THE ENERGY INDUSTRY August 2017 • Volume 10 • No 6 • Published monthly • ISSN 1757-7365 www.teitimes.com TIMES

Special Incentivising energy Supplement storage Final Word The IEA’s World Energy With digitalisation and The success or failure of storage Investment 2017 reveals a slump decentralisation becoming more programmes in the US may inform the in global energy investment but widespread in the energy sector, decisions of other regulators as they there are reasons to be cheerful, cyber attacks are on the rise. formulate their own policies. Page 14 says Junior Isles. Page 16

News In Brief UK support for storage seen as “game changer” Electricity sector The UK has moved to shake-up the way electricity is produced, used and stored with the announcement that it will invest £246 million in battery technology over the next four years, alongside new reforms investment to govern a flexible energy system. Page 2

Australia split over energy recommendations overtakes A set of recommendations aimed at delivering a blueprint for the future of Australia’s electricity market policy has split the country’s Coalition government. Page 5 oil and gas Varro: wind and solar have been doing “very well” Dutch aim for subsidy-free wind farms The Netherlands is to hold an The electricity industry is leading global energy investment as the sector continues to auction for 700 MW of offshore transform to low carbon generating sources. wind energy capacity for Junior Isles developers interested in building the developments without subsidy Electricity sector investment has over- investment worldwide was around area of electricity spending. Although the IEA’s Chief Economist said: “The support. taken investment in oil, gas and coal $1.7 trillion in 2016, 12 per cent lower renewable investment fell 3 per cent biggest area of power generation in- Page 6 supply for the first time, driven by the than 2015 in real terms. The lower to $297 billion, it will generate 35 per vestment is renewable, low carbon global clean energy push and a contin- investment is largely attributed to cent more power thanks to cost de- generation. Wind and solar power ued drop in upstream oil and gas spend- lower costs in sectors such as wind clines and technology improvements have been doing very, very well and AES, Siemens exert ing. The International Energy Agency and solar PV, as well as in upstream oil in solar PV and wind. 2016 was a record year. We can ex- influence in storage sector (IEA) noted, that the electricity sec- and gas. The report finds that progress in pect 200 TWh of electricity from the AES and Siemens have become the tor’s share (including networks) in Global electricity investment was technology and project management wind and solar investment [made] in latest companies to seal a strategic overall energy investment – grew 12 nearly flat (down just 1 per cent) at are driving down solar and wind costs, 2016.” deal in order to gain traction in percentage points in 2016 to 43 per $718 billion, with growing network reflected in low generation contract Coal fired generation, however, con- the growing global energy storage cent of the overall energy spend. spending mostly offset by fewer coal prices. Solar PV unit capital costs fell tinued to suffer with Laszlo saying market. According to the World Energy In- fired power plant additions. 20 per cent in 2016, partly offsetting a that the days of coal as a major power Page 9 vestment (WEI) 2017 report launched Notably, investment in renewable- 50 per cent rise in additions. generating source were numbered. by the IEA in mid-July, total energy based power capacity was the largest Launching the report, Laszlo Varro, Continued on Page 2 Energy Outlook: Renewables change landscape for gas Although the current market outlook for gas fired generation is at a low in Europe, generators can G20 stands firm on climate pact help themselves by valuing their flexibility and adjusting their trade Despite the US withdrawal from the vour to work closely with other coun- the US decision to quit the global for Growth at the meeting. It calls for strategies in a market increasingly Paris Agreement, all of the other G20 tries to help them access and use fossil deal to demand more money from continued efforts to mobilise private dominated by renewables. members maintain the climate accord fuels more cleanly and efficiently.” wealthy nations. sector investments in renewable en- Page 14 is “irreversible” in a joint statement The German chancellor, Angela More than 150 countries have for- ergy and to tackle the challenge of issued after last month’s summit in Merkel, said she “deplored” the US mally ratified or joined the accord that integration of greater volumes of Hamburg, Germany. exit from the agreement and added came into effect last November but green energy into the energy systems. Technology: Frequency After lengthy negotiations, the final that she did not share the view of Brit- Turkey is one of around 40 nations yet The document also says that the en- response goes offshore joint statement noted US President ish Prime Minister Theresa May that to take such a step. ergy transition should happen not A wind-battery storage hybrid Donald Trump’s withdrawal from the the US could decide to rejoin the Turkey’s President, Recep Tayyip only in power generation but also in system being installed at the Paris deal while stating that the pact. Erdogan, surprised G20 summit the heating and cooling, transport, and Burbo Bank offshore wind farm is world’s other major economies all The strongest proponents of the cli- members when he told reporters his industry sectors. expected to pave the way for rapid still support the international effort to mate deal, including Merkel and the country may be less inclined to ratify The action plan notes that flexibility frequency response services to slow dangerous global warming. French president, Emmanuel Macron, the Paris agreement following the US options such as interconnection and ensure grid stability. The communiqué stated: “We take have attempted to shore up support decision, suggesting it could jeopar- transmission capacities, demand side Page 15 note of the decision of the United for the Paris deal among countries fol- dise funds promised to developing management, smart grid technology States of America to withdraw from lowing Trump’s decision to exit the countries. and energy storage, among others, are the Paris agreement,” adding, “The agreement. Saudi Arabia and Indone- Barbara Hendricks, Germany’s en- key elements of a reliable and resilient leaders of the other G20 members sia were reportedly considering wa- vironment minister, downplayed Er- energy system. G20 members say Advertise state that the Paris agreement is irre- tering down their commitment to the dogan’s remarks saying “it’s about they will also work to improve the [email protected] versible” and “we reaffirm our strong deal but they ended up reiterating access to international financial functioning, transparency and com- commitment to the Paris agreement”. their support at the G20 summit. mechanisms”, rather than a funda- petitiveness of gas markets, as natural Subscribe The US did, however, successfully During the summit, Germany mental rejection of the Paris accord. gas also has a role to play in the en- [email protected] manage to insert text referencing fos- played down a threat from Turkey to The leaders of the world’s 20 ergy transition, including for provid- or call +44 208 523 2573 sil fuels which read: “The United abandon the Paris Agreement amid wealthiest economies also released ing increased flexibility for the inte- States of America states it will endea- fears that countries could start using the Climate and Energy Action Plan gration of variable renewable energy.

THE ENERGY INDUSTRY TIMES is published by Man in Black Media • www.mibmedia.com • Editor-in-Chief: Junior Isles • For all enquiries email: [email protected] THE ENERGY INDUSTRY TIMES - AUGUST 2017 2 Headline News

Continued from Page 1 As the world’s largest energy in- vestor, China saw a 25 per cent de- cline in coal fired power investment last year and is increasingly driven by clean electricity generation and UK support for networks, as well as energy effi- ciency investment, said the report. China’s focus on energy efficien- cy reflects a growing global trend. Investment in energy efficiency rose 9 per cent to $231 billion with storage seen as China being the fastest growing region, accounting for 27 per cent of the total last year. At this rate, China could overtake Europe as the leading spender on energy effi- ciency within a few years, says the “game changer” IEA. India became the fastest growing major energy investment market n Government to invest £246 million in battery technology with spending up 7 per cent, thanks to a strong government push to n Ofgem to introduce new rules modernise and expand the power sector. The report also highlighted the Junior Isles for battery technology, but for the hand- “These technologies give us [the] energy consumption according to ongoing challenges facing the oil brakes to be taken off we need to see flexibility to run on solar when the sun electricity price and availability. and gas sector. Capital spending in The UK has moved to shake-up the the rules and regulations made in a dif- isn’t shining, and be powered by wind The UK’s energy sector regulator, oil, gas and coal continued to way electricity is produced, used and ferent age updated for these new tech- when it is still. It will support the tran- Ofgem, was also expected to unveil plunge, falling by 25 per cent com- stored with the announcement that it nologies and approaches… The govern- sition to electric cars and enable our new rules to govern this new energy pared with 2015 but still accounts will invest £246 million ($321 mil- ment needs to remember that the homes to be more efficient – which system. The rules, due to come into for 40 per cent of global energy in- lion) in battery technology over the success of batteries, renewables and means cheaper, as well as cleaner and effect over the next year, are designed vestment. The report stated that the next four years, alongside new reforms smart technologies are all interlinked.” greener energy. It is critical in engag- to make it easier for the next wave of sector would see a 6 per cent “nom- to govern a flexible energy system. RenewableUK said battery storage is ing us all with the energy we use, and smart appliances that can respond to inal” bounce back in upstream in- The first part of the four-year invest- the “missing puzzle piece” that will giving us the tools we need to use it fluctuations in power prices to increase vestment in 2017. ment, called the ‘Faraday Challenge’, allow the UK to maximise the potential better,” he said. or reduce demand. In the US, investment in oil and will be the creation of a “Battery Insti- of renewable energy resources. Darren Farrar, energy segment man- The government estimates that such gas fell sharply, with the country tute” led by the Engineering and Phys- Secretary of State for Business, En- ager at Schneider Electric commented: an energy system could save UK con- accounting for 16 per cent of glob- ical Sciences Research Council, which ergy and Industrial Strategy Greg “As the world’s need for consistent, sumers £17-40 billion by 2050. al spending. It did note, however, will launch a £45 million competition Clark announced the plan at an ad- reliable energy grows, we need to em- Among the first to benefit from the that after two years of unprecedent- aimed at cutting costs for battery stor- dress to the Resolution Foundation brace innovative ways of generating new rules will be people with solar ed decline, global upstream oil and age technologies. think tank. “As part of our Industrial and making the most of the power at panels and battery storage. Currently, gas investment is expected to stabi- Responding to the announcement, Strategy Challenge Fund, I am today our disposal. Using energy storage to they are charged tariffs when they im- lise in 2017. James Court, Head of Policy and Ex- launching the Faraday Challenge, unlock extra potential in renewable port electricity into their home or ex- In a separate report, the IEA said ternal Affairs at the Renewable Energy which will put £246 million into re- energy is one way to do this and it’s port it back to the grid. the global natural gas market is un- Association, said: “The launch of a bat- search, innovation and scale-up of encouraging to see the government An Ofgem source told BBC News dergoing a major transformation tery institute will help guide next- battery technology.” creating mechanisms for this to take the current rules on trading energy are driven by new supplies coming generation storage technologies Gareth Redmond-King, Head of Cli- shape.” not fit for the digital age because they from the United States to meet through the hazards that lay between a mate and Energy at WWF said battery Storage technology is a central part often discourage people using energy growing demand in developing good idea in a lab and actual deploy- storage is “a clear game-changer” in of the move to a flexible energy system flexibly. The rules were made before economies. ment in homes and on solar farms. the UK’s ability to produce clean pow- that will allow businesses and house- the digital revolution and before the In its latest market analysis and “The UK is among the global leaders er from renewables. holds to automatically adjust their boom in variable renewable energy. five-year forecast on natural gas, ‘Gas 2017’, it says this evolution of the role of natural gas in the global energy mix has far-reaching conse- quences on energy trade, air quality and carbon emissions, as well as the security of global energy supplies. Digitalisation is key to clean Global gas demand is expected to grow by 1.6 per cent a year for the next five years, with consumption reaching almost 4000 billion cubic energy transition metres (bcm) by 2022, up from 3630 bcm in 2016. Digitalisation of the energy sector is Internet of Things (IoT). tial of digitalisation with the launch as the Energy IoT and Smart City China will account for 40 per cent the only true financially viable way to “The use of digital technology will of Aristoteles, a digital tool to watch Technology Alliance, has been of this growth. Demand from the achieve the Paris Climate Agreement be a major contribution to the COP22 and steer renewable energy portfolios launched with US partners, Microsoft industrial sector becomes the main objectives, according to Kaiserwetter, commitment to finding a financially from an executive level perspective. and Accenture. engine of gas consumption growth, a Germany-based independent inter- viable way of implementing the Paris It is claimed to be the first digital so- The alliance aims to unify the dis- replacing power generation, where national service provider dedicated to Climate Agreement objectives in the lution on the market that integrates tributed and fragmented renewable gas is being squeezed by growing the management of renewable energy near future. Investments in renewable technical with financial data. energy space by seeking better ways renewables and competition from assets. energies, while using the IoT and big A growing number of companies are of interconnecting buildings, industry coal. The company noted that the power data analytics, offer unexpected op- recognising the importance of digi- parks, vehicles, power generation “The US shale revolution shows generation industry is facing an in- portunities of boosting the expansion talisation in the energy arena. plants, electric distribution, storage no sign of running out of steam and vestment gap of $1.3 trillion, needed of renewable energies on a global In mid-July Envision Energy, a lead- and end-user consumption to help its effects are now amplified by a through to 2030 to meet the goals of scale.” ing global smart energy solution pro- make cities smart. second revolution of rising LNG the Paris Climate Agreement. He explained, however, that inves- vider, announced an open-platform Going forward, the Energy IoT and supplies,” said Dr Fatih Birol, the Hanno Schoklitsch, CEO of Kaiser- tors need tools to manage their invest- alliance that connects energy pioneers Smart City Technology Alliance will IEA’s Executive Director. wetter, commented: “The worldwide ments in renewables in order to min- and technology innovators to help ac- focus on enhancing technological and Dr Birol added: “The environ- transformation towards renewable imise risks. This, he says, is needed celerate the clean energy transition network exchanges and beneficial mental advantages of natural gas, energies can only be achieved with to attract the necessary financing. through digitalisation. business practices among its member particularly when replacing coal, the help of digitalisation and the Kaiserwetter has shown the poten- The open platform alliance, known companies. also deserve more attention from policy makers.” California secures cap and trade extension Republicans and Democrats in Cali- Ali A. Zaidi is an expert on energy far beyond the state: California’s sup- Valley), who pushed members of his fornia have come together to secure policy who served as Associate Direc- ply chains stretch across the country caucus to work with Democrats on the operation of its cap-and-trade carbon tor for Natural Resources, Energy and and into the world; its GDP heft allows issue, said: “California Republicans emissions programme to 2030. Science under President Obama and the State to set market trends. And it are different than national Republi- The state’s cap-and-trade programme recently became a senior advisor on just did.” cans. Many of us believe that climate – the only one of its kind in the coun- energy matters for law firm Morrison Bipartisan support for the system change is real, and that it’s a responsi- try and the second largest in the world & Foerster. comes as Republicans in Washington, bility we have to work to address it.” – is at the heart of its efforts to reduce He commented: “Regulatory cer- including President Trump, have The bill passed the Senate 28-12 and carbon emissions. It was established tainty pinned down by a strong bipar- blocked, resisted or undermined na- was approved 55-21 in the Assembly, by a 2006 law and launched in January tisan vote – that is California’s latest tional efforts to fight global warming. earning the two-thirds “supermajority” Dr. Birol says gas deserves 2013 to run through 2020, but its fate gift to public health and the innovation Following the vote, Assembly Re- it needed to pass. It now heads to Gov- “more attention” beyond that was uncertain. economy. The impact here will reach publican leader Chad Mayes (R-Yucca ernor Jerry Brown for his signature. Redefining excellence to future-proof the energy industry

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schneider-electric.co.uk/rn2d THE ENERGY INDUSTRY TIMES - AUGUST 2017 4 Americas News Southern calls time on Kemper gasifiers n Gasifiers hit problems in June n Southern to negotiate over cost recovery

Siân Crampsie much-delayed Kemper integrated gas- difficulties of developing state-of- billion of costs from the project. ifiers. However it reported problems ification combined cycle plant. the-art clean coal facilities and the In a stock exchange filing Southern with the coal gasifiers in June 2017 The USA’s first clean coal gasification Southern then announced that it need for such plants in an era of low said that its subsidiary, Mississippi and said that the problems would take plant with carbon capture and storage would suspend operations and start- natural gas prices and strong growth Power Co., “would be required to 18-24 months to repair. is unlikely to ever operate using coal up activities on the gasification por- in renewables. recognize a charge to income in the The 582 MW plant, initially pro- as a fuel, it has been revealed. tion of the Kemper plant, which has Mississippi regulators have also second quarter of 2017 for those un- jected to cost $1.8 billion, has so far Regulators in the US state of Missis- been operating as a combined cycle asked Southern Company for a pro- recovered costs, in addition to any run up a bill of over $7.5 billion in sippi in June rejected a request by power plant using natural gas for al- posal that keeps the plant operating as other costs required to be incurred”. construction and engineering expens- Southern Company for electricity rates most three years. a natural gas fired combined cycle Southern began commissioning the es. Southern has delayed full start-up to be increased in order to recoup the The move is a blow for clean coal unit. Southern says that it still wants Kemper plant in late 2016, achieving of the plant at least five times in 2017 costs of building the over-budget, proponents but has highlighted the to recover some or all of the $3.4 first electricity the facility’s two gas- alone. Southern close to Vogtle takeover Southern Nuclear and Georgia Power The agreement will come into effect V. C. Summer project, while state- Siemens closing are closing in on plans to take over once all the necessary approvals have owned utility Santee Cooper owns the the construction of two new nuclear been obtained, Southern Nuclear said. other 45 per cent. units at the Vogtle plant in Georgia, These include approvals from the Santee Cooper is proposing two rate USA. bankruptcy court, it added. increases that would raise its custom- The two companies have inked a Toshiba is expected to make an initial ers’ monthly electric bills by an aver- Ontario factory deal with Westinghouse, the project’s payment of $300 million to Georgia age of $12.30 by 2019, largely to original contractor, to assume control Power in October. cover financing costs for the reactors. of the engineering, procurement and In South Carolina, South Carolina Those increases, which still need final construction (EPC) contract, and Electric & Gas Company (SCE&G) approval, would be in addition to rate Dramatic changes and increasing com- manufacturing footprint.” hope to have it approved by the start said it had extended an interim agree- hikes in 2016 and 2017. petition in the global wind energy mar- Siemens said that significant chang- of August. ment with Westinghouse in order to SCE&G’s parent company, SCANA ket has forced Siemens to announce es in global and regional markets, Westinghouse filed for bankruptcy allow it to continue construction of Corp., has said abandoning the project the closure of its blade manufacturing combined with physical limitations at in March, throwing nuclear construc- units 2 and 3 at the V. C. Summer is an option. CEO Kevin Marsh told plant in Ontario, Canada. the Tillsonburg plant, had driven the tion projects at Vogtle and at the V.C. nuclear power plant while assessing commissioners in April that other op- Siemens Wind Power Limited, part decision. Increased competition had Summer nuclear plant in South Caro- its options for the site. tions include finishing one or both of Siemens Gamesa Renewable En- driven a 66 per cent reduction in blade lina, into disarray. Westinghouse is building two 1250 reactors. Roughly one-third of the ergy, said that the closure would affect prices over the last seven years, while The new service agreement will give MW AP1000 reactors at the site, with project is complete. 340 employees at the plant in Tillson- larger blade designs were increasingly Southern Nuclear and Georgia Power operations due to start in 2020. Vogtle units 3 and 4 are expected to burg. “This was a very difficult deci- in demand. EPC support as well as access to the Environmentalists have called on start operating in 2019 and 2020, add- sion that was taken only after assessing “The significant investments neces- intellectual property of Westinghouse SCE&G to halt construction of the ing 2.4 GW to Georgia Power’s port- all the options,” said David Hickey, sary to bring the plant in line with cur- needed for the expansion of Vogtle. It V. C. Summer expansion project be- folio. They will be the first in the USA Head of the Siemens Gamesa Business rent market requirements would result also includes ‘parental guarantees’ cause it is behind schedule and will to use Westinghouse’s AP1000 ad- in Canada. “The harsh reality is that, in costs that could not be competitive from Westinghouse owner Toshiba of prove expensive for consumers. vanced pressurised water reactor in order to remain competitive, we in the global markets,” Siemens said $3.68 billion. SCE&G owns 55 per cent of the technology. must constantly evaluate our global in a statement.

Solar expands in Brazil n 325 per cent growth in 2017-07-26 n MME, EPE publish expansion plan Renewable energy capacity in Brazil and the fact that the PV sector was not Funding outlined in the plan, pub- is growing steadily and installed solar affected by Brazil’s economic crisis, lished by the Ministry of Mines and photovoltaic (PV) capacity is expected Absolar said. Energy and Brazil’s Energy Research to achieve growth of over 300 per cent Under Brazil’s recently-released Agency (EPE), contain about $306 this year. 10-year energy expansion plan, the billion for the oil and gas sector, $114 According to the Brazilian Associa- government shows that up to 13 GW billion for electricity, including hydro- tion of Photovoltaic Solar Energy of solar PV could be installed in the power, and $10 billion into biofuels. (Absolar), installed PV capacity in country by 2026. n Brazilian regulator Aneel has Brazil will reach 1000 MW by the end Overall, the energy expansion plan approved eight renewable energy of 2017, a 325 per cent surge over the predicts that non-hydro renewable plants with a combined capacity of end-2016 figure of 235 MW. will account for 48 per cent of Brazil’s 148 MW for commercial or test oper- The growth in PV capacity this year energy mix by 2026, and that installed ations. The plants include the 29 MW has been achieved thanks to invest- capacity will increase by 64 GW to Sao Vicente wind farm and the 30 MW ments of Reals4.5 billion ($1.3 billion), 212 GW. UFV Lapa 2 solar PV farm. THE ENERGY INDUSTRY TIMES - AUGUST 2017 Asia News 5 Bangladesh

Dr. Finkel has made Australia 50 recommendations accelerating split over energy energy diversification recommendations The Bangladeshi government is accel- fossil fuel electricity capacity to ad- erating its efforts to diversify its en- dress a generating shortfall. n ergy mix and enhance self-sufficiency Last month the government said it HELE coal plants claimed to be cheaper in the energy sector. will go ahead with the Rampal power n Tesla to install 100 MW battery in 100 days In July it set a target to generate 2000 coal fired plant after the World Heri- MW of electricity from renewable tage Committee of UNESCO with- sources in three years. drew its objection. that the private sector could use to mod- government to subsidise coal fired Making the announcement in July, Prime Minister’s Adviser on Energy Syed Ali ernise the system. power would be “crazy”. Nasrul Hamid State Minister for Pow- issues Dr Tawfiq-e-Elahi Chowdhury Vesey noted: “It is not a menu, it is “Globally, the world is moving rap- er, Energy and Mineral Resources said: said: "Construction of the Rampal A set of recommendations aimed at 50 recommendations.” idly away from subsidies to fossil fu- “We are working to increase power 1320 MW coal fired power plant delivering a blueprint for the future of Acting Prime Minister Barnaby els,” he said. “It would be odd if Aus- generation from renewable sources at would be carried through with this Australia’s electricity market energy Joyce says the government should tralia went in the opposite direction and a faster pace so it would meet at least new UNESCO stance.” policy has split the country’s Coalition step in to build a new “clean” coal subsidised coal. It’s impolitic of me to 10 per cent of the total demand for The government also recently an- government. The government has ad- fired power station to help deliver say it, but it would be crazy,” he said. electricity in 2020.” nounced it will build a 150 MW diesel- opted 49 of the 50 recommendations cheap and reliable electricity to Aus- Despite the uncertainty in govern- Currently, 447.51 MW of electricity based power plant. The plant, which made in a review led by Chief Scientist tralians if the private sector fails to ment policy, states are still moving comes from renewable sources, which will benefit from government subsi- Alan Finkel but not the Clean Energy stump up the finance. ahead with some significant clean en- is 2.87 per cent of the total power dies, will be operated by the Bangla- Target (CET) because of concerns it New analysis, compiled by power ergy projects. generation, according to the Ministry desh Power Development Board might prohibit investment in new coal and energy sector specialists GHD and In July the South Australia state gov- for Power, Energy and Mineral Re- (BPDB). fired generation. Solstice Development Services, claims ernment contracted Tesla to deploy a sources. Currently, around one dozen diesel- The Finkel report, which did not rule it would cost $2.2 billion to build a 129 MWh lithium ion battery storage The increase in renewables runs based power plants are operating in out new coal fired power plants as be- 1000 MW ultra-supercritical (USC) system near Jamestown. The 100 MW alongside a continuing move to grow the country. ing part of the nation’s energy mix, coal fired power plant and that it would battery is claimed to be three times analysed how the government could deliver the cheapest electricity on the more powerful than any other system work to secure energy supply, drive market. in the world. The system being in- down prices and cut emissions. Dr Fin- The high efficiency low emissions stalled by Tesla and the French renew- kel’s final recommendation for a CET (HELE) coal plant, which the Turn- able energy group Neoen, is designed is expected to return to cabinet over the bull government has not ruled out to provide power to the grid at times winter break, and to the party room, funding, would produce electricity at of generation shortfall, as well as pro- where conservative MPs have argued ­ $40-$78/MWh, compared with gas at viding stability to the network, day and against new emissions regimes. $69-$115/MWh and solar at $90- night. Commenting on the impasse, AGL $171. The 550-page technical study, Tesla’s billionaire boss Elon Musk Energy chief executive Andy Vesey commissioned by the Minerals Coun- has promised the system will be in- and Origin Energy chief executive cil of Australia and the COAL21 stalled in 100 days from the signing of Frank Calabria said the government Fund, claims that clean-coal plants the contract or it will be free. should embrace all 50 of Alan Finkel’s would drive down energy prices, and In a separate development, Photon recommendations to improve energy offers the Prime Minister an econom- Energy has started the development of EP17_Ad_160x120-EN_op.pdf 1 9/5/2017 下午12:56 security, affordability and carbon ic blueprint on the viability of new a 316 MW solar power plant near Gun- abatement. coal fired stations. ning in the state of New South Wales Calabria said the Finkel review pro- Former US Vice President and now (NSW), Australia. When completed, it vided a road map for energy security, climate change campaigner Al Gore will become the largest planned solar affordability and carbon abatement argued that any move by the Australian power plant in the country. S. Korea moves away

from coal and nuclear C

M South Korea aims to increase its use of panies and small merchants to use The decision to phase out coal and renewables and gas for power genera- renewable energy by offering finan- nuclear could, however, be less painY - tion after the new Moon Jae-in admin- cial incentives and other promotional ful if demand slows, as some are preCM - istration committed to reducing its packages. dicting. A group of experts recentlyMY reliance on fossil fuel and nuclear By 2023, the government will require said electricity usage for the 2017- power plants. power utility firms with a generating 2031 period is forecast to be smallerCY Moon aims to increase the share of capacity of 500 MW or more to gener- than a previous government forecastCMY gas in the power generation mix to ate 10 per cent of their electricity from that covers 2015 through 2029. K about 27 per cent by 2030, from 19 per renewable sources, according to the “The electricity demand for 2030 cent today. For renewables the plan is policy outline. will likely reach 101.9 GW, down to grow the share from 5 per cent to 20 The so-called Renewable Portfolio from the forecast of 113.2 GW made per cent by 2030. The country cur- Standard (RPS) mandates power util- two years earlier,” said Yoo Seong- rently generates two-thirds of its elec- ity firms to generate a certain amount hoon, an energy professor from Seoul tricity from thermal coal fired power of electricity from renewable sources. National University. plants and nuclear reactors. Under the RPS system, the proportion n South Korean firm Solkiss plans to The decision to move away from of electricity generated by renewables build the largest rotating floating solar coal and nuclear has been prompted could rise to as high as 28 per cent by park in the world, with a capacity of by the desire to cut air pollution in 2030, the report said. 2.67 MW. According to Solkiss, rotat- cities and the Fukushima nuclear di- The Moon administration has yet to ing solar parks are 22 per cent more saster in Japan. come up with comprehensive mea- efficient compared to conventional In a policy report to President Moon sures to make up for the expected ground-mounted PV plants, while Jae-in, who took office in May, the power production shortfalls caused by their efficiency is 16 per cent higher State Affairs Planning Advisory Com- the shutdown of the nuclear and ther- than that of water-fixed floating mittee said it will encourage big com- mal power plants. facilities. THE ENERGY INDUSTRY TIMES - AUGUST 2017 6 Europe News Dutch aim for Floating subsidy-free wind wind farm farms as offshore costs continue to fall project n Dong, Siemens embark on new UK study n Svea Vind plans subsidy-free projects sinks Plans for a floating wind farm demon- firm awarded the construction contract Siân Crampsie farm capacity, social costs, and risk nance activities, so understanding if stration project off the coast of Scot- for its development to Global Energy identification and analysis. these costs can be reduced by condi- land are in doubt after the developer Group and struck a deal with Scrabster The Netherlands is to hold an auction “Three years ago it was expected that tion monitoring is key in our aim to decided to call in the administrators. harbour to service the scheme. for 700 MW of offshore wind energy up to €18 billion would be needed for reduce costs further,” said Benj Sykes Dounreay Tri has submitted a plan- n Investors in the proposed Swansea capacity for developers interested in the five wind farms off the coast of of Dong. ning consent application to build a 10 Bay tidal energy scheme have put building the developments without Zeeland and Holland,” said Minister In Sweden, Svea Vind Offshore says MW scheme off the north coast of funding for the project on hold until subsidy support. Kamp. “That included €4 billion for it wants to build six new wind farms Scotland, near Caithness, demonstrat- the UK government makes a commit- Minister of Economic Affairs Henk the offshore grid, necessary to get the off the coasts of Gävle and Oxelösund, ing a semi-submersible foundation ment to back it. The 320 MW scheme Kamp has announced that the tender power ashore. But now the costs have and plans to submit the permit applica- developed by its owner, Hexicon AB. has planning permission but requires for sites I and II of the Hollandse Kust been more than halved and the expec- tion for the first 200 MW project later However Dounreay Tri has appoint- support in the form of a contract for Zuid zone to the west of the Nether- tation is that they will fall further.” this year. ed accountancy firm French Duncan difference (CFD) to make it finan- lands will initially be opened on a And developers are continuing work The wind farms will be built without as administrators. Earlier this year the cially viable. subsidy-free basis. to further drive down the costs of off- subsidies, with factors such as good If there is no interest in building the shore wind. wind conditions and proximity to the two 350 MW wind farm zones without In July, Dong Energy and Siemens shoreline helping to reduce costs, Svea subsidies, the tender procedure will go Gamesa Renewable Energy joined Vind said. on as planned, Kamp added in a letter forces with several UK academic in- The company believes that the cost to Parliament. stitutions to establish a five-year work- of production from its wind farms will The move follows recent offshore ing programme on offshore wind be less than €50/MWh. wind farm auctions held in Germany, technology. The Netherlands has six offshore where three out of four wind projects Working with the universities of wind sites in the pipeline at the two were won by developers on the basis Hull, Sheffield and Durham, Dong Hollandse Kust zones: four at Hol- of subsidy-free bids. A developer in and Siemens Gamesa will examine landse Kust Zuid, and two at Hollandse Sweden has also recently announced current and future challenges of re- Kust Noord. Each of the sites at the plans to build offshore wind farms ducing offshore wind technology wind farm zones can accommodate without subsidies, serving as further costs. Operations and maintenance 350 MW. evidence of the falling costs of offshore will be a key theme of their research, The tenders for the 700 MW Hol- wind technology. Dong said. landse Kust Zuid zones III and IV are The Dutch subsidy-free tender will “As we build more offshore wind scheduled for 2018. The Hollandse North coast of Scotland: assess bids on criteria such as devel- farms in the UK, we are investing Kust Noord tenders are slated for wind plan in doubt oper expertise, design quality, wind heavily in operations and mainte- 2019.

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FREE 1 WORKSHOP Spanish grid scheme Brought to you by 5 – 7 SEPTEMBER 2017 Plans to modernise Spain’s electricity which aims to improve the quality of Asturias, Navarra and the Basque LANDMARK CENTRE, LAGOS, NIGERIA www.power-nigeria.com distribution networks and the digitisa- electricity services and supports smart Country. It will install more than four tion of electricity meters have won the grid development. million remotely controlled digital support of the European Investment The company will initiate the pro- meters that can monitor consumer Main Sponsor Bronze Sponsor Utility Partners Organised by Bank (EIB). ject across several counties in the information in real-time. Spanish electricity firm Iberdrola country including Aragon, Cantabria, Iberdrola has already installed 9.5

A BRAND OF has signed a €500 million loan agree- Castilla-La Mancha, Castilla y Len, million digital meters in Spain, it said ment with the EIB that will help it to Comunidad Valenciana, Extremadu- in May 2017, as well as the smart grid realise its so-called Star project, ra, La Rioja, Madrid, Murcia, Galicia, infrastructure to support them. THE ENERGY INDUSTRY TIMES - AUGUST 2017 Europe News 7

Critics jump on Hinkley cost rises n Construction costs rise, delays likely n Kepco in Moorside talks Separately, government figures have tional Audit Office (NAO), a spending er at Greenpeace UK. “Long before tor construction projects in North The admission by EDF that construc- shown that consumers will be bur- watchdog, said that the deal for Hin- Hinkley is even finished, offshore Wales, Gloucestershire and Cumbria. tion costs of the Hinkley Point C nu- dened with a higher bill than previ- kley struck between EDF and the UK wind will be producing far cheaper At the end of June, Korean firm clear power plant in the UK will rise, ously estimated for supporting Hinkley government was “risky and expen- and safer power. The nuclear new Kepco confirmed that it is in talks with and that delays are also likely, has led Point C. sive”, and that the project would pro- build programme should be halted for Toshiba over the purchase of a stake in to further criticism of the project. EDF signed a contract for difference vide “uncertain strategic and eco- better alternatives that will meet our NuGen’s proposed Moorside nuclear EDF said last month that a review (CFD) with the UK government for nomic benefits”. Critics of the scheme energy needs and provide jobs in the power project in Cumbria. of the costs and timetable for the proj- Hinkley in 2013, guaranteeing that the have called for the government to put regions.” Toshiba’s financial difficulties have ect – set to be the first new nuclear plant would earn a minimum of £92.5/ a stop to the project – and the UK’s However the government maintains cast doubt over the viability of the 3.8 plant in the UK for two decades – in- MWh for energy generated for 35 other planned new nuclear power that nuclear energy is required in the GW Moorside project and NuGen an- dicated that project completion costs years. plants – and invest in alternative en- UK to help keep the lights on while nounced in May that it was seeking are now estimated at £19.6 billion, a Because of falling wholesale energy ergy technologies. reducing carbon emissions, and has strategic investors to enable it to keep £1.5 billion increase over previous prices, it is now estimated that house- “Some may think nuclear is too big pointed out that the CFD strike price the project afloat. evaluations. holds could end up shouldering a £50 to fail, but no one can credibly say awarded to Hinkley is in line with Kepco is seen as a likely partner in It also said that the risk of deferral billion bill for the contract, more than that Hinkley, or indeed other nuclear other low-carbon power plant deals. the project, but will want to use its own of delivery is estimated at 15 months eight times the 2013 estimate. power plants, should go ahead with- The government says it is also con- reactor technology at the site, rather for the first unit, and nine months for The latest data on the plant comes out serious, public re-evaluation,” tinuing negotiations with Horizon and than that of Westinghouse, Toshiba’s unit 2. just a few weeks after the UK’s Na- said Nina Schrank, energy campaign- NuGen, which are planning new reac- bankrupt US subsidiary. Dong moves ahead with Asnaes conversion Dong Energy is moving ahead with carrying out full conversions at others. plans to convert a coal fired power Conversion of the Asnaes plant will plant in Denmark to biomass firing start in the coming weeks and Dong after concluding heat and power sup- has selected Finland-based Valmet to ply agreements with customers. supply the biomass plant, it said. Asn- The utility is to convert the Asnaes aes power station currently has two power station near Kalundborg – one coal-fuelled units – Unit 2 with a capac- of the largest power plants in the coun- ity of 142 MW power and 193 MWth try – to fire on wood chips from late district heating and process steam, 2019 onwards. It will sell steam, dis- and Unit 5 with a capacity of 640 MW trict heating and power to customers power and 308 MWth district heating including Novo Nordisk, Novozymes and process steam. and utility Kalundborg Forsyning, for The conversion from coal to wood 20 years, it said. chips at Asnæs will result in an an- Dong announced in February 2017 nual reduction in CO2 emissions of that it would no longer use coal at any around 800 000 tonnes. Pharmaceuti- of its power stations beyond 2023. It cal firm Novo Nordisk said that the has already reduced the use of the fossil deal with Dong would enable its Ka- fuel by 73 per cent since 2006 through lundborg production unit to become co-firing at some of its plants and carbon neutral. THE ENERGY INDUSTRY TIMES - AUGUST 2017 8 International News Wind wakes up in Saudi Arabia n RFP will open in August n Saudi Aramco commissions first turbine

Siân Crampsie The RFQ for the Dumat Al Jandal is part of round one of the National one this year,” said Khalid Al-Falih, enabling a reduction in the consump- facility was opened in mid-July by the Renewable Energy Program (NREP), Minister of Energy, Industry and Min- tion of diesel at the plant, and will also Saudi Arabia is preparing to host its Renewable Energy Project Develop- the other part being the 300 MW solar eral Resources. NREP seeks to have feed energy to the grid. first utility-scale wind energy project. ment Office (REPDO) of Saudi Ara- photovoltaic (PV) scheme in Sakaka, 3.45 GW of renewable energy capac- Abdulkarim Ghamdi, Saudi Aramco The Kingdom has issued a request bia’s Ministry of Energy, Industry and for which an initial tender was issued ity by 2020 and a total of 9.5 GW by executive director for Power Systems, for qualification (RFQ) for a 400 MW Mineral Resources. The RFQ window in April 2017. The winning bid for the 2023. The wind and solar projects said that the turbine “was the start of wind farm in Dumat Al Jandal, in the will close on August 10 and the quali- solar project will be announced in will secure 20-year and 25-year something new” in the country. “Wind Al Jouf region. fied companies will then proceed to the November 2017. power purchase agreements (PPAs), energy offers potential to provide new It has also seen the commissioning of request for proposals (RFP) stage. “The release of Dumat Al Jandal’s respectively. energy in the kingdom’s energy mix and its first wind turbine, a GE unit installed That process is scheduled to start on wind project RFQ, and upcoming RFP The Saudi Aramco wind turbine, a enhance power generation efficiency, at a Saudi Aramco facility in Turaif, in August 29 and close in January 2018. next month, ensures that we remain GE 2.75-120 unit, will provide energy thus delivering on the core objectives the northwest of the country. The Dumat Al Jandal wind project on course to tender 700 MW in round directly to the firm’s Turaif facility, of Vision 2030,” Ghamdi said. G20 lacks climate stewardship, says new index Nuclear plant Countries in the G20 are still a long publisher of the study. “If we are to energy use per capita. way from demonstrating responsible realise the goals of the Paris Agreement China’s ranking is expected to im- stewardship in the area of climate pro- we need countries to get down to the prove because of its efforts to limit the tection, a new report has found. business of serious implementation, to growth of greenhouse gas emissions. progresses in UAE The G20 Climate Change Perfor- come prepared to assess their collec- “Particularly promising are the de- mance Index (CCPI), produced by tive progress in 2018 and trigger a velopments in some of the major Germanwatch, ranks countries based process to increase climate ambition emerging economies such as Brazil The construction of the first nuclear complete and work to pour the con- on their emissions, energy use, renew- by 2020.” or India,” said Prof. Niklas Höhne power plant in the UAE is crete and complete the RCB is pro- able energy and climate policy. Its Germanwatch said that Italy is the from the NewClimate Institute. “Bra- 75 per cent complete, according to the gressing. The RCB is expected to be latest report shows that the USA and unexpected leader in the G20 ranking, zil has achieved crucial advancements Emirates Nuclear Energy Corporation completed in the first quarter of 2017, Saudi Arabia trail far behind countries while Brazil is placed second. Key in reducing deforestation over the last (ENEC). roughly a year after similar work was such as Italy, Brazil and France in cli- factors in Italy’s success are its down- years, which need to be kept going ENEC has announced that construc- concluded on Unit 2, the statement mate stewardship. ward trend in per capital greenhouse within the present challenging politi- tion of units 3 and 4 at the Barakah said. It also states that no country in the gas emissions and strong growth in cal debate. nuclear energy plant is now more than The Barakah facility is scheduled G20 is on track to meet the Paris cli- renewables. “India is seeking to skip traditional 50 per cent complete. for completion in 2020, with con- mate goals. China is ranked 12th due to its im- stages of development by favouring ENEC has now set in place unit 3’s struction having started in 2012. “It’s time for the world’s richest mense growth in energy use and emis- renewables over coal and electric ve- Reactor Containment Building (RCB) A Korea Electric Power Corporation economies, accounting for over 80 per sions in the years up to 2014. The USA hicles over gasoline and diesel. Both liner dome section, installing the roof (Kepco) led consortium is building cent of global emissions, to step up occupies second to last place because countries are moving in the right direc- of the structure which now houses the the four 1400 MW nuclear reactors, their game on climate action,” said there are no recognisable attempts at tion – yet climate policies and interna- Reactor Vessel (RV), a statement which will provide around one quarter Wael Hmaidan, Executive Director of national level to tackle either the very tional climate finance needs further said. of the UAE’s electricity needs when Climate Action Network (CAN), co- high CO2 emissions or the immense support.” Unit 3 is now more than 62 per cent complete.

ALIGN YOUR BRAND WITH UGANDA’S ENERGY SECTOR AfDB supports Ngozi

n Up to 100 MW at Ngozi n Plant will be template for the future

Tanzania is taking a step forward in its being built on a sustainable energy This SREP highly concessional fi- plans to transform its economy with source,” said Leandro Azevedo, nance will be instrumental in mitigat- the development of a geothermal ener- AfDB’s Senior Climate Finance Offi- ing the high-risk nature of geothermal 13 – 14 SEPTEMBER 2017 gy project, the African Development cer and CIF Coordinator. prospection and field development. Serena Hotel, Kampala, Uganda Bank (AfDB) has said. “Developing geothermal capacity in Ultimately, the project is also expected The Climate Investment Funds (CIF) Tanzania is an essential part of that to have transformational effects not Uganda aims to grow installed capacity from 868MW to has approved funding of $21.7 million transformation and we hope that this only on Tanzania and its energy sector 4100MW by 2030. to finance the country’s efforts to ex- project’s success will lead downstream but also more broadly in the African ploit its geothermal energy capacity. to the installation of a 100 MW power Rift Valley region. This is your opportunity to showcase your capabilities to project managers The project is a key part of Tanzania’s plant and help create the conditions for The proposed 100 MW Ngozi plant efforts to develop an affordable and the development of other geothermal would generate 823 GWh per year, Secure face time with key decision makers in the Ugandan sustainable source of baseload energy sites in the country,” he added. improving Tanzania’s energy security energy sector, including utilities and government to underpin its economy. The project involves conducting ex- by reducing its reliance on imports The funds will support development ploratory test drilling and installing the from neighbouring countries. PART OF UGANDA’S 17TH With the support of of the Ngozi geothermal steam field in required steam gathering infrastruc- The project will also contribute southwestern Tanzania. The project ture in the Ngozi geothermal site. The downstream to capital mobilisation ENERGY WEEK Ministry of Energy and Mineral Development will showcase the potential for the ap- project is funded under the CIF’s from both public and private investors plication of geothermal energy in the Scaling-up Renewable Energy Pro- by creating an enabling environment Secure your place today. Please contact Jason Zeelie country, AfDB said. gram (SREP) and will receive $5 mil- for unlocking both public and private E: [email protected] I T: + 27 21 700 3557 “We are assisting in the first step in lion as a loan and $16.73 million in funds, AfDB said. The total contribu- Also visit www.future-energy-uganda.com the transformation of Tanzania’s en- grant resources to be implemented by tion expected from private sector is ergy sector, a transformation that is AfDB. estimated at $300 million. THE ENERGY INDUSTRY TIMES - AUGUST 2017 Special Supplement Investing more energy in cyber security With digitalisation and decentralisation becoming more widespread in the energy sector, cyber attacks are on the rise. As a global company with expertise in operational technology, Siemens is well placed to deliver cyber security solutions to the industry. Junior Isles

lthough there has been a grow- President of Global Cyber Strategy 2011, which creates one of the largest the capability to detect, conduct secu- ing awareness of the impor- at Siemens, noted that it is a “top- strategic relationships between a rity analytics, respond, and quickly Atance of cyber security, the three issue” for customers. “Among global engineering company and a recover. Business continuity is im- seriousness of the threat was thrust all sectors, energy is the most at- global IT provider. The two compa- perative,” he said. into the global spotlight in May with tacked,” he said. nies are now leveraging their portfo- Connectivity and interconnectivity the Wannacry ransomware attack. The threat has largely been brought lios to help US utilities and the oil and bring increased risk across the whole It was reportedly the biggest cyber by digitalisation. Digitalisation in the gas industry establish an integrated energy value chain – from upstream attack in history, with one security energy sector brings a convergence of and seamless first line of defence to distribution and retail. Data flows software supplier observing 57 000 information technology (IT) and op- against cyber-attacks. from the field to the control room and infections in 99 countries. Notably, erational technology (OT) connectiv- The cyber risk is greater on the OT to the enterprise network. Key for the UK’s National Health Service ity so that data can travel from the side than to IT for several reasons. As companies who want to strengthen (NHS) was severely affected, includ- field to the control room to the enter- legacy assets are digitalised, connec- their defences against cyber attacks is ing 40 hospital trusts. prise network. The crossover between tivity also grows. This leads to a not only securing the data that sits in Operations and appointments were IT and OT has underscored the need larger attack surface that is harder to the control room environment but cancelled and ambulances diverted. for a unique set of solutions. secure. Also, attackers are looking for also securing the data at the edge. Hackers demanded payment to restore According to a recent independent new areas to penetrate, where they Simonovich explained: “You have access to vital medical records. Other study conducted by the Ponemon In- can extract additional cost out of the to think about what data needs to big names such as Spanish telecom stitute, the OT side is significantly system. travel where.” He cited the December giant Telefonica and international more vulnerable to a cyber attack than “When we think about the impact of 23, 2015 cyber attack that left homes shipper FedEx Corp in the US were the IT side, and breaches have a much an attack against the OT environment, in Western Ukraine without power for also infected. bigger impact. “OT, which is every- things like ransomware become a lot several hours. “For five hours the The power sector did not escape thing outside the enterprise network, more powerful,” said Simonovich. operator did not know he was experi- damage. WannaCry attacked comput- is the new frontier for the cyber risk.” Finally, increased competitiveness in encing a cyber attack. As a result, 225 ers at the West Bengal power distribu- Simonovich noted that attacks against the power and oil and gas sectors has 000 homes lost power in the middle of tion company in India. Officials from OT have increased six-fold over the led to “lots of different bad actors winter.” West Bengal State Electricity Distri- past few years, from five per cent to looking to go after the environment”. One year later Ukraine was attacked bution Company (WBSEDCL) de- 30 per cent today. Simonovich insists, however, that again. On December 17, 2016, a tected the malicious software (mal- The Ponemon study revealed that greater connectivity also creates end- power outage affected Kiev just be- ware) at four of its offices. nearly 70 per cent of US oil and gas less opportunities for optimising op- fore midnight, resulting in an hour- The WannaCry attack served as an cyber managers said their operations erations. And it gives an organisation long blackout. Ukrenergo said the important reminder for key infra- have experienced at least one security greater visibility into its assets and incident led to the loss of about one- structure sectors, such as power and compromise within the past year, re- operations, and therefore greater abil- fifth of Kiev’s power consumption. energy, to strengthen their cyber sulting in the loss of confidential in- ity to detect and respond to an attack. Cyber security is not just about re- defences. formation and OT disruption. It is safe to say that most companies acting to isolated incidents. When Siemens has long recognised the This upsurge in attacks led Siemens face 2-3 attacks a year, according to business continuity is critical, such as gravity of the danger posed by and Atos, a global leader in digital Simonovich. “This means that the with power and electricity supply, it is the growing cyber threat to the services, to increase the scope of an possibility of a successful attack is just as critical to protect against the power sector. Leo Simonovich, Vice alliance the two companies formed in 100 per cent. Companies must develop persistent threat of cyber attacks. As THE ENERGY INDUSTRY TIMES - AUGUST 2017 Special Supplement

Simonovich noted, the Ukraine at- environments. It brings deep domain tacks affected different parts of the know-how and solutions for OT cy- value chain. “To be able to detect an ber, including security program de- attack that is happening in the utility sign, security lifecycle management, environment, you have to know what plant security monitoring, and inci- is normal, which is based on how dent response. your assets are performing. You have Leveraging advances in machine to be able to do security analytics at learning and probabilistic mathemat- the asset level, the SCADA level and ics, Darktrace’s Industrial Immune the network level. When you can do System platform can detect and reme- all three at the same time, you have diate in-progress cyber threats at their true insight. At Siemens, we know nascent stages. By learning the ‘pat- this from experience,” he said. tern of life’ for every network, device, “Global companies are looking for and user across both OT and IT net- 24/7 coverage, including OT dedi- works, the companies claim the Arti- cated monitoring,” Simonovich not- ficial Intelligence (AI) algorithms can ed. “You can’t simply drop IT solu- identify and automatically take action tions into the OT environment. The against emerging attacks that other protocols are not standard. Engineer- tools miss. Simonovich commented: ing specifically for OT means you can “We’re very excited about teaming follow customer needs and deploy with Darktrace. Together we can help tools – everything from intelligence, detect attacks like Wannacry well in to network monitoring to anomaly advance and stop them.” detection – in order to quickly detect In addition to delivering cutting- and stop attacks from happening.” He edge technology, Simonovich says added: “Combining the asset-level utilities want “first line of defence data with network-level data means measures”. The industry, he says, is facing a perfect storm: although customers can gain deep insights into fundamentals? Have you transformed parties to provide their operation and the behaviour of their assets across digitally connected, it has not yet It is critical to think about addressed many fundamentals. their security environment? We then their IT, the weakest link can be the what data needs to travel the value chain as well as down the look at how to begin monitoring and cause of a major incident. We look to technology stack.” “Customers are looking for partners where to help them navigate along their detection – smartly, aligned with the play a critical role in helping to ‘lift In a move to bring cutting-edge cy- business objectives and priorities. By the middle’ and address weak points ber defence for OT to electric utilities cyber journey – build a strategy that addresses foundational issues such monitoring in blocks, based on where head on.” and the oil and gas industry, Siemens the risk is and the customer’s assets “Lifting the middle” is becoming an recently entered into a strategic part- as cyber asset management, vulner- ability management and monitoring prioritisation, we can come up with a increasingly important business, es- nership with Darktrace, a leading smart strategy for connectivity, moni- pecially given the increasing preva- machine learning company for cyber solutions.” When building a cyber security toring and response. lence of distributed energy. “Our security. Both companies bring spe- Simonovich noted: “Technology customers know that cyber security is cific expertise to the partnership. programme, the first step is usually to assess where the utility or organisa- will not solve the problem on its a major imperative and that they need As an industrial technology pro- own. A holistic approach designs the to be proactive,” said Simonovich. vider, Siemens has an inherent and tion is on the maturity curve. Simonovich explained: “The first right kind of strategy that technology “They know we are here to help them holistic understanding of how to supports. In a world where you have in times of need. But it is important manage business risk by minimising thing I ask a customer is: Do you have a strategy? Have you dealt with the a decentralised operating model, in for them to be proactive in building cyber risks in complex operating which asset owners rely on third up their defence measures. We can

A more proactive approach

A shift in the approach to cyber security is taking place in the power generation sector, particularly as more sophisticated cyber threats are uncovered. While traditional cyber security offerings based on a collect-and-report model are still in use, more proactive approaches to information gathering, usage and reporting are also being deployed to enable advanced analytic capabilities and interactive report- ing. In addition, these new approaches allow for tailoring the exact scope of the data gathering and analysis to meet the needs of the customer. The drivers for these changes are primarily the same, regardless of the region where the power generation assets are operated. Regulations and standards, as well as a desire for more tailored cyber security solutions were the common requirements for the new concepts. For example, in the US, this change is partially driven by the newer industry standards, such as those set forth by the North American Electric Reliability Corporation (NERC) with the Critical Infrastructure Protection (CIP) V6 rule. Prior revisions of standards like NERC’s focused more heavily on becoming compliant as an end goal, whereas newer revisions consider compliance the starting point, and focus on staying compliant. But regardless of whether the customer follows CIP, VGB PowerTech, National Institute of Standards and Technology (NIST), National Electronic Security Authority of the United Arab Emirates (NESA), or other industry standards: the old way of doing things is based around the idea of ‘getting to compliance’, whereas the new requirement is focused on ‘living in compliance’. To address this new paradigm, Siemens has developed its cyber security offerings to the energy industry in a central monitoring, alert- ing and reporting system concept called Cyber Security Center (CSC). Using industry standard tools and processes, the Siemens Cyber Security Center meets the requirements of a modern cyber monitoring system by combining Security Configuration Change Manage- ment (SCCM), Security Intrusion Event Monitoring (SIEM), a Network Intrusion Detection System (NIDS) and an advanced dashboard. In addition to creating a “single-pane-of-glass” view of the cyber solution, the CSC also provides the ability to review the gathered information in a variety of channels. The central dashboard resides within the DCS itself. It can be made visible within the SPPA-T3000 control system’s workbench as a standard HMI graphic. And, it can be accessed from both the plant DMZ and the customer OT/IT secu- rity teams via the corporate network, all controlled by the customer’s security staff. A major US utility customer was the first to deploy the CSC solution in the US market. Their cyber analysts met with Siemens during the Customer Factory Acceptance Test and spent several days going over the product in great detail, resulting in a number of customisa- tions to the dashboards and reporting capabilities to meet their specific internal requirements. Later, during site integration and testing, the utility’s resident site security engineer spent several more days testing and evaluating the product using actual data being generated by the power plant. Further customisations were made to fine-tune the output. At the end of the project, the entire solution was copied off and merged into a template so that it could be installed by the utility on future projects. The utility’s cyber experts are required to monitor and review daily the logs generated by the CSC, and any incidents are captured, reported on and mitigated as quickly as possible. Their approach to making the CSC dashboard directly visible to their resident site secu- rity engineer guarantees that they can do their job without having to constantly walk out to the DCS and review the logs locally. Addition- ally, in the event they are off-site or working remotely for any reason, these same dashboards can be accessed from any location. This tailored approach is central to the product development strategy for Siemens’ cyber offerings, not only for the current portfolio, but for the future as well. Each iteration of the CSC is representative of a phased approach whereby each phase builds upon the last to enrich the value of the offering. For example, Phase 1 was simply designed to meet the requirements of the regulatory market; Phase 2 updated offerings to be more flexible in meeting each customer’s individual requirements; and Phase 3 extends the solutions beyond the Siemens products to meet all of the customers’ needs in the OT cyber space. To do this Siemens is partnering with a number of top-tier technology providers to create a vendor-agnostic, solution-specific cyber of- fering that customers can deploy across their entire fleet, regardless of vendors or specific products. Tackling headache-inducing topics such as cyber asset management, network intrusion detection, vulnerability auditing and reporting, and multi-tiered risk assessments, Siemens is acting as the integrator and solution provider for these technologies, as well as providing a Managed Security Services offering to help customers who need assistance in the OT Cyber environment. THE ENERGY INDUSTRY TIMES - AUGUST 2017 Special Supplement

certainly provide remediation mea- sures, but they must take a step back and ask themselves: ‘What is my strategy?’” Simonovich advises customers to place IT-savvy employees at all levels of the organisation, from the board- room to the plant operator. While companies are keen to take advantage of the value that digitalisa- tion can bring, some are wary of the accompanying risk. It is therefore im- portant to assure them that the products and systems they are introducing are inherently safe. According to Siemens, secure products are its foundation. Every product business line has a product security officer that looks at the full lifecycle, from design all the way through to disposal. “Our customers initially fear greater connectivity because they think this Simonovich: most companies increases their risk, but in reality it face 2-3 attacks a year provides them with insight,” said Simonovich. He says that on the OT side 70 per cent of attacks are due to insider threats and that the average number of days a piece of malware sits on the OT side ranges from 200-400 days. “Once connected, you can have visibility into what’s happening. If a piece of mal- ware is brought into a power plant by a contractor, you can detect it. Con- nectivity equals insight, and that’s power.” Determining whether the cyber se- curity measures that have been put in place are a success, however, is a moot point. Simonovich says, it is not a case of simply assuming that they must be working because the organisation has not suffered a breach. He said: “First it starts with looking at your risk appetite, assessing your residual risk and everything in be- tween, and then figuring out how to build up your matrix. You can’t be fool proof; attacks will happen. The ques- tion is: understanding what the risk profile looks like and determining whether cyber risks have been mini- mised. That’s what we help our cus- tomers figure out – defining and con- trolling those which are technical, and those that are more to do with strategy and process.” security has long been important to He stressed the importance of iden- The Ponemon study revealed As cyber threats change and the na- Siemens, but Stuxnet really demon- tifying an attack as soon as it takes that nearly 70 per cent of US ture of cyber breaches evolve, staying strated the need to transform our cyber place. While knowing who has oil and gas cyber managers on top of changing risks and types of security operations, to build up our launched an attack is useful, it is more said their operations have attack is imperative. Today, attackers defenses even further.” Siemens is a important to understand the methods experienced at least one have no geographic boundaries. Si- diverse company with a broad geo- they used to get in, and put a strategy security compromise within monovich believes that what energy graphic footprint, in 190 countries, in place against those measures. the past year companies need is an OT provider that with over 50 business units. “That Simonovich commented: “The real- has global coverage, and preferably global presence gives us visibility ity of Wannacry is that basic cyber have to do both.” one that has secured its own environ- across our installed base. And, through hygiene could have prevented much He concluded: “There is no silver Connectivity equals insight: ment and understands the threat. our partnerships and participation of the damage. That’s why the first bullet that will protect anyone from a Once connected, operators Having experienced a cyber attack with communities, we can quickly thing we tell our customers is to focus cyber attack. Security requires devel- can have visibility into what is early on, Siemens shares its own expe- detect and understand what is happen- on the fundamentals and then address oping a strategy and sticking with it. happening rience with energy companies. “Cyber ing around the globe.” the more advanced issues. But you It’s the journey not the destination.” Generating powerful insight, beyond what’s in sight. Introducing Digital Services for Energy.

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Insights power outcomes visit siemens.com/digital-services-energy THE ENERGY INDUSTRY TIMES - AUGUST 2017 Companies News 9 EDF seals AES, Siemens New NP exert influence in deals storage sector

Technology firms are keen to bolster their expertise and technology portfolios to gain market share in a rapidly expanding sector.

will operate independently of its par- it would leverage Younicos’ “compel- Siân Crampsie ent companies. ling” capabilities through its global Mitsubishi Heavy Industries (MHI) is partners, both leaders in their activi- “As the energy storage market ex- footprint and that the purchase would to take a 15 per cent stake in French ties, in the shareholding of New NP AES and Siemens have become the pands, customers face the challenge of enable it to help its customers to reduce nuclear reactor business New NP after marks the achievement of a key mile- latest companies to seal a strategic deal finding a trusted technology partner their energy costs. signing a binding agreement with util- stone in the restructuring of the French in order to gain traction in the growing with an appropriate portfolio and a “Together we are a powerful combi- ity EDF. nuclear industry. This demonstrates global energy storage market. profound knowledge of the power sec- nation; our scale, fleet and global pres- The deal marks a significant step for- the attractiveness of our projects and The two companies have announced tor. Fluence will fill this major gap in ence, coupled with a smart energy ward in the restructuring of France’s expertise to the other players of the an agreement to create a new global the market,” said Ralf Christian, CEO capability, will allow us to open up new nuclear energy sector, involving the global nuclear industry.” energy storage technology services of Siemens’ Energy Management Di- markets and provide our customers break up of Areva Group’s activities EDF said in a statement that it and company, called Fluence, that will vision. “With the global reach of an around the world with a reliable, and the acquisition of its nuclear reac- its strategic partners would acquire combine their respective expertise, experienced international sales force cheaper and cleaner source of energy,” tor business by EDF. their respective stakes in New NP si- experience and technologies in the en- as well as Siemens’ leading technology said Chris Weston, Aggreko CEO. EDF has also agreed to sell a five per multaneously, and that they were tar- ergy storage field. platform Siestorage at its disposal, Flu- Wärtsilä said in July that its deal to cent stake in New NP to French nucle- geting the end of 2017 to complete the Fluence will combine AES’s Advan- ence will be perfectly equipped to serve buy Greensmith had closed. ar engineering company Assystem for deals. cion technology with Siemens’ this very interesting market.” The Finnish firm believes that the €125 million. At the same time, the At the end of June, EDF said that Siestorage platform to meet the needs Together, Siemens and AES have deal will enable it to rapidly expand its French utility is continuing talks with French nuclear watchdog ASN had is- of the rapidly changing and growing deployed or have been awarded 48 footprint in the energy storage market other potential strategic investors, it sued a positive opinion on the reactor energy storage market, Siemens and projects totaling 463 MW of battery- globally and offer standalone energy said. vessel at the Flamanville 3 nuclear AES said in a statement. based storage across 13 countries, in- storage solutions as well as hybrid EDF agreed in 2015 to buy a control- power project. “The company will empower cus- cluding the world’s largest lithium-ion plants. ling stake of up to 75 per cent in The ASN’s ruling is a precondition tomers around the world to better battery-based energy storage project “Greensmith brings an unmatched Areva’s reactor unit as part of govern- for the French government’s plan to navigate the fragmented but rapidly near San Diego, California. track-record of software and systems ment plans to rescue the struggling inject €4.5 billion into Areva to shore growing energy storage sector and The deal between the two global integration capabilities, having deliv- engineering firm. MHI announced in up its finances. meet their pressing needs for scalable, firms follows other recent agreements ered a third of all 2016 energy storage January 2017 that it would acquire a ASN head Pierre-Franck Chevet flexible, and cost-competitive energy in the market, including Aggreko’s installations in North America,” said five per cent stake in New Co, which told French media that the reactor storage solutions,” they added. acquisition of Younicos, and Wärt- Javier Cavada, President of Wärtsilä combines Areva’s nuclear fuel cycle vessel is fit for service despite the Siemens and AES will each hold a silä’s deal to buy Greensmith Energy Energy Solutions. “Wärtsilä’s global activities, for €250 million. weaknesses in the steel of the cover 50 per cent stake in Fluence, which Management Systems Inc. footprint with an extensive sales and Jean-Bernard Lévy, Chairman and and the bottom discovered in 2014. will have global headquarters in In July, Aggreko announced plans to service network, besides its proven Chief Executive Officer of the EDF However, EDF will have to replace Washington, DC, and additional of- acquire Younicos, a battery integration EPC expertise, will create significant Group said: “The entry of new the vessel cover by 2024, he said. fices in Erlangen, Germany. Fluence specialist, for £40 million. It said that synergies and growth.” A2Sea finds new Kite secures home £2 million n GeoSea buys installation specialist n A2Sea will continue as key Dong supplier investment Dong Energy says that the sale of its specialises in the installation of off- The combined organisations will be offshore wind installation business, shore wind turbines and foundations, well positioned to provide a broader The Scottish Investment Bank (SIB) requires less construction and installa- A2Sea, will enable it to maintain its to remain a key supplier for its pipeline range of integrated services and solu- has joined E.On, Schlumberger and tion materials than conventional off- focus on its core business. of projects. A2Sea will continue to tions to offshore wind energy custom- Shell Technology Ventures with an shore wind farms. It is currently man- The Danish utility and its partner, operate out of Denmark, Dong said in ers. We continue to build on existing investment in innovative technology ufacturing and assembling a 500 kW Siemens, have agreed to sell A2Sea to a statement. customer relationships and ensure a group Kite Power Systems. demonstration model. GeoSea, a unit of Belgian dredging Luc Vandenbulcke, Managing Direc- safe and reliable delivery of current SIB, the investment arm of Scottish Scottish Economy Secretary Keith and marine engineering group DEME tor of GeoSea, said: “The activities of and future projects.” Enterprise, has pledged a £2 million Brown said: “Scotland has a long and for an undisclosed sum. A2Sea represent a strong and comple- A2Sea has installed more than 1500 equity investment in Kite, which is proud history of innovation and Kite Dong still expects A2Sea, which mentary fit with GeoSea’s operations. turbines and 400 foundations, it said. developing a new kite power technol- Power Systems’ pioneering approach It is currently installing turbines at the ogy from its base in Scotland. to harnessing wind energy shows great Dudgeon and Race Bank offshore Kite Power Systems said that the promise. This £2 million investment wind farms in the UK. investment would enable it to acceler- from the Scottish Investment Bank will Future projects in the pipeline in- ate its commercial development plans enable it to expand further and dem- clude Arkona, Hornsea Project One, and the deployment of a deepwater onstrate the latest iteration of its kite Horns Rev 3 and East Anglia One. offshore wind energy technology. power technology in Scotland.” Dong and Siemens have owned Kite’s technology consists of two Kite Power Systems has been testing A2Sea since 2009 and the installation kites that can fly up to an altitude of a 40 kW pilot model in Scotland and specialist enabled both companies to 450 m. Both kites are attached by teth- has secured planning consent for the consolidate their position in the off- ers to a winch system that generates 500 kW demonstration, which it plans shore wind sector. electricity as it spools out. to deploy in August 2017. The transaction requires the approv- The firm says that the technology has Eventually the company plans to al of regulatory authorities and is ex- A2Sea has installed over 1500 turbines and 400 foundations the potential to transform the global build an array of 500 kW kites, and pected to be completed in the third offshore wind generation market be- develop a 3 MW onshore system for quarter of 2017, Dong said. cause it is cheaper to manufacture and testing. THE ENERGY INDUSTRY TIMES - AUGUST 2017 10 Tenders, Bids & Contracts

Americas ABB statcoms for East voltage direct current (HVDC) trans- Asia-Pacific mission link. Elecnor orders Vestas Sabah solar project Anglia ONE wind farm The Konti-Skan transmission link units for Larimar II takes shape was built 52 years ago as the first in- ABB has won a $30 million order terconnection between Sweden and Vestas says it has received an order SPIC Energy Malaysia has placed an from ScottishPower Renewables to Denmark enabling electricity ex- from Elecnor to supply of 48.3 MW order with JA Solar for the supply supply two SVC Light Static Com- change. ABB will install its latest of wind turbine capacity for a project of photovoltaic (PV) modules for a pensators (STATCOMs) that will Ability MACH control and protec- in the Dominican Republic. 50 MW solar power plant in Sabah, help the utility integrate renewable tion system to extend the life span of Vestas will deliver and install 14 of Malaysia. energy into its grid. the HVDC link and further enhance its V117-3.45 MW wind turbines at JA Solar will supply its Percium The STATCOMs will increase power availability as well as grid re- the Larimar II wind farm in the re- mono modules with improved anti- power transfer capability, improve liability and efficiency. gion of Enriquillo. Deliveries will PID function and reduced light in- power quality and enhance grid sta- start in early 2018, with commission- duced degradation rate for the proj- bility following the construction of International ing scheduled for the third quarter of ect, which will be the first of its kind the East Anglia ONE offshore wind that year. in Malaysia. farm. Wärtsilä secures Iran deal Elecnor is building the wind farm The project is scheduled to be East Anglia ONE is a consented under an $89.1 million (€77.6 mil- completed by the end of 2017. offshore project that will comprise Wärtsilä is to supply engineering and lion) turnkey contract from Spanish over 100 wind turbines capable of equipment deliveries for two baseload utility Empresa Generadora de Elec- Jacobs wins Australia generating 714 MW located off power plants to Iranian energy com- tricidad Haina SA (EGE Haina). wind farm role England’s east coast. panies Baran Niroo Beshel Co. and STATCOM is part of ABB’s family Tamin Niroo Saam Co. EDF awards contract for Powering Australian Renewables of FACTS (Flexible Alternating Cur- Baran Niroo Beshel Co.’s plant will Copenhagen, NY, project Fund (PARF) has appointed Jacobs rent Transmission Systems) technol- be located in the city of Savadkoh in Engineering Group Inc. as project ogies that help reduce losses, en- the Mazandaran province, and it will EDF Renewable Energy has placed manager and owners engineer for a hance the capacity and flexibility of consist of three Wärtsilä 34SG en- orders with Vestas and Renewable proposed 200 MW wind farm in west- power transmission systems and gines with a combined output of Energy Systems (RES) for the ern New South Wales, Australia. contribute to more efficient and reli- 29 MW. The other power plant, lo- 80 MW Copenhagen wind project, it The A$450 million ($356 million) able grids. cated in the city of Tabriz, will con- has announced. wind farm will comprise 58 turbines sist of two Wärtsilä 34SG engines Vestas will supply its V110-2.0 and is part of plans by PARF to de- Aquila expands Midtfjellet with a total output of 19 MW. MW wind turbines for the project, velop, own and manage 1000 MW of while RES was awarded the contract large-scale renewable energy infra- Aquila Capital is increasing the in- Pöyry wins Dzora deal for balance of plant construction. structure assets and projects. stalled capacity of its Midtfjellet wind Located in Lewis and Jefferson farm in Norway by 40 MW to a total Energy Invest Holding has awarded counties in upstate New York, USA Equis places Tolo 1 order of 150 MW. Eleven Nordex N117 tur- Pöyry with the engineering and con- the project benefits from a 15-year bines are to be installed, each of which sultancy services assignment for Power Purchase Agreement with Equis Energy has placed an order with has a 3.6 MW-rated output. the headworks rehabilitation project Narragansett Electric Company, a Siemens Gamesa for 20 wind turbine Midtfjellet has been in operation for the Dzora hydropower station in subsidiary of National Grid. units for the Tolo 1 wind farm project since 2013 and currently consists of Armenia. Construction on the project will in Indonesia. 44 Nordex N100 and N90 wind tur- Pöyry will prepare an inventory of start this month and the plant is Siemens Gamesa will supply its bines that were built in two phases. the observed damage to the concrete scheduled to start commercial opera- gearless SWT-3.6-130 wind turbines The latest phase will be constructed structures and hydromechanical tions in November 2018. for the project, which will be located in early 2019, Aquila said. equipment, assess the reduced opera- in Jeneponto on the south coast of bility or the expected durability of the central Indonesian island of Su- Siemens, Nexans selected the hydro scheme based on a risk Korean firms win Guam lawesi. For the installation work, analysis and clarify the geological/ solar-storage projects Siemens Gamesa Renewable Energy for DolWin6 geotechnical potential causes for the is working in consortium with one of Siemens and Nexans have secured damage in view of designing proper Korea Electric Power Corp (Kepco) the largest Indonesian construction contracts to supply equipment for the countermeasures. and Hanwha Energy Corp have been companies PT PP (Persero) Tbk. 900 MW DolWin6 grid connection for The Dzora plant was built on the awarded contracts to build separate The turbines will be installed in offshore wind farms in the German Dzoraget river and has been operat- solar farms equipped with energy stor- late 2017 for commissioning in ear- North Sea. ing since 1932. age in the US territory of Guam. ly 2018 according to Equis, an inde- The contracts were awarded by Kepco and Hanwha have signed pendent power producer. Equis has TenneT, which said that the cost of Siemens debuts new contracts with the Guam Power Au- signed five-year contracts with the whole project would be below platform in Turkey thority to build the 60 MW solar Siemens Gamesa for engineering, €1 billion thanks to the competitive farms, which are due to start operat- procurement and construction (EPC) tender process and continued cost re- Siemens Gamesa has landed its maid- ing at the end of 2019. as well as operations and mainte- ductions for offshore technology. en order from the Turkish investor Kepco has signed a $200 million nance (O&M). Siemens will provide high voltage Sancak Enerji for the supply of 118 deal to build a 60 MW solar farm direct current (HVDC) equipment MW at two wind farms in the region and 42 MWh energy storage unit in Japan plans offshore for the offshore substation, while of Konya. Mangilao, northern Guam. Hanwha Nexans will produce, supply and lay The order is Siemens Gamesa’s will build a solar farm and 65 MWh capacity the cables. first in Europe for its 3.3 MW plat- energy storage facility in Guam’s The government of Japan’s Ibaraki Siemens said it will use its ‘DC CS’ form. It will provide 20 of its G132- Dandan region. prefecture has selected a consortium direct current compact switchgear, 3.3 MW turbines (66 MW) at the of Hitachi Wind Power Co Ltd and which requires much less space than Baglar wind farm and another 16 Windpower Energy Group Co Ltd for current air-insulated solutions and so turbines (52 MW) of the same make Wärtsilä signs O&M deal the development of the 93.6 MW will allow for a roughly 10 per cent at the Ardicli site. Kashima Port South wind farm in reduction in the size of the offshore Delivery of the turbines is sched- Wärtsilä is to take over full operations Japanese waters. platform. uled to begin in the second quarter of and maintenance (O&M) of the Cen- The consortium was selected after Dong Energy’s Gode Wind 3 proj- 2018 with the facilities slated for tral Térmica Parque Pilar power plant the reopening of the bidding process ect has already secured a contract for commissioning in 2019. The compa- located in the Buenos Aires province, for the ¥49 billion ($430 million) connection to DolWin6, while a ny will also provide both facilities’ Argentina. project as the previously picked de- number of other offshore wind proj- operation and maintenance services The Finnish firm has signed a 10- veloper, Marubeni Corp., withdrew ects are competing for the link. for five years. year O&M deal with Pampa Energia in January. Marubeni said at the time SA, which is building the 100 MW that the scheme was no longer con- Vestas wins Dutch order power plant. sidered to be profitable. Wärtsilä signs deal for PV The baseload facility is powered by The proposed offshore wind farm Eneco has placed an order with Vestas asset management six Wärtsilä 50DF multi-fuel engines will consist of 18 Hitachi turbines of for a 22 MW wind farm near Rotter- and will run primarily on natural gas, 5.2 MW each, which will be installed dam in the Netherlands. Wärtsilä has signed its first asset man- with heavy fuel oil as a back-up fuel. near the Kashima Port. The machines The order is for the supply and agement deal for a solar photovoltaic The installation will be continuous- will use 66.5 m blades made by LM commissioning of six V112-3.45 (PV) plant. ly remotely monitored, and the re- Wind Power. MW wind turbines in 3.6 MW power The firm is to assume full responsi- ceived data serve as the basis for optimised mode. The machines will bility for the operation and mainte- Wärtsilä to constantly evaluate the Europe be installed at the Slufterdam wind nance of the Essakane solar plant in power plant’s performance in order park near Rotterdam, with delivery the Sahel region of Burkina Faso, to proactively mitigate any opera- Nordex turbines for and commissioning slated for the which shares a control system with a tional deviation, thus preventing and second half of 2018. thermal power plant. minimising unexpected downtime. Pays Chaumontais The contract also includes a full- The seven year agreement includes Wärtsilä will handle risk manage- The Nordex Group has been awarded scope service agreement. the daily operation of the solar plant, ment and provide Pampa Energia a contract for the installation of the preventive, scheduled and corrective with performance and lifecycle cost Pays Chaumontais wind farm in maintenance, cleaning of the mod- guarantees, ensuring efficient and Jonchery, France. ABB upgrades Konti-Skan ules and coordination of operations optimised operations. The scope of Nordex will supply six of its with those of a thermal power plant services includes personnel for oper- N117/2400 turbines for the 14.4 MW ABB has won an order worth around using the same control system. ations, spare parts and a full range of project, which is being developed by $30 million from Svenska Kraftnät in Wärtsilä will optimise the produc- maintenance services, from sched- Neoen. The contract includes tur- Sweden and Energinet in Denmark to tion of the PV plant and make sure uled service activities to predictive bines delivery, operation and mainte- upgrade the control and protection that the thermal plant delivers effec- and unscheduled maintenance. nance for a period of 16 years. system for the Konti-Skan high- tive, efficient and stable power THE ENERGY INDUSTRY TIMES - AUGUST 2017 Energy Industry Data 11

Global energy investment fell 12 per cent in 2016, a second consecutive year of decline. Total energy investment was $1.7 trillion in 2016. Electricity sector investment overtook oil and gas for the first time For more information, please contact: International Energy Agency 9, rue de la Fédération 75739 Paris Cedex 15 France.

Email: [email protected] website: www.iea.org

China remains the first destination of energy investment in 2016, representing 21 per cent of global energy investment

A wave of coal power investment is coming to a pause. In 2016, sanctioning of new coal power fell to the lowest level in nearly 15 years

Investment in clean power is not keeping pace with demand. Clean power FIDs in 2016 generate at only two-thirds the level of power demand growth

This section is supported by ABB

Source: World Energy Investment 2017. © IEA/OECD THE ENERGY INDUSTRY TIMES - AUGUST 2017 12 Fuel Watch

Oil Crude Oil Prices - 2017 Settlement Prices For Benchmark Crudes ($/B) Nymex WTI ICE Brent DME Oman ICE Dubai OPEC Basket Opec and friends Price/Barrel $80.00

$75.00

$70.00 face production $65.00 $60.00

$55.00

$50.00 dilemma $45.00 $40.00

$35.00 n Little change in oil price despite production cut $30.00 n Shale a real problem for Opec/non-Opec alliance $25.00 Date 15 June 21 June 26 June 3 July 7 July 13 July 17 July 2017 2017 2017 2017 2017 2017 2017

David Gregory out of the market again. part of the energy industry now, even producers, particularly the US. It said from both Libya and Nigeria were Bringing the market “back into bal- if it does in the future serve the purpose non-Opec production is expected to scheduled to attend the St. Petersburg The results of the Opec/non-Opec ance”, at somewhere near $60/b is the of being the ‘swing’ element, as Saudi rise by 700 000 b/d in 2017 and 1.4 meeting. crude producers’ ministerial meeting current goal of Opec, but the glut on Arabian oil production once did. million b/d in 2018. Prolonged low oil prices forced Opec in St. Petersburg were unknown as The the market appears impervious to the The tight (shale) oil formations in the Global demand for 2017 is expected member Ecuador to announce a few Energy Industry Times went to press, attempts made so far to increase pric- US make significant contributions to to average 98 million b/d and for 2018 days before the meeting in Russia that but it is likely safe to bet that US shale es. In an industry that is always boom US oil production. The Energy Infor- it could average 99.4 million b/d, ac- it would no longer abide by its com- oil production continues to forge or bust, this situation may change mation Administration said the Perm- cording to the IEA. mitment to cut output by 26 000 b/d, ahead and that there has been little someday and crude will be in short ian and Eagle Ford areas in Texas will Opec production was up in June by prompting questions as to whether the change in the price of oil since the supply. Plenty of analysts are pointing be producing around 2.9 million b/d 340 000 b/d to 32.6 million b/d, with agreement could really hold together latest round of deliberations. out that not enough investment is and 1.3 million b/d, respectively by the compliance to the production cuts fall- until the end of March 2018, by which What it will take to rebalance the oil being made in future production to end of 2018. The Bakken region in ing to 78 per cent, down from 95 per time Opec believes the market will be market remains a mystery – or at least forestall any jump in demand once North Dakota in will produce at a rate cent in May, and increased output by improving. a scenario too painful for oil producers the longed-for balance comes and is of 1.1 million b/d. Opec leader Saudi Arabia, as well as Many market analysts believe that it to contemplate. surpassed. Opec, meanwhile, is struggling to Libya and Nigeria, neither of which will take a further financially painful The Opec/non-Opec alliance, Shale has proved to be a real problem stick to its plans with non-Opec to were party to the original agreement step to make the glut seep away. Pro- formed late last year, has few options. for Opec and friends, especially since keep 1.8 million off the market. Ac- to cut output. ducing more oil will bring prices crash- It can stay the course and adhere more the decision to cut production at the cording to the Paris-based Interna- Together, production from Libya ing and cause a decline in revenues for tightly to the production levels agreed, start of this year led to an increase in tional Energy Agency (IEA), global and Nigeria rose by 700 000 b/d over oil producers that are already hurting cut production further, or reopen the oil prices that shale producers quickly oil supply rose by 720 000 b/d in June the last few months, effectively eras- from three years of low prices. Further taps and produce at a rate that will took advantage of. Regardless of the to 97.46 million b/d. This was 1.2 mil- ing more than half of the 1.2 million cutbacks in production could bring cause a further price reduction that course that Opec and partners take, lion b/d more than in June 2016, with b/d cut that Opec agreed with non- losses in market share and more en- could work to drive shale producers shale oil – and gas – are an established most of it coming from non-Opec Opec producers. Energy ministers couragement for shale producers.

Gas Questions loom over completion of Southern Gas Corridor Financial problems are said to be looming for the Southern Gas Corridor, according to a recent report.

Mark Goetz funding for TAP, but the report said this years of low oil prices and falling gas advantageous position as a gas sup- plans to ship 15 bcm/year to Southern has been complicated by Baku’s with- revenues have seriously hit Azerbai- plier to Southern Europe. The country Europe via a subsea Black Sea pipeline drawal from the Extractive Industries jan’s financial growth and ability to has significant gas reserves that it in- that will land in Turkey and stretch to Financial problems are said to be Transparency Initiative earlier this invest the money it had planned when tends to market in Europe in the future. the Greek border. Furthermore, Mos- looming for the Southern Gas Corri- year. A transparency assessment of the oil prices were in the $100/b range. The The Shah Deniz reservoir is estimated cow has expressed an interest in buying dor, the $45 billion BP-backed project country’s oil and gas industry is now project is scheduled to be complete and to hold 1.2 trillion bcm of gas, and the excess capacity in an expanded TAP designed to bring Azeri gas to Europe, being carried out by a private UK ac- operating by 2020. country’s entire reserves are put at 2.6 pipeline if Azerbaijan is unable to fill according to a recent paper issued by countancy firm in order to comply with Besides the investment in TANAP tcm. However, after completing Shah phase two capacity. Shipping Russia the UK’s Chatham House. those institutions’ requirements. and TAP, Socar had also attempted in Deniz Stage 2 (SD2), it will be the mid- gas through TAP would be the opposite Azerbaijan has been unable to secure The Southern Gas Corridor was a hot 2013 to purchase 66 per cent of the 2020s before further gas development of the pipeline’s original purpose. the $4 billion in financing that would topic from the mid-2000s until earlier Greek national gas transmission sys- becomes a viable proposition. But according to regional leaders, the cover its share of the 1840 km Trans this decade when BP, the State Oil tem Desfa for €400 million. That deal According to the Chatham House Southern Gas Corridor is on course. Anatolian Natural Gas Pipeline Company of the Azerbaijan Republic collapsed at the end of last year after a report, Azerbaijan owes some $9 bil- Speaking in Istanbul in early July at the (TANAP) across Turkey, and needs a (Socar) and other partners in the Cas- ruling from the European Union de- lion in loans that is due to be repaid in World Petroleum Congress, Azeri further $2-3 billion for the Trans Adri- pian offshore Shah Deniz gas field clared that Socar could only hold 49 2020 and it appears unlikely that hy- President Ilham Aliyev said the project atic Pipeline (TAP), according to the selected the pipeline routes to transport per cent of Desfa and after the Greek drocarbon revenues will be sufficient would be successfully completed and report. So far, Baku has landed only Azeri gas to Europe, enabling Europe government passed a law reducing the to meet that deadline. It said that rev- would supply gas to countries in the $1.4 billion in funding from the World to reduce its reliance on Russia for rate at which tariffs for the transmission enues from Shah Deniz sales have region for years to come. Aliyev said Bank and Asian Infrastructure Invest- natural gas supplies. The combination system could be increased. Socar fallen from $532 million in 2014 to work on the SCP is 87 per cent com- ment Bank for TANAP, while approv- of an expanded, existing Southern Cau- agreed to sell 17 per cent of Desfa to $64 million in 2016. plete, TANAP 77 per cent complete and al of the balance is pending. casus Pipeline (SCP) that currently Italy’s Snam, but would not agree to The pipeline project is also facing the TAP 44 per cent complete. Loan applications to the European transports Shah Deniz gas to Georgia pay the initial agreed price after the competition from Russia’s TurkStream Turkey’s President Recep Tayyip Er- Investment Bank (EIB) and the Euro- and Turkey, TANAP and TAP, would tariff rate was decreased. gas pipeline project, which was de- dogan, also speaking at the Congress, pean Bank for Reconstruction and deliver 10 billion cubic metres/year Socar’s purchase of the Greek grid, vised after the South Stream project said TANAP, which is a strategic en- Development (EBRD) have been (bcm/year) to Southern Europe and combined with its shares in TANAP was abandoned by Moscow in the face ergy project for Turkey, will be com- made to cover Azerbaijan’s share of later be expanded to 20 bcm/year. But and TAP, would have put it in a very of EU regulations. Russia’s Gazprom pleted and operating by mid-2018. THE ENERGY INDUSTRY TIMES - AUGUST 2017 Industry Perspective 13 Incentivising energy storage

he ongoing technological de- promoting additional investment. Recognising the velopment and expanding im- In another proposed rulemaking, plementation of electric stor- FERC has suggested amendments to potential of storage, T its pro forma Large Generator Inter- age is poised to drastically change the US Federal the face of modern energy markets. connection Agreement that would re- Among other things, electric storage quire regulated transmission provid- Energy Regulatory devices help manage peak demand, ers to clarify its applicability to increase the viability of widespread storage resources. Although some Commission intermittent renewable energy, and transmission providers have already provide valuable grid support met this requirement, FERC has ar- and a number of through frequency regulation. gued that broader adoption would Recognising this potential, the Fed- “ensure that all transmission provid- states throughout eral Energy Regulatory Commission ers have interconnection procedures (FERC) and a number of states and agreements applicable to… elec- the country have throughout the US have recently tak- tric storage resources,” resulting in en steps to promote storage technol- just, reasonable, and non-discrimina- recently taken ogy through procurement mandates, tory rates. financial incentives, and inclusive In January of 2017 FERC issued a steps to promote market rules. policy statement designed to promote In November of 2016 FERC issued participation by storage resources in the technology. The a proposed rulemaking that, if adopt- wholesale markets. In the policy state- success or failure of ed, will significantly expand the abil- ment, FERC provided guidance and ity of energy storage resources to clarified its precedent related to cost these programmes participate in wholesale electricity recovery for electric storage resourc- markets. The proposal, described as es. The policy statement specifically may inform the a “continuation of [FERC’s] efforts establishes the ability of electric stor- to promote competition in organised age resources to concurrently provide decisions of other wholesale electric markets by remov- separate services at, and seek to re- ing barriers to the participation of cover costs through, both cost-based Ryan: The proposed energy storage rule would significantly regulators as they new technologies,” would require re- and market-based rates. This provides increase the potential for a growing class of storage providers gional transmission organisations storage resources with more flexibility Outside of FERC, states have also state to offer such a dedicated energy formulate their own and independent system operators with respect to how they participate in undertaken initiatives in the form of storage tax credit. (RTOs/ISOs) to update their market wholesale markets and, potentially, both mandates and incentives to en- The law provides credits for energy policies. rules. The update would allow ener- allows for greater financial returns for courage market entry of energy stor- storage systems that are “used to gy storage resources to sell all of the savvy project developers. age resources. California and Oregon store electrical energy, or mechani- Jay T. Ryan, electric services they are technically Specifically, FERC’s policy state- have imposed specific requirements cal, chemical, or thermal energy that capable of providing, including ca- ment addressed three main concerns on investor owned utilities to procure was once electrical energy.” Thus, it Michael Didriksen, pacity, energy, and ancillary services. raised in prior proceedings. a certain minimum level of capacity covers more than just battery storage and FERC hopes to address the fact First, FERC determined that double in energy storage facilities. In the systems. The tax credits are equal to Kyle H. Henne that, in many cases, existing resource recovery of costs by storage resourc- past year both Massachusetts and 30 per cent of the installed cost of participation models do not recogn- es can be avoided by crediting mar- Nevada have passed laws directing the energy storage system, with a ise the unique physical and opera- ket-based revenues back to cost- state regulators to consider adopting $5000 cap on systems installed on tional characteristics storage can pro- based ratepayers. This can be similar energy storage requirements. residential property and a $75,000 vide. Even where storage-specific accomplished by either recovering Pursuant to the Massachusetts law, cap on systems installed on commer- participation models have been de- the full cost of the storage facility the Massachusetts Department of cial property. veloped, some organised wholesale through the cost-based rate, but cred- Energy Resources determined that it Credits are non-refundable, and un- markets have imposed requirements iting all market-based revenues to would be prudent for the state to used credits are not carried over to that hinder broad participation (e.g., cost-based customers, or by offset- adopt such a requirement, and on other tax years. The credits are only minimum operating times, prohibit- ting the revenue requirement used to June 30, 2017, announced the adop- available for energy storage systems ing injecting power onto the grid, re- develop the cost-based rate by the tion of an “aspirational” 200 MWh installed between January 1, 2018 stricting participation to the regula- anticipated market-based revenues. energy storage target to be achieved and December 31, 2022. To receive tion market only, etc.). Second, FERC explained that it did by January 1, 2020. credits, taxpayers are required to ap- The proposed energy storage rule not share commenters’ concerns re- Other state policies provide finan- ply to the Maryland Energy Admin- would significantly increase the po- garding adverse market impacts. In- cial incentives to utilities and cus- istration for tax credit certificates, tential for a growing class of energy stead, it analogised allowing multiple tomers to implement advanced ener- and the total incentives are subject to storage providers, ranging from fly- revenue streams for storage resources gy storage technology. States such as a combined $750 000 cap per year. wheels and batteries to pumped- to the multiple revenue streams al- California and North Carolina have Applications for tax credit certifi- storage hydroelectric facilities, to ready available to generation resourc- promoted research and development cates are reviewed on a first-come, more fully participate in, and re- es and vertically integrated utilities. in energy storage technology through first-served basis. Didriksen: FERC’s policy of ceive payment from, organised en- Finally, regarding independence of the creation of pilot or demonstration Given the variety of policies that promoting an equal footing ergy markets. The rule would also market participants from RTOs/ISOs, projects. To reduce the impact of the have been implemented or proposed, for storage providers in likely result in greater uniformity FERC stated that some amount of anticipated closure of the Indian other energy regulators, including wholesale markets could be across US wholesale energy markets coordination between storage re- Point nuclear facility in New York, those in US states without storage- borrowed in other markets with respect to energy storage, source owners or operators and Consolidated Edison and the New promoting policies and those in in- RTOs/ISOs will be necessary. FERC York State Energy Research and De- ternational markets, may find it ben- explained that when cost-based ser- velopment Authority partnered to eficial to look to the experience to vices must be provided, RTO/ISO provide a schedule of incentive pay- date in the US. FERC’s policy of dispatch should receive priority, with ments to customers and developers promoting equal-footing participa- penalties for any failure to perform. based upon implementation of differ- tion for storage providers in whole- Market-based services, however, ent storage technologies, with bonus sale markets through, to an extent, may be implemented according to payments for larger scale projects. uniform rules, could easily be bor- parameters provided by resource Likewise, California’s Self Genera- rowed in other markets. owners or operators, just as is the tion Incentive Program allows cus- Jurisdictions that are more directly case for other market participants. tomers to receive payments for im- involved in determining which new Although FERC’s recent efforts plementing a number of advance resources will ultimately be devel- have been substantial, it should not technologies, including the installa- oped could borrow from the policies be forgotten that the proposed rules tion of energy storage capabilities on in Oregon and California that direct and policy statement discussed were a customer’s facilities. Funding for minimum levels of storage procure- issued by a Democratic-majority the program was recently increased ment. A less heavy-handed approach FERC, the majority of whom have in a manner that heavily favours pay- could use tax incentives or incentive now left the agency. Moreover, Com- ments for energy storage projects. payments to broadly promote storage missioner LaFleur, who will remain Other states are testing tax incen- or, as in New York, to target specific on the Commission, dissented from tives as a mechanism to promote the resource planning concerns. Examin- the policy statement, voicing con- deployment of energy storage tech- ing the successes and failures of cerns about its lack of clear guidance nologies. For example, the Maryland these programmes as they mature for evaluating particular filings and General Assembly, with broad bipar- may inform the decisions of other its potentially broader implications tisan support, passed S.B. 758, which regulators as they formulate their with respect to generic multiple-pay- Governor Hogan signed into law on own policies. ment stream issues, including state May 4, 2017. The legislation pro- policy initiatives. It remains to be vides income tax credits for taxpay- Jay T. Ryan, Michael Didriksen, and seen how a Republican-led FERC ers who install certain energy storage Kyle H. Henne are attorneys at Baker will address electric storage. systems, making Maryland the first Botts L.L.P. THE ENERGY INDUSTRY TIMES - AUGUST 2017 14 Energy Outlook Renewables change the landscape for gas

he European power markets Converting a CCGT to run as an Although the current have gone through periods of open cycle gas turbine (OCGT) has market outlook for Tconsiderable change over the numerous benefits including last 100 years, with levels of electricity reduced maintenance costs, faster gas fired generation demand having risen from nominal response rates and the ability to carry levels in the early 1900s to peak levels out shorter runs, but it does reduce is at a low in Europe, within the last two decades. the efficiency of a power station However, few changes have down to around 30 per cent (from generators can arguably had greater impact than the 40-50 per cent). recent rise of renewables and the These lower efficiency levels sound help themselves by associated recent pushes towards counter-productive, but running hours greater levels of electrical efficiency diminish the impact of lower valuing their flexibility and sustainability – which has had a efficiency declines, whilst at the same huge impact on the way in which coal time the levels of income from and adjusting their and gas plants operate in an ever availability fees rather than utilisation changing market. fees rises; increasing the need to trade strategies in a Although the current market out- control maintenance and other fixed look for gas fired generation is at a costs. storage technologies. market increasingly low in Europe, generators can help The ultimate goal of a clean Britain has at times seen a Providing balancing power, dominated by themselves by valuing their flexibility electricity system is to be backed complete shift away from coal plants. however, is not just about burning and adjusting their trade strategies to almost exclusively by renewables Whilst average generation at coal more or less fuel to adjust output; renewables. the new market situation. This still and storage, but along the way this plants in 1991 amounted to the generators also need to be around to leaves an uncertain future for gas transition is going to be facilitated by equivalent of full output through the provide this flexibility. This ‘being Rob Lalor across European markets that gas fired power stations that will year at 24 GW of coal stations around’ reward is related to market continue to be dominated by coal, but have to adapt to their continually (generating at 100 per cent of their conditions and psychological factors. Britain may yet prove to be the changing circumstances. As this potential), the market is set to see As the case for baseload operations template for an EU-wide transition transition progresses, all the old coal fired capacity drop to only 6.6 for traditional generators declines – towards this cleaner fuel. accepted practices of the market will GW from 2020/21 – having already losing ground to renewables – fossil In the immediate future, this means go out the window and new best seen considerable levels of plant generators wanting to remain in the that power stations need to be able practices will have to evolve on the retirements at coal power stations. market will need to capitalise on their to maximise their gas-burning fly and along the way. This has come as the UK sees a added value, which is their ability to efficiencies at lower levels of This situation has been created by UK-only levy on carbon worth around provide flexibility – something GB- generation and would ideally be able the unparalleled levels of change £18/t CO2 that has pushed coal station based plants have been able to do to generate at low levels of power seen in the market over the last costs above those of gas fired plants effectively. output without going offline. This decade. In Britain, for example, and propelled them out of the In post-election France and the can only be achieved using flex- levels of fossil fuel generation fell to market. Netherlands, support for a carbon tax ible equipment that is well suited 56 per cent between 2010 and 2016, Whilst Europe has followed a or a carbon floor price is an important to a highly variable generation with renewables in 2016 providing similar route in terms of renewable aspect of the political agenda and the requirement. around 21 per cent of total generation. expansion – with many countries US leaving the Paris agreement has In the longer term, and as This recent trend has resulted in seeing high levels of wind and solar only made this a more prominent renewables continue their upward more than a mere loss of total installed capacity – gas-fired plants agenda item. Any form of carbon growth, levels of run hours will generation; it has meant that thermal on the continent only have to pay the price increase will favour gas over decline at gas fired power stations generation has had to fit not only much lower EU ETS carbon price coal and reinforce gas’s position. with below average efficiency levels. around changing demand but also which has allowed coal plants to France has announced that it intends For the lowest efficiency combined around the changing levels of remain competitive and provide a to bring in a carbon price floor in line cycle gas turbine (CCGT) power renewable generation in the market. large share of power generation in with that used in Britain at €30/tonne stations this will mean that plants Increasingly, lower efficiency plants many European countries. (versus around €25/tonne for Britain) will become uneconomic to run. At have had to wait for periods of low By contrast, Britain – a country and this could mark the first step of a this point, plants will need to start renewable generation and rely on with a long history of burning coal correction in carbon costs across converting to open cycle operation, earning higher scarcity payments, and plentiful coal supply – saw its Europe that is able to take the activity as has been seen in Britain with both through higher peak prices and first ‘no coal day’ on April 21, 2017. seen in Britain and replicate it on an plants such as Brigg, Barry, Corby capacity mechanism fees. France and Belgium have little EU-wide scale. Such a move will face and Peterborough. As levels of renewable capacity dependency on coal and gas due to political opposition, but this early have continued to grow, higher their huge nuclear production and move by France is an extension of the efficiency plants have increasingly the fact that they have some hydro template already set out by Britain, a had to turn off overnight during and pumped storage to balance out template that seems ready to be periods of high wind and mid-merit renewables, but Germany and the applied in other parts of Europe. plants have increasingly had to Netherlands have a much larger However, it’s not just politicians become more flexible to respond to dependency on coal and gas. who may influence market conditions changes in market values. Lower As no carbon levy exists in Europe, for gas. Public opinion around the efficiency plants have had to change it is not so much renewables that are major population centres is their business model entirely to reduce pushing gas out of the market. Coal increasingly involved in the battle their underlying costs. still comes before gas in the European against pollution. In many cases, these latter plants mainland merit order and this has A good example is the activity have moved to open cycle operation, caused some very hard times for gas surrounding the Dutch Hemweg 8 which reduces their efficiency to fired power stations. In recent years, power station in Amsterdam – the around 30-35 per cent but also allows the Netherlands has seen some of the oldest coal plant still in operation and for shorter run times, lower operating most modern gas fired plants shut said to be the most polluting. costs and faster response times. down (Rijnmond II and Maasstroom), After an initiative by green energy At the same time, the plants entering whereas the second turbine of the supplier Vandebron, which made a the market have predominantly been Enecogen power station was sold and first bid to buy the plant and shut it small flexible gas engines that can shipped off to Israel before even down, a coalition has formed consisting respond within minutes, deliver short going into operation. of Vandebron, local government, runs and then go offline and actively Another factor in the difficult period Greenpeace and others, raising over target the highest value periods of a for gas generation is the limited €5 million. A crowdfunding initiative given day. rewards for flexibility in the Euro- saw 42 000 people pledge to raise cash Currently the transition from one pean balancing markets. Although just to close down the plant. Since coal market to another is creating high balancing mechanisms allow for plant is still better positioned than gas levels of value for these plants, which more assertive pricing of flexibility, fired stations, the initiative has been generate when prices peak. Looking this has not yet been discovered as a unsuccessful in buying the plant, but far out into the future, there is likely ‘trading’ product on a large scale, it has started to shape discussions to be a shift towards much lower with a large volume of the available around coal and carbon pricing. operation hours in the form of capacity not being traded. This has Lalor: France’s intention to bring in a carbon price floor in line standby plants, with the wider mar- reduced the ability of many power Rob Lalor is a senior analyst at with the UK could mark the first step of a correction in carbon ket completing its transition towards stations to secure the necessary levels energy data monitoring specialist costs across Europe renewables backed by low-cost of income to continue operations. EnAppSys. THE ENERGY INDUSTRY TIMES - AUGUST 2017 Technology 15

Frequency response

The 90 MW Burbo Bank wind farm and its 2 MW/2MWh battery will help to manage goes offshore grid stability

anish power player DONG consumers. frequency response contracts had effectively compete with existing A wind-battery Energy has revealed plans to Wind farms are in fact already ca- been awarded to eight providers us- technologies in the ancillary service storage hybrid Dequip its Burbo Bank off- pable of delivering frequency re- ing battery storage for balancing ser- market. shore windfarm with energy storage sponse services, but usually only by vices under its so-called Enhanced Smith commented: “Buying these system being capabilities to offer frequency re- down regulating, through feathering Frequency Response tender. En- commercial services and new tech- sponse services for grid stability. the blades for example. The 90 MW hanced frequency response is defined nology, the pricing arrangements will installed at the Burbo In a claimed world first, the 90 Burbo Bank can down turn by 25 by National Grid Electricity Trans- be different. It’s not necessarily safe MW wind farm and its 2 MW/2MWh MW for instance. Adding a battery to mission as being a service that to say it will be cheaper. As the ener- Bank offshore wind battery will form a hybrid system to wind farms effectively enhances this achieves 100 per cent active power gy mix continues to change what we help manage grid stability for Na- capability by also being able to dis- output at 1 second (or less) of regis- do still see is the level of inertia fall- farm is expected tional Grid, the company which charge and therefore inject power tering a frequency deviation. ing; so the job gets more difficult. owns and operates the UK’s national into the grid. Smith said: “We run tenders for Actually, we work harder to even to pave the way electricity transmission network. The Sun said: “These services are usu- frequency services on a regular basis stand still.” ability to inject bursts of active pow- ally of very short duration, so we are as part of a stable operation. The re- And as Smith observed: “Tradi- for rapid frequency er allows the grid to respond to talking about very small amounts of cent tender that we did and also an tionally, we have mainly looked to changes in order to maintain fre- energy and that is what we are look- innovation project we have running gas and coal fired power stations to response services quency at or close to 50 Hz. ing at given the state of battery tech- is more about increasing the speed.” provide frequency response. In fu- Frequency response services are nology today.” National Grid procured 200 MW of ture, it’s vital that we look at the po- to ensure grid typically needed in the event of a The 2 MW battery system will be enhanced frequency response tential for lower carbon and non- disturbance on the grid, for example, supplied by ABB, which also previ- through this tender. According to the generation solutions to help stability. This kind a unit outage. Previously, these types ously worked on the power export company, this enhanced ability to maintain frequency within the re- of development of services were supplied using con- elements of the Burbo Bank wind control variations in frequency al- quired levels, for example wind and ventional thermal generation tech- farm extension, supplying the grid most immediately will result in re- solar or demand response, storage comes in the face nology like gas turbines. However, connection equipment under a £30 duced costs of approximately £200 and interconnection”. according to James Sun, Senior Lead million deal announced in 2014. million ($300 million). Bids were re- He added: “I’m looking forward to of a dramatic fall in DONG Energy’s Asset Business Recognising that the rapidly chang- ceived from 37 providers, and of the seeing how the DONG Energy solu- Development team, combining a bat- ing nature of the energy landscape is 64 unique sites taking part, 61 are for tion of storage connected to the off- in system inertia tery system with a windfarm can increasing frequency volatility, both battery assets. Contracts have been shore wind farm will provide servic- provide faster and less costly fre- regulators and industry are looking awarded on a four-year term. es to help us respond to day-to-day as thermal energy quency support than had typically to improve the response times for Commenting on the tender, Cordi operational challenges.” been the case. frequency control inputs. O’Hara, Director of UK System Op- This is a point picked up by Sun. is phased out and Sun explained: “Digital technology In particular the increasing vol- erator, National Grid, said: “I believe “We do expect to make a return on can respond quickly, in a matter of umes of variable output renewable storage has much to contribute to the the investment, but it also at the replaced by variable seconds or less, whereas in conven- generation on the system together flexible energy system of tomorrow. same time is a platform to demon- tional plants that have these massive with a steady reduction in the pro- This is the beginning of an exciting strate. This is the first time that an renewables. rotating pieces of metal generating portion of stable thermal capacity new chapter for the industry.” actual wind farm is being used in power it takes time for them to such as coal and nuclear are dramat- The tender follows on from a UK conjunction with a battery as a hy- David Appleyard change what they are doing.” ically curbing system inertia, giving energy regulator Ofgem-backed En- brid unit for providing the service.” He continued: “The fastest current rise to an increase in the volume and hanced Frequency Control Capabili- Certainly as more conventional frequency response service has the speed of frequency response re- ty (EFCC) research project, which is thermal generation is phased out to requirement to respond in 10 seconds quirements. Under existing arrange- due to conclude in March 2018. be replaced by renewables, this type and that’s because thermal plants re- ments this increased response re- Launched in November 2014, Of- of system is expected to become quire that length of time to actually quirement is anticipated to see the gem awarded £6.9 million ($10 mil- even more prevalent as National respond. But 10 seconds is a long cost of controlling frequency in- lion) to test the capability of low-car- Grid and other transmission system time for the frequency to continue to crease by £200-£250 million per an- bon technologies like wind and solar operators ensure that the renewable drift away from the set point without num by 2020. to provide rapid frequency response assets that are part of the energy sys- correction. Dr Richard Smith, Head of Net- as part of an overall £46 million tem of the future can also deliver the “If you start to introduce batteries, work Capability (Electricity) at Na- Electricity Network Innovation services that used to be provided by wind farms and other digital technol- tional Grid, explains: “With decar- Competition (NIC) programme. The thermal plants. ogy that can respond in a matter of a bonisation and decentralisation the project will be run in partnership Indeed, in many respects the ad- second or less, you can address that energy mix is changing. As you get with DONG Energy, Siemens, GE vent of renewables and storage sys- frequency drift much sooner and that shift away from those types of Grid Solutions, Centrica, Flexitricity, tems may prove to be a far more ef- therefore minimise the amount of power station, you have less spinning BElectric and the Universities of fective solution to maintaining grid overall service that you might need.” metal to keep that inertia of the sys- Manchester and Strathclyde. frequency than the incumbent ther- The containerised Minimising the frequency re- tem going 50 Hz so you need more According to Ofgem, the objective mal capacity. Wind farms and other 2 MW/2MWh battery system sponse services required is expected corrective action.” He continued: of this project is to develop and dem- renewable generators are typically to significantly reduce costs, ulti- “We’re looking at alternative ways onstrate an innovative new monitor- decoupled from the grid, using pow- mately resulting in lower prices for of getting that response in a world ing and control system which will er electronics to ensure synchronisa- where we have less inertia.” obtain accurate frequency data at a tion, for example where power is Indeed, in late August last year Na- regional level, calculate the required fed onshore via HVDC cables. tional Grid revealed that sub-second rate and volume of very fast response Potentially, this is a new form of and then enable the initiation of this functionality highlighted by Smith. required response. “A battery alongside a wind farm is Smith explained: “You’re operating not synchronised, but can simulate at that millisecond response time synchronisation and can link to the level, which is an automated process network in a way to provide services so getting all of those things proven that give us the equivalent of provid- to work in an operational real-time ing a free-from-inertia synchronised environment is very important.” linked power station,” he said. Having demonstrated the viability With 90 MW of wind coupled to 2 of obtaining rapid response from MWh of battery storage, the Burbo new technologies such as solar PV, Bank wind farm represents an oppor- storage and wind farms the research tunity to capture more of the land- will support the development of an scape of capabilities that National appropriate commercial framework Grid needs to maintain grid stability. that will provide incentives and In this context, the whole is far great- ensure these new technologies can er than the sum of the parts. THE ENERGY INDUSTRY TIMES - AUGUST 2017 Final Word 16 Reasons to be cheerful?

an Dury and the Blockheads was energy investment was $1.7 trillion in the oil and gas sector is getting better spending last year, the US increased not really my cup of tea. Yet while 2016, down from the $1.8 trillion at cutting costs. its global share in energy investment Ithe lyrics to their 1979 hit seemed figure reported for 2015. “The oil and gas industry is under- primarily due to an increase in electric- random, to say the least, for some According to the IEA, energy in- taking a major transformation in the ity and in particular renewables for reason the hook is unforgettable. vestment has been falling because of way it operates, with an increased power generation. As Varro noted: Again, the chorus line came to mind two main reasons: firstly the reaction focus on activities delivering pay- “Renewable energy investment in the Junior Isles when reading the International En- of the oil and gas industry to a pro- backs in a shorter period of time and US is doing very well.” ergy Agency’s (IEA) World Energy longed period of low oil prices; and the sanctioning of simplified and And despite Trump’s best efforts, Investment (WEI) 2017 report. second, technological progress that is streamlined projects. The global cost Varro does not see coal coming back While some might initially view the reducing investment costs in both curve has rebased, and a significant any time soon. “The last time anyone report’s headline of a fall in world renewable electricity and the oil and component of the cost reduction ex- made an investment in a coal fired plant energy investment with concern, it gas industry. perienced over the last two years is in the US was in 2011. The collapse in does in fact give reasons to be cheerful. After a 44 per cent plunge between likely to persist in the foreseeable investor interest in new US coal plants Closer inspection should lead to the 2014 and 2016, the report says up- future,” it stated. took place under the Bush administra- conclusion that the findings confirm stream oil and gas investment has Launching the report, Laszlo Varro, tion when electricity demand started the energy industry is continuing to rebounded modestly in 2017. A 53 per Chief Economist at the IEA pointed to slow down and shale gas started to move in the right direction in terms of cent upswing in US shale investment out that last year was a landmark year emerge. Weak electricity demand becoming cleaner and more efficient. and resilient spending in large pro- for the energy industry. He said that growth and the abundant availability The WEI 2017 report revealed that ducing regions like the Middle East with the big cuts in the oil and gas of cheap domestic gas are the two most global energy investment fell for the and Russia has driven nominal up- sector, it was the first time that invest- important factors by far. None of this second year in a row, decreasing by 12 stream investment to bounce back by ment in that segment was surpassed has changed, so we don’t see any in- per cent in 2016. The Paris-based 6 per cent in 2017 (a 3 per cent in- by electricity. vestor appetite for new coal plant in agency’s figures showed that global crease in real terms). Notably, it says Global electricity investment inched the US.” down by just under 1 per cent to $718 Indeed the IEA says the days of coal, billion, with an increase in spending which has been the major fuel for on networks partially offsetting a drop power generation this century, are in power generation. Investment in numbered. “Coal was the single big- new renewables-based power capac- gest source for the growth of power ity, at $297 billion, remained the generation, especially in China and largest area of electricity spending, India. This coal investment is coming despite falling by 3 per cent. to an end; at the very least it is coming A key takeaway from the report is to a pause.” that although renewables investment According to the IEA, the coal fired was 3 per cent lower than five years capacity that is starting construction ago, capacity additions were 50 per fell from over 130 GW ten years ago cent higher and expected output to only 40 GW last year. The decline from this capacity about 35 per cent is particularly visible in China, where higher. This is due to declines in unit the country’s electricity sector is costs and technology improvements plagued with over-capacity and power in solar PV and wind. At the same demand growth has slowed compared time, investment in coal fired plants to previous years. fell sharply, with nearly 20 GW less It is a similar story for coal in India. commissioned. The IEA attributes the fall in coal fired It was interesting to note that while generation to two factors: firstly the project finance still only represents a financial difficulties India’s electricity small portion of global energy financ- sector and secondly the increased ing – just 7 per cent of the total – it competitiveness of solar power. plays an important and growing role While coal fired generation invest- in financing renewable and clean ment remains robust in many develop- energy projects. It is especially im- ing countries in Southeast Asia such portant in utility-scale projects in as Indonesia, Thailand, Vietnam and countries where long term contracts Pakistan, there is no doubt that the are available, as well as gas infra- ongoing shift in the energy mix is structure pipeline linked to natural having a positive effect on carbon gas facilities. emissions. The IEA report also found Energy is a capital-intensive busi- that carbon emissions stagnated in ness and in most countries, the key to 2016 for the third consecutive year – attracting investment is having the another reason to be cheerful. right energy policy. Commenting on the changing gen- China remained by far the most eration landscape, Varro said: “The important investment destination. biggest area of power generation in- Although investment in oil and gas, as vestment is renewable, low carbon well as coal has declined, the country generation. Wind and solar power leads the way in spending on clean have been doing very, very well and energy and energy efficiency. “What 2016 was a record year. We can expect is increasing in China significantly, is 200 TWh of electricity from the wind investment in low carbon power and solar investment [made] in 2016, generation and electricity networks,” which is almost 1 per cent of total said Varro. He also noted that energy- global electricity consumption.” efficiency investment rose 9 per cent, While these are all reasons to be a rate at which if sustained would see cheerful, we should not get carried it overtake Europe as the biggest away. Varro said: “In the last five years, spender on energy efficiency this year. the truly remarkable success of wind “Energy efficiency investment is, and solar was only sufficient to com- overall, doing well but it is a fragile pensate for the investment shortfalls success that is dependent on policy in hydro and nuclear, without a struc- considerations… Efficiency is doing tural breakthrough in the speed of in- well where these policies are in place,” crease in low carbon electricity. In fact, he said. this speed of increase in low carbon Similarly, investment in India has electricity is below the average growth increased, where electricity reforms of global electricity consumption. So and robust policy to promote renew- with this level of low carbon invest- ables, has resulted in significant ment, fossil fuel based power genera- growth. tion will have to continue to increase In the US, however, the IEA says as it has for the past five years.” energy efficiency investment is There is therefore still work to be stagnating due to the impact of low done on the journey to a low carbon oil prices. But even here, where the energy future. The full title of Ian Trump administration is attempting Dury’s song was ‘Reasons to be cheer- to undo the former President’s clean ful: part 3’. Why ‘part 3’ is anyone’s energy work, there are still reasons to guess. I also cannot say what part of be cheerful. the journey the energy industry is on, Despite a drop-off in oil and gas but there are reasons to be cheerful. Cartoon: jemsoar.com