THE ENERGY INDUSTRY July 2013 • Volume 6 • No 5 • Published monthly • ISSN 1757-7365 www.teitimes.com TIMES

Special Lessons from little Supplement Britain Final Word Junior Isles analyses the London Array: offshore wind Is Britain smarter than the rest of problems of the elephant comes of age Europe on metering? Page 13 in the room. Page 16

News In Brief Anti-dumping duty escalates Improved coal EU-China tension The European Commission’s decision to impose an anti-dumping duty on Chinese-made solar panels looks set to start a trade war and creates market uncertainty. plant efficiency Page 2

Pakistan load shedding a government priority Converting existing thermal power can “keep climate plants to coal would help combat power shortages and bring down the cost of power generation, wiping billions off Pakistan’s circular debt. Page 6 goals alive” Van der Hoeven: Climate change has “quite frankly slipped to the back burner” of policy priorities UK debates market reforms The UK government’s plans to According to the International Energy Agency, improving coal plant efficiency is one of four policies reform the electricity market sector remain on track in spite of a fierce governments must adopt to get climate change efforts back on track. While the IEA’s proposals debate over decarbonisation targets. Page 7 for carbon dioxide emission reductions from coal plant are ambitious, industry argues they are achievable. Junior Isles Global dynamics drive The International Energy Agency burner of policy priorities. But the two-thirds of global GHG emissions, industry and transport; limiting the energy changes (IEA) says it is possible to “keep climate problem is not going away – quite the reveal a 1.4 per cent increase in 2012, construction and use of the least effi- Trends published in BP’s latest goals alive” without harming econom- opposite.” reaching a record high of 31.6 giga- cient coal-fired power plants; actions Statistical Review of World Energy ic growth if governments swiftly en- The report, which highlights the tonnes (Gt). to halve expected methane releases show how the world’s energy system acted four energy policies. need for intensive action before 2020, IEA Chief Economist Fatih Birol, into the atmosphere from the upstream adapts to global events and patterns. The call to governments came as the presents the results of a 4-for-2°C the report’s lead author said: “We iden- oil and gas industry; and implementing Page 8 IEA warned that the world is not on Scenario, in which four energy poli- tify a set of proven measures that could a partial phase-out of fossil fuel con- track to limit the global temperature cies are selected that can deliver sig- stop the growth in global energy-relat- sumption subsidies. increase to 2°C. nificant greenhouse gas (GHG) emis- ed emissions by the end of this decade Notably, it said that limiting ineffi- Market woes force Siemens Speaking at the press launch of its sions reductions by 2020, rely only on at no net economic cost.” cient coal-fired power plants delivers solar closure latest report in London last month: existing technologies and have al- In the 4-for-2°C Scenario, global more than 20 per cent of the emissions Siemens is to close its solar thermal ‘World Energy Outlook Special Re- ready been adopted successfully in energy-related GHG emissions are 8 reduction while helping to curb local business after failing to find a buyer. port, Redrawing the Energy-Climate several countries. per cent lower in 2020 than the level air pollution. In the IEA scenario, Page 9 Map’ IEA Executive Director Maria New IEA estimates for global ener- otherwise expected. The four policies the share of power generation from van der Hoeven said: “Climate change gy-related carbon dioxide (CO2) presented by the IEA are: targeted en- has quite frankly slipped to the back emissions, which account for around ergy efficiency measures in buildings, Continued on Page 2 Energy Outlook: Marine potential The race is now on to deploy full- scale marine devices at sea to prove the technology works and begin the China getting climate change effort back on track process of driving down costs. Despite recent pollution reaching lev- responsibilities for local air quality. “The most encouraging thing I find Development Commission (NDRC) Page 14 els that have caused public outcry, One of the mandates says heavy pol- in the current five-year plan of the said at the end of May: “I am sure China is taking positive steps to cut luters like coal-fired power plants and Chinese government is the energy in- China will have a total emission target emissions and is softening its stance on metal smelters must release detailed tensity improvement target, and the during the 13th five year plan.” Technology: Marrying the agreeing to a cap on greenhouse gas environmental information to the gen- push for renewable energies includ- It is the first time policymakers have internet with industry emissions. eral public. ing hydropower,” said Fatih Birol, spoken publicly about such a plan and The industrial internet combined Following some of the worse levels The announcement on air pollution Chief Economist at the IEA. this shift in policy could be an important with ‘big data’ analytics could have of air pollution recorded in the country came as China prepared to launch its Birol pointed out that emissions boost to talks on a global agreement to a tremendous impact on the power in recent years, last month China’s first pilot carbon market in Shenzen. It growth in the country halved in 2012 curb greenhouse gas emissions. industry. Cabinet announced new measures to is one of seven cities selected in 2011 compared to 2011. This is among the Jiang said that it was “very possible” Page 15 curb air pollution. The State Council to test out emissions trading before lowest rises in a decade, and marks the China would drop its longstanding op- approved 10 “tough measures to ac- deciding whether to launch a national increasing effectiveness of policies position to carbon caps for developing complish tough tasks”, the council scheme from 2015. designed to cut emissions and to im- nations before the UN climate talks in Advertise said in a statement. The Shenzen scheme will cover 635 prove energy efficiency. Paris in 2015. [email protected] These include a target to reduce pol- companies whose combined emis- China is also considering an out- China’s emissions cap would be lution emissions by at least 30 per cent sions were just over a third of the city’s right cap on carbon emissions in its linked to the existing cap on coal con- in heavy-polluting industries by the total in 2010. next five-year plan (2016-2020) and sumption. As part of its effort to cut Subscribe end of 2017 – a target that is more am- The International Energy Agency is studying what level would be emissions from coal fired plant, in [email protected] bitious than any in the past. (IEA) last month praised China for its appropriate. May the National Energy Administra- or call +44 208 523 2573 The State Council said local govern- role in getting the world back on track Jiang Kejun, a carbon policy re- tion proposed to ban imports of low ments should shoulder the general in its climate change efforts. searcher at the National Reform and quality coal.

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 - JULY 2013 2 Headline News

Continued from Page 1 renewables increases (from around 20 per cent today to 27 per cent in 2020), as does that from natural gas. Solar anti-dumping Speaking on the sidelines of the press conference Birol said: “Most of that 21 per cent [reduction] will come from India, China and East Asia. China is already doing a lot, having closed 70 GW [of inefficient coal plant] until 2011 and a further 8 GW in 2012.” duty escalates He added: “The US is also doing work; the EPA has already put new regulations in place. They have banned the building of new ineffi- cient coal fired power plants and there is now a discussion about ex- isting inefficient coal fired power EU-China tension plants.” Milton Catelin, Chief Executive, Anti-dumping duties on Chinese-made solar panels sold into Europe will create market World Coal Association said: “The uncertainty in the coming months, says Junior Isles IEA should be working with the coal industry and multilateral de- The European Commission’s decision Ministry, Dutch Minister of Foreign affect the European solar industry and Other industry observers essentially velopment banks to ensure the best to impose an anti-dumping duty on im- Affairs Frans Timmermans was quoted is against the interests of the global echoed this view. David Grindley of available technology is used… If ports of crystalline silicon photovoltaic as saying: “The European Commis- solar market,” said Ben Hill, President Savills Energy, a specialist in the field new coal-fired generating capacity wafers, cells, and modules originating sion’s decision to impose provisional of Trina Solar Europe. of solar park developments comment- added between 2000 and 2011 had in or consigned from the People’s Re- duties on solar panels from China goes Others argue, however, that the EU ed: “Although the first reading of the used best available technology, public of China looks set to start a trade against the principle of free trade and decision although regrettable, is justi- changes in anti-dumping tariffs on im- cumulative emissions of CO2 over war between the two sides. the Netherlands is firmly opposed to it. fied. Luc Graré Senior Vice President ports from China may initially be cause that period would have been re- Last month EU trade commissioner “I think we should find a compromise Solar Sales and Marketing, at Euro- for concern, the longer-term reality is duced by almost 2 gigatonnes. This Karel De Gucht lowered the 47 per cent here… There are more things at stake pean solar manufacturer REC said: that this will likely bring about a nego- is three times the expected effect punitive tariffs recommended by Brus- than just one issue in the long-term re- “We wish there was fair trade from the tiated compromise agreement and, ul- of the Kyoto Protocol.” sels in May to just 11.8 per cent. The lationship between the EU and China.” beginning so that this whole thing was timately, stability in the marketplace. According to major power equip- lower tariff, however, will only last The German Federation of Industry unnecessary. But the EU decision “In the shorter term, however, we ment manufacturer, Alstom, the until August 6 and reverts to 47.8 per (BDI) said it regrets the EU’s decision sends a clear message that things must expect to see fluctuations in panel CO2 gain from tackling efficiency cent if China does not respond to EU and urgently appealed to both sides to be done in a fair way.” prices and difficulties for developers is significant. Its calculations show allegations that it is selling solar panels find a “mutually acceptable solution”. Commenting on the potential impact looking to get hold of panels in large that adding an extra 4 per centage in Europe for below cost. The EU will Chinese manufacturers claim the tar- of the anti-dumping tariffs Graré said: quantities.” of points of efficiency to a coal-fired issue a final decision on anti-dumping iff will be damaging to the industry. “Over the last two months we have seen According to information and analyt- plant can equate to about a 12 per duties on December 5, 2013. Liansheng Miao, Chairman and CEO Chinese manufacturers move their ics provider IHS, China’s pending cent reduction in CO2 emissions. Chinese officials have rejected the of Yingli Green Energy noted: “Puni- playing field from Europe into Asia but move to slap anti-dumping tariffs on Giles Dickson, Vice President, EU finding that its companies are tive tariffs – no matter at what level – some manufacturers are still very much imported solar polysilicon from key Policy and Advocacy at Alstom, dumping panels into Europe and have will inevitably lead to higher prices for relying on Europe. countries will generate a surge in pric- said to some extent the IEA’s rec- warned of a trade war if the EU does solar products causing at least the stag- “I don’t foresee a collapse of the mar- ing for this key raw material in June ommendations are “already lean- not back down. nation of the solar industry in Europe. ket in Europe. Although there might be and July – but the size of the increase ing against an open door”. According to the Financial Times, We therefore encourage the prompt an increase in the module price, other will be limited by market factors. He explained: “There has already China’s premier Li Keqiang called EC resumption of talks between China equipment in the system such as invert- Lux Research recently said the glob- been, and is currently ongoing, a lot president José Manuel Barroso to say and the European Commission.” ers may see a fall in price. Therefore al market for photovoltaic materials is of movement towards supercritical “the case, if not properly handled, Meanwhile, Trina Solar said it was the total system price will not increase poised to grow 52 per cent to $27.2 bil- or ultra-supercritical coal fired pow- would hurt both the Chinese and EU “disappointed” with the European that much. There may be some uncer- lion, up from $17.8 billion in 2012. As er plants across the world and more interests”. Commission’s preliminary conclu- tainty in the market until December, as PV supply and demand come back into can be done here. It’s going with the Some countries within the bloc are sion. “We disagree that we have developers question whether to build balance in 2015, margins will steadily grain of policies in many countries, opposed to the EC decision. In a news dumped imports into the European plants now at current module prices or improve and create new opportunities so we can see why they have come release from the Chinese Foreign market. The decision will negatively wait.” for innovative materials developers. out with the recommendation.” UK broadens its nuclear options n Joint working group set up with Rosatom n Hinkley Point C contract will last up to 35 years A deal between the UK and Russia will representative in the UK, said: “On negotiations with French electricity It also said there was a “consensus” Dickson: targets are broaden the UK government’s options the working level, we have been in group EDF over the terms to build a that EDF should be able to make a 10 ambitious but achievable on selecting partners for its planned contact with our colleagues from the new nuclear power station at Hinkley per cent return on investment. nuclear power programme. UK’s Department of Energy and Cli- Point in Somerset. There was, however, still no agree- The IEA’s target would require the In June, Energy Secretary Ed Davey mate Change and there is the poten- MPs have warned that the govern- ment on the cost of the project or the idling of about 250 GW of existing struck an agreement with the deputy tial at some time in the future, if the ment is being held to ransom by EDF ‘strike price’, the guaranteed long-term plant up to the 2020 period. In light prime minister of Russia, Arkady decision has been made, to enter the because it is the only group bidding for price for electricity produced from the of what is already being done in Dvorkovich, to set up a joint working British nuclear new-build market.” the contract. plant. In February it was reported that places like India and China, Dick- group between Rosatom and the UK He added that Rosatom was follow- In late May, the Financial Times the Treasury offered EDF a strike price son says the IEA’s recommenda- on the future of nuclear power. ing the EDF deal closely. “We will reported that EDF and the UK govern- of £80/MWh while EDF was holding tions are ambitious but achievable. The deal could pave the way for the learn lessons from EDF in this area,” ment moved closer to a deal as the two out for just under £100/MWh. He noted: “About 50 GW is closing Russian state-owned nuclear power he said. sides agreed that the contract for pow- Last month, however, the UK govern- anyway due to the Large Combus- company to build plants in Britain. The agreement came as Britain er generated from the new Hinkley ment agreed that the price for electric- tion Plant Directive in Europe and Sergey Ruchkin, Rosatom’s new remained locked in long-running Point C plant would last up to 35 years. ity would be fully linked to inflation. measures elsewhere. However, there will need to be a big push to deliver this additional 250 GW. We see a clear push in China where the gov- Obama switches focus to ernment has called on the five major utilities to invest in carbon capture and storage demonstrations.” In a statement released in mid- climate change May China’s National Develop- US President Barack Obama is prepar- facilities. Proposals would also see a Frank O’Donnell, president of watch- ment and Reform Commission ing to return his attention climate tightening of energy efficiency stan- dog group Clean Air Watch, said that (NDRC) said: “CCUS [carbon cap- change with plans for reducing its dards and an increase in renewable the issue of coal fired power plants ture use and storage] will promote greenhouse gas emissions. energy use on federal land. needed to be tackled. “Everyone knows the transition and upgrading of high During a recent address in Berlin, The plan, which could force dirtier this is the giant environmental elephant emissions industries such as elec- Obama said the effort to slow climate coal fired plants to close, is likely to in the room,” he said. tricity, coal and chemical… It has change required “bold action”. face strong opposition. The US Cham- The success or failure of the propos- significant value to Chinese medi- The statement came as the Obama ber of Commerce, the business lobby als will depend on the interpretation um and long-term plans to combat administration prepared to outline new group, has already said the proposals of the Clean Air Act, which gives the climate change and promote low rules limiting emissions from exist- would “weaken energy security and government the authority to act on carbon development.” ing power plants and other industrial raise energy prices”. greenhouse gases. THE ENERGY INDUSTRY TIMES - JULY 2013

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Siân Crampsie company said that it would take a regulatory hurdles and uncertainty Dominion Resources, concluded that for making billion-dollar up-front in- $100 million charge in the second over when the reactors could return to the region’s low wholesale electricity vestments in new nuclear reactors. Power utilities in the USA are finding quarter of 2013 for “the costs for service mean that its “efforts are better prices no longer justified keeping it However the economic recession and it increasingly difficult to justify these projects currently capitalised in focused on planning for the replace- open. the failure of the Obama administration capital expenditure on nuclear energy property, plant and equipment”. ment generation”. Last month MidAmerican Energy to enact climate legislation has made projects. It blamed market conditions for the Other nuclear energy plants have decided against pursuing plans to nuclear investment more uncertain. Exelon last month scrapped plans to cancellation of the uprates, which also suffered setbacks because of mar- build a nuclear power plant in Iowa, The 2011 nuclear accident at Fukushi- uprate four of its nuclear energy have become uneconomic amid low ket conditions. The Nuclear Energy largely because of a lack of clarity over ma further compounded the sector’s reactors, while Southern California power prices and weak electricity de- Institute says that companies have an- future carbon regulations and the issues, while a surge in production of Edison said that it would close the mand growth in the USA. nounced the closure of 3554 MW of lengthy regulatory processes involved gas from unconventional sources in the San Onofre plant rather than carry out Southern California Edison said in nuclear capacity so far this year. in new nuclear plant construction. USA has led to a fall in energy prices. repairs. June that it would permanently retire In February, North Carolina-based The situation is in stark contrast to a In June the Los Angeles Times re- Exelon had been due to increase the units 2 and 3 of the San Onofre plant, Duke Energy Corp. decided to close few years ago, when the nuclear ported that the Obama administration capacity of two units at the LaSalle which have been out of service since the Crystal River nuclear plant in power sector appeared to be undergo- is considering a plan that would address plant in Illinois and two units at the January 2012 following the detection Florida after workers cracked a con- ing a rebirth. climate change and limit carbon diox- Limerick plant in Pennsylvania by a of a leak in a tube in one of the steam crete containment building during an Supported by economic growth, ris- ide emissions from power plants. Spe- total of around 350 MW. generators. attempt to upgrade the plant in 2009. ing energy prices and the prospect of cific measures have not yet been de- In a filing with the US Securities and The utility has spent $500 million on The Kewaunee plant in Wisconsin legislation to control carbon emis- fined, but an announcement could be Exchange Commission (SEC) the repairs so far but has decided that the shut down in May, after its owner, sions, utilities began to draw up plants made in mid-July, said the report. Mainstream sees further success Mainstream Renewable Power has across four continents and is cur- pledged to build 600 MW of renew- rently constructing wind and solar able energy capacity in Chile by projects in Ireland, South Africa, early 2016. Chile and Canada. Project will The Ireland-based renewable energy In 2012 Mainstream successfully company has announced a joint ven- bid and won three government ten- ture with Actis, a global emerging ders in South Africa for 238 MW of market investor, to deliver wind and wind and solar projects, which are cur- solar power projects that will help rently in construction. Actis invested Chile to meet rapidly rising electric- $100 million in the projects, which are ity demand. due to be operational in early 2014. treble Mexico The deal will enable Mainstream to Energy demand is growing rapidly accelerate the delivery of its projects in Chile thanks to strong growth in the in Chile, where it has a development industrial sector, especially the mining pipeline of 3500 MW. Mainstream sector in the north of the country. will own 40 per cent of the joint ven- ture and Actis 60 per cent. The collaboration is the second time Energy demand in cities PV capacity the two companies have worked to- such as Santiago has helped gether, and Mainstream CEO Eddie a strong growth O’Connor said that the company would consider replicating the deal structure in other markets. Mainstream will develop and build the Chilean projects, which Actis will n Mexico attracts renewables investment purchase at financial close. Mainstream n will continue to manage the construc- Geothermal investors lack confidence tion and support the operation of the projects on behalf of the joint venture. A 30 MW solar photovoltaic (PV) proj- and Corporacion Aura Solar. geothermal energy market and the Globally, Mainstream has a devel- ect set for construction in Baja Califor- Mexico has excellent solar energy need to exploit proven reserves in opment pipeline of over 17 000 MW nia Sur will be the largest plant of its potential and this, coupled with the existing fields has created robust in- kind in Latin America and will treble country’s renewable energy targets, is vestment opportunities, according to Mexico’s installed PV capacity. starting to attract serious investment. Frost & Sullivan energy and power The Aura Solar I plant is Mexico’s In May Toronto-based JCM Capital research analyst Gustavo Stainoh. Edwardsport starts operation first utility-scale solar project under a said it had established a company in However, the country’s energy plan One of the world’s most advanced retirements,” said Duke Energy Indi- power purchase agreement (PPA) con- Mexico to invest in utility-scale solar favours wind and combined cycle proj- coal-fired power plants has started ana President Doug Esamann. tract between a private company and energy projects. German PV firm Geh- ects, and investors need more protec- operating in Indiana, USA. The 618 MW IGCC plant will build Comisión Federal de Electricidad, rlicher Solar also said that it would tion in the high-risk exploration phase The Edwardsport coal gasification up its availability gradually over the Mexico’s federal power company. pursue opportunities in Mexico. of projects. plant entered commercial operation next 15 months. It uses less water than It will be built by Martifer Solar for Mexico has set renewable generation According to Stainoh, the installed on June 7 and will replace around 500 a conventional coal-fired power plant Mexican project developer Gauss En- targets of 20 per cent by 2016 and 35 capacity of combined cycle and wind MW of existing capacity that is due and will also produce byproducts such ergía. Gauss CEO Hector Olea said in per cent by 2035. power is expected to register a com- to be retired due to new US Environ- as sulphur and slag for the agricultural a statement that the project would The country’s geothermal sector is pound annual growth rate (CAGR) of mental Protection Agency (EPA) and construction markets. “open the way for the development of also set for growth, although analysts 4.6 per cent and 7.9 per cent, respec- regulations. Edwardsport is the first power plant the photovoltaic sector” in Mexico. believe that the government should tively, between 2012 and 2025. Mean- “The average age of coal-fired plants to use IGCC technology on this scale The project is being funded by alter regulations to give potential in- while geothermal’s installed capacity on our Indiana system is 45 years, and and is the first coal fired power plant local development bank Nafin, the vestors more confidence. is likely to grow at a CAGR of 2.8 this facility is key to modernising our to be built in Indianan in more than 20 International Finance Corporation Mexico is the world’s fourth largest per cent. system and filling the gap left by plant years THE ENERGY INDUSTRY TIMES - JULY 2013 Register by August 30 & www.platts.com/biomassconference SAVE $200 September 23 - 24, 2013 | Hilton London Paddington | London, UK Biomass2nd Annual Power Generation Achieving sustainability and scalability for the fourth energy source

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[email protected] THE ENERGY INDUSTRY TIMES - JULY 2013 6 Asia News Nuclear remains key to economic growth In an attempt to revitalise its economy, Japan is placing nuclear at the heart of a new economic growth strategy. The strategy was endorsed as the country also approved a bill to reform its electricity sector. Syed Ali. The Japanese government made it clear the restart of the reactors, the general In the wake of the Fukushima disaster, report by research firm IHS Inc, Japan n Chubu Electric Power Co. plans to that nuclear power will continue to play public has not been so supportive. A Japan has also moved to reform its is expected to become the world’s establish a joint special purpose com- a key role in meeting future energy reported 60 000 protesters took to the power sector. The House of Represen- largest solar energy market this year, pany with Tokyo Electric Power Co. demand as the country prepared to in- streets at the start of June to rally tatives recently approved a bill that with the installation of new solar pow- (Tepco) to build and operate a 600 MW troduce its new safety regulations. against the re-openings. takes the first step of a planned major er systems more than doubling capac- coal fired power plant, according to the In its economic growth strategy en- Commenting on the re-start of the reform of a sector that has long been ity. The estimated generation capacity Associated Press (AP). The deal, which dorsed in June, the government said it country’s idled reactors, Minister Akira dominated by regional monopolies. of 5.3 GW to be added this year rough- would see Chubu selling electricity in would “move ahead” with the restart of Amari, who is in charge of the eco- Under the current plan, the govern- ly equals the output of five nuclear the Tepco service area, would help reactors that have been idled since the nomic growth strategy said: “The gov- ment intends to reform the power sector reactors. break the regional monopoly system for Fukushima disaster and “work to win ernment has the responsibility to pro- in three stages, starting from the creation While the 6.8 GW of new solar pow- regional power utilities, said AP. In an the approval and cooperation” of local ceed with the resumption of reactors that of an independent entity that will be in er systems projected in China this year attempt to cut costs while dealing with governments hosting the facilities. are confirmed safe [by the Nuclear charge of coordinating power supply and exceeds that of Japan, the high price of the Fukushima Daiichi nuclear power Although the business community, Regulation Authority], but we do not demand nationwide by around 2015. equipment is expected to make Japan plant accident, Tepco has invited bids which has seen electricity rate hikes intend to make light of the procedure It is also placing a greater focus on the largest market in terms of value, the to provide it with a total of 2.6 GW of since the closures, has been calling for for getting the nod from local people.” renewables. According to a recent report said. generating capacity. Increased coal imports Pakistan load to reduce Indian power shortages shedding a NTPC Ltd. (NTPC), Asia’s second- “Increasing imports has become a biggest power utility by value, will must for NTPC since many of its almost double purchases of coal from [power] plants are running with alarm- outside India this fiscal year to curb ingly low coal stocks,” said Lakshmi- fuel shortages at its power plants, ac- narayana Ganti, an analyst at Standard government priority cording to a local report Chartered Securities India Ltd. The state-run Indian company will n India’s Central Bureau of Investiga- import 17 million metric tons of ther- tion last month filed a case against for- mal coal in the fiscal year, which mer coal minister Dasari Narayana Rao Converting existing thermal power plants to coal would not only help started April 1, compared with 9 mil- and billionaire industrialist Naveen combat power shortages but would also bring down the cost of power lion tons the previous year said two Jindal, an MP and the head of Jindal company officials familiar with the Steel and Power, over the misallocation generation and wipe billions off Pakistan’s circular debt, says Syed Ali. plans. of mining rights to big businesses.

Frustrated by the rising power genera- Power Khawaja Asif said load shed- plants to coal would not only bring tion costs, uncontrollable subsidies ding was “like piled up garbage of down the cost of power generation but and chronic power shortages, Paki- 13/14 years that could not be cleared would also wipe off Rs175 billion Robust economy stan’s new government is launching immediately”. He said it might take from the Rs500 billion circular debt. four new power generation schemes. years and the first priority was to re- Pakistan recently said it is to borrow Under the plan, oil and gas-fired units duce the duration of load shedding. more than $5 billion to pay off the debt at two existing plants will be convert- Engro Corporation – one of the big- it owes to private power producers as stimulates activity ed to coal and two new coal-fired gest conglomerates in Pakistan – be- well as fuel suppliers. plants will also be built. lieves Pakistan can start solving its According to the Engro study, current The conversions, costing Rs252.23 problems by creating a single energy power generation stands at 9000 MW, in Philippines billion ($4.25 billion), will receive sup- ministry by merging the oil, gas, water compared to demand for a whopping port and financial assistance from the and power sectors. 15 500 MW, excluding the Karachi n San Miguel considers selling Meralco stake Asian Development Bank (ADB). It “Pakistan’s energy problems are dif- Electric Supply Company (KESC). will see the conversion of units 1-6 of ficult, but not impossible to overcome This has resulted in a massive short- n FPHC to make $3.14 billion in investments the 1350 MW Muzaffargarh thermal if the new government starts taking fall of 6500 MW, with the KESC sup- power station and units 1 and 2 of the short- and long-term measures,” Engro plying around 1500 MW against de- Companies are moving to take advan- a disclosure to the country’s stock 450 MW Jamshoro power station. Powergen Qadirpur Limited Chief Ex- mand for 2000 MW. tage of the Philippines’ robust economy exchange. The two new coal-fired power plants, ecutive Syed Muhammad Ali said Parts of Pakistan have remained and buoyant stock market to fund ex- In late May, Ramon Ang, San Miguel each with a capacity of 660 MW, will while presenting a detailed report on without electricity for up to 20 hours pansions and pay off debt, especially President and CEO said that the com- cost of Rs155.23 billion, which will the energy sector in Karachi on June a day this summer. after ratings agency Fitch Ratings pany is also preparing for the initial be supported by an ADB loan of 11, 2013. The study also said that a severe granted the country an investment- public offering of a 49 per cent stake Rs124.1 billion. “Pakistan can immediately increase shortfall in gas production is immi- grade credit rating in late March. in its power unit SMC Global Power While the projects will help bridge power production by 2000 MW, for nent, as production growth has re- Philippines conglomerate San Miguel Holdings this year. the power deficit, the new government which it will have to divert oil [power] mained negative since 2006-07. In Corp. is considering selling its nearly SMC Global is currently pushing for still cannot give a deadline for when supply to more efficient power plants,” 2014, gas demand is expected to be 33 per cent stake in electricity pro- the construction of a 300 MW coal load shedding will end. said Ali. 6.3 billion cubic feet per day (bcfd) ducer Manila Electric Co. (Meralco) in plant in Davao and a 600 MW coal Last month Minister for Water and It said shifting oil-based power against a supply of 4 bcfd. a deal that could be the biggest in the plant in Bataan. SMC Global has ear- country’s history. marked $1.5 billion for the projects. Meralco serves an area that produc- In another indicator of the country’s es half of the nation’s gross domestic increasing activity in the sector, First product. The purchase of a stake of Philippine Holdings Corp. (FPHC) last that size – worth about Peso142 billion month said that it is expanding its ($3.4 billion) at the current share price power generation portfolio with $3.14 – could trigger a tender offer for the billion in investments. rest of the shares depending on the FPHC’s operating units First Gen structure of the sale. Corp. and Energy Development Corp. Several groups have expressed inter- are pursuing new energy projects that est in buying the 32.8 per cent com- will increase the Lopez-owned group’s bined stake in Meralco that is held generating capacity by 50 per cent to by San Miguel and its subsidiaries, more than 4000 MW in the medium CFO Ferdinand Constantino wrote in term. THE ENERGY INDUSTRY TIMES - JULY 2013 Europe News 7 EDF EN and UK debates wpd commit to French tender Davey: Bill will attract n 6 MW Haliade confirmed market investment n UK seeks to boost offshore status

Two key players in the European off- Maria McCaffery. “The fact that this shore wind energy sector are joining new organisation will coordinate gov- forces to win contracts in the French ernment’s work with business via a government’s plans to increase off- leading industry figure is important as shore wind capacity. it further cements the positive rela- reforms EDF Energies Nouvelles and wpd tionship between government and offshore have signed a partnership industry.” agreement to combine their expertise RenewableUK has also highlighted in the French government’s second the importance of attracting manu- call for tenders. facturing companies to the UK to Business groups, the government and the green lobby in the UK agree They have selected Alstom as their underpin the country’s offshore wind on one thing – the need for policy certainty to attract investment. turbine supplier. sector. The French government launched its second call for tenders in January Siân Crampsie sector,” wrote Davey in a letter to the “It is clear that investment decisions 2013 calling for investments of Financial Times. “Indeed, it will en- will stand or fall on the details of the around €3.5 billion and the construc- The UK government’s plans to reform sure that we reduce the UK’s emis- contracts for difference, the capacity tion of 1000 MW of offshore wind the electricity market sector remain on sions by 50 per cent by 2025, putting mechanism, and the levy control frame- capacity. The tender makes France track in spite of a fierce debate over us ahead of many economic rivals.” work – not on a carbon intensity target,” one of the most important emerging decarbonisation targets. The UK government – most notably said Hall. markets for offshore wind alongside Lawmakers voted in favour of the the Chancellor, George Osborne – is “Debates about the effect of includ- more established markets such as the Energy Bill at its third reading in the concerned that setting a decarbonisa- ing a [decarbonisation] target in the UK, Germany and Belgium. House of Commons just a day after an tion target now would restrict business Bill should not be allowed to prevent EDF Energies Nouvelles and wpd amendment to include a 2030 decar- at a difficult economic time. The gov- critical policy details being tied down. teamed up in the French government’s bonisation target for the electricity sec- ernment and business groups alike are Vital investment decisions are hang- first call for tenders and say that their tor was narrowly defeated. keen to get the bill passed into law. ing in the balance.” continuing partnership indicates their The Bill has now moved on to the “The Energy Bill remains the best The debate in the UK echoes the on- commitment to supporting the French House of Lords – the UK’s upper house instrument for government to give in- going debate in Europe about the need offshore wind energy industry. As in – for debate. vestors the certainty they need to for policy certainty and the potential the first round of French tenders, they The environmental lobby wanted the plough billions of pounds into keeping impact of emissions targets for 2030. will propose the use of Alstom’s 6 MW UK government to include a 2030 de- UK lights on, through an affordable Last month Johannes Teyssen, CEO Haliade 150 offshore wind turbine for carbonisation target in the Bill in order low-carbon economy,” said Katja of E.On and the new president of elec- the second call for tenders. to improve the UK’s clean energy in- Hall, Chief Policy Director at business tricity association Eurelectric called Last month the UK reiterated its vestment environment and discourage group CBI. “We can’t afford further on policymakers in Europe to create a commitment to the continued devel- a ‘dash for gas’. delays, so it is essential there’s politi- consistent and stable regulatory opment of the offshore wind sector However the UK Energy Secretary cal agreement and the Bill is on the framework that would allow sustain- with the announcement of plans to Ed Davey maintains that the Bill as it statute book this year.” able business growth. create an Offshore Wind Investment stands will cut emissions and attract The government believes that the bill Both Teyssen and Fulvio Conti, CEO Organisation tasked with increasing the investment needed in the UK’s will unlock £110 billion of investment of Enel and the outgoing Eurelectric levels of inward investment. energy infrastructure. He emphasised by 2020 while keeping consumers’ bills president, said that political and regu- “This news is a welcome boost for last month that a decarbonisation tar- as low as possible and enhancing en- latory intervention was damaging the British industry and restates the get for 2030 could be set in 2016. ergy security. Its measures include the competitiveness of Europe’s econo- government’s acknowledgement that “Everything in our energy bill is introduction of a capacity mechanism, my. “There are too many national tar- offshore wind represents massive based on the premise that we need to long-term contracts for difference and gets and there is too little European economic potential for the UK,” significantly decarbonise the power an emissions performance standard. cooperation,” said Conti. said RenewableUK Chief Executive Polish regime could woo investment Spain plans further Poland is hoping that new regulatory include a 40 per cent cap on taxes and proposals will encourage investment the creation of a new national energy in its shale gas sector. mines operator, dubbed NOKE, Prime Minister Donald Tusk says which would be required to be a part- cuts to tackle that he wants investors to feel secure ner in all energy projects. about their business and appears de- The US Energy Information Ad- termined to make progress on pro- ministration (EIA) said in 2011 that posals for a new tax and regulatory Poland had estimated reserves of 5.3 package for the oil and gas sector. trillion m3. These estimates were power sector debt Reports indicate that the new pack- downsized by the Polish Geological age would be in place by 2015 but Institute to around 760 billion m3. that taxes would not be collected un- The Polish government has so far til 2020 in order to coax investors to issued 109 exploration licences for Spain’s government has warned that the Financial Times. the hardest. the shale gas sector. shale gas. Some 43 test wells have a further planned overhaul of the The tariff deficit built up over many The reforms could trigger lawsuits Poland is thought to have signifi- been drilled and the extent and viabil- country’s energy sector will spell fi- years in Spain because the portion from the green energy sector, which cant reserves of shale gas and a suc- ity of Poland’s shale gas reserves nancial pain for utilities. of consumers’ electricity bills that has lobbied hard to oppose further cessful shale gas extraction industry remain unclear. The country is expected to reveal at is regulated by the government did rule changes to the subsidy system. would enhance energy security in the n Germany’s brewing industry has the end of June measures designed to not adequately cover costs. The €28 Endesa could also be hit by the up- country. warned the government that permit- reduce the tariff deficit – a multi-bil- billion deficit is guaranteed by the coming changes because of the sub- However the initial excitement ting unconventional gas exploration lion euro debt that sits on the balance government, which has been told by sidies it receives for supplying energy about the country’s shale gas poten- would put the country’s beer sector sheets of power utilities. Brussels to eliminate the debt. to the Spanish islands. tial wore off after a number of test at risk. The German Brewers’ Fed- The measures could include cuts to Spain has already cut back renew- In a note to clients, Berenberg bank wells showed disappointing results, eration is concerned about water con- subsidies and would reduce revenues able energy subsidies in an attempt estimated such cuts to knock 14 per and a number of key players – includ- tamination and has asked the govern- for utilities by 10-20 per cent. Spain’s to reduce the deficit and further cuts cent off Endesa’s earnings per share, ing ExxonMobil and Marathon Oil ment to cease work on a new banks have been told that they should of up to ten per cent are possible. Re- followed by a 9 per cent hit for Enel – withdrew from the country. framework being drawn up for shale be prepared to refinance or take over newable energy companies such as and 8 per cent for Gas Natural and The government’s latest proposals gas extraction. assets, according to sources cited by Acciona and Abengoa will be hit Iberdrola. THE ENERGY INDUSTRY TIMES - JULY 2013 8 International News Global dynamics drive energy changes Large changes to patterns of energy production and consumption illustrate the flexibility and dynamic nature of the global energy system. Siân Crampsie World Energy and show how the energy available. Our challenge as an figure is 56 per cent. For a second con- The cartel accounts for around 40 per world’s energy system adapts to glob- industry is to make the best choices secutive year, oil supply disruptions in cent of global oil production and some Global energy consumption slowed al events and patterns. about where to invest,” said Bob Dud- Africa and the Middle East were off- of its members would be adversely significantly in 2012 on the back of an Oil and natural gas production ley, BP Group Chief Executive. “We set by growth among other Middle affected by falling oil prices. economic recession and an increase in growth in the USA was the largest in want to provide energy in ways that East producers, with record oil pro- Dudley said that the shale gas revolu- efficiency, according to BP. the world in 2012 as a result of the enable us to be both safe and com- duction in Saudi Arabia, the UAE, and tion in the USA shows how increasing The oil giant says that emerging shale gas revolution there. Natural gas petitive – deploying our strengths Qatar. Despite these supply increases, the diversity of energy sources was economies accounted for all of the net prices therefore fell in the USA lead- while reducing our risks, and manag- average nominal oil prices reached helping the global market to adapt to growth in energy consumption last ing natural gas to displace coal in ing our costs.” another record high. change. year, while consumption declined in power generation. Globally, growth in energy demand The International Energy Agency “For those of us in the energy indus- OECD countries for the fourth time in But while coal consumption de- slowed to 1.8 per cent from 2.4 per (IEA) has said the USA will be a net try, the challenges are about how we five years. clined in the USA, it rose in Europe, cent in 2011. China and India account- exporter of oil by the next decade and respond to the big shifts we are seeing The decline in energy consumption where natural gas prices remained ed for almost 90 per cent of the global could overtake Saudi Arabia as the – a shift in demand towards emerging was most notable in the USA with a high. Consumption of fossil fuels in increase, says BP. world’s top crude producer by 2020. economies and a shift in supply to- 2.8 per cent fall. Japan also rose due to a decline in out- Just 20 years ago, the emerging Opec has already expressed con- wards a greater diversity of energy The trends are published in the latest put from nuclear power plants. economies accounted for only 42 per cerns about the potential impact of sources, including unconventionals,” edition of the BP Statistical Review of “The data show there is ample cent of global consumption; now that rising US oil exports on its powers. he said. Africa realising renewables potential International banks are showing in- world. China leads the way with $67 Ethiopia creased interest in renewable energy billion invested in 2012, but sharp in- projects in Africa thanks to significant creases were also seen last year in potential for solar and wind energy and South Africa, Morocco, Mexico, Chile evolving regulatory regimes. and Kenya. Countries such as South Africa and The Middle East and Africa saw $12 Morocco have the most advanced re- billion invested in renewables in 2012, gimes for attracting renewable energy a rise of 228 per cent over 2011. project developers and financers but other The 2012 global investment total for countries – including Kenya and renewable energy (including small Uganda – are emerging as target mar- hydropower projects) was $244 bil- kets, according to law firm Baker & lion. In previous years, global invest- McKenzie. ments totalled $279 billion (2011), So far financing of renewable energy $227 billion (2010), $168 billion projects in Africa has been dominated (2009), $172 billion (2008), $146 bil- angers Egypt by local banks and international devel- lion (2007) and $100 billion (2006). opment finance institutions. However Total renewable power capacity international banks are showing “tre- worldwide exceeded 1470 GW in mendous interest” in African projects, 2012, up 8.5 per cent from 2011. says Baker & McKenzie, which re- According to Baker & McKenzie, cently surveyed 140 senior executives debt financing for African renewables n Expert panel submits report in the energy industry. is key. Investors need strong relation- “I am seeing lots of interest from ships with local banks and interna- n Egypt proposes national commission countries such as Korea, Japan and tional development finance institu- even Thailand and Malaysia now, in tions to access affordable capital on a Ethiopia has maintained that the Egypt that concludes that their water not worry about a diminished water investing in renewables outside their meaningful scale. South African banks construction of a dam on the River supplies will not be significantly af- share from the Nile. own country,” says Baker & McKen- have so far financed most of the coun- Nile will not affect Sudan and Egypt fected. The panel included represen- “The dam is solely intended for elec- zie Sydney partner Paul Curnow. try’s programme to bring 6.9 GW of following the completion of a year- tatives from Sudan and Egypt and also tricity production... So there should “Asian investors will really focus on renewables capacity online by 2020. long study of the project by a panel found that the dam project meets in- not be any concerns about a dimin- countries that have the most attractive “South Africa and Morocco are not of experts. ternational standards. ished water flow,” Alemayehu said. renewable policy.” the end of African renewable energy Ethiopia last month announced that The Ethiopian Ministry of Water and “Even during the period when we Baker & McKenzie’s survey results by any means,” said Baker & McKen- it was diverting the flow of the Blue Energy said it would carefully con- would be filling the reservoir, we are reflect two other recently released re- zie London partner Marc Fèvre. “In Nile to begin building the Grand Re- sider recommendations of additional going to employ a careful and scien- ports that show a geographical shift East Africa, Kenya and Uganda both naissance Dam, angering Sudan and assessments and proposals in the re- tific water impounding technique to in the deployment of renewable en- have feed-in tariff regimes. There is a Egypt, which both depend heavily on port “that would help the basin coun- make sure the normal flow is not sig- ergy towards developing countries. lot of interest in geothermal power in the river’s water. tries benefit better from the dam”. nificantly affected.” According to Bloomberg New En- the Rift Valley region, while Kenya’s Egyptian president Mohammed The dam has been under construc- Ethiopia’s decision to construct the ergy Finance (BNEF) and the Renew- Lake Turkana and Kinangop wind Morsi said that “all options are open” tion for over two years on the Blue dam challenges a colonial-era agree- able Energy Policy Network for the farms are both significant projects. to deal with any threat to his country’s Nile River in Ethiopia’s Benishangul- ment that had given downstream 21st Century (REN21), more coun- “In West Africa, Senegal has imple- water supplies posed by the $4.7 bil- Gumuz region near a Sudanese bor- Egypt and Sudan rights to the Nile tries are taking up renewable energy mented legislation and a programme lion dam, suggesting that conflict der. It will have a generating capacity water. than ever before. to develop renewable energy. Further could arise if Ethiopia pressed ahead of 6000 MW on completion. Morsi says that Egypt would create Of the 138 countries worldwide that south, we are working on the first wind with the project. Ethiopian Minister of Water and a national commission to address the have renewable energy policies in farm in Namibia, but it won’t be the Ethiopia has submitted a report writ- Energy Alemayehu Tegenu told the dam and its impacts on transboundary place, two-thirds are in the developing last.” ten by a panel of experts to Sudan and Associated Press that Egypt should water sharing on the Nile. THE ENERGY INDUSTRY TIMES - JULY 2013 Special Project: London Array Offshore wind comes of age The inauguration of London Array, the world’s largest offshore wind farm, is a significant milestone in the evolution of wind power. It marks the industry’s ability to deliver truly large-scale wind projects. Junior Isles

Offshore installation: Siemens installed 175 of its 3.6 MW turbines at London Array

here is no mistaking the impor- would be a significant amount of time and permission was granted for the equipment tools and management to tance of the UK to the global – maybe 10 years – before the next onshore works in 2007. Work on support them during this difficult time. Toffshore wind industry. Cur- project took place. This is basically Phase 1 started in July 2009 when the It secured our delivery of components rently it has the lion’s share of the mar- what happened. It was 2001 before the consortium began building the onshore to meet our milestones and meet the ket, accounting for nearly 60 per cent next real project with large 2 MW substation at Cleve Hill in Kent. installation vessel load-out dates,” of the total approximate 6 GW. Nota- machines happened.” The contract for the supply of the said Randle. bly, in the EU more than 73 per cent The market grew slowly at first, with turbines was also signed in 2009, at Components were manufactured in of all new offshore wind capacity a few projects appearing around 2002 which time London Array Ltd and several locations around Denmark. installed in 2012 was placed in UK and 2003. However, it was not until Siemens agreed a contractual sched- Marsh Towers and DS SM manufac- waters. 2007 that offshore wind really began ule and programme for installing the tured the turbine tower sections in Over the last decade or so, the UK to take off when the UK entered the turbines. Herning and Roedekro, respectively; has become home to some of the in- market in a big way. Chris Randle, Siemens Project blades were manufactured in Siemens’ dustry’s most ambitious projects and “The UK really made a market, with Manager for London Array, had the blade manufacturing plant in Aalborg, will be the place where the offshore a pipeline of projects that brought job of ensuring the monumental task and the nacelles were assembled in wind sector demonstrates that it can volume to the industry. You can say of building such a huge project ran as the Siemens facility in Brande. play an important role in a country’s this is when offshore wind started to smoothly as possible. Delivery of the components from the energy mix where there are ample industrialise. With regards to London “The first step was to align ourselves various sites for loading onto the in- wind resources. Array, it is the first large scale wind internally with our internal supply stallation vessels was managed by a The recent inauguration of the first project that you can say is a produc- chain and procurement departments,” large team of project managers re- phase of the London Array wind farm, tion plant; a power plant like you he noted. “Managing a wind farm sponsible for various packages of the world’s largest offshore wind might see in the coal fired sector,” said project of this size with such a large work. “With a project the size of project, is an important milestone in Hannibal. number of components is a vast and London Array, these packages are the history of offshore wind schemes London Array was born in 2001, complex challenge. There are many quite big sub-projects in their own and demonstrates the possibilities in when a series of environmental stud- key interfaces, both internally and right,” noted Randle. this fast growing business. ies in the outer Thames Estuary con- externally that have to be carefully A transport coordinator worked The project has 175 wind turbines firmed the area as a suitable wind managed to ensure aspects such as closely with two of the team managers supplied by Siemens to deliver a farm site. Two years later, the Crown component quality, while meeting responsible for managing the installa- maximum power output of 630 MW Estate gave London Array Ltd a delivery schedules.” tion and pre-assembly activities. – enough to power half a million 50-year lease for the site and cable The task was not made any easier by “They coordinated what components homes in the UK, while saving about route to shore. London Array Ltd is a the financial crisis. Delivering so would be arriving, and when they 925 000 t of CO2 a year. consortium comprising: Danish util- many components, especially during would be picked up from production. Commenting on the significance of ity DONG Energy (50 per cent); difficult economic times placed addi- They were responsible for coordinat- the project, Michael Hannibal, CEO German energy giant, E.On (30 per tional strain on sub-suppliers. It was ing the transport contracts with the of Offshore EMEA at Siemens Wind cent); and Masdar, Abu Dhabi’s therefore vital that Siemens kept a heavy goods vehicles collecting the Power said: “We built the first offshore multi-faceted initiative set up to ad- close dialogue with all of the parties components from Aalborg, Brande wind farm – called Vindeby in Den- vance the development, commerciali- involved in component production. and Herning. They were also respon- mark – in 1991. It followed a strategic sation and deployment of renewable “I can recall one occasion where we sible for coordinating with the site decision in 1989 by Siemens (Bonus energy technologies. had to step in to support one of our key managers in the port of Esbjerg, where Energy at the time), to go into offshore. Planning consent for a 1 GW off- suppliers. We had to provide some they were delivered for pre-assembly At the time, everyone believed it shore wind farm was granted in 2006, additional resources, infrastructure, work.” THE ENERGY INDUSTRY TIMES - JULY 2013 Special Project: London Array

The production of the wind turbines due to the shallow water location. second installation of Siemens’ SWT- and the their delivery was scheduled MPI Discovery is a large, self-pro- 3.6-120 turbines. according to project management re- pelled jack-up barge that would pick When it was first introduced, the quirements. As with some other proj- up components directly from the port 3.6 MW turbine was Siemens’ offer- ects, a buffer of turbines were held on of Esbjerg and take them to the off- ing for the coming offshore market. Towers were the quayside, ready to go in case the shore wind farm. Seaworker is a Henrik Stiesdal, Siemens’ Chief pre-assembled at Esbjerg programme was accelerated and an smaller vessel that could only carry Technology Officer recalls: “The tur- installation vessel became available one turbine at a time. It would there- bine was our shot at the big turbine earlier than planned. fore take components from the barges that we could see the offshore market The schedules varied according to coming in from Esbjerg and take them needed.” production and project demands but from the port of Harwich to the site. The wind turbine operates automati- were ramped up as the project pro- These vessels would also carry up to cally. It is self-starting when the wind gressed. Manufacturing of the main 20-25 of the Siemens installation team speed reaches an average of about 3 to components – transformers, nacelles, on each journey. 5 m/s (about 10 mph). The output in- hubs, towers and blades – began in Randle explained: “The big vessel, creases approximately linearly with March 2011. Offshore construction Discovery, could not operate in the the wind speed until the wind speed also started in March when the first shallow water, so Seaworker was used reaches 12 to 13 m/s. At this point, the foundation was installed. for a lot of the shallow water loca- power is regulated at rated power. Following pre-assembly, the first tions. Discovery would bring six tur- If the average wind speed exceeds components were ready to be shipped bines into the field for installation in the maximum operational limit of out from Esbjerg port in November some of the deeper locations.” 25 m/s, the wind turbine is shut down 2011. Typically, six turbines at a time Installation of each turbine followed by feathering the blades. When the were loaded onto two barges for a similar process. Once the jack-up average wind speed drops back below transport to the port of Harwich, UK, vessel was in place, the pre-bolted the restart average wind speed, the near the site. bottom and middle section of the systems reset automatically. Despite shipping in November, tower was installed, followed by the According to Stiesdal, one of the however, the first turbine was not in- top tower section. The nacelle and things that set it apart from other stalled until January 2012. The delay blades were then installed. offshore turbines is that it was de- highlighted the main areas of unpre- In line with safety requirements, signed as an offshore machine from dictability in building offshore wind turbines can only be installed when the beginning in terms of size and projects – the weather. “We had to wind speeds out at sea are within the construction. wait for an available weather window limits specified for the various compo- The turbine is a geared machine with to transport over at the right times,” nents. This meant it took an average of 58.5 m blades made of fiberglass-rein- noted Randle. 14-22 hours to install each turbine. forced epoxy and cast in one piece to Sticking to a schedule that can be At this rate 175 turbines were in- eliminate weaker areas at glue joints. affected by the vagaries of the weather stalled in less than a year but it was by Stiesdal noted: “We put out a proto- at sea can be tricky. Randle explained: no means a walk in the park. type with a 107 m rotor [diameter] but “We try to plan as far in advance as Randle pointed out: “I was on the the idea was always that the funda- possible and then it turns into a very installation vessel several times and I mental design would target a large dynamic plan with risk assessment up can tell you, it’s a hard working day rotor. We just did not feel that we to the day it happens. So if the offshore. You’re on a vessel that’s could start with a larger rotor from the weather completely changes on the moving around, the conditions are beginning because we always had a planned date – which often happens wet and windy but you have to carry healthy respect for taking too large a and we can’t do that work – then the out lifting operations in the best way jump.” plan changes.” you can in those conditions. Plans Siemens therefore decided to first Weather uncertainty or not, like all change on a minute-by-minute basis build a 52 m blade machine, since on major power projects, constructors of sometimes.” the same 3.6 MW rating it gave the offshore wind projects are still subject London Array represents only the same rotor loading in watts per square to liquidated damages for late delivery or missing contractual milestones. This means there has to be a certain amount of flexibility and contingency SWT3.6-120 main specifications planning within the big plan for the overall project. “It’s of crucial impor- tance for us to plan effectively and Operating data utilise the time we have,” stressed Cut-in wind speed 3-5 m/s Randle. Siemens also encountered several Nominal power at 12-13 m/s other challenges on this project, some it had not seen before. The main dif- Cut-out wind speed 25 m/s ference between London Array and Maximum 3 s gust 70 m/s (IEC version) previous projects, apart from its size, is the site. It is 20 km into the Thames Estuary, which is in the middle of a Rotor very busy shipping lane. This presents a number of transport complexities to Type 3-bladed, horizontal axis managing offshore work. Diameter 120 m The site is also located in two very distinct areas – one in deep water (up Swept area 11300 m² to 25 m), while the other dries out. “This makes it a very difficult site to Nominal rotor speed 5-13 rpm manage,” said Randle. “It means you Power regulation Pitch regulation with variable speed can’t access a number of turbines dur- ing the day because the water level Blade type B58 drops with the tide and you can only see sandbanks. So we had to plan our Blade length 58.5 m work around the tides, water depths and the times of the day, as well as plan our daily work activities.” Generator Siemens had to therefore take vari- Type Asynchronous ous approaches to tackle the problem, such as the use of different crew ves- Nominal power 3600 kW sels, and implementing different innovations. Protection IP 54 “We commissioned a tract vehicle as Cooling Integrated heat exchanger a rescue vehicle in the event of an emergency. Although helicopter res- Insulation class F cue is possible, we also wanted a Plan B. During the design phase, we com- missioned the design of an Argo Cat, Tower which sits on the back of one of our Type Cylindrical and/or tapered tubular crew transfer vessels. It can tract across the sand to rescue one of the Hub height 90 m or site-specific crew if necessary. It was trialled at our Gunfleet project and we took them on board for London Array as a safety Weights (approximate) vehicle should we ever need it.” Rotor 100 000 kg Two different vessels – ACT Sea- worker and MPI Discovery – also had Nacelle 125 000 kg to be used for the installation process THE ENERGY INDUSTRY TIMES - JULY 2013 Special Project: London Array

entire process began at the end of should be aiming for €100/MWh as October 2012 and was completed in opposed to £100/MWh. To do this, April this year. Hannibal says the industry will have Randle noted: “The industry has to be smarter. never seen 175 turbines commissioned “We can’t just depend on developing in that amount of time.” larger and larger turbines. We will Once commissioned, each turbine have to look at foundations, cables started to generate electricity and fol- and electrical system solutions. Adopt lowing a 240-hour reliability test, was new ways of thinking. then handed over to the customer – a “We have to do things differently – process that was repeated 175 times. get smarter at installation. London The last turbine completed its reli- Array has contributed significantly to ability test in May and the full asset the industry. For example it has en- was handed over in June. abled the next wave of special- The entire project from start to finish purpose vessels for installing both has been a learning exercise for foundations and turbines to be built. It Siemens and the experience and infor- is a project where we have noticeably mation gathered will be shared taken things one step further and we throughout the organisation. One key can take what we have learned here piece of advice that Randle has for forward to other projects.” other project managers is to “always There will no doubt be a number of have a Plan B and a Plan C ready”. other projects to look forward to in the “The best plans in the world can UK. As much as 30 GW of new capac- change, and they do change, so be ity could be installed under the coun- Rotor blades at Esbjerg port: a buffer of components was held on the quayside flexible and ready to adapt that plan to try’s Round 3 offshore programme. the situation at the time.” Hannibal warns, however, that the He also stresses that projects of this UK is in danger of losing momentum metre as on its earlier machines. browser. All the turbines for London size are about collaboration and work- with the current uncertainty surround- Stiesdal explained: “We would al- Array are controlled and monitored ing in partnership with everybody in- ing electricity market reform. The ways stay within a 60 per cent leap in from an operation and maintenance volved. While this is very important current incentives provided through size. So moving from a 2.3 MW to this centre in the port of Ramsgate. during project execution, a good rela- Renewable Obligation Certificates size felt like a safe bet. “These features are important for a tionship between a utility and supplier (ROCs) is being phased out and will “The 120 m rotor was in the calcula- machine that is out at sea. It means can bring other benefits. be replaced by a feed-in tariff with tion right from the start but we did not you have control of your machine if Prior to winning the London Array contract for differences (CFDs). have the ambition in the beginning to something starts going wrong,” said contract, Siemens had entered into a While the industry generally sup- make such a big blade. However, the Stiesdal. framework agreement with DONG ports the electricity market reforms market was showing signs of moving Stiesdal also notes that the SWT-3.6- Energy for 500 turbines. This was a aimed at delivering low carbon gen- to lower rotor loadings and the 120 m 120 has a full power converter. “There significant milestone for the industry eration, the government has been slow rotor was seen as the maximum that are different schools of thought on since it marked the move from project- in providing details of the reform and the structure was supposed to be ca- how to connect turbines to the grid. by-project thinking, to serial produc- announcing the price that generators pable of carrying.” Siemens’ approach is to have a con- tion thinking. will be paid for producing clean elec- Stiesdal says there are several other verter that converts all the power. Stiesdal said: “[For the customer] tricity. This is causing the market to features that demonstrate that the de- Others use a double-fed induction It’s about selecting a supplier with slow down. sign is specifically aimed at offshore generator where you only convert the whom you want to get the benefits of “The new CFD will provide the right operation. power that comes out of the rotor. We serial production. This master agree- regime to attract investment from For example, it has climate control are of the opinion that the full con- ment took us out of the stop-and-go pension funds and other investors. But to help prevent corrosion of internal verter offers the highest degree of purely project-oriented business into what is not positive for the market is components. flexibility for grid requirements.” something that was more of a stan- the current uncertainty on what the It also has operation and control Connection to the grid and commis- dardised product. It essentially ‘on- strike price will be, what the actually features that are important for a ma- sioning marks the final step in a project shorised’ offshore.” CFD means, how long it will run for chine operating out at sea. going live, and Siemens put a lot of Such developments could be hugely etc. Uncertainty like this has the ten- The SWT-3.6-120 wind turbine is effort into optimising the commis- important for both Siemens and the dency to delay projects, so we will see equipped with the Siemens WebWPS sioning process to help deliver power industry. According to Siemens, its the UK market lose momentum be- SCADA system to allow remote con- as fast as possible. agreement with DONG will help pro- fore it picks up,” said Hannibal. trol and a variety of status views and It had a construction office in the mote the industrialisation the industry Fortunately, Siemens says it has a useful reports from a standard internet port of Ramsgate housing the site needs. good pipeline of projects to balance web browser. The status views display management and a number of techni- According to Hannibal, London Ar- out any temporary lull in the UK. information such as electrical and cians. Once installation of the turbines ray, together with other projects, is “We have a backlog of projects in mechanical data, operation and fault was complete, personnel from the helping the industry to reduce the cost UK waters and are installing projects status, meteorological data and grid construction office would transfer out of energy. in Denmark and Germany. So it is station data. to a hotel vessel and onto a crew He said: “Each decade, we have good that we are well positioned and The turbine is also equipped with transfer vessel to the turbines to begin managed to reduce the levelised have a backlog of projects in different Siemens’ TCM condition monitoring commissioning. cost of energy by about 40 per cent. places,” said Hannibal. system. This system monitors the vi- Personnel were specialised in areas So far it has been largely achieved While policy challenges remain, the bration level of the main components such as mechanical completion, high through turbine development but UK still looks set to take offshore and compares the actual vibration voltage work, cabling work and final looking ahead, we still need other wind to the next level and, as Hannibal spectra with a set of established refer- commissioning activities. The internal innovations.” says, London Array signifies that off- Blades were transported by ence spectra. Result reviews, detailed components of each turbine were The UK has set itself a goal to reduce shore wind farms are now “in the heavy goods vehicle from analysis and reprogramming can all commissioned before it could be the cost of energy to £100/MWh by grown-ups class when it comes to Aalborg be carried out using a standard web cleared for connection to the grid. The 2020. Siemens believes the industry power plants”. A vision becomes reality. Just outside of Greater London, we’ve built the world’s largest offshore wind power plant.

siemens.com / wind

A total of 175 Siemens offshore wind turbines were erected in the an offshore leader, demonstrating the potential of modern offshore outer Thames Estuary to realize the world’s largest offshore wind wind power. power project – London Array. With a capaci ty of 630 MW, it generates Drawing on over 30 years of experience in wind power and a global enough energy to power more than 500.000 homes. network of highly skilled employees, Siemens has again proven itself By supplying wind turbines, substations, and service to this landmark to be a trustworthy and reliable business partner. As the world looks project, Siemens has contributed to the UK maintaining its position as for energy solutions, if anyone has the answers, then Siemens does.

Answers for energy.

15_01_041 Ad London Array_292x370_RZ.indd 1 24.06.13 11:57 THE ENERGY INDUSTRY TIMES - JULY 2013 Companies News 9 Tognum makes Centrica makes Russian deal Engine firm Tognum is hoping to ce- with Transmashholding and the con- ment its position in the Russian and sequent joint decision to further de- CIS engine market with the creation of velop the CIS-market with modern foray into UK a new production facility in the city of diesel technologies,” Tognum’s CEO Kolomna, near Moscow. Joachim Coers said. Tognum has signed an agreement The new plant is expected to produce with Transmashholding, one of Rus- up to 1000 engines per year for the rail, sia’s largest rolling stock manufactur- mining and on-site power generation shale gas ers, to set up a joint venture company sectors. Production is set to start by to assemble, test and finish diesel en- December 2015. gines and gensets in the new factory. Tognum rival Wärtsilä has also es- The new site will also handle sales tablished a joint venture with Trans- and aftersales service and will be oper- mashholding and announced in June ated by the joint venture company, 2012 that it was ready to start construc- MTU Transmashholding Diesel Tech- tion of a new factory in Penza, Russia The potential for shale gas development in the UK is starting to lure nologies. Tognum will invest €80 mil- for the manufacture of diesel engines. lion in the project. Wärtsilä said that the deal would the big players. “This joint venture is an important strengthen its position in the Russian and logical milestone in the develop- market, in particular the rail locomo- ment of our long-term relationship tive market. Siân Crampsie committed to fund £60 million of ex- ergy revolution caused by shale gas in penditure on exploration and apprais- the USA is unlikely to be repeated in Centrica is betting around £100 million al costs and will also make a further the UK due to differences in geology, ($155 million) on successful growth in £60 million contingent payment on population density and regulations. the UK’s shale gas sector. completion of certain milestones. Environmentalists are also con- The UK energy firm has paid £40 Cuadrilla has welcomed Centrica’s cerned about the impact of hydraulic million in cash for a 25 per cent stake investment as a “ringing endorsement” fracturing – or “fracking” – on the en- in the Lancashire Bowland shale gas of the UK’s shale gas potential. vironment. WWF said that shale gas exploration licence area operated by “This transaction presents an attrac- exploration was “completely incom- Cuadrilla Resources, the only com- tive opportunity for Centrica to explore patible” with efforts to tackle climate pany to have so far undertaken ‘frack- the potential and commercial viability change. ing’ operations in the UK in search for of natural gas from shale in the UK,” “Just a few months ago, [Centrica shale gas. said Mark Hanafin, Managing Director CEO] Mr Laidlaw was highlighting The deal is a sign that the energy ma- of Centrica’s international upstream environmental concerns and popula- jors are getting serious about the poten- business. “With North Sea gas reserves tion density as problems facing shale tial of shale gas in the UK. Cuadrilla declining and the UK becoming more development in the UK,” said Jenny believes that its Bowland licence area dependent on imported gas supplies, it Banks, climate and energy specialist at contains 200 trillion cubic feet (TCF) is important that we look for opportuni- WWF-UK. “These haven’t gone away of shale gas – enough in theory to meet ties to develop domestic gas resources, so it’d be interesting to know what has the UK’s needs for 67 years. to provide affordable sources of gas to changed for Centrica now.” Last month IGas estimated that there our customers, and to deliver broader In May the UK’s Institute of Direc- is up to 170 trillion cubic feet (TCF) economic benefits to the UK.” tors (IOD) published a report analysing of shale gas in its licence area in north- Energy firms are hoping that success- the economic benefits of onshore shale west England. ful exploration of shale gas reserves in gas development in the UK. In it the Centrica’s move is a bet, however, the UK will help to boost energy secu- IOD said shale gas development could as it is unclear how much of the gas in rity and economic growth as well create tens of thousands of jobs, reduce place can be extracted, and how much as reduce energy bills. Analysts have energy imports, generate tax revenue it will cost to extract. Centrica has already warned, however, that the en- and support economic growth. Kolomna: home of Tognum’s planned Russian production centre Strategic shift planned for Market woes EnBW force Siemens Embattled German energy utility spread across Germany, Austria, EnBW is planning to boost invest- Switzerland and Turkey. ment in renewables and power net- Like other power generators around works in a bid to overcome tough Europe, earnings from EnBW’s gas- solar closure trading conditions. fired power plant fleet have fallen due The company is expecting a sharp fall to low power prices and competition Siemens is to close its solar thermal receivers remains low. rapid growth in the market, it has also in profits from its conventional power from renewables. RWE and E.On have business after failing to find a buyer. “We had negotiations with a number wiped out profit margins for many generation business and is also trying also taken steps to adjust to the trading The German engineering firm an- of interested parties but no agreement PV product manufacturers. to compensate for the forced early clo- environment, including the closure of nounced in October last year that it could be achieved,” read a statement These market conditions coincided sure of two nuclear power units. generating capacity and streamlining would exit the solar energy business from Siemens. “Current and prospect- with the economic recession and cur- By 2020, EnBW intends to generate company structure. but weak market conditions in the so- ed market volumes for solar thermal rency crisis, forcing Siemens to reas- 40 per cent of its profits from its renew- Dow Jones newswires reported in lar sector have made it hard to find an receivers remain on a low level, mak- sess its activities in the PV and solar able energy business and its regulated June that RWE was considering the investor. ing it difficult to agree on a business thermal businesses. power networks sector, compared with mothballing of gas and coal-fired pow- The closure will result in the loss plan for an acquisition scenario that In 2009, Siemens paid $418 million 12 per cent at present. It says that an er plants in Europe amid low wholesale of 280 jobs and is expected to cost meets the requirements of both inves- for Israel-based Solel Solar Systems, asset disposal programme will raise power prices, which currently stand at Siemens millions of euros. Siemens tor and seller. a manufacturer of solar thermal plant €2.7 billion of funds for its strategy. around €38/MWh. announced in May that it would In 2012 Siemens said that global products. A year later it acquired a stake According to CEO Frank Mastiaux, Wholesale prices of €55-60/MWh phase out its solar photovoltaics (PV) market expectations for concentrated in Archimede Solar Energy, a solar EnBW will expand its onshore wind are needed to run a fleet of power plants business. solar power had shrunk from 4 GW to thermal company based in Italy. generating capacity to 1750 MW over over the long term, Dow Jones re- Siemens says it will complete cur- slightly more than 1 GW. The reduced The firm hoped to emulate its rapid the next seven years, up from 200 MW ported RWE board member Rolf rent projects and continue to fulfil market size is largely due to intense growth in the wind energy sector and at present. Its investments will be Martin Schmitz as saying. warranty obligations in the solar sec- competition from the PV segment of had forecast double-digit annual tor. It said that there had been a num- the solar market. growth rates in the solar thermal sec- ber of interested parties for the solar The PV market has witnessed a tor to 2015. However the solar thermal thermal business but that negotia- rapid fall in product prices as a result units is reported to have suffered tions had proved difficult because the of surplus production capacity glob- nearly $1 billion in losses over the last current and future market for solar ally. While this has helped to drive two years. THE ENERGY INDUSTRY TIMES - JULY 2013 10 Tenders, Bids & Contracts

Americas third major order for a hydropower Fife Energy Park in Scotland, and fea- Vestas equips Croatian plant in Laos. tures turbine blades that are over Abengoa orders Carty 80 m long – lnger than the wingspan project of an Airbus A380 aircraft. CCGT Gamesa agrees India deal Grouting will take place in July 2013 Vestas is to supply the wind turbines Abengoa has placed an order with Gamesa has reinforced its position in and will be done in two phases. for a 42 MW project in Croatia. Mitsubishi Power Systems Americas India with the signing of two agree- The order was placed by Eko En- Inc (MPSA) for the supply of a natu- ments for the supply of wind turbines Alstom improves West ergija d.o.o., a company wholly ral gas powered combined cycle to two major developers. owned by the EnerCap Power Funds, power unit at the Carty generating The Spanish firm has signed a deal Burton and Cottam managed by EnerCap Capital Part- station in Oregon, USA. to provide 130 MW of wind turbines Alstom has been awarded a contract ners. Vestas will supply, install and The 440 MW Carty plant is being to China Light & Power India (CLP to retrofit intermediate pressure (IP) commission 14 of its V90-3.0 MW built on behalf of Portland General India) and has also signed another turbines at West Burton and Cottam turbines at a site in Obrovac, Croatia. Electric (PGE) and is scheduled for agreement with Greenko Win Project coal-fired power stations in the UK. “We’re delighted to commence the completion in mid-2016. MPSA will for 100 MW. The retrofit will improve the efficien- construction of the Obrovac wind equip the plant with an M501GAC For CLP India, Gamesa will sup- cy and extend the life of turbines at power plant which marks our first gas turbine, an SRT-50 reheat steam ply, install and commission 65 of its the two EDF Energy power stations. investment in Croatia,” said Alastair turbine and a heat recovery steam G97-2.0 MW wind turbines at the West Burton and Cottam power Hammond, partner at EnerCap Capi- generator. Jath wind farm in the state of Maha- stations are both rated at 2000 MW tal Partners. “We are pleased to work Under a separate long term service rashtra. It will also undertake opera- and are located in Nottinghamshire with Vestas again, following our agreement, MPSA will provide the tions and maintenance at the site for in the East Midlands. successful project in Scieki, Poland, Carty generating station with com- ten years. The contract entails replacing the last year.” prehensive turbine maintenance, re- For Greenko, Gamesa will install inner cylinder and fitting a new rotor The first turbine delivery is plan- pair and outage services, replacement 50 G97-2.0 MW wind turbines at and blades on Cottam 2 and West ned for the first quarter of 2014 and parts supply, and dedicated remote two 50 MW wind farms in the state Burton 1. The work will improve the the wind power plant is expected to monitoring for its gas turbine. of Karnataka and Andhra Pradesh. heat rate, reset the life of the major be commissioned during the second IP turbine components, and ensure quarter of 2014. Nexans to supply EHV lower maintenance costs for the re- Europe mainder of their life. link Nordex expands in South Nexans has been awarded a contract Centrax expands in Areva contracted for Africa by China’s Sinohydro Corporation to France supply the extra high voltage (EHV) research reactor Independent power producer Cenner- power cable link for Ecuador’s Centrax has expanded its presence in Areva has signed a multi-million euro gi has placed an order with Nordex 1500 MW Coca Codo Sinclair hydro- the French power generation market contract with the Technical Univer- for the delivery and turnkey installa- electric project currently under con- with the sale of three gas turbine sity of Munich (TUM) in Germany for tion of a wind farm in South Africa. struction in the Amazon Basin. packages. the supply of fuel elements for the The 134.4 MW Amakhala Emoyeni Nexans will supply 7 km of single- Dalkia has ordered two CX501-KB7 FRM2 research reactor. plant will be built near Bedford in core 500 kV state-of-the-art XLPE units while Cofely has ordered one The 20 MW reactor was commis- Eastern Cape Province, with work (cross-linked) insulated power cable, CX501-KB7 unit. Dalkia will install sioned in 2004 and is used for the starting in the third quarter of 2014. with a 1600 mm2 copper cross-section, one unit at the Omnitherm district production of neutrons for scientific Installation of the turbines will start together with associated accessories, heating plant in Valence and the sec- research in the nuclear, industrial in mid-2015. to transmit power generated from the ond at the Gie Evry district heating and medical domains. Nordex will supply and install 56 new dam on the Coca river to the local plant in southwest Paris. of its N117/2400 turbines and has substation for distribution into Ecua- Cofely’s KB7 unit is destined for the also signed a ten-year service agree- dor’s power grid. Chambery plant of gypsum producer Metso wins WTE orders ment covering the plant. The cable will be manufactured dur- Placoplatre. Metso has been awarded its sixth Amakhala Emoyeni is one of the ing 2013 and delivered in 2014. Centrax will deliver all three units and seventh repeat orders from the projects from the second round of the this summer. CNIM group for the automation of South African REIPP auctions ap- two greenfield waste to energy proved by the South African Ministry of Energy in May 2012 and comes Asia-Pacific RWE npower selects (WTE) plants in the UK. Metso will supply an extensive with a 20-year electricity power pur- Trilliant Metso DNA distributed control sys- chase agreement. The next round of Siemens delivers Ashuganj tenders is to be held in August this GT package Trilliant has announced that it has tem and safety system to both new been selected by RWE npower to sup- plants, one of which is located in year, when Nordex hopes to win fur- Daewoo International and UTE TSK- ply smart meter services for the roll- North Oxfordshire and the other in ther business, it said in a statement. Inelectra have placed orders with out of a smart energy meter pro- Cardiff. Siemens for the delivery of gas turbine- gramme in the UK. The control systems aim to help Algeria projects select based power generation systems for Trilliant’s services include commu- WTE plant operators maximise in- Siemens two new combined cycle power plants nications hubs and its UnitySuitehead cinerator capacity by keeping com- being built in Bangladesh. end software. The deal will make the bustion and steam production stable Siemens has won orders from Daewoo Daewoo is building a 225 MW pow- firm the largest provider of in-home while allowing high availability of E&C Co. and Hyundai Engineering er plant at Ashuganj while UTE TSK- smart energy communications equip- the production processes. Co. for the supply of power plant com- Inelectra is building a 385 MW plant ment in the UK. Both plants will be operated by ponents for the Ras Djinet and Ain at the same site. Both projects are With over 500 000 homes in the Viridor, one of the UK’s leading re- Arnat combined cycle power plants in owned by the Ashuganj Power Station UK already connected to Trilliant’s cycling, renewable energy and waste Algeria. Company Ltd. UnitySuite head end platform, RWE management companies. The two plants are being built for For the 225 MW plant, Siemens npower will be able to use Trilliant’s Sociéte Algérienne de Production de will supply an SGT5-PAC 2000E knowledge of smart meter deploy- l’Electricité (SPE), the state-run ener- package comprising an SGT5-2000E ments to leverage the current solution International gy provider in Algeria, and will have gas turbine, an SST5-600 steam tur- for deployment this year. a combined generating capacity of bine, and two SGen5-100A genera- Kenya orders biogas more than 2000 MW. Siemens will tors. For the Ashuganj 385 MW com- Gamesa sells Scottish power plant supply six F-class gas turbines, six bined cycle power unit, Siemens will wind farm steam turbines and six generators. be delivering an SCC5-PAC UK-based Clarke Energy has placed The two plants will supply power 4000F/3000 package consisting of an Gamesa has closed the sale of a an order with GE for two Jenbacher to over five million households on SGT5-4000F gas turbine, an SST- 15.3 MW wind farm development in J420 biogas engines for a new Algeria’s Mediterranean coast. They 3000 steam turbine and an SGen Scotland to John Laing, a specialist 2.8 MW agricultural biogas power are part of plans to expand the coun- 5-2000H generator. investor and asset manager. project at a large vegetable farm try’s power generating capacity from The new plants will help Bangladesh The Carscreugh wind farm, located near Lake Naivasha in Kenya. 11 GW to 26 GW by 2022 in re- cope with rising energy demand, in Dumfries and Galloway in south- The project is owned by Tropical sponse to economic development. which is being driven by strong eco- west Scotland, will be equipped with Power and will be the first biogas en- nomic growth. 18 Gamesa G52 turbines, each with a gine project in sub-Saharan Africa for Voith modernises Inga I unit capacity of 850 kW. Clarke Energy. It will use biogas gen- Gamesa expects to install the wind erated from farm waste as a fuel. Voith has been awarded a contract to Toshiba wins Laos order turbines towards the end of this year The farm grows vegetables for sale modernise the Inga I hydropower Sinohydro Resources has awarded and to commission the facility in the in supermarkets. Its biomass waste, plant in the Democratic Republic of Toshiba Hydro Power (Hangzhou) Co first quarter of 2014. Under the agree- including trimmings and unsold veg- Congo. (THPC) a contract to supply three ment, the company will also carry out etables, will be processed in a di- The €58 million project will be car- 80 MW hydroelectric turbines and operations and maintenance services gester to create biogas. The contai- ried out by Voith and its partner Elec- generators for the Nam Ou 5 hydro- at the facility for 10 years. nerised gas engines will be nor SA, and will be financed by the power plant on the Nam Ou, a major configured for cogeneration, with World Bank. It will involve a com- river in Laos. FoundOcean awarded Fife surplus heat recovered as hot water prehensive rehabilitation of two tur- THPC will design and manufacture and used to support the biogas bine-generator units inside the power the turbines and generators and start contract plant’s process heating. station, which entered service in the delivery next January. The first unit is Graham Construction has awarded The project is important for Ke- early 1970s and which has completed expected to enter operation in Decem- FoundOcean a contract to pile grout nya’s local economy because current nearly 260 000 operating hours. ber 2015. the foundation for the world’s largest economic development efforts are Voith and Elecnor will replace two Following on from Nam Ngum 2 offshore wind turbine. The 7 MW putting a strain on the local power existing generator sets with new sets and Nam Ngiep 2, this is Toshiba’s wind turbine will be installed at the distribution network, says GE. rated at 55 MW. THE ENERGY INDUSTRY TIMES - JULY 2013 Fuel Watch 11

Oil

Crude Oil Prices - 2013 2013 Settlement Prices For Benchmark Crudes ($/B) Nymex WTI ICE Brent DME Oman ICE Dubai OPEC Basket Crude price Price/Barrel $135.00

$130.00

$125.00 rises may be $120.00 $115.00

$110.00

$105.00 short-lived $100.00 $95.00 n International oil prices to gradually decrease $90.00 n US shale oil production cutting Opec demand $85.00 $80.00 David Gregory of oil supply from the Middle East. The bank noted that Opec’s response, It used as a yardstick what it consid- and particularly that of Saudi Arabia, Date 20 May 23 May 28 May 3 June 5 June 7 June 11 June 13 June 17 June Crude prices eased their way upward ers to be the cost for producing Cana- to such a situation would be key re- 2013 2013 2013 2013 2013 2013 2013 2013 2013 during the first weeks of June, but with dian tar sands, $80/b. garding prices. “A key uncertainty in no genuine indication that they would The economies of oil-exporting the outlook is how Opec reacts to continue that trend. West Texas Inter- countries could be particularly vulner- changing global demand and non-Opec wave” in non-conventional oil produc- est share on record. mediate (WTI) moved from $93.45/b able to a shift in crude prices, accord- supply conditions,” the report said. tion would see North American oil Global crude output increased by 1.9 on the first trading day of the month to ing to the bank report, which said that “Since 2004 when crude oil prices supply increasing by 3.9 million b/d million b/d, 2.2 per cent, with Opec a high of $98.24/b by June 19, only to if real prices were to fall to $80/b in started rising, Opec has responded to during the next five years. It said shale accounting for about three-quarters of fall to $95.40/b the following day. mid-2014 due to rising production and subsequent price weakness by cutting oil production would raise US output the rise, although Iranian production Brent followed the same tack, going reserves in the US and other non-Opec supply, but has not been as willing to to 8.4 million b/d over that time. And was down by 680 000 b/d, BP said. from $102.06/b to $106.12/b and then countries, oil exporting countries in intervene when prices increase,” it it said that it sees demand for Opec Non-Opec output grew by 490 000 back to $102.26 on the same days. the Middle East and North Africa said. “However, as non-Opec supplies crude remaining below 30 million b/d b/d with increases in the US averaging June was a month of reports that could see their GDPs fall by 1.4 per continue to come on-stream and de- (the organisation’s current production more than 1 million b/d and Canada, looked into the future of the oil market. cent and their current account balances mand moderates in response to higher target) for the next several years. Russia and China offsetting unexpect- The World Bank forecast that interna- shrink by 3.5 per cent in 2014. prices, the sustainability of this ap- BP released in June its annual statis- ed outages in Sudan/South Sudan tional oil prices would gradually de- “In the current environment, regional proach may come under pressure.” tical report in which it said global oil (-340 000 b/d) and Syria (-160 000 crease to an average of $80/b by 2025, oil exporters will no longer be able to Analysts see rising shale oil produc- consumption grew by 890 000 b/d in b/d) as well as declines in mature areas in its latest Global Economic Pros- rely on high and rising prices, but will tion in the US as cutting into demand 2012, which is 0.9 per cent below the such as the UK and Norway. pects. Using the average of WTI, Brent increasingly need to rely on increased for Opec crude. This situation is al- historical average. Oil had the weakest Meanwhile, Norway’s state-owned and Dubai crudes, the World Bank output,” the bank report said, adding: lowing crude stocks to build and put- global growth rate among fossil fuels Statoil said in its long-term outlook forecast an average oil price $102.40/b “This in turn necessitates reforms that ting downward pressure on oil prices. for the third consecutive year, BP said. to 2040 that “strong crude oil prices, for this year, compared to $105/b in would allow them to invest heavily in The reason prices are not lower is be- OECD consumption declined by 1.3 less fuel subsidisation in the non- 2012. The price would average $101/b infrastructure, and exploration to raise cause of supply disruptions from per cent (530 000 b/d), the sixth de- OECD countries, technological ad- in 2014 and 2015, but it cautioned that current production levels which have Libya and the sanctions against Iran. crease in the last seven years. The vances and more stringent environ- the price of crude could jump by $50/b stagnated or been steadily declining in The International Energy Agency OECD now accounts for only 50.2 per mental regulations will dampen future or more if there was a major disruption recent years.” (IEA) said in early June that a “shock- cent of global consumption, its small- oil consumption.” Gas Turkmenistan gas elusive option for Southern Gas Corridor A deal that would see Turkmen gas moving westward would give a solid boost to the Southern Gas Corridor but a deal that would bridge the political differences between Ashgabat and Baku remains elusive.

Mark Goetz BP-led Shah Deniz partners make a Afghanistan, Pakistan and India – the Over the years, numerous statements estimates reserves in Galkynysh at decision, construction will need to get TAPI project. There is a strong market agreeing on the shipment of Turkmen between 13.1 and 21.2 trillion m3, In mid-June, the partners in Azerbai- under way. for Turkmen gas in those countries, gas to markets west of the Caspian enough to keep China, the TAPI jan’s Shah Deniz consortium were still For all the angst that has so far been but concerns over security keep that have been signed. The latest joint project, Turkey and Europe well sup- deciding between rival pipeline proj- put into the Southern Gas Corridor, 10 project from moving ahead. statement between Turkmenistan and plied for decades. ects – Nabucco West or the Trans Adri- bcm/year is not a great deal of gas, but There has long been talk of shipping Turkey signed in late May said the two The project requires an investment atic Pipeline (TAP) – for the transport it is seen as a start by the EU towards Turkmen gas to Europe through a countries discussed “projects in the of $9.7 billion and would produce contracts of Shah Deniz Stage 2 (SD2) diversifying its energy supplies and Trans-Caspian Gas Pipeline. The proj- sphere of supplying Turkmen natural 30 bcm/year. Following a second gas to Europe. thus boosting its energy security. ect almost materialised in 2000, and for gas to Europe.” stage of development at Galkynysh, SD2 will produce an additional 16 Europe’s energy diversity and secu- the last two years the EU has been at- With gas demand growing and ex- Turkmen gas exports to China could billion cubic metres per year (bcm/ rity of supply could be enhanced fur- tempting to negotiate a treaty for the pected to reach 70 bcm/year by 2025 rise to 65 bcm/year. year), 6 bcm/year of which will go to ther if agreements could be reached construction of a subsea gas pipeline or shortly thereafter, Turkey would International energy companies, in- Turkey and the remaining 10 bcm/ that would see shipments of Turk- connecting Turkmenistan with Azer- welcome the arrival of Turkmen gas cluding ExxonMobil, Chevron, Shell, year to Europe, either through TAP’s menistan gas arriving in Europe. The baijan, where Turkmen gas would enter as much as Europe. BP and BG Group have expressed southern route to Greece, Albania and Central Asia state has huge natural gas the system transporting Shah Deniz gas Turkmenistan’s potential is there. In their interest in investing in the coun- Italy, or through Nabucco West’s sys- resources that have only in the last few through the Caucasus to Turkey. May, during an energy conference in try’s gas resources, but the country tem through Eastern Europe to the years come into their own. A deal to move Turkmen gas west- Ashgabat, Turkmen officials announced does not welcome foreign companies Central Europe Gas Hub at Baumgar- During the Soviet era and well into ward would boost the Southern Gas that gas production from the giant to operate onshore. ten, Austria. the 2000s, land-locked Turkmenistan Corridor, but so far a deal that would Galkynysh field would begin in late Turkmen sources estimate that the The pipeline through which SD2 gas was dependent upon Russia’s pipe- bridge the political differences be- June and in September at the latest. country produced about 70 bcm during to Europe will travel – the Trans Ana- line system to export its gas. That tween Ashgabat and Baku, and ease Galkynysh, previously known as 2012 but the new BP Statistical Review tolian Pipeline (TANAP) across Tur- changed in 2009 when a trans-Asian Turkmen concerns over Caspian re- South Yolotan, is considered the sec- of World Energy, using a new system key – is due to start delivering gas at gas pipeline to China began to trans- gional affairs remain elusive. Further- ond largest gas field in the world, and for calculating reserves and produc- the EU border in 2019. None of the port gas across Uzbekistan and more, there are questions about Azer- the largest offshore (the largest being tion for former Soviet republics, said pipelines that have been proposed as Kazakhstan to the Chinese border. baijan’s own interest in transporting the North Field/South Pars in the in the 2013 edition that gas output in components of the Southern Gas Cor- Turkmenistan continues to support Turkmen gas through TANAP, in Persian Gulf). According to UK audi- Turkmenistan amounted to 64.4 bcm ridor have been built, but once the a project to build a pipeline to which it will hold a majority share. tor Gaffney, Cline and Associates last year. THE ENERGY INDUSTRY TIMES - JULY 2013 Title 12Power Energy generation Industry capacity Data additions and retirements in the New Policies Scenario, 2012-­‐2035 Figure No Power generation capacity additions and retirements in the New Policies Scenario 2012-2035

KeLrements Coal 2012 -­‐ 2025 Gas 2026 -­‐ 2035 Oil Capacity addiLons Nuclear 2012 -­‐ 2025 Bioenergy 2026 -­‐ 2035 Hydro Net capacity change 2012 -­‐ 2035 Wind

Solar PV

Other*

-­‐600 -­‐300 0 300 600 900 1200 1500 GW *Other *Other includes includes geothermal, geothermal, concentrating solar concentrating power and marine solar power and marine. Title Global World Energy Outlook incremental 2012 © OECD/IEA, Figure generation 6.3, page 184 and capacity by type, 2010-­‐2035 Figure No Global incremental generation and capacity by type, 2010-2035

1 000 10 000 Capacity GW TWh TWh Coal GeneraNon 800 8 000 Gas (right axis) Oil 600 6 000 Nuclear Bioenergy Hydro 400 4 000 Wind Solar 200 PV 2 000 Other* For more information, please contact: 0 0 International Energy Agency Coal Gas Gas Nuclear Bio-­‐ Hydro Wind Solar Other* 9, rue de la Fédération mid-­‐load peak energy PV 75739 Paris Cedex 15 France. *Other includes geothermal, concentrating solar power and marine. *Other includes geothermal, concentrating solar power and marine Email: [email protected] World Energy Outlook 2012 © OECD/IEA, Figure 6.4, page 185 website: www.iea.org

Power sector cumulative investment by type in the New Policies Scenario, 2012-2035

This section is supported by ABB Wind Solar PV Other*

*Other includes geothermal, concentrating solar power and marine World Energy Outlook 2012 © OECD/IEA, Figure 6.9, page 195

Source: World Energy Outlook 2012

THE ENERGY INDUSTRY TIMES - JULY 2013 Industry Perspective 13 Lessons from the Island Britain’s smart metering programme could provide a blueprint for nations elsewhere in Europe and beyond. Elster’s Managing Director, Richard St Clair, looks at the progress made and lessons learned so far.

he smart meter programme in companion spec will set out further uncertainty pervading in the EU, industry has shown in setting up the Great Britain being led by the detail and is due to be published soon. smart metering rollouts are driven SSWG voluntarily. TDepartment of Energy & Cli- SMETS 2 will also be governed largely by internal energy markets SSWG has had its detractors and mate Change (DECC) has made much more rigorously by the securi- and political objectives. Few, if any, criticisms in light of how inclusive it good progress. Following the suc- ty requirements mandated by the have dual fuel requirements, or place is, but it has continued to build a cessful notification of Smart Meter- government as part of the CSP/DSP the consumer and carbon reduction at more formal, yet open structure to ing Equipment Technical Specifica- contracts due to be awarded this their core: gain industry-wide consensus and tions (SMETS) 1 by the EU, the summer. These contracts will be n France is targeting 35 million smart avoid the delays from ‘design by Foundation stage started proper in with the central Data and Communi- electricity meters by 2018 (90 per committee’. Likewise, DECC has autumn last year. cations Company (DCC), the func- cent of customers). Gas smart meter- been proactive in driving the smart By 2020, smart meters together tion established by DECC to manage ing is less advanced, although a meter programme amidst criticism. with in-home displays will have the data that travels to and from gas smaller scale pilot completed in mid- For DECC, a key success factor has been rolled out across the country and electricity smart meters in 2011 may lead to a rollout of 11 mil- been the de-coupling of SMETS 1 under the mass rollout (now due to households and energy suppliers. lion smart gas meters between 2014 and SMETS 2 to expedite (and in- commence 2015), giving people During this process CSP/DSP bid- and 2020. The drivers are different in deed enable) a Foundation. real-time and comparative informa- ders have been asked to include pro- France, given its large, stable, low- In many other countries, smart me- tion to better manage their energy vision of the communications hub as carbon nuclear base, which makes it tering projects have ended up taking consumption, save money, and re- part of their infrastructure, instead of comparatively immune to market too long to get going because they duce carbon emissions. have attempted to get everything ex- For energy suppliers, the challenge actly right before they start. The re- now is to replace over 53 million One of the biggest challenges in Britain has been ality is there will always be continu- gas and electricity meters, and install around finding a security design that is proportional ous technology development. Just 30 million communications hubs in the simple act of starting delivers homes and small businesses. For to the risk involved. value and crucially, with SSWG and government and industry, there are a number of other industry groups several major tasks ahead, including energy suppliers. The thinking be- volatility and high carbon outputs im- being formed, Britain’s work on in- publication of the second version of hind this is that CSPs/DSPs will then pacting on other nations. teroperability has been outstanding. the Smart Metering Equipment own the end-to-end communications n The Netherlands rollout of smart One of the biggest challenges in Technical Specification (SMETS 2), responsibility, assuring the level of gas and electricity meters started last Britain has been around finding a se- and the award of the communication security and privacy vital to gaining year and aims to reach 7 million do- curity design that is proportional to service provision (CSP) and data consumer acceptance. mestic and small business users by the risk involved. The electricity and service provision (DSP) contracts. Britain has made security of the 2015. It follows some initial delays gas networks are part of Britain’s SMETS covers gas and electricity smart metering system a top priority, caused by a failure to properly con- critical national infrastructure, and meters, the in-home display, and adopting a ‘secure by design’ ap- sider consumer concerns related to for that reason, programmes such as communications hub with standards proach. This means security concerns data access and privacy. Objectives smart metering fall under the gaze of to ensure that equipment will com- are considered and addressed at every of the programme now include en- the authorities. municate in a consistent and secure stage of the development lifecycle, to abling greater energy market compe- Thus a pragmatic balance must be format. The communications hub will give consumers confidence in the up- tition through easier switching for struck between satisfying the high- act as the ‘bridge’ between devices in coming rollout and avoid any poten- customers, improving operational level security requirements of a criti- the premises and the utility, allow de- tial backlash, such as the one wit- efficiency, and supporting energy cal national infrastructure, but in re- vices to be added or replaced over nessed in the Netherlands. savings. spect of the fact only small amounts time, and ensures consumers can Consumers will have a choice over n Spain – 26 million smart electrici- of meter reading data are being switch suppliers easily. who has access to their smart meter ty meters are to be rolled out to do- transmitted. The volume of data be- To give suppliers the confidence to data, except where the data is needed mestic customers by the end of 2018 ing transported via the smart meter- get going, the UK government split to fulfil regulated duties. It is pro- to allow energy suppliers to remote- ing infrastructure has multiplied sev- the SMETS into two stages. SMETS posed that suppliers have access to ly change the limits on the amount eral times to satisfy the security 1 published in April last year and de- monthly data without specific cus- of energy the household can draw requirement, but the fact remains St Clair: early engagement livered functional interoperability in tomer consent. For access to daily upon. It is worth noting that security that even if someone did hack an in- with all stakeholders is smart metering equipment for Foun- data, however, they will have to pro- has not been a primary focus. dividual’s meter, they would not essential dation. Meanwhile, SMETS 2 and its vide a clear opportunity for the cus- As markets across Europe begin to gain access to the national grid. tomer to opt out. Furthermore, with- liberalise, it is logical that the smart Consumer engagement is perhaps out the customer’s explicit consent metering programme in Britain will Britain’s other greatest challenge. Up they cannot use that data for market- provide a blueprint in respect of cre- until very recently, this had not been ing or other purposes. ating an ‘information market for budgeted for, but should now be ad- By putting consumers in control, it consumers’. Certainly, there have dressed with the establishment of the is hoped that smart meters will en- been a number of key lessons Central Delivery Body. A wide-reach- courage them to adopt behaviour learned thus far. ing advertising campaign should be changes to improve energy efficiency One of the most important lessons planned; similar to the one managed and save money on their energy bills. involved the wireless technology by Digital UK for the switchover to The government has mandated a specification. With so many different digital television, informing consum- Central Delivery Body, established parties involved, the process was de- ers of what they will need to do and and funded by suppliers, to deliver a layed by a vacuum of governance. how they can benefit. programme of consumer engagement However, it was resolved with the Early engagement with all stake- activities that build consumer will- establishment of the Smart Specifi- holders is also essential. The smart ingness, awareness, and understand- cation Working Group (SSWG), metering value chain is wide and the ing of how to use smart meters to which has created a level playing danger is that without early engage- manage energy consumption. field and quickly consolidated indus- ment, rollouts can run into scenarios Britain’s much stronger emphasis try thinking. where equipment needs to be bolted on communicating the consumer ben- It is also recognised that a wired on at a later date to meet evolving efits of smart metering and its poten- solution will be required for certain requirements. tial for energy efficiency savings types of property (e.g. high-rise As the smart metering experience makes it stand out from the approach- flats), and a trial of wired network- in Britain clearly demonstrates, the es being taken in many other Europe- ing solutions is planned. Indeed, sooner all relevant parties are en- an nations where the primary benefits Britain’s greatest achievement with gaged, the better the overall system are viewed as being improving the smart metering centres on the in- design will be – ensuring a cost ef- management of supply, and reducing teroperability and potential for scal- fective, efficient and future-proof losses and administrative costs. ability moving forward – especially delivery to the benefit of the market, Given the political and regulatory when one considers the maturity the the environment, and consumers. THE ENERGY INDUSTRY TIMES - JULY 2013 14 Energy Outlook Marine potential full-scale devices at sea to prove the Falmouth Bay, offers a nursery facility UK (which will close to new projects technology works and to begin the for sea trials and prototype develop- from 31 March 2017) with a system of process of driving down costs. ment in a less energetic environment. Contracts for Difference (CfD). The To enable this to happen, the role of Although it was built primarily to CfD model will be based on a pre-de- offshore test centres is absolutely cru- test wave energy technology, Wave termined ‘strike price’ payable to eli- cial. With the typical cost of deploying Hub is also the preferred location for a gible generators, measured against a a single full-scale device exceeding UK government-backed project to reference wholesale market price. £6 million, it is really only at pre-con- create a £25 million offshore floating While the new scheme looks good sented facilities where a grid is pro- wind turbine demonstrator. This could on paper, and potentially offers a vided that technology developers can be deployed by 2015. greater level of price certainty, it does demonstrate their technology in real Taken together, the UK test centres, put the fledgling marine energy sector sea conditions. The provision of such combined with other university and in with the big boys of nuclear and facilities has therefore been a key part private sector resources, are able to of- offshore wind. The danger is that, un- utting values against the poten- of the UK’s marine energy strategy. fer marine energy developers continu- less a bespoke package can be agreed Marine energy tial energy generation capacity The European Marine Energy Cen- ous support along the technology devel- for new technologies, marine energy of the world’s oceans will never tre in Orkney off the west coast of opment pathway from concept design will be swamped by lower cost com- has tremendous Pbe an exact science, but one thing that Scotland was established in 2003 and through to full commercialisation. petitors before it has had a chance to unites the various forecasts available is a grid-connected, full scale wave Coupled with the strong political compete. potential. But while is the considerable size of the numbers and tidal energy converter testing and support that has been given to the For this reason the industry is cur- involved. accreditation facility. It is widely sector, the UK has been able to estab- rently asking the government for a the big numbers are Estimates from the International credited with accelerating the devel- lish itself as a focal point for technol- market entry strike price of £300-320 Energy Agency say a combination of opment of marine energy over the last ogy developers and their investment per MWh for wave energy and £280- generating investor wave, tidal, ocean thermal and salin- decade. partners. The clustering of research, 300 per MWh for tidal as the mini- ity gradient technologies could pro- mum requirement to provide ade- interest, the focus vide more than 100 000 TWh of en- quate returns for investors over a ergy a year. While the big numbers are helping to generate 20-year period. This price would of now is to deploy Further, it believes there could be a investor interest , the real focus now is to deploy course be expected to fall rapidly as 200 GW market for marine energy by full-scale devices at sea… technology costs are reduced. The full-scale devices 2050. industry also wants to make sure it is Global estimates for economically not squeezed out of the market and so at sea to prove the exploitable wave power vary, but In the North East of England, the alongside financial support, has also is asking for a small allocation of the technology works and analysis suggests there is potential National Renewable Energy Centre enabled the UK to invest in its supply total subsidy available to be ring- for around 800 GW, corresponding to (Narec) offers a range of facilities chain capability, skills, vessels and fenced for marine energy. begin the process of more than 2000 TWh, which accord- including a 3 MW tidal turbine test ports, in regions like the southwest of The finer details of the EMR – in- ing to the World Energy Council’s rig, and a wind turbine blade facility England, in order to provide the sector cluding strike prices – will emerge in driving down costs. survey of energy resources is ap- designed to simulate extreme condi- with the wider infrastructure needed the coming months when the UK proximately 10 per cent of global tions offshore. to promote industry growth. government issues prices for different electricity production. In recent years the southwest of It is still early days, but the immedi- technologies for the period 2014-19. Johnny Gowdy Just a few years ago the UK’s Carbon England has seen significant invest- ate impact has been to create a buzz of Following consultation they are ex- Trust put the value of the global marine ment in marine energy infrastructure activity with projects such as Fred pected to be finalised before the end of energy sector at $760 billion by 2050. and expertise, prompting the UK Olsen’s Bolt 2 deployment at FaBTest, the year. With numbers like those it is easy to government to designate the region as which engages with local communi- The high strike price required by understand why marine energy has the UK’s first Marine Energy Park. ties and also brings in economic op- marine energy is not unreasonable become such an exciting sector for The South West Marine Energy Park portunities for local businesses. given that the technology is new, and technology developers, but extracting (SWMEP) has successfully brought The feeling at the moment is that the that the scale of the projects within the it commercially and sustainably re- together a broad range of private sec- sector is on the cusp of commercial review period will be insignificant mains a huge – and capital-intensive tor companies, local authorities, uni- reality. This optimism has been fuelled when compared to other low carbon – challenge. versities and research organisations by the increasing investment coming sectors – so the impact on consumers One of the global hotspots for marine with the collective aim of accelerating into the industry from major industrial will be barely discernible. Neverthe- energy development is the UK. With the development of marine renewables firms including Siemens, Alstom, less in the febrile politics surrounding more wave and tidal stream devices in the southwest and UK. Fred Olsen, DCNS and ABB. the UK renewable energy sector this installed than the rest of the world It also aims to capitalise on the These international companies bring level of subsidy will come in for very combined, it is widely regarded as the southwest’s 8.7 GW of wave generat- much needed capital to finance large stringent scrutiny from both Treasury world leader. ing capacity and the single largest scale deployments. They also provide and the media. That optimism stems in part from the tidal resource in the UK; in the Bristol the scale and muscle needed to help The pressure is therefore on the in- UK having approximately 50 per cent Channel and Severn Estuary. reduce costs and underwrite the per- dustry to demonstrate that it can make of the total European wave energy re- The SWMEP includes significant formance guarantees and warranties use of the additional subsidy to deliver source and 25 per cent of the European assets and expertise such as a tank- that the ultimate customers, utility a commercial technology, and also to tidal energy resource. Enough resource testing facility at Plymouth University companies, will need before investing make good the promise that marine The Crown Estate has estimated, to which has attracted global interest in full commercial projects energy can open a global marketplace theoretically provide 285 TWh/year since its opening last year. It includes So while not quite there yet in terms bringing jobs and economic benefits from a combination of tidal stream, a 35 m ocean wave basin capable of of technology readiness, the industry to the UK economy. tidal range and wave energy projects. producing waves almost 1 m in height is confident that commercialisation We will know more at the end of the This is over 75 per cent of the current and offering multi-directional, recir- can be achieved in the near term and summer, but given the level of com- (2012) UK electricity consumption. culating current generation. the focus is naturally turning to the mitment shown to the sector thus far, The key word here is “theoretically”. The tank is part of MARIC, Plym- creation of future markets. To do this, and the strong level of regional sup- The reality is that the marine energy outh University’s Marine Innovation the industry needs the right financial port, it is expected that a deal will be sector is still at an early stage of tech- Centre, connecting industry expertise, incentives to be in place, and for gov- struck that allows momentum to be nology development and must over- academic research and facilities to ernments to create a stable and long- maintained. If this happens, the UK come both technical and commercial support the growth of the marine and term policy framework within which will continue to be the prime destina- hurdles before this resource can be renewable energy sectors. these markets can operate. tion for wave and tidal developers and harnessed. Even then, the practical In Cornwall, the £30 million Wave The imperative for industry experts to limited consented and grid connected and planning constraints of deploying Hub has been built for the testing of talk earnestly with government has in test sites such as Wave Hub will be technology at sea will mean that the arrays of wave energy converters. part been driven by impending changes extremely busy. actual energy potential is somewhat Wave Hub is a grid-connected facility to the way in which the UK provides a Johnny Gowdy is a director at Regen less than the theoretical. 10 miles offshore in oceanic sea con- subsidy for low carbon energy. SW, an independent centre of expertise So, while the big numbers are help- ditions into which wave energy con- Called Electricity Market Reform supporting the renewable energy sec- ing to generate investor interest in the verters can be plugged and tested on a (EMR), the proposal is to replace the tor, and programme manager of the sector, the real focus now is to deploy large scale. Its sister site, FaBTest in existing Renewables Obligation in the South West Marine Energy Park.

Artist’s impression of the Swansea Bay Tidal Lagoon project. The proposed £650 million project moved forward with the recent announcement that formal consultation would begin on July 4, 2013. The project could deliver up to 400 GWh of electricity each year THE ENERGY INDUSTRY TIMES - JULY 2013 Technology 15

Marrying the internet with industry

outh London’s old Battersea duced a prototype of its “brilliant” from gas turbines but it also runs nu- lot can be done in terms of looking at Some are hailing the power station, an iconic mono- 2.5-120 wind turbine, which it claims clear and coal plants, and has renew- the whole power plant and having ‘industrial internet’ Slith from a bygone era was cho- is the most efficient high-output wind able generation in the form of wind systems that can optimise how we sen as the European launch pad for turbine. and hydro. dispatch every single piece of equip- as the third great GE’s plans to marry the internet with The new machine, which is now “When I think of how we can opti- ment on what is actually a complex its industrial expertise. operational at a test site in Wieringer- mise and create the most value out site.” wave of innovation “Out of the ashes of the industrial meer, Netherlands, uses the industrial that portfolio, there are two ways. Another area for potential signifi- revolution, which is this building, we internet to analyse tens of thousands Firstly, there is the generation of cant cost reductions is in maintenance. after the industrial are going to create the birth of the of data points every second, allowing revenue and then there’s the cost Richelle says if maintenance can be wave of the industrial internet,” said for management of variable wind side. performed based on data related to revolution and the Ferdinando Beccalli-Falco, President sources to provide smooth, predictable “Looking at the revenue side, if, for the history of the actual machine in- and CEO of GE Europe and CEO, power. example, you are operating in a stead of according to standard main- internet revolution. GE Germany. While the turbine’s multiple on- merchant market like the US, one of tenance programmes, the number of The industrial internet brings to- board computer systems can respond the things you have to do is capture spare parts could be reduced and time Combined with ‘big gether the advances of two transfor- to the enormous amounts of data the value during those few hours in the between outages extended. mative revolutions: the countless machine’s network of sensors can de- year when power is extremely expen- “For example the ability to measure data’ analytics, its machines, facilities, fleets and net- liver, the new advances allow GE’s sive and the margin is therefore very the actual degradation of the coating works that arose from the industrial central operations centres to remotely high.” on [gas turbine] blades would be very use could have a revolution and the more recent ad- respond to variables that the turbine’s Richelle looked back to Texas in interesting to us,” Richelle noted. vances in computing, information automated response fails to manage. 2011 when average power prices Certainly there could be significant tremendous impact and communications brought by the These variables range from a change were $40/MWh but in summer hit benefits if all the data coming out from on the power industry, internet revolution. in wind or local grid conditions to a highs of $3500/MWh for a few hours. equipment operating in plants around It is about using the internet to lightning strike. During these peak price times, huge the world could be mined. says Junior Isles monitor equipment remotely, taking The machine’s networking infra- margins could be generated compared GE says a 30 MW class aeroderiva- the vast amounts of data, or ‘big structure and wireless communica- to the average. tive gas turbine has about 180 sensors data’, coming from the equipment tions allow it to interact with input He noted: ‘Equipment such as gas that look at 1200 parameters related and using analytics software to anal- from its own sensor system and the and steam turbines are set for the av- to both its operation and health. Such yse that data in order to optimise internet. It can assimilate detailed erage operation. The settings are not a machine produces about 100 GB of performance and improve industry weather forecasts, grid energy supply- designed to allow you to exceed your data per day. Making sense of all this productivity. demand needs, and transmission sys- safety margins for the few hours when data is impossible for even the most GE estimates that the technical in- tem frequencies and voltages to adjust you might need it. If we were able to experienced operator. Data analytics novations of the industrial internet its operations and increase efficiencies increase the power output – based on software is therefore essential. could find direct application in sectors in everything from power electronics the historical operating information Just ahead of the London launch, accounting for over $32.3 trillion in to blade positioning. of the asset – for those few hours GE announced strategic alliances economic activity. As the global Designed for low wind speed sites, when power is expensive, the asset with Accenture, Pivotal and Amazon economy grows, the company says according to GE the turbine captures a could generate a lot more value.” Web Services aimed at advancing that by 2025 it could be applicable to 25 per cent increase in efficiency and Richelle gave another example of the industrial internet by integrating $82 trillion of output – or approxi- a 15 per cent increase in power output where value could be created on the services and developing software, mately half of the global economy. analytics and cloud-based capabili- The application of the internet to ties that serve diverse functions for the industrial setting is therefore one Power generation is a capital-intensive industry industry. of the key areas that GE is putting and utilities struggle to differentiate themselves GE also announced a big data and its investment dollars. Jeff Immelt, analytics platform to manage data GE’s Chairman and CEO summed from their competitors produced by large-scale industrial up the new development as “the machines in the cloud. Built to support combination of materials science and the industrial internet and turn big analytics for the purpose of driving compared to its current model. revenue side. “Despite having 50 data into real-time insight, the plat- better customer outcomes”. This is the type of advance that will years of experience, excellent opera- form will benefit major industries. According to GE, even small perfor- be crucial for utilities struggling to tors and operating procedures, mod- Combined with GE’s Predictivity mance changes can drive massive improve profit margins. Power gen- ern DCS systems, and well main- services and technologies, it will al- economic improvements. A key mes- eration is a capital-intensive industry tained machines, we still see cata- low utilities to manage and operate sage stressed by Immelt is what he and utilities struggle to differentiate strophic events at sites. When a gas critical machines such as gas turbines describes as “the power of one”. themselves from their competitors. turbine fails, it is extremely costly. in the cloud. According to GE, it He explained: “If you improve the Guy Richelle , Chief Executive But it’s not just the cost of repair; marks the first time industrial compa- installed base of GE installed aircraft Officer of GDF Suez Branch Energy there’s the knock-on effect and cost nies will have a common architecture, engines by one percentage point in International, explained: “Our com- of replacing the power you have combining intelligent machines, sen- fuel performance a year, that saves our petitors have access to the same promised to supply to the customer. sors and advanced analytics. customers $2 billion on the bottom equipment, the same capital etc. So So limiting downtime is extremely Bill Ruh, Vice President of GE’s line. I can give similar examples as it what you do at the margin is very important.” Global Software Centre in Silicon pertains to fuel-energy performance important in helping the business be Utilities currently buy expensive Valley said: “GE’s industrial strength of gas turbines.” successful.” insurance to protect against unforced platform is the first viable step to not According to the company’s calcula- Richelle admits that GDF Suez is not outage risk – insurance that Richelle only the next era of industrial produc- tions, a 1 per cent efficiency improve- using the industrial internet today but says does not cover the first 45 days tivity but the next era of computing. ment in the global gas fired power is keen to explore areas in which he of downtime. He believes a lot more The ability to bring machines to life plant fleet could yield a $66 billion believes it could be applied. could be done by using the instru- with powerful software and sensors saving in fuel consumption over 15 The company has approximately mentation on the machines to detect is a big advancement – but it is only years. 115 000 MW of generating capacity the onset of a failure. the ability to quickly analyse, under- GE has already started harnessing installed in more than 30 countries at In terms of cost, a utility’s biggest stand and put machine-based data to the industrial internet to improve the around 150 sites. Its portfolio is a mix outlay is on fuel, so improving fuel work in real-time that point us to a operation of major industry compo- of old and new plants. Some 50 per efficiency is key. “It is very dependent society that benefits from the promise nents. In January this year it intro- cent of its generating capacity comes on technology,” said Richelle, “but a of big data.” THE ENERGY INDUSTRY TIMES - JULY 2013 Final Word 16 We don’t need another ‘lemma s if it did not already have ultimately will achieve none of the in one direction it knocks over the rest have to be integrated into the system enough conflicting goals, the goals effectively. of the shop with its butt. In the end, if in an intelligent manner with sustain- EU is now introducing yet an- At the Eurelectric press conference, you look around we are sitting in a lot able conventional backup.” Junior Isles A other target to an energy policy that is Dr Johannes Teyssen, CEO of German of broken glass right now and the ele- Meanwhile, Eurelectric continues to already struggling to fulfil its current energy giant E.On, told journalists: “If phant is still in the middle of the support the concept of the ETS. Both ambitions. you look at security of supply, across room.” Teyssen and Enel’s CEO, Fulvio Since the introduction of carbon Europe you hear that investors are Certainly the industrialisation target Conti, stressed that something has to targets, there has been much debate on considering retiring over 100 GW of is a good one but Europe has to find a be done to fix the failing scheme. With how energy policy can address the sometimes older plants [but] some- better way of delivering all of its goals. carbon prices languishing around the ‘trilemma’ of delivering affordable, times very efficient, modern plant. Much of the debate at the Eurelectric €4/t CO2 mark, urgent action is needed secure and low carbon electricity. With These plants are needed but system conference therefore focused on the and perhaps it is time to consider other difficult economic times and contract- prices tell us they are not needed. We re-design of market structures. ways of putting a price on carbon. ing economies, politicians are now have growing instabilities in parts of Both E.On and Enel said the industry Conti noted: “We have said let’s fix stipulating that energy policy must the system because it can’t cope with must work out how to: promote renew- the ETS for the short-term, in anticipa- also foster economic growth. the influx of renewables and the need able growth without destroying the tion of a major reform that has to be To avoid de-industrialisation the EU for flexible power [to compensate]. system; re-invent the European Emis- made. We strongly advocate the resto- recently set another target – 20 per cent “With regards to affordability, it sions Trading Scheme (ETS) to give a ration of a system that is credible of GDP must come from the manu- doesn’t look good because prices are fair and sustainable price signal; and enough for the ETS to be the only facturing sector by 2020. In late May going up for retail customers. On integrate Europe to avoid national driving force for decarbonisation.” the European Council said it would Teyssen added, however, that if this begin an impact assessment on energy cannot happen politicians need to and industry. Continually altering policy to meet an increasing admit that the “system is bust” and Antonio Tajani, European Commis- find other instruments. “We believe a sioner for Industry and Entrepreneur- number of goals is much like trying to fix a balloon market-based system has its advan- ship has the job of presenting the results with a bulge. tages… but if they don’t get their act of this impact assessment, which together and another year passes should be published ahead of the next without fixing the ETS, then maybe important European Council on indus- sustainability, CO2 emissions are go- approaches to energy policy. at some point the only thing would be trial policy in February 2014. ing up again. Instead of staying on the Part of the problem is the way some to give a price signal. This can be done Speaking at the annual Eurelectric sustainable pathway, we are silently parts of the industry, media and the in various ways but the politicians conference in Bologna, Italy, in June, turning around. Compared to all other political arena set renewables and need to decide. The worst scenario is Tajani said: “We need more industry global regions we are doing worst of fossil fuel generation against each doing nothing and have a lost decade but we will not be able to do it without all and still pretending we are leaders other. The fact is, both have their in carbon abatement. a good energy policy. Europe wants to in climate abatement strategy. So Eu- strengths and weaknesses and should “The message has to be clear: if we lead the green revolution but not at the ropean policy is violating all funda- be rewarded accordingly. continue in this faulty blurred way, we expense of jobs and industry”. mental targets.” Teyssen said: “Renewables cannot will continue to miss our targets even This latest move by European politi- He added: “Instead of questioning deliver system stability. Fossil pro- worse. And I promise you, the outcome cians is further evidence that climate the three ‘20’ targets that we already ducts cannot deliver clean energy. So will not be re-industrialisation of Eu- change is in reality taking a back seat have, they have added a fourth one, you need to marry them. Cleaner rope but de-industrialisation because to the economy. There is no doubt that and none of these are aligned with any conventional fossil fuel generation, of an uncompetitive power strategy.” politicians face an extremely difficult of the others.” such as gas and cleaner coal, is a natu- Earlier, Tajani had pointed to the US’ task in designing a policy that can Continually altering policy to meet ral partner for renewables and not a success in reducing the cost of energy meet all of its goals. Having started an increasing number of goals is much foe, and vice versa. Both will fail by and said Europe should also be prag- out with a focus on just affordability like trying to fix a balloon with a bulge. themselves. matic in its approach to cutting energy and security of supply, they are now Squeeze it in one place, and it bulges “Today, however, politics throws prices. “It is important for growth and trying to adjust and make amendments somewhere else. them against each other as enemies… new jobs,” he stressed. “We need to to meet new objectives as they arise. Teyssen offered a somewhat more through unfair competition. Both de- diversify energy resources to prevent Unfortunately, the end result is a set colourful visual. “Politics is like an liver valuable products and should be de-industrialisation of the EU,” he of incoherent policies that cause elephant in a glass shop: four targets rewarded for what they deliver... we added. confusion, followed by stagnation and and every time it turns around to run want, and support, renewables but they It was interesting to learn that many are now looking to the US for leader- ship on how the EU might achieve its goals. In an electronic vote at the conference, 50 per cent of delegates thought that the US was the most suc- cessful region in terms of energy market strategy. Yet one has to be wary of using such snapshots as a bellwether. While hold- ing up the US as an example, the majority of that same audience also believed that building renewable en- ergy sources should be the most impor- tant greenhouse gas reduction option. The US’ success in reducing energy costs and cutting emissions has been more the result of good luck than de- sign. Its achievements are largely at- tributable to the discovery and exploi- tation of significant shale gas resources rather than any focus on re- newables or real desire to cut GHG emissions. As RWE’s CEO Peter Terium noted: “The US is having a large reduction of CO2 because of shale gas, not because of any climate intent or any policy.” So while good fortune is helping the US to deliver cheap, secure energy, and cut emissions at the same time, an effective EU energy policy becomes even more impossible. Instead of a ‘trilemma’ we now have a ‘quadrilemma’. But I suggest we stop here. Apart from confusing the ele- phant even further, there could be even greater confusion as to which ‘lemma would come next – would it be a ‘pentalemma’ or ‘quintalemma’?