1999. The average hub height in 2013 was 80 meters, up 45% since 1998-1999, while the average rotor diameter was 97 meters, up 103% since 1998–1999.

    • Growth in rotor diameter has outpaced growth in nameplate capacity and hub height in recent years. Rotor scaling has been especially significant in recent years, and more so than increases in nameplate capacity and hub heights, both of which have seen a modest reversal of the long-term trend in the most recent years. In 2012, almost 50% of the turbines installed in the United States featured rotors of 100 meters in diameter or larger. Though 2013 was a slow year for wind additions, this figure jumped to 75% in that year.

    • Turbines originally designed for lower wind speed sites have rapidly gained market share. With growth in average swept rotor area outpacing growth in average nameplate capacity, there has been a decline in the average “specific power” i (in W/m2) among the U.S. turbine fleet over time, from 400 W/m2 among projects installed in 1998–1999 to 255 W/m2 among projects installed in 2013. In general, turbines with low specific power were originally designed for lower wind speed sites. Another indication of the increasing prevalence of lower wind speed turbines is that, in 2012, more than 50% of installations used IEC Class 3 and Class 2/3 turbines; in 2013, based on the small sample of projects installed that year, the percentage increased to 90%.

    • Turbines originally designed for lower wind speeds are now regularly employed in both lower and higher wind speed sites, whereas taller towers predominate in lower wind speed sites. Low specific power and IEC Class 3 and 2/3 turbines, originally designed for lower wind speeds, are now regularly employed in all regions of the United States, and in both lower and higher wind speed sites. In parts of the interior region, in particular, relatively low wind turbulence has allowed turbines designed for low wind speeds to be deployed across a wide range of site-specific resource conditions. The tallest towers, on the other hand, have principally been deployed in lower wind resource areas, presumably focused on those sites with higher wind shear.

    Performance Trends

    • Trends in sample-wide capacity factors have been impacted by curtailment and inter-year wind resource variability. Wind project capacity factors have generally been higher on average in more recent years (e.g., 32.1% from 2006–2013 versus 30.3% from 2000–2005), but time-varying influences—such as inter-year variations in the strength of the wind resource or changes in the amount of wind power curtailment—have tended to mask the positive influence of turbine scaling on capacity factors in recent years. Positively, the degree of wind curtailment has declined recently in what historically have been the most problematic areas, as a result of concrete steps taken to address the issue. For example, only 1.2% of all wind generation within ERCOT was curtailed in 2013; this was the lowest level of curtailment in Texas since 2007, and is down sharply from the peak of 17% in 2009.

    • Competing influences of lower specific power and lower quality wind project sites have left average capacity factors among newly built projects stagnant in recent years, averaging 31 to 34 percent nationwide. Even when controlling for time-varying influences by focusing only on capacity factors in 2013 (parsed by project vintage), it is difficult to discern any improvement in average capacity factors among projects built after 2005 (although the maximum 2013 capacity factors achieved by individual projects within each vintage have increased in the past five years). This is partially attributable to the fact that average “specific power” remained largely unchanged from 2006–2009, before resuming its downward trend from 2010 through 2013. At the same time, the average quality of the wind resource in which new projects are located has declined; this decrease was particularly sharp—at 15%—from 2009 through 2012, and counterbalanced the drop in specific power. Controlling for these two competing influences confirms this offsetting effect and shows that turbine design changes are driving capacity factors significantly higher over time among projects located within a given wind resource regime.

    • Regional variations in capacity factors reflect the strength of the wind resource and adoption of new turbine technology. Based on a sub-sample of wind projects built in 2012, average capacity factors in 2013 were the highest in the Interior (38%) and the lowest in the West (26%). Not surprisingly, these regional rankings are roughly consistent with the relative quality of the wind resource in each region, but also reflect the degree to which each region has, to this point, applied new turbine design enhancements (e.g., turbines with a lower specific power rating, or taller towers) that can boost project capacity factors. For example, the Great Lakes (which ranks second among regions in terms of 2013 capacity factor) has thus far adopted these new designs to a much larger extent than has the West (which ranks last).

    Cost Trends

    • Wind turbine prices remained well below levels seen several years ago. After hitting a low of roughly $750/kW from 2000 to 2002, average turbine prices increased to more than $1,500/kW by the end of 2008. Wind turbine prices have since dropped substantially, despite continued technological advancements that have yielded increases in hub heights and especially rotor diameters. Recently announced turbine transactions have often been priced in the $900–$1,300/kW range. These price reductions, coupled with improved turbine technology and more-favorable terms for turbine purchasers, have exerted downward pressure on total project costs and wind power prices.

    • Reported installed project costs continued to trend lower in 2013. The capacity-weighted average installed project cost within our limited 2013 sample stood at roughly $1,630/kW, down more than $300/kW from the reported average cost in 2012 and down more than $600/kW from the apparent peak in average reported costs in 2009 and 2010. With just 11 projects totaling 650 MW, however, the 2013 sample size is limited, perhaps enabling a few projects to unduly influence the weighted average. Early indications from a larger sample (16 projects totaling more than 2 GW) of projects currently under construction and anticipating completion in 2014 suggest that capacity-weighted average installed costs are closer to $1750/kW—still down significantly from 2012 levels.

    • Installed costs differed by project size, turbine size, and region. Installed project costs exhibit some economies of scale, at least at the lower end of the project and turbine size range. Additionally, among projects built in 2013, the windy Interior region of the country was the lowest-cost region.

    • Operations and maintenance costs varied by project age and commercial operations date. Despite limited data availability, it appears that projects installed over the past decade have, on average, incurred lower operations and maintenance (O&M) costs than older projects in their first several years of operation, and that O&M costs increase as projects age.

    Wind Power Price Trends

    • Wind PPA prices have reached all-time lows. After topping out at nearly $70/MWh for PPAs executed in 2009, the national average levelized price of wind PPAs that were signed in 2013 (and that are within the Berkeley Lab sample) fell to around $25/MWh nationwide— a new low, but admittedly focused on a sample of projects that largely hail from the lowest- priced Interior region of the country. This new low average price level is notable given that installed project costs have not similarly broken through previous lows and that wind projects increasingly have been sited in lower-quality wind resource areas.

    • The relative competitiveness of wind power improved in 2013. The continued decline in average levelized wind PPA prices (which embeds the value of federal incentives, including the PTC), along with a bit of a rebound in wholesale power prices, put wind back at the bottom of the range of nationwide wholesale power prices in 2013. Based on our sample, wind PPA prices are most competitive with wholesale power prices in the Interior region. The average price stream of wind PPAs executed in 2013 also compares favorably to a range of projections of the fuel costs of gas-fired generation extending out through 2040.

    Policy and Market Drivers

    • Availability of Federal incentives for wind projects built in the near term has helped restart the domestic market, but policy uncertainty persists. In January 2013, the PTC was extended, as was the ability to take the 30% investment tax credit (ITC) in lieu of the PTC. Wind projects that had begun construction before the end of 2013 are eligible to receive the PTC or ITC. These provisions have helped restart the domestic wind market and are expected to spur capacity additions in 2014 and 2015. With the PTC now expired and its renewal uncertain, however, wind deployment beyond 2015 is also uncertain. On the other hand, the prospective impacts EPA’s proposal regulations to reduce carbon emissions from existing and new power plants may create new markets for wind energy.

    • State policies help direct the location and amount of wind power development, but current policies cannot support continued growth at recent levels. As of June 2014, RPS policies existed in 29 states and Washington D.C. From 1999 through 2013, 69% of the wind power capacity built in the United States was located in states with RPS policies; in 2013, this proportion was 93%. However, given renewable energy growth over the last decade, existing RPS programs are projected to require average annual renewable energy additions of just 3–4 GW/year through 2025 (only a portion of which will be from wind), which is well below the average growth rate in wind capacity in recent years, demonstrating the limitations of relying exclusively on RPS programs to drive future deployment.

    • Solid progress on overcoming transmission barriers continued. Over 3,500 miles of transmission lines came on-line in 2013, a significant increase from recent years. Four transmission projects of particular importance to wind, including the Competitive Renewable Energy Zones project in Texas, were completed in 2013. A decrease in transmission investment is anticipated in 2014 and 2015. Nonetheless, the wind industry has identified 15 near-term transmission projects that—if all were completed—could carry almost 60 GW of additional wind power capacity. The Federal Energy Regulatory Commission continued to implement Order 1000 in 2013, which requires public utility transmission providers to improve intra- and inter-regional transmission planning processes and to determine cost allocation methodologies for new transmission facilities. Despite this progress, siting, planning, and cost-allocation issues remain key barriers to transmission investment.

    • System operators are implementing methods to accommodate increased penetration of wind energy. Recent studies show that wind energy integration costs are almost always below $12/MWh—and often below $5/MWh—for wind power capacity penetrations of up to or even exceeding 40% of the peak load of the system in which the wind power is delivered. Two recent integration studies include a detailed assessment of cycling costs. In both, cycling was found to increase with more renewables, though the associated costs were modest. Studies on frequency response with higher shares of wind highlight technical options to maintain adequate frequency response, including the potential participation of wind plants. Because federal tax incentives are available for projects that initiated construction by the end of 2013, significant new builds are anticipated in 2014 and 2015. Near-term wind additions will also be driven by the recent improvements in the cost and performance of wind power technologies, leading to the lowest power sales prices yet seen in the U.S. wind sector. Projections for 2016 and beyond are much less certain. Despite the lower price of wind energy and the potential for further technological improvements and cost reductions, federal policy uncertainty—in concert with continued low natural gas prices, modest electricity demand growth, and the aforementioned slack in existing state policies—may put a damper on growth.

    QUICK NEWS, August 26: CLIMATE MODELS PROVE RIGHT AGAIN; ABOUT INVESTING IN SOLAR; GM VS TESLA IN THE 200 MILE RACE

    CLIMATE MODELS PROVE RIGHT AGAIN Unpacking unpaused global warming – climate models got it right; Global surface warming has slowed down due to internal and external factors, consistent with climate model predictions that account for these effects

    Dana Nuccitelli, 25 August 2014 (UK Guardian)

    "Although the global climate has continued to build up heat at an incredibly rapid rate, there has been a keen focus among climate contrarians and in the media on the slowdown of the warming at the Earth’s surface. The slowdown is in fact a double cherry pick – it focuses only on the 2% of global warming that heats the atmosphere (over 90% heats the oceans), and it only considers the past 10–15 years…[Nevertheless,] the latest IPCC report addressed it specifically:...‘The long-term climate model simulations show a trend in global-mean surface temperature from 1951 to 2012 that agrees with the observed trend (very high confidence). There are, however, differences between simulated and observed trends over periods as short as 10 to 15 years (e.g., 1998 to 2012).’ …From 1998 through 2012…[it was estimated] that global surface temperatures had warmed by about 0.06°C, whereas the average climate model projection put the value at closer to 0.3°C. This apparent discrepancy only represented a tiny fraction of overall global warming…but it was nevertheless a challenge for climate scientists…[Recent studies show] the climate models are doing a pretty good job…” click here for more

    ABOUT INVESTING IN SOLAR What You Need to Know Before You Invest in Solar Energy

    Motley Fool, August 24, 2014 (NASDAQ)

    "Solar energy is one of the greatest investing opportunities of our generation with well over a trillion dollars in annual market potential around the world. But with all that potential comes tremendous risk, particularly as new technologies emerge…[T]he cost of [silicon] technology has been reduced to a level that's now economically viable…[Thin-film technology and utility-scale technology] costs are too high…New solar technologies can make for great headlines but…the best bets are technologies that are tried and true…[Four keys for solar investing are…1. Make manufacturers prove it...2. Bet on cost reductions over technology improvements…3. Understand the risk a company is taking…4. Remember the bottom line…The solar industry has literally trillions of dollars in potential but with that potential comes risk…” click here for more

    GM VS TESLA IN THE 200 MILE RACE The story of Elon Musk and GM’s race to build the first mass-market electric car

    Steve Levine, August 25, 2014 (Quartz)

    “One of the hottest clashes in technology pits two pathmakers in the new era of electric cars—Tesla and General Motors. Both are developing pure electrics that cost roughly $35,000, travel 200 miles on a single charge, and appeal to the mass luxury market…The stakes are enormous…Experts regard 200 miles as a tipping point, enough to cure many potential electric-car buyers of…the fear of being stranded when their battery expires. If GM and Tesla crack this, sales of individual electrics could jump from 2,000 or 3,000 vehicles a month to 15 to 20 times that rate…But there is a price to such distance. The 208-mile S starts at around $70,000…Getting 200 miles of range in a $35,000 car will require a battery that can leap over the best lithium-ion technology known to be within reach. And to be ready for 2017 or even 2018 models, it has to accomplish the jump with astonishing speed…Musk’s battery economics are superior…[and GM also] lacks the pizzazz, the style, and the engineering…This makes Musk the bettors’ favorite. Yet where Musk is gambling his company on the success of the Model 3, GM has options. It could ignore Tesla, and surrender the $30,000-$40,000 electric market, along with the technological crown that will go with it…and pull a winning, 200-mile automobile from the drawing boards of its design-and-engineering teams…[or] produce an entirely different, 200-mile car, one aimed at a lower demography, such as that served by its $14,000 Chevy Sonic… GM would arguably leapfrog over Musk, into the biggest mass market of all…” click here for more

    Monday, August 25, 2014

    TODAY’S STUDY: NEW CALMER WINDS AHEAD FOR EUROPE

    Wind energy scenarios for 2020

    July 2014 (European Wind Energy Association)

    Background

    EWEA’s previous wind energy scenarios were pub lished in 2009 (‘Pure Power 2’) following the adoption of the EU’s Renewable Energy Directive. They were subsequently re-published in 2011 (‘Pure Power 3’).

    The scenarios looked at both annual and cumulative installations and included a country breakdown for 2020, but not for intermediate years. The headline figure was 230 GW (of which 40 GW offshore) producing 581 TWh of electricity, meeting 15.7% of electricity consumption. EU electricity consumption for 2020 was projected to be 3,689.5 TWh1.

    Reasons for the new scenarios

    In light of developments since 2009, not least the economic European markets, EWEA has reviewed its 2020 scenarios according to present and expected realities. The European Commission now2 expects final power demand in 2020 to be 11% lower than it did in 2009 (2,956 TWh gross final consumption in EU27, instead of 3,336 TWh). In reality, therefore, the Commission does not expect EU power demand to increase above its 2008 peak until after 2020. This economic reality has had a impact on demand for new power installations for all generation technologies.

    The economic reality has also fed through to the stability of regulatory and market frameworks for wind energy, both onshore and offshore. This has impacted investment plans, new orders, investment decisions already taken, and existing installations in markets across Europe. Retroactive and retrospective changes to regulatory and market frameworks have had a particularly negative impact on the wind energy sector, especially in certain markets.

    Proposed new scenarios

    Given the expectations for energy demand, the persisting instability in numerous markets across Europe, the rapidly changing national policy frameworks for wind energy, the new round of climate and energy discussions at EU level on a policy framework to 2030, and the potential impact of the 2015 COP climate negotiations in Paris, it is apparent that a single growth scenario for wind energy is no longer sufficient.

    Consequently, EWEA is proposing three growth scenarios to 2020. These are based on the premise that the instability experienced in wind energy markets to date is not fully compensated for by new installations in the latter half of the decade, particularly offshore. It does not necessarily follow that lower installations will undermine the EU’s 20% renewable energy target being met. As the 20% target is a consumption target, and with consumption in 2020 being lower than previously expected, meeting the target with fewer installed MW producing fewer TWh is feasible. EWEA’s new central scenario expects 192 GW of wind installations to produce 442 TWh meeting 14.9% of electricity consumption in 2020.4

    The central scenario will result in cumulative installations over the seven year period of 75 GW and an investment volume in wind farms of between €90 billion and €124 billion, with the leading markets being Germany, France, the United Kingdom, Poland and Italy. By 2020, 354,000 people (up from 253,000 today) will be employed in the European wind industry.

    • Low scenario 2020

    Installed capacity increases by 41% compared to 2013 to 165.6 GW. Offshore installations are 19.5 GW. Onshore wind installations produce 307 TWh of electricity and offshore installations 71.9 TWh. The combined wind energy production of 378.9 TWh covers 12.8% of total EU power demand.

    The effects of the economic crisis on power demand linger, pressure on public spending persists across Europe until the latter years of the decade. Instability in national regulatory frameworks in both mature and emerging markets continues. This instability makes it difficult to attract financing for new wind energy projects, especially in the offshore sector that struggles to de-risk. EU and international climate and energy policy post-2020 decisions are weak and unambitious, providing few extra stimuli for wind energy development.

    • Central scenario 2020

    Installed capacity increases by 64% compared to 2013 to 192.5 GW. Offshore installations reach almost 23.5 GW. Onshore wind installations produce 355.2 TWh of electricity and offshore installations 86.4 TWh. The combined wind energy production of 441.7 TWh covers 14.9% of total EU power demand. Regulatory stability is not fully recovered throughout Europe; however, in key onshore markets such as Germany, France, United Kingdom and Poland policy reforms are finalised rapidly and the new regulatory frameworks are conducive to a pick-up in wind power installations. EU post-2020 energy and climate negotiations provide some medium-term perspectives for the wind energy sector. Offshore installations are similar to those under the low scenario, but extra confidence in the UK and faster deployment in France and the Netherlands push the EU total to 23.5 GW.

    • High scenario 2020

    Installed capacity increases by 84.9% compared to 2013 to 217 GW. Offshore installations almost reach 28 GW. Onshore wind installations produce 397.8 TWh of electricity and offshore installations 102.2 TWh. The combined wind energy production of 500 TWh covers 17% of total EU power demand. Regulatory stability returns to most markets in Europe with annual installation growth rates returning to pre-2012 levels. Agreement on a strong EU climate and energy package, proposing domestic greenhouse gas reductions of 40% in 2030 compared to 1990 levels and a renewable energy target of 30% boosts installations in a number of key markets such as Germany, France, Italy and the United Kingdom. As the effects of the economic crisis fade, markets that came to a virtual standstill in 2013, such as Spain, begin to show signs of growth. Offshore installations are similar to those of the central scenario, except in Belgium, Ireland and the UK where there is some extra growth. Germany’s offshore connection capacity of 7.7 GW is almost totally met.

    QUICK NEWS, August 25: JULY’S U.S. ENERGY BUILD WAS ALL NEW ENERGY; CLIMATE CHANGE FOR ENERGY INVESTORS; WIND CAN GROW FASTER THAN NUCLEAR

    JULY’S U.S. ENERGY BUILD WAS ALL NEW ENERGY Renewable Energy Accounts For All New U.S. Power In July

    August 20, 2014 (Renew Grid)

    "All new U.S. electrical generating capacity put into service in July came from renewable energy sources…[including 379 MW of wind, 21 MW of solar and 5 MW of hydropower, according to the July 2014 Federal Energy Regulatory Commission (FERC)lEnergy Infrastructure Update]…For the first seven months of this year, renewables have accounted for more than half (53.8%) of the 4,758 MW of new U.S. electrical capacity that has entered service, with solar (25.8%) and wind (25.1%) each accounting for more than a quarter of the total. In addition, biomass provided 1.8%, geothermal 0.7% and hydropower 0.4%...natural gas accounted for 45.9%, while a small fraction (0.3%) came from oil and ‘other’ combined…[T]here has been no new electrical generating capacity from either coal or nuclear thus far in 2014…Renewable energy sources now account for 16.3% of total installed operating generating capacity in the U.S.: hydro - 8.57%, wind - 5.26%, biomass - 1.37%, solar - 0.75%, and geothermal steam - 0.33%...” click here for more

    CLIMATE CHANGE FOR ENERGY INVESTORS Why Climate Change Could Be the Biggest Threat to Your Portfolio

    Arjun Sreekumar, August 22, 2014

    "…[C]limate change may be the biggest threat of all…[to] oil and gas companies' asset values and share prices…[W]e must limit emissions to no more than 900 gigatonnes of carbon dioxide (GtCO2) over the period 2013-2049 if we are to keep, at 80% probability, the global temperature from rising 2 degrees Celsius above pre-industrial levels…Meeting that emissions target means that the vast majority of the global fossil fuel reserves owned by energy companies and foreign governments cannot be burned...[Burning these reserves] would raise the global temperature by well over 3 degrees Celsius…[Even with allowances, companies like ExxonMobil, Chevron, Shell, and BP] could harvest no more than a third of their existing reserves…[A]out two-thirds of their reserves could be, at worst, worthless…[But the more likely case is that] we fail to act and end up exceeding the stated target…For investors, this means that your fossil fuel stocks are likely safe for the foreseeable future. But in the improbable event that global leaders somehow scrape together and enforce a carbon reduction plan, fossil fuel stocks could be in trouble. Caveat emptor…” click here for more

    WIND CAN GROW FASTER THAN NUCLEAR Which Is More Scalable, Nuclear Energy Or Wind Energy?

    Mike Barnard, August 22, 2014 (Forbes)

    “China is the true experiment for maximum scalability of nuclear vs wind. It has a tremendous gap between demand and generation. It can mostly ignore democracy and social license for nuclear. It is building both wind and nuclear as rapidly as possible. It has been on a crash course for both for about the same period of time. It has bypassed most of the regulatory red tape for nuclear…[And] China turned on just over 16 GW of nameplate capacity of wind generation in 2013…[while over] the four years of 2010 to 2014, China managed to put 4.7 GW of nuclear into operation [at five plants. Their stated plans for nuclear] had them building almost double this in 2013 alone and around 28 GW by 2015…The variance between the nuclear roadmap and nuclear reality in China is following the trajectory of nuclear buildout worldwide: delays, cost overruns, and unmet expectations…Modern wind turbines have a median 40.35% capacity factor…[The nuclear capacity factor is] 90.9%...[T]hat’s about 6.5 GW of real capacity of wind energy in one year vs 4.3 GW of real capacity for nuclear over four years. That’s roughly six times more real wind energy capacity than nuclear per year…In empirical terms, it doesn’t matter what anybody claims is theoretically possible: wind energy is growing rapidly while nuclear is going backwards. That’s reality…” click here for more

    Saturday, August 23, 2014

    New Thoughts About New Energy For A New Climate

    This is deceptively simple. Enjoy the tapestry of details in the animation. From Environment Club

    Carbon

    A new documentary about climate change, voiced by Leo DiCapario.“We need to keep this carbon in the ground.” From Green World Rising via YouTube

    Why Utilities Struggle With New Energy

    Utilities call infrastructure that becomes outdated "stranded assets." Business calls such investments "sunk costs." As explained here, New Energy could mean lots of both for utilities. But it will prevent a "sunk" earth and "stranded" people. From EnergyShouldBe via YouTube

    Friday, August 22, 2014

    WHY DENIERS’ BRAINS REJECT CLIMATE CHANGE

    Why our brains are wired to ignore climate change

    Matthew Hutson, August 21, 2014 (Washington Post)

    Don’t Even Think About It by George Marshall asks what causes climate change denial. One familiar answer is that humans respond most urgently to threats that are present, concrete and definite, but climate change is gradual, hard to observe and indefinite. Another is that addressing it requires making palpable sacrifices now in order to prevent unclear costs in the distant future. Some answers are newer:

    (1) Surviving a weather disaster (a) gives people a sense of invulnerability and (b) people just want to get their lives back to normal and not worry about some even larger threat.

    (2) After having kids, (a) the optimism bias kicks into high gear and (b) you’re too busy changing diapers.

    (3) Environmental campaigns communicate individual responsibility, and thus blame, which leads to resentment.

    (4) Everyone’s heard the facts; denial is due to a surplus of reinforcing culture, not a lack information.

    The book is full of advice, including that, like religion, advocates should offer (1) opportunities for public commitment to the cause, (2) treat certain goals as sacred values, and (3) develop a language of forgiveness, so people can deal with their guilt rather than turn to denial. click here for more

    CHINESE TO HELP SAUDIS GO NEW ENERGY BY 2032

    China, Saudi Arabia to cooperate on renewable energy development; The Middle Eastern kingdom targets 41 GW of solar power by 2032 as it seeks to free up more of its abundant oil and gas reserves for lucrative export.

    Ian Clover, 19 August 2014 (PV Magazine)

    “…The oil- and gas-rich Kingdom [of Saudi Arabia] also boasts some of the world's highest levels of solar irradiation and hopes to install as much as 41 GW of PV solar energy capacity by 2032, and has enlisted the help of solar world-leader China to reach that goal…[T]he state-owned Chinese National Nuclear Corporation (CNNC) [will] partner with the…King Abdullah City for Atomic and Renewable Energy (K. A. CARE) on the development of renewable and nuclear energy in the Middle East nation…Saudi Arabia runs almost entirely [on the one quarter of its] oil and natural gas reserves held back for domestic consumption…[and sees] nuclear and renewable energy as the perfect, long-term replacement…By 2032, the Saudi government estimates that power demand will surpass 120 GW per year. The goal is for renewable and nuclear power to supply half that figure by that date, with solar energy poised to stump up 41 GW, nuclear 17 GW and wind power 9 GW…[Solar plants larger than 10 MW can produce solar electricity in Saudi Arabia at] between $70 and $90 per MWh…” click here for more

    BUILDING EFFICIENCY TO BOOM IN EUROPE

    Energy Efficient Buildings: Europe; Energy Efficient HVAC, Lighting, Insulation and Glazing, Building Controls, and Energy Service Companies: Market Analysis and Forecasts

    3Q 2014 (Navigant Research)

    “…As a result of legislation [across the European Union (EU)], including the Energy Performance of Buildings Directive (EPBD), mandatory changes to country-level building codes are increasing the performance requirements that apply to new construction and major renovations of existing buildings…[and pushing toward nearly zero energy public (2019) and private (2021) buildings. Technologies, sophisticated building automation and control systems, software] solutions providers and traditional hardware vendors of heating, ventilation, and air conditioning (HVAC), lighting, and control systems are expanding…Financial products for energy efficiency retrofits are also growing and removing barriers such as access to finance. Navigant Research forecasts that the European market for building energy efficient products and services will grow from €41.4 billion ($56 billion) in 2014 to €80.8 billion ($109 billion) in 2023…” click here for more

    GEOTHERMAL SEEKS CARIBBEAN BREAKTHROUGH

    The Caribbean Goes Geothermal

    Melissa Pandika, August 19, 2014 (USA Today)

    “…The Caribbean’s real treasure might be buried deep, deep underground…[T]he Antilles, lesser and greater, has emerged as a hub for geothermal energy exploration. Nevis and St. Vincent are soon to host private geothermal investment projects. The European Union recently awarded Dominica a $10.3 million grant to jump-start geothermal energy development. And on the eastern Caribbean island of Montserrat, geologists are using cutting-edge techniques to map the rocky subterranean surfaces…If the region can harness the power of its heat — and it’s a big if — a nearly endless supply of energy could reward it. That, in turn, would free up billions of dollars Caribbean countries spend importing diesel, which fuels most of its power plants…But tapping it is costly and risky, just like drilling for oil can be. Companies can spend millions of dollars on drilling a well only to find it empty. Small regional markets make it hard enough to attract the private investment needed to drill...That’s where the maps come in. Lessening the risk of drilling a well could lead to wider adoption of geothermal energy, and could spawn big opportunities besides…” click here for more

    Thursday, August 21, 2014

    THE RISKIEST ENERGY PLAYS IN THE WORLD

    Oilsands, deepwater among riskiest energy plays in the world, report says; A U.K study highlighted 20 projects around the world that need a minimum oil price of US$95 a barrel to be viable

    Lauren Krugel, August 15, 2014 (The Canadian Press via Maclean’s)

    “Some of the world’s costliest energy projects are in Alberta’s oil sands and some could be cancelled without higher oil prices, according to Oil & Gas Majors: Fact Sheets from the Carbon Tracker Initiative, which] highlighted 20 of the biggest projects around the world that need a minimum oil price of US$95 a barrel to be economically viable…Most on the list require prices well north of US$110 a barrel and a few in the oil sands even need prices higher than US$150…Crude for September delivery was at around US$97 a barrel…[T]he 20 projects represent close to $91 billion in capital spending over the next decade…[raising the question of] whether those funds should be invested in risky projects…” click here for more

    FACTS ON BIRDS AND SOLAR POWER

    Setting The Record Straight: Solar Flux And Impact To Avian Species

    Joe Desmond, August 19, 2014 (BrightSource Limitless)

    “…[The impact on birds from solar thermal power tower technology like that used at the BrightSource Ivanpah Solar Electric Generating System] needs to be put in context…Let’s be clear: No one disputes that certain levels of concentrated solar flux present a risk to birds. The U.S. Fish and Wildlife’s Office of Law Enforcement (OLE)…found that ‘significant avian mortality is caused by the intense solar flux that produces feather singeing.’…Ivanpah reported 321 avian fatalities between January and June 2014, of which 133 were related to solar flux…An estimated 1.4-3.7 billion birds are killed each year by cats…[Up to] 980 million birds crash into buildings annually…174 million birds die from power lines every year…340 million birds perish from vehicles/roads…Approximately 6.8 million birds die flying into communications towers…[and] one million die annually in oil and gas fluid waste pits…Solar (light) flux is not the same as thermal (heat) flux…Birds are not vaporized or incinerated after traveling through solar flux…[S]ociety as a whole has tradeoffs to make in every interaction we make with the natural world…” click here for more

    WIND PRICES AT ALL TIME LOWS

    Study: Price of wind energy in U.S. at all-time low

    Allen Chen, August 19, 2014 (R&D Magazine)

    “Wind energy pricing is at an all-time low, according to [2013 Wind Technologies Market Report from Lawrence Berkeley National Laboratory]…The prices offered by wind projects to utility purchasers averaged just $25/MWh for projects negotiating contracts in 2013, spurring demand for wind energy…Though wind power additions slowed in 2013, with just 1.1 GW added, wind power has comprised 33% of all new U.S. electric capacity additions since 2007…[and] currently contributes more than 4% of the nation’s electricity supply…Since 1998-99, the average nameplate capacity of wind turbines installed in the U.S. has increased by 162% (to 1.87 MW in 2013), the average turbine hub height has increased by 45% (to 80 m), and the average rotor diameter has increased by 103% (to 97 m). This substantial scaling has enabled wind project developers to economically build projects in lower wind-speed sites…Wind turbine prices have fallen 20 to 40% from their highs back in 2008…Wind energy prices have reached all-time lows, improving the relative competitiveness of wind…[P]rojections are for solid growth in 2014 and 2015, with uncertain prospects in 2016 and beyond…” click here for more

    PRICES DROPPING ON GREEN BUILDING

    Innovation Will Drive Costs of Green Roofs and Walls by 28% in 2017; Combining diverse approaches can cut costs to $23/ft2 but building-integrated vegetation (BIV) will still depend on incentives for wider adoption…

    August 19, 2014 (Lux Research)

    “Building-integrated vegetation (BIV) – the use of green roofs and green walls to improve air quality, manage storm-water and generate energy savings – is experiencing a burst of innovation to lower costs and hasten payback on investment…[T]he $6 billion industry has come up with a number of new ways to reduce material, installation and maintenance costs. All told, costs could be cut 28% -- from $38/ ft2 in 2012 to $23/ft2 in 2017, according to [Crossing the Chasm: Demonstrating Economic Value Is the Next Test for Building-integrated Vegetation by Lux Research]…City-level incentives…can sharply cut payback period, enhancing the economic viability of BIV…Green roof cost cuts drive…[its global market down] from $5.1 billion in 2011 to $4.7 billion in 2017…[and strong technology developers are emerging]…” click here for more

    Wednesday, August 20, 2014

    TODAY’S STUDY: IMPORTS, EXPORTS AND NEW ENERGY

    South-South trade in renewable energy; A trade flow analysis of selected environmental goods

    June 2014 (United Nations Environment Programme)

    Executive Summary

    This study analyses trends and opportunities for trade among developing countries (i.e. South-South trade) in selected environmental goods, in order to assess the contribution such trade can make to a green economy transition. The term ‘developing countries’ includes all countries and territories listed as developing economies in the UNCTAD Handbook of Statistics (UNCTAD, 2012).

    The study focuses on South-South trade flows in several RE products and their components, including solar photovoltaic (PV) cells and modules, wind turbines, hydroelectric turbines, biomass feedstock, solar water heaters and solar lighting equipment, as well as other select environmental goods. The latter include water filtering and purification equipment and environmentally preferable products, such as organic agricultural goods.

    South-South trade in environmental goods and services (EGS) is critical to the transition to a green economy for a number of reasons. First, South-South trade allows developing countries to export EGS to the dynamic markets of other developing economies, providing new opportunities for participation in global value chains. Second, South-South trade can allow access to more appropriate and affordable goods for developing countries, responding to similar technology needs and prevailing local conditions (UNDP, 2013). Third, properly managed South-South trade in EGS can stimulate employment growth in industries where developing countries have a comparative advantage, such as organic agriculture (UNEP, 2010b). Finally, South-South trade is important as regional economic cooperation expands globally, facilitated by regional trade and investment agreements that allow developing countries to increase regional production and trade of EGS.

    Renewable energy (RE) technologies are particularly important for the contribution that South-South trade in EGS can make to the green economy transition. RE technologies are critical for reducing greenhouse gas (GHG) emissions, enhancing rural and off-grid access to energy, improving energy security and disseminating sustainable technologies. The job generation potential of RE is particularly high compared with fossil fuel-based energy sources, especially in the manufacturing and services activities related to solar PV and wind-powered energy.

    Before describing the methodology adopted in this South-South trade flow analysis in EGS, it is important to note three trends that clearly underlie this study. First, global prices for EGS and, in particular, for RE technologies have been falling. As the cost of producing RE increasingly approaches the cost of fossil fuel energy production, investment in RE is likely to increase. Second, government policy, including fiscal incentives, feed-in tariffs and minimum use requirements, has had a major impact on EGS market and trade trends in recent years. In the RE sector, fluctuations in government policy have both stimulated and, more recently, also repressed demand for new installations. Third, trade policies remain critical to EGS deployment worldwide. The reduction or elimination of trade restrictions among developing countries facilitates South-South access to lower cost EGS, but also introduces trade competition. In order for trade liberalisation to contribute to the transition to a green economy, trade liberalisation efforts would require flanking policies such as taxation or regulation to ensure the positive economic, social and environmental benefits of trade…

    Trends in global and South-South trade in environmental and renewable energy goods

    The trends analysis focuses on the period 2004-2012. Growth rates shown in Chapters 2 and 3 mostly cover the period 2004-2011. Inclusion of earlier data might distort the trends analysis, as there was insignificant trade in RE products in the early 2000s. More recent trade data is affected by sharp declines in prices, uncertainties in incentive schemes and antidumping and CVD actions. At the time of writing, 2013 trade data were available for only a limited number of countries. The analysis presented in Chapter 4 is based on relevant information available at the time of drafting. The paper highlights several key aspects of general South-South trade, observed in the period 2004-2011 (unless otherwise indicated):

    • South-South trade has grown faster than global trade. With the growing economic importance of developing countries, overall South-South trade has grown faster (15.9 per cent per year on average)1 than global trade (excluding intra-EU trade) in manufactured products (9.7 per cent). Additionally, South-South trade in the RE goods analysed in this paper grew slightly faster (29.4 per cent) than global trade (excluding intra-EU trade) in the same sectors (26.7 per cent). These include solar PV cells and modules, wind-powered generating sets, hydraulic turbines and products associated with RE generation from biomass.

    It must be emphasized, however, that trends shown for South-South trade in solar PV cells and modules are significantly affected by the inclusion of unrelated products in the same HS subheading (HS 854140). Whereas most of the increase in developing countries’ exports in the period 2004-2011 was triggered by import demand in developed country markets (rather than South-South trade), PV-specific trade data for 2013 show a surge in Chinese exports of solar PV cells and modules to other developing countries.

    • Global trade in RE goods outpaced trade in manufactures. Globally, manufactures trade grew only 9.7 per cent while trade in selected RE goods, measured at the level of HS subheadings, grew by 26.7 per cent. South-South trade in manufactures grew by only 15.9 per cent from 2004-2011, while South-South trade in most RE categories, as measured in the study, seems to have grown faster than global trade in the same categories. Similar patterns exist for narrower product categories, including selected environmental protection products and water filtration, in which South-South trade grew at 20.9 per cent and 23.1 per cent, respectively. It is impossible to assess the growth of global South-South trade in solar cells and modules vis-à-vis the growth of global trade in these products during the period 2004-2011.

    • Developing countries have become net exporters of RE goods identified in this paper. In 2007, developing countries went from net importers to net exporters of these RE goods (see Figure 1). This trend appears to have been driven entirely by trade in solar PV and other products in HS 854140. In the case of wind-powered generating sets, hydraulic turbines and products used in biomass-based energy generation, the value of their imports appeared to be larger than the value of their exports based on trade in the HS subheadings identified in this paper. Particularly relevant during the period 2004-2011 was the rapid increase of developed- country solar PV imports from developing countries (in particular in Asia), driven largely by lower manufacturing costs and developed country installation incentives. In recent years, however, developing country exports to developed countries (with the notable exception of Japan) fell significantly due to falling prices, scaled-back incentives for RE installation in the developed world (in particular Europe) and the initiation of antidumping (AD) and countervailing duty (CVD) in the United States and the European Union.

    • Asian developing countries are the largest players in South-South trade. Asian countries make up the majority of South-South trade (see Figure 2). Developing countries in East and South-East Asia accounted for a very large share of South-South trade in selected products associated with the solar PV, biomass and small hydro sectors. Asian developing countries are also the principal destination markets of South-South trade (in the case of wind turbines, however, Latin American countries accounted for the largest portion). A similar picture, although less pronounced, is shown for water filtering and purifying machinery.

    • South-South trade makes up a larger portion of some categories of RE global trade than others. While South-South trade in wind-powered generating sets makes up only around six per cent of global trade in that category in the period 2009-2012, South-South trade in the HS subheadings selected as proxies for trade in products associated with biomass-based energy generation and hydropower make up 45 per cent of such global trade (see Figure 3). Overall South-South trade (measured at the level of HS subheadings) in RE products made up more than a quarter of all global trade in RE in 2012 (around one fifth in the period 2009-2012).

    • A number of positive developments provide favourable conditions for enhanced South-South trade in RE products. These include falling prices of RE technologies and equipment, faster growth in RE investment in developing countries (compared with developed countries) and the growing importance of developing country markets as drivers of trade in RE products (see Chapter 4). For example, in the last four years (2010-2013), developing countries added more new wind energy installations than developed countries. Whereas China accounted for most of these additions, a relatively large number of developing countries have small but dynamic wind markets. Similarly, in 2012, new solar PV capacities added in developing countries were more than 60 per cent higher than in 2011, whereas in the European Union they were almost a quarter lower. Preliminary data indicate that developing countries collectively accounted for well above one third of new solar PV capacity additions in 2013, with particularly strong growth in China. Finally, in the wake of recent price declines, strong growth (from a low base) is also expected in RE installations in other developing regions, in particular in Latin America and Africa.

    • Solar PV and other products in HS 854140 have dominated South-South trade in RE. These products make up the majority of South-South trade in RE in value terms. Most of this trade has been driven by intra-regional trade in East and South-East Asia, both by growing demand for solar PV for energy generation and by demand for solar PV components along a value chain.

    Solar energy products

    The study reveals several key points on global trade in solar PV products:

    • The global solar PV market has grown rapidly. In the period 2004-2011, global annual solar PV capacity additions increased at an average annual growth rate of more than 80 per cent. The value of global trade increased rapidly and given that prices have been falling, the increase in volume terms was even faster. In 2012, however, the size of the market remained relatively stable, as a sharp contraction in capacity additions in the European Union was compensated by strong growth in the United States, China, Japan and India, and other developing countries. New solar PV capacity installed globally during 2013 was almost a quarter larger than in 2012, despite a further decline in Europe.

    • The solar PV industry has been affected by overcapacity, resulting in continuous reductions of prices of solar PV cells and modules and negative or very low profit margins. The global solar PV market stagnated in 2012. Whereas global solar PV manufacturing capacity has continued to increase in recent years, the margins have become increasingly tight. The solar PV industry is clearly in a consolidation phase, with large companies gaining market share. New entrants in developing countries have to compete with large-scale, integrated and low-cost producers in China. In India, for example, incentives under the Jawaharlal Nehru National Solar Mission and various state-level incentive schemes helped to increase the size and stability of the solar PV market, but have not resulted in significant progress towards building up a low-cost, high-quality solar manufacturing sector.

    • With falling solar PV module prices, other parts of the value chain are increasingly important. The manufacture and supply of certain Balance of System (BoS) components (such as mounting structures) as well as downstream services (such as installation) are becoming increasingly important parts of the solar PV system value chain. Since new market entrants from developing countries may find it difficult to compete (in particular in the manufacturing of solar PV cells), developing country companies could focus on specific parts of the manufacturing chain such as module assembly and the manufacture of certain BoS components. Some developing countries may successfully engage in South-South operations in emerging regional markets.

    • In terms of trade measures, solar PV panels face little or no tariff barriers with most countries providing duty-free access to their markets. However, key components such as inverters face relatively high tariffs in certain developing countries. In recent years, AD and CVD actions have been initiated in the United States, the European Union as well as certain developing countries. Local-content requirements (LCRs) are also used in countries, such as India and South Africa, to stimulate and expand local manufacturing capacity.

    • South-South solar PV trade has so far been largely confined to East and South-East Asia. A large part of this has been driven by trade in intermediate products for incorporation into predominantly Chinese exports to developed country markets. It has also been driven by end-market demand for solar PVs in rapidly-growing markets of Asian developing countries. Intra-regional trade in RE supply goods in other developing regions is still in its infancy, due to low levels of demand.

    • China’s role in South-South solar PV trade has been significant, both as an exporter and importer. Chinese exports have provided low-cost RE goods (e.g., solar PV cells and modules) to emerging solar PV markets, both in Asia and other developing regions. Trade statistics for PV-specific national tariff lines show that in the period 2009-2012, developing countries absorbed only around 6 per cent of Chinese global solar PV exports, in value terms (as most exports went to developed-country markets). Developing countries may absorb a growing portion of Chinese exports of solar PV modules as they increasingly invest in solar PV power, driven by lower prices of solar PV modules, and as Chinese manufacturers look for new markets in developing countries. Indeed, the share of developing countries as a destination for Chinese global solar PV exports increased to 23 per cent during 2013. China also contributed to South-South trade as an importer. For example, some countries in East and South-East Asia have been exporting intermediate products to be incorporated into China’s exports to developed country markets. In addition, end-market demand in China itself is growing rapidly, providing market opportunities for other Asian developing countries. In fact, China was a net solar PV importer from other developing countries in the period 2009-2011, largely on account of imports from other developing countries in East and South-East Asia, but became a net exporter in 2012.

    • A number of developing countries are emerging as small but potentially significant importers of solar PV cells and modules. The most important markets are China, India and some other countries in East and South-East Asia. Other emerging markets include Bangladesh, Indonesia, Nigeria, South Africa, United Arab Emirates, and Viet Nam. Ghana, Kenya, Myanmar, Philippines and Tanzania emerged as dynamic markets during this period (see Figure 4). This trend was revealed by mirror data based on the exports of key traders reporting PV-specific national tariff lines in 2009-2012.

    Wind energy products

    The study reveals several key points on global trade in wind energy products:

    • Global annual wind capacity additions increased rapidly. Worldwide wind capacity additions increased by 22 per cent per year on average during the period 2006-2011. Developing countries accounted for much of these additions, growing at more than 40 per cent per year on average (from a small base) and raising their participation in global capacity additions from 26 per cent in 2006 to 55 per cent in 2011. Global annual capacity addition experienced lower growth in 2012 and less capacity was added in 2013 than in the previous year, largely due to uncertainties concerning the renewal of the Production Tax Credit in the United States. The value of world trade in wind-powered generating sets increased rapidly until 2008, but subsequently declined due to several factors, which include the decline in the price of wind-turbines, increased domestic manufacturing in key markets and the increasing role of foreign direct investment (FDI) vis-à-vis direct exports.

    • South-South trade in wind turbines was relatively small. South-South trade in wind-powered generating sets remained small (relative to global trade, even when intra-EU trade is excluded) through 2007, accounting for only around 2 per cent of developing country imports in 2004-2006, but has mostly been above 20 per cent since 2008. Cumulative South-South trade in wind-powered generating sets accounted for US$ 1.3 billion in the period 2008-2012 (US$ 270 million per year on average). Large wind companies based in developing countries (in particular India and China) have played a major role in increasing manufacturing and export capacity. The prominent position of Chinese companies has been gained largely through domestic sales, although these companies have increasingly become more active in export markets with strong export growth in recent years.

    • Domestic measures may be affecting South-South trade in wind power equipment. Most favoured nation (MFN) -applied tariffs for wind-powered generating sets are still relatively high. This is particularly true in a number of developing countries, especially those that have significant wind markets and have been interested in building up domestic manufacturing capacity, for instance Brazil (14 per cent), China and Korea (both 8 per cent). Smaller countries that import wind turbines usually apply low or zero tariffs. Local-content measures often tied to domestic incentives are also used in a number of developing countries such as Brazil, South Africa and Turkey to bolster domestic manufacturing capacity. China ended its LCRs in 2009.

    • Opportunities for South-South trade remain. Despite falling values of global and South-South trade in wind-powered generating sets from peak levels in recent years, opportunities for South-South trade continue to arise for a number of reasons. These include the emergence of new developing country markets, significant export capacity of developing country wind companies and the successful participation of developing countries in value chains by manufacturing components. Some risks nevertheless exist, such as a possible decline in demand as developing countries build up domestic manufacturing capacities and the dependence of wind markets on government policies.

    Policy implications for trade and the green economy transition

    South-South trade opportunities in RE and other environmental goods are clearly rising quickly, and are likely to accelerate in coming years. In order to benefit from this increasing trade, countries could consider taking the following concrete steps.

    Trade policy initiatives

    • Actively identify opportunities for South-South trade in RE products, installation, innovation and diffusion. RE products are increasingly being supplied to developing countries by other developing countries, due to increasing global cost competitiveness and shared needs. Cost-effective innovation can lead to the design of low-cost environmental goods that bolster South-South trade. Some examples include small off-grid solar PV systems, solar lighting, community wind turbines, small hydro and water filtering. Countries could seek to improve South-South trade cooperation for the installation, innovation and dissemination of RE technologies.

    • Design appropriate incentives for RE that do not distort South-South trade in environmental goods. Incentives, including government subsidies, may have implications for international trade, including South-South trade. Incentives aimed at encouraging the use of RE-based electricity, by creating demand for associated goods and services, could have a positive impact on trade as part of such demand will be met by imports. For example, incentives in key developed country markets have stimulated trade in renewable-energy products, such as solar PV cells and wind turbines. Governments could also provide incentives, including through subsidies, intended to boost domestic manufacturing capacities to help ensure that the use of renewable-energy-based electricity results in benefits to the domestic economy (in terms of employment and industrial development). Such incentives could have direct and indirect impacts on trade. Many incentives, such as the provision of infrastructure and financial assistance, could indirectly support trade, including South-South trade. Subsidies that are provided across sectors and which do not specifically benefit one sector or industry would not be considered incompatible with WTO subsidy rules. However, certain types of subsidies and other support measures to boost domestic manufacturing may have negative effects on trade, distort global markets, causing trade tensions and potentially undercutting the competitiveness of industries in other developing countries. In certain cases, trade-policymakers could consider time-limited exemptions from WTO subsidy rules to enable developing countries to build up a certain degree of domestic manufacturing capacity.

    • Bolster support for environmental goods that are particularly suited to South-South trade. For many developing countries, imports of water purification equipment, a sector characterized by growing South-South trade, could be a vital component of their transition towards a green economy. Organic agriculture is another environmental goods sector where developing countries have immediate potential for increasing production and export. Successful development of the organic sector requires sustained government and private sector support and the involvement of various stakeholders in policy and strategy formulation. Standards, mutual recognition and labelling initiatives, both globally and regionally, could facilitate South-South trade in environmental goods.

    • Implement a trade policy regime favourable to local RE potential, including relaxed barriers to trade in intermediate goods. The reduction or elimination of import duties and non-tariff barriers on RE goods, including components, could promote the domestic availability of affordable RE products. Inverted duty structures, where components face higher import tariffs than final products, could discourage the development of local manufacturing capacity. Where a certain level of tariff protection for finished products is considered desirable for some time to help boost local manufacturing capacities (where domestic markets are large enough to economically justify local production), tariffs on final products could be reduced gradually to provide an incentive to manufacturers to reduce costs and become internationally competitive. Trade agreements including those at the regional level could facilitate South-South trade, if designed accordingly.

    • Support revision of the Harmonised System codes for trade in environmental goods to assist policymakers in making better informed decisions. The fact that most environmental goods are classified under HS subheadings that include unrelated products complicates trade analysis and negotiations. Future HS revisions could pay special attention to creating specific subheadings for key RE goods, in particular solar PV equipment.

    Investment initiatives

    • Promote new RE installations in order to increase domestic generating capacity, on-grid and off-grid, leading to cheaper, more secure and more abundant electricity supplies. Declining global costs of RE equipment, in particular solar PV cells and modules, are making investments in RE more attractive. In many countries, ‘off-grid’ RE projects in solar, wind and hydro are already cost-competitive with conventional sources. Appropriate targets, incentives and flanking environmental and social policies are helpful tools to take advantage of current favourable conditions for RE generation.

    • Implement appropriate policies to harness green economy benefits from RE installations. Apart from improved electricity supply and greater energy security, RE investment brings a range of additional green economy benefits. These include reductions in fossil fuel production and imports, cleaner production, rural electrification and new employment opportunities in downstream services, such as RE installation, operation and maintenance. Policies are recommended that encourage both RE deployment and sustainable trade.

    • Take advantage of green economy-related financial assistance initiatives. Incentives will be important in enabling the deployment of environmental goods and services. This is particularly true in countries where governmental and financial support are insufficient. Such incentives include financing mechanisms such as the Clean Development Mechanism (CDM) and the ‘Green Fund’ at the United Nations Framework Convention on Climate Change (UNFCCC), among others. Export finance initiatives launched by regional development banks could also bolster South-South RE deployment.

    • Strategically consider investments for developing domestic manufacturing capacity suited to global RE value chains. Countries seeking to build up a certain degree of export manufacturing or downstream service capacities can focus on parts of the global value chain where local companies may be competitive, such as solar PV components, module assembly, and parts of the BoS segment. In many countries, the introduction of RE technologies will initially depend on imported equipment, but as markets become more significant, local manufacturing and export capacity could become competitive.

    • Improve national and regional grid capacity to support increased renewable electricity production and trade. Countries with excellent RE resources (e.g., solar radiation, wind and hydropower potential) could export renewably generated electricity by investing in improved grid capacity. Some regions, including the Economic Community of West African States (ECOWAS), have begun building institutional support through regional mechanisms such as the West African Power Pool (WAPP).

    • Invest in domestic downstream skills development for an adequate human talent pool. Many economic benefits from downstream services can accrue in the RE sector, especially in installation, maintenance and removal. Investing in a skilled RE labour force will not only provide more quality jobs, but prepare the wider economy for the RE transition. A skilled domestic RE labour force could be key in attracting further investment in the RE sector, including for the development of domestic manufacturing and export capacity…

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