Best Export Markets for U.S. Renewable Energy Equipment, 2009
Best Export Markets for U.S. Renewable Energy Equipment, 2009 was compiled by Marie- Catherine Verdy, under the supervision of Maurice Kogon, Director of the El Camino College Center for International Trade Development (CITD) in Hawthorne, California. The report is based largely on 2009 Country Commercial Guides (CCGs) prepared by United States Commercial Service (USCS) posts abroad. All CCGs include a standard chapter “Leading Sectors for U.S. Exports.” This report drew from those CCGs which specifically recommended Renewable Energy as a best prospect for U.S. exports.
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Best Export Markets for U.S. Renewable Energy Equipment
Table of Contents
Page
I. U.S. Renewable Energy Industry – Competitive Position & Market Potential 3-5
II. Export Market Brief: Photosensitive Semiconductor Devices, including 6 Photovoltaic Cells; Light-Emitting Diodes (HTS 854140)
III. Market Potential Indicators: Photosensitive Semiconductor Devices, 7-9 including Photovoltaic Cells; Light-Emitting Diodes (HTS 854140)
A. Top 30 U.S. Export Markets, 2005-2008, by Country 7 B. Top 30 World Importers, 2008 8 C. Top 30 World Exporters & U.S. Market Share, 2008 9
IV. Best Prospect Market Assessments – Renewable Energy Industry 10-74
Austria Ireland Spain Belgium Hungary Switzerland Chile Korea Thailand China Latvia Ukraine Czech Republic Mexico UK Denmark Norway Uruguay Finland Poland Germany Portugal
V. Trade Events 76
VI. Available Market Research 77
Appendix: Products in Renewable Energy, by Schedule B/HS Code 79
2 I. U.S. Renewable Energy Industry Competitive Position and Market Potential
Renewable Energy is derived mainly from solar, wind hydro, geothermal, ocean/tidal and biomass sources to generate electricity and produce clean fuel. Solar energy is most often produced using photovoltaic devices, located on rooftops or on ground-mounted fixtures, to convert the sun's heat or light into electricity. Large-scale concentrating solar power systems can also produce energy at a central power plant. Wind energy transforms the kinetic energy of the wind into mechanical or electrical energy. Mechanical energy mostly uses windmills to pump water in rural or remote locations. Wind electric turbines generate electricity for homes and businesses and for sale to utilities. Hydropower converts the energy in flowing water to electric energy. Huge power generators are placed inside dams. Water flowing through the dams spins turbine blades connected to generators. Power is produced and is sent to homes and businesses.
U.S. Competitive Position. The U.S. renewable energy economy is exploding. In terms of venture capital alone, private investment in the sector topped $2.6 billion dollars in 2007.1 The U.S. solar energy industry grew to new heights in 2008.
• Overall U.S. solar industry capacity increased 17%. • Installed grid-tied PV increased 58% in 2008 over 2007. • Installed grid-tied PV increased by more than 18,000 installations (+27%) in 2008 • More than 6 GW (6,090 MW) of utility-scale CSP plants are in the pipeline. • PV manufacturing capacity increased 65% and production grew by 53%. • California is the top state for grid-tied PV capacity additions in 2008 (178.6 MW) • California is also #1 in total cumulative grid-tied PV (530.1 MW).2
The U.S. wind energy industry shattered all previous records in 2008 by installing over 8,500 megawatts (MW) of new generating capacity (enough to serve over 2 million homes), increasing the nation’s total wind power generating capacity by 50% to over 25,300 MW and channeling an investment of some $17 billion into the economy. For the fourth year, wind power was second only to natural gas in terms of new capacity added. The new wind projects completed in 2008 account for about 42% of the entire new power-producing capacity added nationally last year, according to initial estimates, and will avoid nearly 44 million tons of carbon emissions, the equivalent of taking over 7 million cars off of the road..3
Hydropower facilities in the U.S. can generate enough power to supply 28 million households with electricity, the equivalent of nearly 500 million barrels of oil. The total U.S. hydropower capacity -- including pumped storage facilities -- is about 95,000 megawatts. Researchers are working on advanced turbine technologies that will not only
1 Factsheet – Barak Obama Energy Speech, 08/03/08 2 U.S. Solar Industry Year in Review, 2008. Solar Energy Industry Association 3 The American Wind Energy Association, 2008
3 help maximize the use of hydropower, but also minimize adverse environmental effects.4 Hydropower is the most important and widely-used source of renewable energy. It represents 19% of total electricity production worldwide. Canada is the largest producer of hydroelectricity, followed by the U.S. and Brazil. Roughly two-thirds of the economically feasible potential has yet to be developed..5
Market potential. Competitive trade data for most products in this sector are lumped in basket categories and are not separately identifiable. However, data are available on exports of solar cells and panels (HS 8541406020), which have increased sharply in recent years.
U.S. Exports of Selected Green Products, 2005-08
2008 Value % Change % Total HS/Sch B # Product ($ millions) 2005-08 2008 8541406020 Solar cells and panels Total to World $981.2 201.7% 100.0% Top Market (Germany) $407.1 148.3% 41.5% China (#10) $19.0 2,147.6% 1.9% Source: U.S. Census Bureau
Worldwide demand. Total world consumption of marketed energy is projected to increase by 50% from 2005 to 2030. The largest projected increase in energy demand is for the non-OECD economies. Although high prices for oil and natural gas, which are expected to continue throughout the period, are likely to slow the growth of energy demand in the long term, world energy consumption is projected to continue increasing strongly as a result of robust economic growth and expanding populations in the world’s developing countries. OECD member countries are, for the most part, more advanced energy consumers. Energy demand in the OECD economies is expected to grow slowly over the projection period, at an average annual rate of 0.7%, whereas energy consumption in the emerging economies of non-OECD countries is expected to expand by an average of 2.5% annually. China and India -- the fastest growing non-OECD economies -- will be key contributors to world energy consumption in the future. Over the past decades, their energy consumption as a share of total world energy use has increased significantly. In 1980, China and India together accounted for less than 8% of the world’s total energy consumption; in 2005 their share had grown to 18%. Even stronger growth is projected over the next 25 years, with their combined energy use more than doubling and their share increasing to one-quarter of world energy consumption in 2030. In contrast, the U.S. share of total world energy consumption is projected to contract from 22% in 2005 to about 17% in 2030.
Renewable energy and coal are the fastest growing energy sources, with consumption increasing by 2.1 percent and 2.0 percent, respectively. Projected high prices for oil and natural gas, as well as rising concern about the environmental impacts of fossil fuel use,
4 U.S. Department of Energy 5 Green: Your Place in the Renewable Energy Revolution”, Palgrave-MacMillan, 2008
4 improve prospects for renewable energy sources. Much of the growth in renewable energy consumption is projected to come from mid- to large-scale hydroelectric facilities in non-OECD Asia and Central and South America, where several countries have hydropower facilities either planned or under construction. In non-OECD Asia, China’s 18,200-megawatt Three Gorges Dam project is nearing completion at the end of 2008, and the China Yangtze River Three Gorges Project Development Corporation has already announced plans to increase its total installed capacity to 22,400 megawatts. In addition, work continues on the 12,600-megawatt Xiluodu project on the Jisha River (scheduled for completion in 2020 as part of a 14-facility hydropower development plan) and on the country’s third-largest hydroelectric facility, the 6,300-megawatt Longtan project on the Hongshui River.6
6 International Energy Outlook 2008, Energy Information Administration
5 II. Export Market Brief
A. Photosensitive Semiconductor Devices, including Photovoltaic Cells; Light- Emitting Diodes (HTS 854140)
This Market Brief provides an overview of the world market for Photosensitive Semiconductor Devices, including Photovoltaic Cells; Light-Emitting Diodes (HS 854140), based on the latest trade statistics and market research.
Export growth: U.S. exports of products in the HS – 854140 category rose from $1.6 billion in 2005 to $2.3 billion in 2008, an increase of 45.3% over the four-year period.
Leading Export Markets: Germany is the leading market for U.S. exports of products in the HS 854140 category ($503.2 million in 2008, or 21,3% of total). Other top markets (all valued above $100 million in 2008) were: Mexico (11.1%), Japan (7.3%), Spain (6.4%), Korea (5.9%), Canada (5.2%), Malaysia (5.0%), and France (4.6%). Other significant markets (above $60 million) were: Hong Kong (4.1%), China (3.5%), Singapore (3.1%), Italy (2.8%), Belgium (2.8%), and the UK (2.6%).
Fastest Growing Export Markets: The large volume markets showing the highest four-year growth rates for U.S. exports of products in the HS 854140 category over the latest four years (2005-2008 and continuing in 2007-2008) were: Germany, Mexico, Spain, Korea, Canada, Malaysia, France, Singapore, Italy, and Belgium. Other significant growth markets over the 2005- 2008 period were: Brazil, Sweden and Nigeria.
Leading Importing Countries: The top foreign importers of products in the HS 854140 category in 2008 (all above $1.5 billion) were Germany ($8.5 billion, or 28.8% of total), China (15.2%), USA(9.5%), Hong Kong (6.8%) and Italy (6.4%). Other significant foreign importers (all above $1 billion) were Japan (4.9%), France (3.5%) and Belgium (3.5%).
World Market Size & U.S. Share: Total world exports of products in the HS 854140 category by all countries reached $35 billion in 2008. The U.S. had a 6.6% share of the total world market in 2008, exceeded by China (32.9%), Germany (17.6%) and Japan (17.3%). Other world suppliers with significant market shares were Hong Kong (4.1%), UK (2.9%), Belgium (2.2%) and Czech Republic and Singapore, both with 2.1% market shares.
Best Market Prospects: The markets listed below appear to be particularly promising for U.S. exports of products in the HTS 854140 category over the next two years, based on recommendations of U.S. commercial specialists in these countries:
Austria Hungary Spain Belgium Ireland Switzerland Chile Korea Thailand China Latvia Ukraine Czech Republic Mexico UK Denmark Norway Uruguay Finland Poland Germany Portugal
6 III. Market Potential Indicators
III .A. Top 30 U.S. Export Markets, 2005–2008, By Country Photosensitive Semiconductor Devices, Including Photovoltaic Cells; Light-Emitting Diodes (HS854140)
Values in $ Thousands) % % % Change Change Share Country 2005 2006 2007 2008 2005-08 2007-08 2008 Germany $260,056 $301,146 $404,754 $503,203 93.5% 24.3% 21.3% Mexico $171,174 $213,292 $226,722 $263,408 53.9% 16.2% 11.1% Japan $270,292 $177,230 $130,728 $171,706 -36.5% 31.3% 7.3% Spain $9,113 $38,308 $73,212 $151,721 1564.9% 107.2% 6.4% Korea $47,572 $82,510 $92,810 $138,683 191.5% 49.4% 5.9% Canada $104,198 $114,507 $112,507 $122,763 17.8% 9.1% 5.2% Malaysia $94,030 $84,128 $97,925 $117,666 25.1% 20.2% 5.0% France $38,557 $38,145 $57,414 $109,573 184.2% 90.8% 4.6% Hong Kong $142,917 $129,939 $98,926 $95,948 -32.9% -3.0% 4.1% China $33,802 $50,280 $87,560 $83,113 145.9% -5.1% 3.5% Singapore $30,921 $37,423 $58,999 $72,688 135.1% 23.2% 3.1% Italy $22,784 $17,069 $43,749 $67,270 195.3% 53.8% 2.8% Belgium $43,096 $32,274 $49,851 $65,401 51.8% 31.2% 2.8% United King. $54,207 $59,624 $66,435 $62,555 15.4% -5.8% 2.6% Australia $35,294 $10,639 $13,195 $48,236 36.7% 265.6% 2.0% Taiwan $37,413 $28,527 $54,371 $36,178 -3.3% -33.5% 1.5% India $18,092 $20,600 $39,062 $33,189 83.4% -15.0% 1.4% Netherlands $52,427 $23,547 $22,436 $32,184 -38.6% 43.4% 1.4% Thailand $35,080 $27,676 $29,436 $32,164 -8.3% 9.3% 1.4% Brazil $12,779 $12,254 $14,567 $20,222 58.2% 38.8% 0.9% Sweden $4,026 $10,148 $12,864 $15,046 273.7% 17.0% 0.6% Israel $9,649 $11,161 $12,876 $11,023 14.2% -14.4% 0.5% Switzerland $9,321 $12,688 $8,378 $8,972 -3.7% 7.1% 0.4% Nigeria $4,118 $2,315 $969 $8,183 98.7% 744.5% 0.3% Denmark $11,542 $4,687 $15,210 $6,952 -39.8% -54.3% 0.3% Portugal $5,469 $7,027 $4,163 $5,846 6.9% 40.4% 0.2% Finland $4,659 $5,917 $7,361 $5,805 24.6% -21.1% 0.2% Turkey $4,851 $1,220 $1,854 $4,835 -0.3% 160.8% 0.2% Austria $2,270 $5,833 $2,715 $3,978 75.2% 46.5% 0.2% UAE $501 $569 $816 $3,870 672.5% 374.3% 0.2% Subtotal : $1,570,210 $1,560,683 $1,841,865 $2,302,381 46.6% 25.0% 97.4% All Other: $56,761 $63,800 $72,112 $61,828 8.9% -14.3% 2.6% Total $1,626,971 $1,624,483 $1,913,977 $2,364,209 45.3% 23.5% 100.0%
7 III. Market Potential Indicators
III .B Top 30 World Importers, By Country, 2008. Photosensitive Semiconductor Devices, Including Photovoltaic Cells; Light- Emitting Diodes. (HTS 854140)
Reporter Trade Value % share Germany $8,345,974,000 28.8% China $4,422,229,256 15.2% USA $2,760,189,056 9.5% China, Hong Kong SAR $1,983,785,082 6.8% Italy $1,858,165,697 6.4% Japan $1,412,341,987 4.9% France $1,024,828,573 3.5% Belgium $1,008,526,253 3.5% United Kingdom $898,315,804 3.1% Czech Rep. $785,065,632 2.7% Singapore $559,134,269 1.9% Sweden $511,689,490 1.8% Mexico $487,912,684 1.7% Netherlands $469,840,406 1.6% Austria $431,456,236 1.5% Canada $267,604,461 0.9% Thailand $175,150,792 0.6% Switzerland $174,733,109 0.6% Australia $172,039,373 0.6% Portugal $161,891,557 0.6% South Africa $161,408,807 0.6% Brazil $115,104,689 0.4% Cyprus $77,860,803 0.3% Finland $75,334,205 0.3% Croatia $74,922,425 0.3% Greece $67,475,224 0.2% Slovenia $49,606,659 0.2% Israel $47,220,000 0.2% Denmark $42,294,815 0.1% Romania $38,956,955 0.1% Top 30 subtotal $28,661,058,299 98.8% Others $347,583,846 1.2% World total $29,008,642,145 100.0%
Source: United Nations Comtrade
8 III. Market Potential Indicators
III .C Top 30 World Exporters, 2008. Photosensitive Semiconductor Devices, Including Photovoltaic Cells; Light- Emitting Diodes. (HTS 854140)
Reporter Trade Value % share China $11,788,614,267 32.9% Germany $6,314,016,000 17.6% Japan $6,189,832,071 17.3% USA $2,364,209,170 6.6% China, Hong Kong SAR $1,459,361,874 4.1% United Kingdom $1,046,596,882 2.9% Belgium $801,308,662 2.2% Czech Rep. $750,916,015 2.1% Singapore $737,246,585 2.1% Sweden $634,313,727 1.8% Netherlands $515,380,174 1.4% Austria $496,147,796 1.4% France $432,686,996 1.2% Mexico $397,613,493 1.1% Norway $370,287,710 1.0% Italy $269,559,950 0.8% Thailand $241,214,228 0.7% South Africa $174,647,775 0.5% Canada $162,737,349 0.5% Australia $112,585,009 0.3% Switzerland $104,838,171 0.3% Cyprus $89,690,714 0.3% Croatia $79,955,811 0.2% Portugal $75,420,156 0.2% Finland $40,867,003 0.1% Slovenia $32,064,788 0.1% Denmark $27,838,199 0.1% Luxembourg $20,554,881 0.1% Russian Federation $16,898,586 0.0% Bulgaria $15,891,743 0.0% Top 30 subtotal $35,763,295,785 99.8% Others $58,362,635 0.2% Total $35,821,658,420 100.0%
Source: United Nations Comtrade
9 IV. Best-Prospect Market Assessments
Following are overviews of “best prospect” markets for Renewable Energy, based on observations of U.S. Commercial Service (USCS) posts in each country. The countries appear in alphabetical order. For more detailed market research on Renewable Energy in these and other specific markets, see relevant Market Research Reports listed in Chapter VI. For general commercial and economic information on individual countries, see the relevant Country Commercial Guides (CCGs). Austria
Overview As in most industrialized countries, Austria would like to become less dependent on foreign sources of energy, reduce greenhouse gas emissions, and at the same time keep energy prices at a level that will not hurt industry or the economy in general. In 2006, Austrian final energy consumption was 1.093 million terajoule (1012 Joule), down slightly from 1.098 in 2005 and considerably higher than the 1.063 from 2004. The trend has been increasing energy consumption of 2-3% per annum – the dip in 2006 was largely the result of a particularly mild winter. Austria is highly dependent on energy imports, with an import ratio of 72% in 2005. The lion’s share of energy imports is fossil fuels, specifically, petroleum products and natural gas. There is no nuclear power production in Austria, nor will there be in the foreseeable future as the population is overwhelmingly anti-nuclear.
Austria’s domestic energy production is largely renewable. This is due to two gifts of nature, namely, an alpine geography and rich precipitation, which together make hydropower a highly feasible and readily available energy source. Well-maintained forests are another excellent source of renewable energy in various forms of biomass. The market for renewable energy in Austria is driven to a large extent by political factors, including various legislative measures, international agreements and incentive programs designed to reward investment in cleaner, more efficient energy solutions. The single most important economic market driver over the past several years has been high and volatile fossil fuel prices.
The most notable sources of renewable energy in Austria are large and small hydropower plants, bio-fuels, biomass/wood burning, and waste incineration. Solar-thermal and geo- thermal are only a small part of the total market, but show excellent growth potential for single-family homes. Wind energy and small photovoltaic are also part of the picture, but their economic feasibility is strongly dependent on the budget for guaranteed feed-in tariffs set by the government.
Austria has a significant body of technology in the renewable energy sector. In 2005, 200 Austrian companies sold over $1.8 billion in products and services related to renewable energy. Though there are no statistics for later years, it is safe to estimate sales well over $2 billion today. Austrian companies are among the world leaders in biomass, PV and solar-thermal technologies, with strongly export-oriented production. Waste incineration and district heating systems are also technologically highly advanced.
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Austria is heavily dependent on foreign energy sources. In 2005, imports less exports and domestic production totaled 71.8% of final energy consumption, up from 70.7% in 2004. This is primarily due to the demand for fossil fuel for transportation (petroleum products) and heating (natural gas), as well as imported electrical energy, which is cheaper than locally produced electricity. Austria’s most important energy sources as a share of final consumption are petroleum products (46%), natural gas (18%), and electric energy (18%), followed by renewables (11%) and district heating (5%). Coal accounts for a share of only 2%.
Of the energy Austria produces domestically, renewable sources are the most important with a share of 75.6%, followed by natural gas (14%) and petroleum products (10%). The only sector of energy production that grew in 2005, if only by 2.2%, was renewable. Other domestic sources of energy fell in output: petroleum by 8.9%, natural gas by 16%, and coal mining was discontinued completely.
Hydro power is the most important renewable energy produced in Austria, with 38.8% in 2006, down slightly from the 41.4% of 2005. Biogenic sources, including bio-diesel, account for 29% of the total, up from 27.3% in 2005. This will grow again as new regulations come into effect and enter the statistics. Wood burning/pellets has declined slightly, from 20.1% in 2005 to 19.1% in 2006. The fastest growing segment is waste incineration, which makes up nearly 8% of the total in 2006, up from 6.5 in 2005 and expected to rise further as new incinerators come online. Wind and solar energy, taken together, account for only 2% of domestic energy production. Though the share is small, it is up significantly from 1.5% in 2005. Finally, ambient or geothermal heat has stayed relatively constant at 3.1% in 2005 and 3.2% in 2006.
The most important market drivers for renewable energy in Austria are political, including legal measures, international agreements, and incentives. The Austrian “green electricity” law (Ökostromgesetz) regulates the guaranteed feed-in tariffs for green electricity providers. The original law, passed in 2002, guaranteed attractive feed-in tariffs for 13 years and had an annual budget of about $153 million. Between 2003 and 2005, the number of renewable energy source power plants grew quickly, and the budget to cover the difference between market rates and the guaranteed feed-in tariffs was overburdened. The law was amended in 2006, when a budget ceiling was added and the guarantee feed-in tariff period was reduced to 10 years. One important aspect of this amendment was the creation of the OeMAG, a public-private-partnership company dedicated to managing the system.
Their main areas of responsibility are
• managing the yearly green energy budget; • publishing the remaining yearly contingent of renewable energy support available; • purchasing the green electricity at the mandated feed-in rate; • processing applications for new green electricity projects; and • keeping statistics on the green electricity quotas.
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Currently, the green electricity law is under review again. Expert sources expect the new version of the law to go into effect in the summer of 2008, and to contain a stronger focus on wind and small hydro projects. The reasons for this shift of focus are twofold: first, legislators are wary of supporting power plants dependant on vegetable resources after the rescue action for biomass plants in 2007, when raw materials prices shot up and facilities required an emergency financial injection in order to survive. The second reason has to do with the cost of operation: small hydro plants are able to produce electricity at market-profitable rates, and wind energy is significantly cheaper than PV. According to the 2006 Green Energy legislation reform, feed-in tariffs are guaranteed for 10 years plus 2 additional (reduced tariff) years. The tariffs are constantly being recalculated for new plants coming online.
Another significant legal market driver has been the EU Directive 2002/19/EC: Energy Performance of Buildings Directive. Basically, the directive requires that all buildings be tested for energy efficiency and that they receive a certificate (Energieausweis) that gives standardized and comparable information about the energy efficiency of a building. This directive is currently being phased in, and will be mandatory for the sale or rent of all buildings starting January 4, 2009. The hope is that this will encourage property owners to improve their energy efficiency of their buildings in order to attract buyers or renters.
A third piece of legislation that has had an impact on the market for renewable energy, is the landfill regulation (Deponieverordnung), which was amended in 2004 to require mechanical/biological treatment of all waste before it can be put into a landfill. The result has been a boom in waste treatment and incineration, the last of which are scheduled to come online this year. These incinerators generate energy, which in turn is being used in waste-to-energy projects, most notably district heating projects.
Finally, the bio-fuel regulation should be mentioned. In October 2007, Austrian legislation requiring a biogenic component in automotive fuels was strengthened from 2.5% to 4.3%, and will be strengthened again in 2008 to 5.75%. The EU has set the goal of a 10% biogenic component to automotive fuels by 2020; the Austrian government would like to see that goal met by 2010. The popularity of biogenic fuels is being challenged by their apparent impact on foodstuff and forestry product prices and questions about their ultimate impact on greenhouse gas reduction; the future of bio-fuels will depend on the outcome of further studies on its efficacy as a tool to combat CO2, and on market adjustment to higher demand for biologically based raw materials.
Two international agreements are also factors in the Austrian market for renewable fuels. The Kyoto Protocol, of which Austria is a signatory, set as its goal that the industrialized nations reduce CO2 emissions by 5% compared to the base year of 1990 by 2012. To date, Austria has not reduced CO2 emissions – in fact, instead of reducing emissions by 13%, Austria’s emissions have actually risen by 18% (2005). This is symptomatic of the conflict facing Austrian politicians: they see climate change as a real danger, but have thus far failed to take sufficient action to promote energy efficiency and renewable
12 energy use for fear of hurting the country’s economic base or challenging the expectations of their voters.
The European Commission introduced a Proposal in January, 2008, to reduce greenhouse gas emissions by 20% while at the same time increasing the market share of renewables to 20% in the European Union by 2020. While some green activists see this as regression from the ambitions goals of Kyoto, because it is based on 2005 emissions, many also see it as a more realistic goal that could positively impact the European market for renewable energy and provide opportunities for technology providers.
Fiscal incentives are both a political and a microeconomic market driver. With the possible exception of the general tax break for biogenic fuels, there is no transparent national incentive system to encourage the use of green energy in Austria. Instead, there are various incentive programs administered by cities and provinces, each with its own focus and its own location within the regulatory framework.
The single most important purely economic market driver is the volatility and relatively high price of fossil fuels, including heating oil, natural gas, and petroleum products. Renewable energy sources are becoming economically more attractive compared to the competition.
Photovoltaic Market: On December 31, 2006, there were 2,031 PV installations with a capacity of 16,110kW attached to the Austrian electricity grid, accounting for an insignificant 0.03% of Austrian electricity use. 82% of all PV systems are attached to the grid and 17.5% are autonomous. In 2006, 39,599kW (peak) of solar modules were produced, 9,992 were imported and 46,705 were exported. The domestic market reached an unimpressive 1,564kW (peak), collapsing by 47% compared to 2005. Production, however, rose by 123% as did exports. Sales rose by 102% over 2005. These somewhat contradictory figures are explained when the domestic and the export market are considered separately. Austria has several PV global players; though the domestic market collapsed with the review of the Green Energy Law in 2006, which weakened feed-in tariff guarantees, the export market continues to boom.
Solar-thermal Market: At the end of 2006, there were 3.3 million square meters of installed solar-thermal collectors with a thermal capacity of 2,318 MW thermal. In 2006, nearly 300,000 square meters were newly installed, mostly in single and two-family homes. Sales value in 2006 is estimated at $500 million, up from $330 in 2005. Around 65% of the systems installed were for warm water and 35% were attached to the heating system. Financial incentives offered at the county and provincial levels covered an average of around 45% of the initial investment. Austria is also a leading producer of solar-thermal energy systems. In 2006, Austria produced around 1.1 million square meters of solar-thermal collectors, growing by 66% compared to 2005. The export quotient is high at 75%.
Biogenic Fuels Market: In 2006, Austria was the third largest consumer of bio-fuels in Europe with 275,200 tons, after Germany (3.3 million tons) and France (682,000 tons).
13 That is a remarkable statistic, considering Austria’s population of only 8.1 million. In total, EU consumption rose by 78% between 2005 and 2006, from 3 to 5.38 million tons. In October 2007, Austrian legislation requiring a biogenic component in automotive fuels was strengthened from 2.5% to 4.3%, and will be strengthened again in 2008 to 5.75%. Diesel fuel currently contains a biogenic component of around 5%; in order to comply with the new regulation, an ethanol component is now being added to gasoline. Though biogenic fuel is still considerably more expensive than fossil fuel, tax breaks make up the difference and allow for price stability. The EU has set the goal of a 10% biogenic component to automotive fuels by 2020; the Austrian government would like to see that goal met by 2010.
Wind Energy Market: In 2004, there were 392 wind turbines online in Austria. In 2005 the number had grown to 531, and in 2006 there were 612. That is a 54% growth in the number of turbines over that 2-year period. The profitability of wind energy, however, has fallen since 2006 as steel prices have gone up and feed-in tariffs have gone down.
Biomass/Pellets Market: Pellets heating systems are gaining popularity in Austria. In 2000, Austrian pellets consumption was a niche product at 50,000 tons per year. By 2006, that figure had risen to nearly 400,000 tons. Pellets production in 2007 is estimated to have topped 1 million tons, more than twice the (predicted) consumption of 450,000 tons. Primary drivers in this market are high and rising petroleum and natural gas prices, and provincial incentives for renovating old buildings to improve their CO2 footprint (incentives vary from province to province, ranging from $1,370 to $4,100 reimbursement of initial investment).
In 2007, there were 1.5 million boilers installed in privately owned homes. 450,000 of those are more than 20 years old, of which half again are old oil-fired boilers. These are the prime candidates for replacement with pellets systems because they are the most expensive to run. Pellets-fired boilers, though they are low-emission, use renewable energy, and are cheaper to run than oil-fired burners, are also significantly more expensive than conventional natural gas or oil-fired boilers. Conventional boilers cost between $5,500 and $9,000, but pellets boilers average around $13,700. The market for pellets systems is expected to continue on its growth pattern, supported by volatile petroleum and natural gas prices, financial incentives, and the increasing availability and technical prowess of the new pellets systems.
Small Hydro Market: There are currently more than 2,400 small hydrothermal plants in operation in Austria with a combined capacity of around 4,000 GWh, or 8% of the current Austrian electricity demand. Small hydro plants power approximately 1.5 million Austrian households. The future of this renewable energy source has excellent potential for two reasons. First, these small plants are capable of producing profitably at current market rates. And second, it seems likely that the 2008 reforms in the green electricity law will increase incentives for this sector.
Geothermal Market: At the end of 2006, there were 160,000 geothermal pumps in operation in Austria. Of all the installed systems, 65% are used for heating water and
14 31% for homes. In 2006, more than 13,630 new systems were installed - a growth of 37% over 2005. The strongest growth was charted in geothermal pumps for temperature control in home ventilation systems, where production figures grew by 65% and domestic demand by 141%. Domestic market demand for the whole range of geothermal products saw strong growth in 2006: the market for heating-system pumps grew by 43%, and for water-heating pumps by 18.8%.
Waste Incineration Market: The 2004 amendment of the landfill regulation caused the tonnage of incinerated waste to increase dramatically; in 2000, around 880,000 tons were incinerated; by 2005, that number had increased to 1.8 million tons. Additional increases are expected through 2009 as the incineration plants still under construction come online. Energy recovered through waste incineration is used for district heating, process steam, or power generation; while some plants concentrate exclusively on one form of recovery, the most efficient plants generate a mix of electricity and heat.
Opportunities Austria has established itself as a competence-center for renewable energy technologies, presenting interesting opportunities for U.S. companies to establish partnerships for expansion throughout Europe. Austrian companies are particularly strong in these sub- sectors: • Solar energy systems for heating and cooling • Waste to energy and district heating • Pellets heating systems
The renewable energy sectors that are growing fastest in Austria are solar-thermal and geothermal systems for heating single-family homes. Wind energy and small hydro projects are expected to gain momentum with the 2008 reform of the green electricity law.
Belgium
Overview Domestic gross electricity consumption has grown by an average of 1.7% over the last 10 years, reaching 95,182 GWheq in 2006. Sources of electricity are nuclear power plants (49%), fossil fuel power plants (35.6%), biomass fuels (2.7%), pumped storage (1.3%), hydroelectric installations (0.4%) and renewable energy sources (0.4%). Current political will has determined that no further investments will be made to replace ageing nuclear power plants and there is pressure to gradually abandon Belgium’s nuclear facilities. As a result, the share of electricity generated by nuclear power plants will need to be derived from other energy sources, and massive investments, research and development will be expected in those areas.
Renewable energy sources (including biomass) amounted to a mere 2630 GWheq of Belgium’s electricity production in 2006. With oil prices having increased tenfold in the past decade, the renewable energy sector has received sustained political interest at the European Union (EU) and national levels due to the common interests of energy security
15 policies and the diversification of energy sources. Policy instruments to develop renewable energies have been implemented in the last couple of years, generally in the form of financial incentives. Since July 1st 2007, the liberalization of the European energy markets and imposed separation of distribution and production activities have also acted as a catalyst to reform the European energy sector through increased competition. The result is a strong growth in Belgium’s renewable energy market. While European and Belgian federal policies have launched large-scale schemes, such as green-certificate trade, that target large utility companies and electricity distribution companies, the resulting financial incentives have led businesses to invest in renewable energy generation projects. Individual citizens are also encouraged, via important subsidies, to install alternative energy generators in their homes. The result is a broad demand base for renewable energy products and services on an industrial as well as a private residential scale.
For the southern region of Wallonia alone, investments in alternative energy sources are forecast to reach about $1.180 billion for the period of 2007 to 2012, but it is becoming increasingly apparent that this figure will be at least twice as high. Therefore, Belgium delivers opportunities for U.S. firms offering energy-related products or services for industrial plants and home-based appliances alike.
An important EU policy goal, described in the Renewables Directive 2001/77/EC, is to produce 21% of all EU electricity from renewable energy sources by the year 2010. Under a “burden sharing agreement”, this target differs among the various Member States according to their perceived individual potential in renewable energy production, i.e., hydraulic power, solar and wind energy.
Given the slow pace of sustainable and renewable energy development in certain Member States within the last few years, the European Commission has recommended an improvement in the investment climate for green energy projects by reducing the risks (notably through continuous commitment to the support schemes by national policymakers) and increasing liquidity, which will support the development of long-term contracts. With the 2010 deadline approaching, the consolidation of the green certificate trading scheme and the explicit long-term commitment to green energy, Belgium is promoting renewable energy projects at both the regional and federal level.
U.S. companies should be aware of Belgium’s federal structure, with different levels of competencies. Federal competencies have been hollowed out in recent years through regionalization. The notable federal competencies are electricity grids above 70 kV, nuclear plants, and Belgium’s territorial waters (Hence regulation of offshore wind farm developments is centralized). Relevant regional competencies include electricity grids under 70 kV, policies for energy rationalization including renewable energies and subsidies. As a result, the support schemes are different in each of the three regions of Flanders, Wallonia and Brussels.
For various reasons, the green electricity production target of Belgium has been limited to 6% of overall production by 2010. Despite a rather low percentage, Belgium has been
16 slow to own up to its obligation. In 2006, electricity generation from renewable sources was just 3% (including biomass). The current trend shows a rapidly increasing interest in green energy developments and regulatory incentives offering support in the form of subsidies, as the 2010 deadline quickly approaches.
Of the four support mechanisms available (feed-in tariffs, green certificates, tendering and tax incentives), Belgium has opted for green certificates. Producers of electricity from renewable sources can sell their excess production through the electricity grid, with their production representing a certain amount of green energy quantified in certificates. These certificates can then be traded between producers of green electricity and distributors, or electricity companies, which have to meet a minimum quota of green electricity in their overall production.
Support comes from the trade in green certificates, which is managed by the regional energy regulators (VREG in Flanders, CWAPE in Wallonia, IBGE in Brussels, CREG at the federal level). The minimum quota of green electricity in each producer’s overall production determines the demand for green certificates; the regional energy regulators impose this quota. By gradually increasing the quota, the demand for green certificates will rise. The desired result is to more investment in renewable energy generation infrastructure.
In Brussels and Wallonia, a green certificate is valued in terms of its savings in CO2 output. In Flanders this applies to Combined Heat Power (CHP), but for renewable energy generation the rationale is the actually produced quantity of green electricity (one certificate represents 1 MW of green electricity). These separate weighting methods, and higher subsidies lead to different monetary values for certificates; the average trading value in Wallonia and Brussels has been $128, versus $153 in Flanders. Flanders does not recognize the Walloon certificates and inter-regional trade is not possible. (Note: draft legislation is underway at the European Commission for a pan-European green certificate trading market.)
In Wallonia, the imposed minimum quota for green electricity started at 3% of the overall electricity production for 2003, with a 1% increment each year until 2012 (for a total quota of 12%). The penalty for electricity companies is $139 per missing certificate, weighted each quarter. The downside of this indirect regulatory support mechanism was that the long-term value of green certificates remained uncertain, even more so since policy makers had not made any clear commitments until recently. This has proven to be a major risk factor in green energy investments. At an average value of $128 per certificate, the penalty for each missing certificate is only $11 (i.e., penalty cost minus certificate purchase cost), which was unlikely to encourage long-term investment. Furthermore, utility companies simply passed on the penalty costs in end users’ electricity bills. Investment incentive has recently been created, and risk decreased, through increased competition among electricity providers and longer-term contracts for support schemes.
17 In Flanders, support mechanisms depend on the nature of the renewable energy: (passive) CHP on the one hand, and (active) renewable electricity generation on the other. Both have a green certificate scheme, but the support mechanism for renewable electricity generation is enhanced by the intervention of the electricity grid administrator, who has an obligation to purchase green certificates from installations connected to his network, at predetermined prices. As the prices are guaranteed for a very long period (10 years after commissioning, even 20 years, in the case of photovoltaic generation), the long-term value of green certificates is set and investment risk is entirely mitigated. Furthermore, certain mandatory buy-in prices are very high (see below “economic market drivers”), so break-even periods are short and return on capital can be very lucrative. Wallonia and Brussels are starting to emulate a similar approach to Flanders (currently still limited to photovoltaic generators) with long-term buy-back prices for green certificates guaranteed by the regional energy regulators.
Private companies are assessing their interest in renewable energy-related developments. Direct investment in infrastructure can be profitable by selling electricity to the grid, combined with green certificate trade, or by reaping the benefit of private electricity production for individual consumption. Industrial sites invest in combined heat power for their existing processing plants to lower energy bills and receive tax rebates. For example, a 300MW offshore wind park that produces 1000 GWh of green electricity, the equivalent of four times Belgium’s wind electricity production in 2005, will cost $1.180 billion. This project is the result of an investment from a consortium of private companies not associated with the electricity trade. In the port of Antwerp, a major chemicals company has invested in an 800 MW combined heat power plant, ensuring energy self sufficiency for its facilities.
In Flanders, the guaranteed price of green certificates from photovoltaic generators greatly exceeds its trading value (a $625 buy-in price versus a $153 trade value). Furthermore, installation is relatively simple and capital requirements are limited, so many enterprises, such as warehouses and logistic centers with large roof areas, are installing solar panels. One company reported reaching a break-even point after nine years, while the manufacturer guaranteed the system for 20 years. This leaves at least 11 years of net profit generation. Partial independence from energy price fluctuations is also a major advantage for energy-intensive businesses. With long-term buy-back guarantees now also applicable in Wallonia, demand for photovoltaic generators will come from all across Belgium. Banks have been stepping back from high-risk investments recently, but are very favorable to providing capital for privately developed renewable energy projects. One company had to cover only 15% of investment costs with its own capital, the remaining 85% came from bank loans. Fortis, a major European bank, has allocated 10% of its investment portfolio to renewable energy, up from only 1% in 2000. Cash is therefore readily available for businesses willing to invest in renewable energies.
The participation of private users in the electricity market has been an important development in the shifting dynamics of the European energy sector: not only are individual citizens now able to choose their own electricity provider, they can also participate in the production of electricity. For example, a farmer with wind turbines can
18 sell his green electricity to the local grid at regular market rates, or offset his electricity bills by consuming his own production. Since the electricity comes from renewable sources, the producer is eligible to receive an amount of green certificates proportional to the amount of electricity generated. The farmer can sell the electricity directly to electric companies (in Wallonia and Brussels) or to the network administrator at a firm price (in Flanders).
Residential heating is one of two sectors where energy consumption and greenhouse gas emissions have grown unchecked, so this makes it a preferred target of policymakers keen to promote sustainable energies. This is reinforced through the support schemes that are available to private users; all regions have a support system for private individuals’ residential use, generally in the form of a contribution to procurement and installation costs. In Wallonia, capital expenses (purchase plus installation costs) for private investments in photovoltaic systems are subsidized by 20%, up to a maximum of € 3500 per installation. In Brussels, subsidies of € 3 per installed watt are given, up to a maximum of 50% of the system’s costs. The federal administration also offers incentives via tax rebates proportional to the installed power capacity. Private consumers therefore actively drive market demand, increasing opportunities for providers of domestic renewable energy-generating units and related products and services.
The Federal Commission for the Regulation of Electricity and Gas (CREG) estimates that energy demand in Belgium will rise 1.5% each year until 2019. This increase in demand means that an additional 20 TWh of energy will have to be produced over 2005 levels, ensuring a steady demand from the industrial energy generation sector; part of this increase in energy will have to come from sustainable energy sources. This requirement, in conjunction with the additional demand for renewable energy installations outlined above, the market for green products and services is set to rise for many years to come.
It appears that total installed wind energy production capacity, especially offshore, is nowhere near attaining its 2010 target. This applies to photovoltaic generators. Hydraulic energy is almost fully developed and due to the high capital investments required, little expansion is expected in this field. One exception could be wave and tidal generators, which are still under development, primarily in the United Kingdom. Biomass has already attained its 2010 target and continued development is expected. Geothermal energy is currently not well developed, presumably because of poor subsidy support for its high capital expenses.
The Walloon industrial society for renewable energies, Fierwall, made a prospective survey in 2006 to assess the Region’s demand and growth in renewable energy products. The report estimates the following minimum investments in the sector for the period of 2007-2012:
• Green electricity: $675 Million; • Solar thermal: $121 Million; • Combined Heat Power: $31 Million
19 In 2005, the Flemish Institute for Technological Research, VITO, produced a market assessment for alternative energy demand in Flanders until the year 2020. The best prospects for development were Combined Heat Power, wind energy and especially photovoltaic cells (12 GWh were installed in 2008, up from 0.5 GWh in 2005). The EU international trade database confirms an increase in demand for U.S. renewable energy products; as Belgian import volumes for U.S. photosensitive / photovoltaic cells (Taric code # 85414090) jumped from $6million in 2001 to $46 million in 2007. This puts the US in second place, closely behind Germany ($50million), and well ahead of the Netherlands ($21 million), Belgium’s main EU-based trading partners for solar cells.
Chile
Overview The Government of Chile (GOC) and the private sector have come to realize that if Chile does not have enough clean energy sources to reduce its carbon production, it may soon be barred from selling its goods in developed countries with more stringent environmental regulations. Therefore, the policies are being oriented toward the development of renewable energies. According to the Minister of Energy, Mr. Marcelo Tokman, if Chile were able to realize its full renewable energies potential, it would be able to generate +20,000 MW from all forms of renewable energies sources.
Wind power: Chile has made big inroads in wind power generation. It has grown from an installed capacity of mere 2.5 MW in 2006, to +200 MW in 2009 and +1,600 MW in projects being analyzed at this moment and that should be in operation by 2011. All these have been carried out by private investors.
Solar Power: Solar generation is just being developed. The GOC will shortly call in Fall 2009 for an international bid for one 1.5 MW PV solar generation pilot plant/demonstrative project and one 10 MW solar concentrator generation pilot plant/demonstrative project. The GOC will put in the seed money needed for these two projects out of conviction that Chile's solar resources are the best in the whole region. These projects will be developed by private companies/investors.
Geothermal: Chile is said to be one of the world's largest ground heat reservoirs (+50 active volcanoes and +400 volcanoes in total). Chile started seriously pushing for geothermal exploration only a few years ago. However, the first drillings were done in the 1910s by an Italian engineer and later in 1960s by the GOC. Currently there are around ten companies doing exploration. One of them (GeoGlobal Energy, a subsidiary of New Zealand Mighty River Power Ltd.), found a good deposit and may start generating, but not sooner than 2011. Estimates indicate that geothermal may generate +4,000 if the known deposits prove to be economically exploitable.
Tide & Current Power: Recently the GOC started talking about their will to make Chile a world center for this type of energy research. Chile has +4,000 miles of coast line and thousands of fiords and straits that may become power generating areas.
20 Biomass-Biofuels: There are two Private-Public consortiums devoted to developing and adapting technologies that would be appropriate to utilize forestry waste, brown algae (macro algae, found in nature), as well as micro algae (naturally occurring, but cultured in closed circuits), to produce bio-ethanol and other Biofuels. On October 2008, the USTDA funded an Orientation Visit to the U.S. by eight Chilean representatives from forestry companies, universities, R&D organizations, energy sector regulators, all supported by the U.S. Commercial Service in Santiago. They met with U.S. companies and research centers (including NREL) to get acquainted with the latest developments on these technologies.
Hydropower: Chile has been traditionally a hydropower generation country, as between 45% to 75% of its electric power generation (depending upon inter-annual rainfall rate) relies upon big hydro units. However, there is a new government program that has special incentives to introduce >20 MW or minihydro units to take advantage of vast untapped water resources, which have been estimated in the order of +4,000 MW.
Resources Carlos F. Capurro, Senior Commercial Advisor, U.S. Commercial Service Tel: 56-2-330-3307 Fax: 56-2-330-3172 [email protected]
China
Overview China not only has enormous needs for cleaner energy, but is also the country best able to afford the massive investment and imports to meet the need. The Chinese Government has set ambitious state investment targets for renewable energy. Rapid urbanization and continuing economic growth are placing heavy demands on the Chinese energy sector. Although fossil fuels will continue to play the dominant role in meeting this demand, environmental concerns and rising coal prices have driven the government to strongly promote renewable sources of energy.
Solar energy. China is rich in solar energy resource. The average daily radiation in most areas exceeds 4 kWh/ m2, comparable to the U.S. and much better than Japan and Europe. The need to expand electricity supply is great, especially in rural areas. Roughly 3 million mostly rural Chinese households (over 11 million people) still have no access to electricity. Grid extension, small hydro, and migration could meet electricity needs for 2 million of these households. Solar photovoltaic (PV) and PV-wind hybrid systems could supply the other 1 million households. Given the standard of cities in remote areas (annual electricity consumption of 1000 kW. h/household), installed capacity would need to reach 700 MWp. At present about 60% of the solar cells in the world are used in grid- connected power systems, mainly on-grid PV systems in cities. In China, such technology is still at a relatively early stage. Building of rooftop projects will start in China before 2010, and the installed capacity will reach 50 MWp by then. It is also expected that there will be on-grid PV projects on a larger scale before 2020, and the cumulative total installed capacity will by then reach the 700 MWp goal. The market for photovoltaic power generation is mainly composed of communications, industrial
21 applications, rural off-grid supply, grid connected systems and small solar products. Among all these applications, about 53.8% is located in the commercial sector (telecommunications, industrial applications and solar PV appliances), whilst the remaining 46.2% requires support from the government (rural electrification and grid- connected generation).7
The biggest potential solar PV market is large-scale desert power plants. With the development of electricity transmission and power storage technologies, large areas of desert will definitely become the future power base. If only 1% of the desert area is used to install solar cells, the total capacity would be 1,000 GWP, which is about twice the current installed power capacity in China. The area of desert, desertified land and potentially desertified land in China amounts to 2,500,000 km2, accounting for a quarter of the total land mass. Using current technology, 1% of this could be used to install 2,500 GWp of solar power plants, generating 3,000 TWh of electricity annually, equal to the current annual output in China. Based on the current potential and policy in China, it is feasible to develop a demonstration LS-PV power station before 2010. According to the Mid-Long Term Development Plan of Renewable Energy of the National Development & Reform Commission (NDRC), it is expected that there will be three to five desert power plants with an installed capacity of 1-10 MWp operating before 2010, with a total capacity of 20 MWp, in order to test the technology and its economic feasibility. LS-PV desert power plants will be further promoted from 2010-2020, and by 2020 the cumulative total installed capacity in the desert is estimated to be 200 MWp.8
Wind power. The wind power market, in particular, has grown rapidly in response to a series of government reforms, and is targeted to provide 10% of China’s electricity by 2020. China currently has the capacity to produce over 6 GW of wind energy from 343 wind farm installations. Although this constitutes less than 1% of total electricity output, it makes China 5th in the world in terms of wind power production. In response to better- than-expected growth, the government has repeatedly raised its goals for wind energy production, now targeting up to 100 GW of output by 2020. If realized, this would likely position China as the world leader in wind power. Given the tight supply, foreign component manufacturers have many opportunities in China, especially for those components which Chinese manufactures remain unable to produce. High demand for continuing technology development and ever-larger turbine capacity means many Chinese firms are seeking partners for technology-sharing and cooperative development agreements. Of all the opportunities, turbine components present the best opportunity for foreign imports. Despite rising levels of technical competency and domestic manufacturing capability, the demand from turbine manufactures for components remains extremely high, with tight supplies forecast to continue for the foreseeable future. In particular, foreign electrical control devices and turbine bearings are most highly sought.9
With an estimated $3.28 billion of investment in 2007, China added 122 new wind farm developments, more than doubling installed capacity to 6 GW. Although less than 1% of
7 China Solar PV Report, 2007. Status of China’s Solar PV Market and Production 8 Ibid 9 Wind Energy in China. Market Research Report, U.S. Embassy Beijing, 10/28/08
22 total energy output, it catapulted China to fifth place on the Global Wind Energy Council's annual capacity rankings, and positioned China as the third-fastest growing market for wind energy in the world. In response to this rapid build-out, in April 2008 the NDRC doubled its 11th Five-Year-Plan (2006 – 2010) target for wind power from 5 GW to 10 GW. According to Sebastian Meyer, Director of Research for Beijing-based Azure International Technology & Development, total installed capacity will have already reached 10 GW by the end of 2008, a full two years ahead of schedule. 3 Statistics released by the China Wind Energy Association (CWEA) indicate that by 2010, total installed capacity will reach 20 GW, and it is widely reported that the NDRC is setting its sights on a target of 100 GW by 2020.4 Even conservative estimates of wind sector growth see China reaching almost 60 GW of wind power by 2020.
There are numerous projections of China’s total wind power potential. These vary between technically feasible projections and projections assuming advances in wind turbine technology. The most often cited statistics come from the China National Meteorological Society, putting total generation capacity at around 1,000 GW, with 250 GW onshore and 750 GW offshore.
Wind farms must ‘sit’ where the wind is strongest and most consistent. In China, these places tend to be remote open flatlands in western and northern China, and coastal areas in the south and east. To date, most development of wind energy has been onshore, in Inner Mongolia, Gansu, Shandong, Heilongjiang and Xinjiang provinces, where building wind farms and connecting them to the grid is cheaper and technologically easier. Inner Mongolia and Gansu, which are expected to account for 40% of wind-generated power by 2010, represent the most developed wind power regions in China. Tapping the estimated 750 GW potential of offshore wind power has only just begun, with an NDRC plan to expand offshore development near Shanghai with 1 GW capacity by 2020. Despite the potential, offshore wind development still lags far behind onshore farms.
Even with continuing advances in turbine technology, the cost of generating electricity from wind is estimated at roughly RMB 0.6 / kWh, not yet competitive with coal. To address this gap, initial drafts of the NREL guaranteed a subsidy of RMB 0.23 / kWh above the current cost of clean (de-sulphurized) coal-produced electricity, and stipulated that the return on investment for renewable energy power projects should be higher than that of traditional power projects. However, the final version of the regulation was stripped of these provisions. Instead, wind-power pricing continues to be set (or guided) by bidding. With concession tariffs averaging RMB 0.45 / kWh and non-concession prices only marginally higher (RMB 0.5 - 0.6 / kWh), current price levels have been too low to satisfy the risk tolerance of most investors.
There is concern that China’s large, state-owned power firms - which have won every wind concession project - have been willing to bid below cost for large projects in order to secure rights to wind fields only for their future value, as well as to ensure they are able to satisfy regulatory requirements for clean energy production. According to Li Junfeng of the China Renewable Energy Industries Association (CREIA), "the big five power companies are using the profit they [make] from coal-fired power generation to
23 make up the loss in wind power projects," while also abusing their status as joint ventures to cash in on preferential tax policies, entitling them to a refund of RMB 0.1 / kWh.” While this results in a more reasonable bottom line, “…it is not fair to other investors, especially the small private ones," said Li.5 This practice represents a significant barrier to entry for both foreign and privately-owned domestic firms, and also has the effect of putting substantial downward price pressure on turbine manufacturers. Many analysts are concerned that without significant price reforms, including the possibility of a fixed subsidy for wind power, recent growth may be unsustainable.
Even in the absence of national price reform, some recent developments suggest feed-in tariffs may be on the rise. In the latest round of concession projects, bidding rules were revised to reward offers closest to the average bid price, not the lowest. And in March, 2008 Guangdong became the first province to offer a fixed feed-in price for wind energy at 0.68 RMB / kWh. Efficiency Gains. China’s wind farms are in a relatively nascent stage of development, and typically produce less electricity than those in more developed markets.
According to data provided by Azure International, the average Chinese wind farm operates with 22% gross capacity utilization, far below the American average of 34%. Azure’s predicts that with improved capacity utilization the price of electricity produced from wind farms would drop to as low as RMB 0.38 / kWh. As the industry develops and technology improves, efficiency progress will lead to further cost competitiveness between wind power and other energy sources.
Low feed-in tariff rates and an international shortage of turbine components represent the greatest challenges to continued growth of the wind power industry. In addition, tightening credit, incomplete wind resource data, antiquated power distribution infrastructure, and human resource restraints add uncertainty to the future of the industry.
The Chinese wind turbine market has become increasingly competitive in recent years. Once dominated by foreign players, advances in technology and increasing government support have allowed domestic manufacturers to compete effectively: in 2007, more than 50% of new turbine installations were produced domestically. However, Chinese firms still remain unable to provide turbines with 3 GW+ capacity, and are only now ramping up production of 2 GW models. Nevertheless, it is expected that domestic manufacturers will be capable of meeting domestic demand entirely within two years. In response to increased competition and localization requirements, many foreign firms have moved aggressively to form domestic subsidiaries and joint venture agreements.
Of all the opportunities, turbine components present the best opportunity for foreign imports. Despite rising levels of technical competency and domestic manufacturing capability, the demand from turbine manufactures for components remains extremely high, with tight supplies forecast to continue for the foreseeable future. In particular, foreign electrical control devices and turbine bearings are most highly sought. Chinese component manufacturers have made great strides in blade, gearbox and generator production, meeting the majority of domestic demand for these items. Nevertheless,
24 turbine developers still rely primarily on foreign firms for a number of technologically advanced components, including bearings and electrical control systems.
As a developing industry, Chinese turbine and component manufacturers are eager for the latest technologies. While the acquisition of technology from overseas is the easiest way to accomplish this, leading international firms are wary of licensing their latest proprietary designs to potential competitors. Consequently, smaller wind power companies who do not compete directly in the Chinese market, and who stand to benefit more from licensing fees, have many potential – and willing – partners for co- development and technology transfer in China.
Firms that plan to operate directly in the Chinese market; localization requirements, cost- savings, and customer relationship management all suggest establishing a local presence in China. Whether this takes the form of a joint-venture operation or wholly-owned domestic subsidiary depends largely on the willingness of the foreign firm to expose themselves to technology transfer. Because domestic firms are unable to develop cutting- edge technology in-house, many Chinese turbine and component manufacturers are eager to form joint-ventures based on cooperative design and production models. In cases where loss of proprietary IP is not a concern, foreign firms can both profit from technological expertise and gain access to the operational knowledge of their local partner to navigate the vagaries of the Chinese market and regulatory system.
Hydropower. China’s hydropower installed capacity reached 172 million kwh in 2008, ranking first in the world. The utilization rate of hydropower resources has also increased to 27%. At present, a large number of world-class projects and leading technologies have emerged in China. At the end of last year, 26 sets of 700,000KW power generators of the world famous Three Gorges Dam Project were put into operation. From 2008 to 2015, China will build a number of cascade hydropower stations on the upper reaches of the Jinsha River, Dadu River, Yalong River, Lancang River, Wujiang River, and Yellow River, and about 150 sets of 700,000KW mega water turbine generators will go into production. Currently, 10 pump storage power stations are under construction, and can add another 30 million kilowatts of installed capacity.10
Biodiesel energy. China’s biodiesel market is a relatively new and expanding rapidly. China’s three-fold need to increase energy availability, reign in pollution, and improve rural welfare has triggered a renewed push for clean energy solutions. From publicly traded biodiesel companies, to clean energy bureaus in the Ministry of Science and Technology, China has a pronounced interest in, and solid foundation for, establishing a prominent biodiesel market. The potential for U.S. firms to enter the Chinese biodiesel market is very strong, and the Chinese government’s positive involvement in biodiesel has propelled the current surge of the industry. This is a new and high-growth industry, which needs foreign expertise, funding, and cooperation. U.S. firms have long-term potential in China’s biodiesel market.
10 China`s hydropower installed capacity ranks world No.1. China Energy Net, 04-21-2009
25 While the current U.S. position on biodiesel, and biofuels overall, is made ponderous by the debate of corn’s use in making ethanol, in China, the prospects for U.S. firms to export and expand is very promising. Chinese officials have said China would increase biodiesel output to 200,000 tons by 2010 and to 2 million tons by 2020. These estimates are conservative compared to German reports done in conjunction with Tsinghua University, which place biodiesel output at 10.6 million tons by 2020. The discrepancy in the numbers can be attributed to the varying estimates of biodiesel feedstock’s availability. While the German study looks more closely at theoretical availability, the government estimate incorporates fuel versus food demand.
Animal fat and waste oil will continue their dominance of China’s biodiesel market. Presently, waste oil is the dominant material for biodiesel production in China. This waste oil includes acidified oil, grease trap waste, slop oil, and waste cooking oil; however, other materials are quickly becoming viable. In Shaanxi and Henan, Chinese pistachios are the crop of choice grown for feedstock. Meanwhile, in Hainan, Fujian, Sichuan, Yunnan and Guizhou, jatropha and palm-oil-based facilities are cropping up. And in Anhui, Jiangsu and Shandong, waste oil, peanut oil, cotton oil and rapeseed are the dominant biodiesel materials.
Concerning location, the major biodiesel facilities that use waste oil and feedstock will continue the trend of being based near medium and large urban cities. Close proximity facilitates the cheaper and more efficient collection of oil. Examples of this include the publicly-traded China Biodiesel International Holding Company (AIM:CIB), which is developing facilities in Fujian, and Gushan Environmental Energy Limited, which has plants in Fujian, Hebei and Sichuan.
China’s biodiesel production was between 100,000 and 200,000 tons in 2006 and 2007, but according to SGS, the domestic output was around 500,000 tons. China’s potential demand for biodiesel is around 18 million tons. On the consumption side, China’s annual diesel consumption reached over 90 million tons in 2007. Despite the annual import of diesel from other countries, China still lacks more than 30 million tons of diesel to meet its needs. China’s potential market demand for biodiesel is around 18 million tons. There are still big gaps between domestic production and demand. According to “ The Medium- to-Long Term Renewable Energy Plan”, China’s annual biodiesel production capacity will reach 2 million tons by 2020.
For the time being, many biodiesel projects are under construction. The total designed annual production capacity is over 3 million tons. Among those projects, there are also several large projects with an annual capacity of 500,000 tons. Domestic biodiesel producers began appearing in 2001. Only a few of them have an annual production capacity over 10,000 or 20,000 tons. Among them are Hainan Zhenghe Bioenergy Co, Ltd; Fujian Zhuoyue New Energy Development Co, Ltd; and Sichuan Gushan Grease and Chemical Company; Xi’an Bluesky Bioengineering Co., Ltd; and Fujian Yuanhua New Energy Development Co., Ltd.
26 Domestic producers can be categorized into three groups:
• Small and medium-sized private plants – mainly rely on spent cooking oil and waste oil they collect themselves, easy-to-find sales channels for their products, and production of low-grade products • 2. Large private firms – lack sufficient raw materials and funding to plant sufficient numbers of biodiesel trees. Also lack channels to collect spent cooking oil, waste oil, etc. • 3. State-owned companies with production capacity above 50,000 tons – mainly focusing on the plantation of raw materials, enjoy government support, and face better long-term development potential.
Production is mainly limited by the availability of raw materials and remains unregulated. Twenty or so small-scale production facilities, each with annual capacities of less than 20,000 tons, rely primarily on spent cooking oil as raw material and sell their low-grade diesel to agricultural producers. Without government support, these enterprises remain profitable because of low production costs. The main impediment to the future growth of China’s biodiesel industry is a lack of government initiatives and guidance. There is still currently little government incentive to encourage the development of alternative oil sources from biodiesel plants such as canola, palm and jatropha. According to the China Renewable Industry Association, the current base of biofuel trees and plants has a production capacity of 5 million tons, and waste oil and spent cooking oil can supply 2 million tons annually. It is estimated that by 2010, China’s demand of biodiesel will be 20 million tons, and the production by 2010 and 2020 can reach 2 million tons and 9 million tons respectively. Although there are many problems with, and impediments to, the growth of the biodiesel market in China, it also has attracted the attention and involvement of three major oil companies and a foodstuff corporation.
Foreign firms have made significant strides in China’s biodiesel industry. Many foreign players have been actively involved in China’s biodiesel market since 2005. Some firms cooperated with local provincial governments, while others chose to cooperate directly with oil majors such as CNPC, CNOOC or private companies. Still others prefer to direct project investment.
Examples of some foreign activities include:
• Biolux Nantong (Austrian) – Signed contract with Chinese government to grow rapeseed on 325,000 hectares of farmland along the Yangtze River. • U.S. Becker Biofuel intends to invest between $ 1.6 and 2.0 billion within the next ten years to develop jatropha plantation and a 500 million liter biodiesel plant. • CNPC plans to invest $297 million in jatropha plantations and processing facilities. • UK Sunshine Technology Group plans to invest $506 million in Chinese biodiesel operations.
27 • Local company, Qingyan Lihua Renewable Energy Technology Co., Ltd cooperated with German PT to establish a biodiesel production facility with 100,000 tons annual production capacity in Hebei GuAn Industrial Development Zone on April 20, 2007.
Other foreign cooperation projects are: • Italian company’s biodiesel project cooperation with Jiamusi, Heilongjiang Province, in 2005 • Singapore invested significant funds in Fujian’s biodiesel project in 2006 • Sino-German biodiesel cooperation project in Guizhou in 2006 • In 2007, Austria invested in a Chinese biodiesel project
Although the biodiesel market in China is still nascent, there is still a promising future ahead. The following areas have great potentials for U.S. firms:
• Core technology for Biodiesel Oxidation Stability • Technology/equipment to lower the cost of producing biodiesel • Testing Labs – China only has only one biodiesel testing agency: SGS • Technology to utilize inexpensive raw materials to produce biodiesel with high rate of transformation capability • Core additives • Biodiesel processing technology for high grade biodiesel output • Technology for using corn stover to produce biodiesel • China does not have national standards for biodiesel’s application in the automotive industry. In this case, biodiesel cannot be used as a transportation fuel, which hurdles the testing and promotion of using 10% biodiesel mixed with fossil diesel in vehicles. China also lacks of experience to implement such a target. • Technology on utilizing ocean plants to produce biodiesel
Czech Republic
Overview: In the Czech Republic the current share of renewable sources in gross electricity consumption is 5.6%, which is 4,225 GWh.
Hydro: Czech renewable electricity generation is currently dominated by hydropower plants which produced approximately 3,257 GWh of electricity in 2006. Production is volatile due to hydropower generation sensitivity to weather conditions. For large hydropower plants there are no more suitable areas available for construction. The existing sites are located mainly on the upper part of the Vltava River. There is still room for small hydropower units to be built in some mountainous regions. Czech Energy Works (CEZ), www.cez.cz, is the Czech major generator of electric energy and it operates all the large hydropower plants.
28 Wind: The wind energy sector is experiencing strong growth. As there is no set limit by the transmission system operators, the growth is largely dependent on the cooperativeness of municipalities and upon the Environment Impact Assessment (EIA) which is examined by the Ministry of Environment. The installed wind capacity grew from 44 MW in 2006 to 116 MW in 2007 and production was 125 GWh in 2007, 2.5 times greater than in 2006. In 2008, the installed capacity grew to 143 MW. CEZ Obnovitelne zdroje (Czech Energy Works Renewables www.cez.cz) wants to build wind power plants with an output of 20 MW by the end of 2009. In 2010, it would like output to increase to 68 MW. By the end of 2010 CEZ OZ would operate wind power plants with a total output of 156 MW. The 156 MW represents an investment totaling roughly $286 million. CEZ OZ already has the approval of municipalities to build 70 wind power units with an expected output of 140 MW; it has already reserved lots for 51 devices. KV Venti is another Czech player in wind power. The private company has already built a wind farm with 5.7 MW of installed capacity in the Bohemian-Moravian highlands.
Note: CEZ supplies 75% of the Czech Republic’s electric energy; 65% of this amount is generated in conventional power plants and 30% in nuclear power plants. CEZ’s commitment to increase its share of renewable is reflected in the establishment of CEZ Renewable Energy (CEZ Obnovitelne zdroje).
Biomass: Out of all the renewable generation sources, biomass has the greatest potential. The country’s total agricultural land that is not used for food production is estimated to be more than 1.3 million hectares, of which about 800,000 hectares were not used in 2006. Of this, at least 500,000 hectares could be used for biomass production. If the total 500,000 hectares is used for biomass, this source could amount to 18% of all energy generated in the country. The country’s total timber harvesting is over 9 million metric tons. Of this amount, wood waste represents over 1 million metric tons. Targeted growing of wood and non-wood biomass has the best prospects. The generating cost for biomass is highly dependent on the cost of the fuel used and on transportation costs. Economically feasible projects are those with transportation distances less than 50 kilometers. Smaller communities remain interested in using biomass for their heat supplies. The Association of Biomass, BIOM CZ (www.biom.cz) is the best source of information on these projects. The Association provides consultation services and participates in the preparation of legislation.
Solar/Photovoltaic: In 2008, the Czech Republic experienced an unprecedented boom in the construction of photovoltaic plants. A total of 976 plants with an installed output of 50.9 MW were put into operation, 211 of these had an output of 31.5 MW in December 2008 alone. In most cases these are small facilities with a peak output of up to 20 kW. Including solar power plants that were launched in past years, a total of 1,214 photovoltaic plants with an output of 54.3 MW were operating in the Czech Republic as of January 1, 2009. This energy source, however, has the lowest potential since the generation costs will not be covered by offsetting subsidies much longer.
In the past, entrepreneurs were not attracted to developing renewable sources of energy because distribution companies were not willing to pay them what it actually cost to
29 generate the energy. This obstacle has been removed by a decree that, since January 1, 2002, requires the compulsory purchase of energy from renewable sources. The Energy Regulatory Office (ERU www.eru.cz) has also mandated a marked increase in the purchase price of electricity from renewable energy sources. ERU stipulates the purchase price of electricity from renewable sources every November.
The cost of renewable-based power generation is generally high. If carbon emission costs are taken into consideration – assuming fossil fuel based generators have to pay for their emission – the comparison is much more favorable for renewable generators. Presently, carbon permits are distributed free of charge to European utilities under the EU Emissions Trading Scheme (ETS) and the utilities can then sell any credits they do not use. From 2013, power generators will receive fewer permits allowing them to emit carbon dioxide (CO2), and they will have to purchase any extra credits they need. Wind is the cheapest source, while biomass generation costs are highly dependent on the cost of fuel used and on the cost of transportation. Calculations were made and they showed that a project is economically feasible if transportation distance does not exceed a radius of 50 kilometers. The Czech Republic offers an option between a feed-in tariff or a premium. There are also multiple investment subsidies in operation as well as tax exemptions.
Denmark
Overview Denmark has a long tradition of using renewable energy and, since the energy crisis in 1973, has sought to increase its self-sufficiency of energy. The first steps towards this were investments in energy savings and the conversion of Danish power plants from oil to coal. Later on, focus was on the development of oil and natural gas recovery in the North Sea. The first subsidies for the construction and operation of wind turbines and biomass plants were introduced in 1981, and a string of energy agreements followed in the decades to come, all with the purpose of increasing self-sufficiency of energy by means of increasing production of renewable energy. Finally, in 1998, Denmark reached its goal and became self-sufficient in energy. Denmark has the lowest energy intensity ratio in the EU. Gross energy consumption has only increased 5.8 percent from 1990 to 2007 (0.3 percent per year), although GDP grew by 45.5 percent. This has led to a drop in primary energy intensity by 18.3 percent, or 1.4 percent per year. Over the same period of time, the CO2 intensity has decreased by 28 percent, reflecting the additional effect of fuel switch from coal to gas and increased use of renewable energy and district heating. Energy savings are being pursued also for non-climate purposes, as they contribute to growth and business development while increasing security of supply. Denmark is moving towards implementation of Kyoto protocol obligations even though the targets of CO2 reduction are very strong – a reduction by 21% of the 1990 level on average during 2008-2012.
Concerns over global warming and energy security have placed renewable energy and CO2 emissions reduction high on the Danish political agenda. The main idea is that energy technologies should be chosen through a combination of market mechanisms and political regulation. The government wishes to secure a future energy supply that is safe
30 and reliable, environmentally friendly, and supports growth and competitiveness. Denmark has excellent wind resources, thanks to its flat terrain and nearness to the sea. Climate and hydrology allow high yields of biomass from agriculture, although land itself is a scarce resource due to the country’s small size and relatively high population density. The long Danish coastline could allow wave energy to become important in the future. Photovoltaics and solar heating could also contribute in the longer term, though their cost-effectiveness is not as attractive as in sunnier countries to the south.
Denmark’s power system is presently characterized by combined heat and power (CHP) plants delivering heat to district heating systems, and a high proportion of wind power. The CHP plants are a combination of a few large plants fuelled mainly by coal and natural gas, and a large number of distributed CHP plants using natural gas, straw and municipal waste. Fuel for road transport is dominated by gasoline and diesel. Goals to be reached before 2025 include at least 30% renewable energy, gross energy consumption at the same level as in 2006, and a 15% cut in fossil fuels compared to 2006. The long term vision is a total phase out of fossil fuels in Denmark. According to Risø-DTU, the National Laboratory for Sustainable Energy, the most important measures for achieving these results are:
Yearly reductions of the order of 1–3% in energy consumption, compared to a development with energy efficiencies fixed at present levels. More efficient conventional vehicles and plug-in hybrid vehicles: Curbing growth in the energy consumption of road vehicles is crucial to achieving CO2 emission reduction targets, as the transport sector at present is nearly 100% reliant on fossil fuels. Using renewably-generated electricity as the fuel for plug-in hybrid electric vehicles also helps to introduce renewable energy to this sector. Plug-in hybrid vehicles will also help electric companies handle the variability and limited predictability of wind power in a cost-effective way.
Wind power: Denmark already has significant experience with wind power, as well as good wind resources, so increasing the share of wind power is an obvious move; most future expansion is likely to be offshore. The power transmission grid has to be reinforced to meet the needs of future offshore wind power plants. Planning permission for new overhead lines is hard to obtain, due to opposition from local communities. Underground and undersea cabling are alternatives. Handling large amounts of wind power, which is fluctuating in nature, requires flexibility in both power consumption and in other generating technologies. There are many ways to do this, including heat pumps, flexible pricing mechanisms and appliances, and the use of electricity for transport. Decisions such as where to build new transmission lines, where to upgrade existing lines, whether to use overhead or underground cables, and where to locate new wind farms can also help to support greater use of intermittent power sources such as wind.
Biomass: Denmark uses biofuels to heat buildings, to supply process heat for industry, and in CHP plants. Denmark already has a large body of knowledge about the use of straw and wood pellets for CHP, making this technology attractive. The development of second-generation biofuel technologies could make biofuels a sensible choice for transport in the future.
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Finland
Overview By 2025, Finland wants to increase its use of renewable energy by 260 PJ (petajoule). With regard to electricity production from renewable energy sources (RES-E), the target is 31.5% of gross electricity consumption in 2010. (Source: European Commission). A Nordic country, Finland shares a long border with Russia. In Finland, the world's northern-most industrialized nation, energy consumption per capita is high. This is due to the severe climate, long distances, high standard of living, and structure of Finnish industry. Finland's energy consumption has increased more than 50% since the early 1970s. During the same period, industrial output and the total volume of construction have more than doubled. On an international scale, energy production and usage in Finland are quite efficient, due to resource availability, production infrastructure and geographical location. According to Statistics Finland, total energy consumption was 1,366 petajoule (PJ) in 2005.
Finland is the fifth largest country in Europe, but has a population of only 5.2 million, mostly concentrated in urban areas. The share of forestland is the highest in Europe (about 70%). More than two-thirds of Finns live in urban areas; only 1.6% north of the Arctic Circle. Finland’s energy needs are high due to its energy-intensive industry, cold climate, and long distances. Finland does not have its own fossil fuels – coal, oil or natural gas – but does have bio fuels, rich reserves of peat, and extensive wood resources. Vapo Energy (www.vapo.fi) is the leading producer and supplier of bio fuels – peat, wood fuels, and pellets in the Nordic and Baltic regions. The company is also a leading supplier of energy crops, briquettes, potting soil, and growth and environmental peat. The company’s long-term research efforts have produced a number of innovative technologies for harnessing renewable energy sources.
Energy-intensive industries play a large role in the Finnish economy, which has spurred the development of efficient energy systems. The pulp and paper industry supplies over two-fifths of heat and electricity needs by utilizing solid and liquid wood residues. In Finland, peat has been defined as slowly renewing biomass fuel. It has a substantial share, about 5%, of Finland’s energy balance. As indigenous fuel, peat has considerable effect on regional policy. It increases employment and security of the energy supply. By 2025, Finland wants to increase its use of renewable energy by 260 PJ. The target for electricity production from renewable energy sources (RES-E) is 31.5% of gross electricity consumption in 2010. The development of renewable energy in Finland is expected to offer opportunities for U.S. companies in introduction of new innovative renewable energy source equipment technology.
Hydropower : There are 207 hydro power plants in Finland. Their combined capacity is almost 3,000 Megawatts (MW) and production in accordance with average flow year is 13 Terra-watt hours (TWh). Although the construction of hydropower in Finland began by the turn of the century, the main increase of capacity took place in the 1950's and 1960's when the share of hydro power of the country's electricity generation was 90 % at
32 its highest. Pohjolan Voima (PVO) will renovate the machinery of its hydropower plants on the Iijoki River and boost energy production. By employing new technology it is possible to increase the power of the plants by about 50 MW. The first phase of the work is carried out at the Kierikki hydropower plant in 2006 and 2007 (see www.pvo.fi). The target for 2010 is to increase the capacity of small hydro power plants by 570 MW and electricity production by 2,2 TWh.
Wood Fuels: Vapo (see www.vapo.fi) is a major supplier of wood fuels in Finland, with over 100 points of supply. In Sweden, Vapo’s subsidiary, Råsjö Torv, is also a leading supplier of wood fuels. In Finland, Vapo has supplied approximately 1.7 TWh in wood fuels to customers, 0.7 TWh of which was in forest chips. The use of wood-based bio fuels accounts for 20% and the total use of biomass over 25% of Finland’s primary energy consumption. Combined heat and electricity production (CHP), based on local fuels accounts for the bulk of bio energy production in Finland. The main end-user of wood-based bio fuels is the forest industry. However, a lot of bio fuels are also used in smaller municipal heating and power plants. Besides wood fuels, the role of recovered bio fuels, biogas, and bio liquors have grown substantially in recent years.
Bio Fuels: Pohjolan Voima’s bio fuel program has involved investments of some €700 million ($870) in new power plants, and an extensive research and development program to increase the use of forestry wood fuel and energy crops. The objective is to utilize biomass resources available from the forests and fields in the vicinity of power plants as efficiently as possible (http://www.pvo.fi.). Neste Oil signed an agreement in April, 2007 with Stora Enso, an integrated paper, packaging, and forest products company, to join forces to develop technology to produce new-generation bio-fuels from wood residues to replace fossil fuels, and cut greenhouse gases. The first step will be to design and build a demonstration plant at Stora Enso’s Varkaus Mill in Finland. The plant, owned on a 50/50 basis by the two companies, is expected to start up in 2008. It will produce heat and electricity for local use, and crude bio-diesel to be refined into commercial fuel at Neste Oil's refinery in Porvoo (http://www.nesteoil.com).
Neste Oil, Helsinki City Transport (HKL), and the Helsinki Metropolitan Area Council (YTV) have signed a letter of understanding covering extensive trial use of Neste Oil’s second-generation bio-diesel to power buses and waste disposal trucks across the greater Helsinki area. The trial, to start in fall 2007, will last until the end of 2010. It will involve about 700 buses, and 75 waste trucks. The goal is to reduce urban emissions and promote the use of biofuels on the road. The trial requiring national public funding includes the option to test other fuels for comparative purposes. Neste Oil's first plant producing second-generation bio-diesel will start up in 2007. It promises to mark the beginning of a new era for the company. The proprietary NExBTL technology behind it won Neste Oil the World Refining Association's Biofuels Technology Innovation of the Year Award in 2006. The company has selected biodiesel as a strategic area of growth, and aims to become the world's leading developer and producer of this type of fuel.
Peat: In Finland, peat is often used as a fuel for heat and power production together with wood fuels. Annual peat production amounts to about 20–25 million cubic meters. Peat is
33 produced in summer, and the depth of rainfall affects it. Mainly milled peat, but also sod peat to some extent is produced for energy use in Finland. In addition, 1–2 million cubic meters of garden peat is produced annually for both exports and domestic use. In Finland, peat has been defined as slowly renewing biomass fuel. It has a substantial share, about 5%, of Finland’s energy balance. As indigenous fuel, peat has a considerable effect on regional policy, and it increases employment and security of energy supply. The National Climate Strategy aims to maintain peat as a competitive fuel for cogeneration of heat and power.
Solar Power: Due to Finland's geographical location, the amount of solar radiation varies greatly throughout the year. In the summer, Finland usually receives more radiation energy from the sun than Central Europe does, but significantly less in the winter. Currently, solar power does not play a significant role in the Finnish energy market. Finland is in the first stages of exploiting solar energy and the industrial activity associated with it. The theoretical potential of solar energy is huge, but the market segments for it in Finland are still small. The target set in the national climate program is to increase the annual production of solar energy to 100 Gigawatt-hours (GWh) by the year 2010. This is equivalent to the use of solar energy in 10,000-20,000 single-family homes.
Wind Power: Finland had 90 wind power plants in 2005 with a total capacity of 82 MW and 89 installed turbines. The target is to reach 500 MW and produce 1,1 TWh of electricity annually by wind power by 2010. The Olkiluoto wind power plant was inaugurated in November 2004, and commercial operation started in 2005. TVO (Teollisuuden Voima Oy) constructed the wind power plant to gain experience in the operation of a wind power plant in the climatic conditions of Olkiluoto. The wind power plant delivered to Olkiluoto was the first one in the product series and contains technology never previously used in a wind power plant. A Finnish company Win Wind Oy manufactured the wind power plant, and the domestic content of the plant was about 85 %. See www.tuulivoimayhdistys.fi for on going wind energy projects, statistics, and location of wind power plants in Finland.
Best Products/ Services Finnish energy companies use open tenders according to European Union regulations. The development of renewable energy in Finland is expected to offer opportunities for U.S. companies in introduction of new innovative renewable energy source equipment technology. U.S. companies have also a possibility to participate in cooperation with Finnish companies in TEKES (National Technology Agency) funded projects (www.tekes.fi). Opportunities for U.S. companies also exist in the following areas:
• Technology for pellet production • Generators, gas engines • Heat pumps to heat private homes • Technology for agricultural biomass • Heat exchangers and heat meters • Small scale hydro turbines • Controls, pumps, piping • Technology to upgrade existing • Boilers for district heating hydro power plants • Forest chippers • Heat panels for oil heating systems
34
Germany
Overview As prices for conventional fuels continue to increase and prices for renewable energy steadily decrease, the renewable energy sector is expected to continue to grow. Electricity generation from renewable energies is substantially based on the German Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz, EEG), which is in accordance with European policy (Directive 2001/77/EC). Germany aims for 12.5 percent of electricity to be produced from renewable sources by 2010. Experts forecast as much as 47 percent of German electricity from renewable sources by 2020.
Wind Energy: Of all renewable energy sources, wind energy will remain the most significant. Until 2020, 25 percent, or 149 TWh, of the entire electric consumption in Germany is expected to be met by wind energy. Most of this production will be realized on shore, with installed capacities expected to reach 45 GW in 2020 (24 GW in 2008). Off-shore installations are expected to reach 10 GW.
Bio Energy: Total installed capacity of bio energy power plants is expected to more than double from 4.1 GW (2007) to 9.3 GW in 2020 to reach an electricity production of 54 TWh. The major share will come from biogas, followed by solid biomass (mainly wood and plants), liquid biomass (plant oils), and sewage and landfill gas. Bio energy is expected to be the second largest source for electric power.
Photovoltaic (PV) Energy: In 2020, 39.5 GW of installed cells will generate 40 TWh (2007: 4.3 TWh). PV will then generate around seven percent of the electricity used in Germany. To reach these ambitious growth goals, a further increase in efficiency combined with drastic price reductions are necessary, particularly since the feed-in tariffs for power generated by PV installations are subject to an annual digression of eight percent on average. It is expected that PV-generated power will cost as much as ‘conventional’ power by 2015. According to the German Solar Association (BSW), € 2.9 billion will be invested in upgrading or new construction of PV manufacturing plants, and € 224 million in additional R & D activities by 2010.
Hydro Power: Major investments are expected in the hydro power segment, not only for refurbishing existing facilities and upgrading them to meet environmental standards (e.g., elimination of barriers, installation of fish passes) but also by reactivating decentralized small units.
Geothermal Energy: At present, total installed electrical power equals to 7 MW generating 150 Million kWh per year. It is expected that this energy form will reach as much as 6000 MW and 400 Million kWh/year by 2020. 150 designated areas for geothermal exploration have been designated in Germany, some of which allow for the realization of several projects. About 62,000 heat pumps are installed, mostly in private residences. More than half use water-to-water or brine-to-water technology for which
35 vertical drilling or horizontal netting is required. A little less than half use air-to-air heat pump technology, which is expected to carry the highest growth potential.
Resources • Hydro Energy: Bundesverband Deutscher Wasserkraftwerke e.V. (BDW): www.wasserkraft-deutschland.de/ • Wind Energy: Bundesverband Windenergie (BWE): www.wind-energie.de • Solar Energy: Bundesverband Solarwirtschaft (BSW): www.solarwirtschaft.de • Geothermal Energy: Bundesverband Geothermie (GtV-BV): www.geothermie.de • Biogas: Fachverband Biogas: www.biogas.org • Renewable Energy: Bundesverband Erneuerbare Energie (BEE): www.bee-ev.de • Agentur fuer Erneuerbare Energien: www.unendlich-viel-energie.de • Government: Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU): www.bmu.de , www.erneuerbare-energien.de • German Energy Agency (DENA): www.dena.de • International Renewable Energy Agency (IRENA): www.irena.org
Hungary
Overview The EU “20-20-20” Goals include binding targets to raise the share of renewable energy to 20% by 2020. The target for Hungary is 13% of total energy production. Currently, Hungary has the lowest renewable energy share in gross electricity consumption among the EU countries, thus there is an urgent need for the development of this sector. The government has made long-term commitments to increase alternative energy use in the coming decades. In addition to environmental concerns, renewable energy also contributes to the security of supply by increasing the share of domestically produced energy and reducing dependence on fossil fuels. Hungary still relies heavily on Russian oil and gas exports. Hungary imports 80 percent of its total oil consumption, and over 80 percent of this, 6.9 million tons/year, comes from Russia. Hungary is also unique in the EU in that it uses more natural gas than oil. In 2006 renewable energy accounted for 4.6% of total electricity production and 4.9% of energy used for heating.*
Biomass: Biomass represents the largest source of renewable energy in Hungary, almost 90 percent. There are several units in operation in Hungary, most of them using biomass mixed with another fuel. Annually 110 million tons of raw material are produced and the strong agricultural background ensures sustainable production.
Biogas: The large-scale production of inputs provides excellent opportunities for development for bio-gas. Hungary plans to increase its biogas production four or fivefold in the next three to five years due to stricter EU regulations for agricultural waste handling. Since 2003, a number of biogas plants have been established in Hungary, with capacities ranging between 1.7 to 3.5 MW.
36 Geothermal Energy: Great potential due to the geological conditions of the country. Currently accounts for over 8% of the renewable energy production and the sector bears excellent possibilities for development.
Solar Power: Relatively undeveloped. A small number of residences and community buildings, like hospitals, use roof-mounted solar panels to supplement heating units.
Wind Energy: Total wind energy capacity is limited to 330 MW by the Hungarian Energy Office. Hungary does not have any pumped storage power plant and the 80% reserve capacity required by wind energy generation must be provided by gas-fueled plants. Currently 30 wind farms (71 towers) are operating, producing about 127 MW.
Hydropower: The capacity is 40MW from over twenty different power plants. Due to the geographical conditions, further large developments are unlikely. Small and micro sized plants are expected to be built.
Bio-fuel: Hungary has production capacity of around 180.000 tons of bio-fuel per year, mainly from two large facilities. Given the easy availability of raw materials, more than 30 manufacturing sites have been planned, but increasing crop prices combined with falling oil prices and the debate around the sustainability of bio-fuels, have slowed down developments. In accordance with the EU directive, the Hungarian Government set the objective of achieving a bio-fuel proportion of 4% in the fuel market by 2010. Differentiated taxation came in force, whereby fuels containing bio-components enjoy a more favorable tax situation. The bio-ethanol content of petrol was raised from 4.4 to 4.8% in 2009 and will be further increased to 5.7% in 2010. E85 fuel (bio-fuel, which contains about 85% bioethanol and 15 % petrol) has also been introduced to the market: by the end of 2008 there were 39 E85 filling stations in Hungary.
Best Products/Services The Hungarian Renewable Energy Strategy forecasts growth mainly in biomass, wind and geothermal energy. The cost-effectiveness of renewable energy production is supported by competitive feed-in tariffs, guaranteed quotas and investment subsidies. In 2008, $380 million worth of incentives were paid for generating power using renewable resources. About 73 percent of the incentives went to combined-cycle power plants that send the heat created when generating electricity into district.
Opportunities The EU is set to provide $30.7 billion to Hungary, from 2007-13, to finance infrastructure upgrades, as part of the New Hungary Development Plan. About $ 500 million is designated to support renewable energy-related investments in the framework of the Environment and Energy Operational Program. The Hungarian Energy Office is expected to invite tender applications for new capacities in wind energy production in 2009.
37 Resources • Greenenergy on-line: www.zoldtech.hu • Elmib Energy Efficiency e-News: www.elmib.hu • Hungarian Energy Office: www.eh.gov.hu • Hungarian Wind Energy Association: /www.mszet.hu • Ministry of Transport, Telecommunication and Energy: www.khem.gov.hu/en • National Development Agency: www.nfu.hu/?lang=en • Union of Biomass Product Line: www.bitesz.hu • Commercial Specialist – Agnes Pandur: [email protected]
Ireland
Overview As Ireland imports approximately 90% of its primary energy requirements, renewable energy is attracting substantial attention across the commercial and political spectrum. Renewable sources account for 8.6% of electricity generation. The Irish government has ambitious plans to raise this to 15% by 2010 with a further target of 33% by 2020. The appointment of two Green Party politicians to head up the Energy and Environment ministries within the new (June 2007) Irish government administration has heightened the emphasis on sustainable and renewable energy policy. Partnerships between Irish and international organizations are viewed as a way of fast-tracking the introduction of additional renewable energy projects into Ireland. The main risks and challenges in entering the renewable market in Ireland center around planning delays, and a possible longer term shortage of available sites - for wind farms in particular.
Renewable energy constitutes a core element of Irish energy policy. The Irish government’s Energy White Paper (April 2007) outlines the three main pillars of Ireland’s energy policy – (1) maintaining secure energy supplies, (2) supporting economic growth and competitiveness, and (3) ensuring that energy supply and use is environmentally sustainable. Renewable energy is perceived to have a significant role to play in meeting all of these three objectives. As the White Paper states, “Renewable energy is an integral part of our climate change strategy and sustainability objectives. The additional diversity that renewables bring to Ireland’s energy demand will also make a direct contribution to our goal of ensuring secure and reliable energy supplies”. Ireland’s demand for renewable energies is strong.
The driving forces behind this demand are:
• The urgent need to find new sources of energy to replace rapidly diminishing Irish oil and gas reserves. • Strong Irish and EU environmental legislation aimed at substantially increasing the proportion of energy produced from renewable sources. One of the major driving forces behind the campaign for renewable energy is meeting Ireland’s commitments under the Kyoto Protocol as a recent European Commission study indicated that Ireland is struggling to meet its targets on limiting emissions.
38 To initiate action on the renewable energy agenda, Ireland passed the Sustainable Energy Act that created Sustainable Energy Ireland (SEI) - Ireland’s national energy agency. SEI’s main objective is to ensure sustainable energy for the future of Ireland. In doing this, the SEI has leaned more to the use of renewable energy rather than nonrenewable. SEI is funded through the National Development Plan 2007-2013 which is partly funded by the European Union. The SEI has established a series of goals for renewable energy in Ireland. Currently Ireland’s renewable energy accounts for about 2% of the total energy consumption. Ireland aims to make renewables 10% of their total energy consumption by 2010. By 2020 Ireland is shooting for 20% of its energy needs from renewables.
Biomass: The most used renewable energy source in Ireland is biomass. Biomass energy (Bioenergy) encompasses three sectors - electricity, transportation, and heat. The heat sector utilizes waste wood used by the timber processing industry for drying and wood burnt by the residential sector. Ireland is working on a program that would use heat from biomass for all new public buildings. Biomass energy in the transportation sector is centered around biofuels such as ethanol from sugar and starch crops, biodiesel from oil, pure bio oil, and fuels produced from wood or grasses by advanced technologies. The three main types of biofuels in Ireland are biodiesel, bioethanol, and pure plant oil. In 2005 only 2% of the transportation was fueled by biofuels. The SEI has set a goal for 5.75% by 2010 and 10% by 2020.
Most of the biomass energy is made from wood. Recently experts found a new renewable resource that is said to generate more energy than wood. Miscanthus giganteus also know as elephant grass is the newest renewable resource used to make biomass energy. Elephant grass is a perinal grass that can grow to be 13 feet high. It works great for carbon sequestration and soil building, but its greatest attribute is its amazing potential to make biomass energy. Scientists claim, if 10% of Ireland’s arable land were given over to the grass, taking into account different growing conditions and climates, ‘as much as 30% of the energy requirements for the country could be provided.’ Also scientists say they can make a sterile plant that would not produce pollen in order to keep this plant contained and to please people with allergies. It requires no special treatment and minimal fertilizer inputs. In 2006 a range of programs were introduced to stimulate the market for renewable heat technologies. These include:
• Greener Homes Scheme (http://www.sei.ie/index.asp?locID=1305&docID=-1) This $64.5 million program provides flat-rate grants for households to assist in the purchase and installation of heat technologies such as solar, wood pellets and heat pump. Over 15,000 applications have been received since the program was launched in March 2006. The program is expected to run for five years. • $35.7 million Reheat Program: This program provides grants for community, voluntary groups and business to install solar, wood chips or pellet, or heat pump technologies. Grants of up to 30% of installation costs are available. • $15.1 million Combined Heat and Power (CHP) Program: This program provides grants of up to 30% for the installation of combined heat and power systems. A call for proposals for Biomass CHP proposals is to issue shortly.
39 In addition to these measures, the Office of Public Works (OPW) has committed to installing biomass-heating systems in 20 of its largest buildings and in all new-builds. This commitment is one of a series of actions agreed in the Bio energy Action Plan.
Wind power: Wind power is the fastest growing of all the renewable energy sources. Wind energy is very compatible with Ireland’s climate since Ireland is well-known for being a very windy country. Currently Ireland’s total wind energy capacity is 866.15KW generated from 88 wind farms in 19 counties as shown on attached map.1 Some experts believe 30% of Ireland’s energy will be produced by wind power by the 2020. Donegal has the greatest wind energy capacity with approximately 185.5 MW produced from 16 wind farms. It is no surprise that Donegal is operating at such high capacity due to the miles of coastline located in northwest Ireland. Because of the ideal wind conditions, an Irish wind turbine has twice as much output as the same turbine in Germany. Oriel Wind Farm Ltd. (http://www.orielwind.com) plans to develop a 330MW off-shore wind farm along the north-east coast of Ireland. The company is currently undertaking technical and environmental assessments of the site before submitting a formal planning application.
Ocean Energy: Ocean energy is produced from the waves and tidal currents in the ocean. Ireland’s ocean energy is one of the vastest resources and is relatively untapped. Currently there are no ocean energy plants that are operational in Ireland. However, due to the rise in energy prices and the advance of cleaner energy the future of ocean energy looks promising.
Solar: Ireland receives enough solar energy to allow a correctly sized solar panel system to provide an annual average of 60% of a building's hot water requirements (the figure will be higher in summer and lower in winter). Clean renewable heat energy for buildings of all sizes can also be obtained using passive solar design, heat pumps and wood fuel. Solar power has great potential, but because of Irelands conditions there are few opportunities for the commercial production of this energy.
Korea
Overview Korea is the world’s 10th largest energy consumer, and has virtually no domestic energy sources of its own. It imports 97% of its energy sources, and is the 6th largest oil importer in the world. To reduce its heavy energy dependency on foreign fossil-fuels, the Republic of Korea Government (ROKG) has launched a series of plans to promote the development and use of new and renewable energies (NRE). The Korean industry has positively responded to the government initiatives by investing in and building more and more power plants using such alternative fuels. Though the Korean Government is making focused investments to address the lack of core technologies and experience in NRE, the Korean power plant industry is constantly seeking imports of advanced technologies, providing ample business opportunities for U.S. NRE companies with innovative technologies.
40 The highlight of ROKG’s policy initiatives towards NRE is Korea’s new National Energy Plan announced in August 2008. Dubbed the “Low Carbon, Green Growth Plan,” it is Korea’s first long-term energy plan proposed to serve as the governing policy for energy generation and use for coming 20 years. According to the Plan, ROKG will increase the ratio of NRE generation out of the entire energy generation from current 2.4% to 11% by 2030. By NRE subsector, specifically; 1) the generation capacity of photovoltaic power will grow from current 80 MW to 3,504 MW (44 times); 2) wind energy will grow from 199 MW to 7,301 MW (37 times); 3) bio energy from 1,874 KGcal to 36,487 KGcal (19 times); 4) and geothermal energy from 110 KGcal to 5,606 KGcal (51 times).
Since renewable energy technologies remain commercially disadvantageous against the conventional power generation technologies, NRE heavily relies on government policies to become economically viable. ROKG’s principal policy drivers for NRE are basically two-fold: 1) providing financial incentives such as subsidiaries, low interest loans, tax reduction/exemption, and feed-in-tariffs to power generation companies using NRE, and 2) mandating that government owned entities must use NRE to supply a growing portion of their needs.
Korea’s energy consumption has gradually increased over the last decade. In 2007, the total energy consumption was estimated at 240 million tons of oil equivalent (TOE, equivalent to 11.630 MW/h). Every year, Korea imports energy sources worth $95 billion to cover 97% of its energy needs. Korea heavily relies on fossil fuels. Out of the entire energy source, oil, coal and liquefied natural gas (LNG) accounts for 43%, 25%, 15%, respectively. Nuclear accounts for 15%, and NRE covers remaining less than 3%.
Korea is a fully industrialized country, and its manufacturing base includes a large number of energy-intensive, heavy industries including shipbuilding, petrochemical, automotive manufacture, etc. Compared to other energy application sectors in Korea, these heavy industries are some of the biggest users consuming 57% of the total energy. By comparison, the transportation, the residential/commercial, and the public sector account for 21%, 20%, and 2%, respectively.
As mentioned above, Korea’s current NRE mix has several sub-sectors. Waste-to-energy is the biggest, representing 77% of total NRE generation in Korea. Small hydro covers 13.9%, bio (6.6%), wind (1.4%), solar thermal (0.5%), photovoltaic (0.3%), and geothermal covers 0.2%. The big portion of waste-to-energy is mainly attributable to Korea’s very strong regulations promoting waste recycling and deriving energy from wastes. Most solid wastes generated from industry and households are reused, recycled or incinerated for energy use and volume reduction. Only a small amount of wastes ends up being dumped in landfills.
The remaining minor NRE sub-sectors include fuel cells, tidal power, hydrogen power, etc. which takes up only minimal part of the NRE generation. However, these sub-sectors pose a strong potential to grow as ROKG is strongly supporting R&D into related technologies. One of the most critical parts of ROKG’s incentives for market development is the feed-in-tariff (FIT), incentive structure to encourage the adoption of
41 NRE. Under FIT, Korea’s electricity utilities are mandated to buy electricity generated using NRE over conventional energy at a ROKG-fixed price. Depending on NRE subsectors, the fixed price can be as high as 10 times that of the market price of traditional electricity cost, a.k.a., System Marginal Price (SMP). ROKG compensates for the cost difference between SMP and the fixed price. For instance, if an electricity utility buys photovoltaic energy at 500 Won per KWh, and the SMP is just 50 Won per KWh, ROKG feeds in 450 won to the utility to offset the cost difference.
It is believed that ROKG’s FIT system has been the key market driver behind the rapid adaptation of NRE in Korea. But ROKG recently noted that FIT makes it difficult for ROKG to forecast electricity generation in the future, and also does not bring in the concept of competition within the industry. To address this issue, ROKG has set a policy to adopt Renewable Portfolio Standard (RPS) that will mandate power companies generate certain amount of electricity using NRE. ROKG plans to adopt RPS to replace existing FIT starting in 2012. Buoyed by ROKG’s strong NRE initiatives, most NRE sub- sectors have experienced rapid growth for the last several years, and are forecast to continue the growth. Several laws and plans either have been established or are soon to be established, which will accelerate the development and growth the NRE industry.
Photovoltaic power: Korea has seen a drastic growth in solar power generation for the last several years. Its very first solar power plant was built in 2004, which had a generation capacity of 200 KW. Today, Korea has more than 800 solar power plants across the nation, of which total capacity exceeds 292 MW, and there are several hundreds of new solar power plants to be built in a few years. Some of the recently built ones have much greater generation capacity, which include a 24 MW one in Sinan-gun, southwest coastal part of South Korea. The Sinan plant is one of world’s largest solar power plants of all, and the largest one equipped with a sun-tracking system, as of today. With ROKG’s goal to increase solar power capacity to 3,504 MW by 2030, there will be much more solar power plants to be built, and some of them will have even greater capacity than that of the Sinan plant. Crystalline solar cells have been the dominant form of solar power technology in Korea, but thin-film solar cells is gradually taking up the market and is experiencing significant demand growth in the past year.
Wind power: Korea’s total wind power generation capacity is 199 MW as of today. The largest wind power plant is located in Pyungchang-gu, in the northeastern part of South Korea and generates 98 MW electricity from 49 wind turbines. The electricity generated is supplied into 50,000 households in the region. Korea’s unique topography is very mountainous terrain providing ample amounts of wind resources. Thus, wind power is one of the most economically viable renewable energies without ROKG incentives. Jeju Island on the southwest is also a popular place for wind power plants as it has sustained winds, and its position as the premier Korean vacation destination means it is not well- suited for building polluting, conventional power plants. There are several feasibility studies going on for new wind power plants by several Korean ventures.
Fuel cells: Korea is home to the world’s largest hydrogen & fuel cell power plants. Three cities (Pohang, Gunsan, Jeonju) have a hydrogen & fuel cell plant, each of them having a
42 capacity 2.4 MW that can cover electricity needs of about 2,000 households. The local government of Seoul Metropolitan City just announced that it would have two hydrogen fuel cell power plants in two residential areas, Mokdong and Nowon, of which combined capacity will be 5.2 MW. While photovoltaic and wind energies require vast amount of land, and their efficiency is highly subject to uncontrollable weather conditions, fuel cells is much less limited in this regard. With ROKG’s strong policy support and Korean industry’s active participation, the fuel cells industry is forecast to grow to be one of most rapidly growing NRE sectors in the future.
Marine energy: As a peninsula with 3 coastlines, Korea has easy access to marine energy. Though still in the developmental stage, Korea is very close to fully commercializing such technologies. Construction projects going on alongside the coastal line include a tidal current power plant, in Uldolkmok in southwest of Korea. Tidal current power (a.k.a. tidal stream power) derives energy of moving water like wind power that use moving air. The ongoing, first-phase, test-bed project at Uldockmok plant is going to generate MW electricity, world’s largest in its kind. When the last-phase project is completed as planned, it will have a combined capacity of 50 MW.
Tidal power is derived from potential energy between low and high tides. The world’s largest tidal power plant is under construction in Sihwa, in the west coast of Korea. The construction is forecast to be completed by 2009 when it will generate 254 MW of electricity. ROKG is very ambitious for the development of tidal power industry, and has plans to build several very large-sized tidal power plants including Saemangum (400 MW), Garorim (520 MW), Chonsuman (720 MW), Gwanghwa (810 MW), Incheonman (1,140MW), all along the west coastline. The cost of electricity generation from tidal power is identified as the lowest among the competing NRE, so the ROKG is actively pushing the further development of the industry.
Integrated Gasification and Combined Cycle (IGCC): While being applied to coal- fired plants that already exist, the IGCC technology is widely considered as a new, low carbon technology. For the high efficiency and environmentally friendly feature of this technology, Korea has plans to adopt it for new coal-fired plants including one with a capacity of 300 MW which is planned to be completed by 2012 by Korea Western Power Company.
Latvia
Overview The European Union is actively working to reduce the effects of climate change and establish a common energy policy. The current EU policy dictates that Latvia has to increase the share of renewable energy in final energy consumption by 7.1% to reach 42% by 2020.
Best Products/Services Wind parks, Combined Heat and Power turnkey plants.
43 Opportunities The most promising sectors for the renewable energy equipment in Latvia are wind energy and energy produced in combined heat and power plants. The Latvian Government provides support for the production of energy from renewable energy resources (wind, biomass, etc).
Resources • Public Utilities Commission http://www.sprk.gov.lv/ • Ministry of Economy, Energy Department http://www.em.gov.lv/em/2nd/?cat=55
Mexico
Overview Renewable energy used for the generation of electricity, including mini-hydroelectric, biomass, photovoltaic-solar, wind power, and geothermal energies, has experienced slow growth in Mexico. The existence of state owned oil and electricity companies has led to little innovation beyond fossil fuels. To this point, hydroelectric and geothermal energy have been Mexico’s most prolific renewable sources, and its geothermal production is the third largest in the world.
But the market looks to be changing as the Mexican Government has recently proposed new renewable energy goals. The increasing level of pollution, higher costs of fossil fuels, difficulties in the reform of the state oil company, and heightened awareness of global warming have all led the government to press for the adoption of more clean energy sources. The recent addition of several new wind turbine plants in Oaxaca shows promise, and as prices for renewable resources continue to fall we can expect the market to open even further. The electricity generated in Mexico by hydroelectric and geothermal plants already represents 25% of the capacity and 15% of the total generation of the National Electric System, but the government has expressed a desire to further increase other renewable sources.
Although the Mexican energy market has been slow to open to new renewable technologies, there is movement in the government towards the establishment of renewables as part of the National Energy Plan. In 2007, President Felipe Calderon established the National Strategy for Climate Change, in which the government proposed that 8% of all electricity would come from renewable energies, excluding large hydroelectric projects, by 2012. This plan continues upon the Initiative of Law for the Use of Renewable Sources of Energy (LAFRE), passed by the Mexican Congress in 2005. The Initiative estimates a public investment of $55-70 million for the generation of electricity using competitive technologies like wind, and an additional $37 million to promote less mature technologies like solar and hydrogen.3
This goal could be reached with the government’s plans to install 7,000 MW of renewable energy capacity to generate 16,000 GWh per year by 2012, excluding the El Cajon and La Parota hydroelectric plants. In 2007, renewable sources, excluding large hydroelectric plants, only constituted about 2% of total effective capacity. If the
44 government’s plans are actualized, the renewable energy market will see strong growth in the future. Mexico’s constitution will make it difficult to obtain much of the investment needed to move forward on renewable energy. It prohibits private companies from generating, transmitting or distributing electricity as a public service. These activities are reserved for Mexico’s two state-owned electric power utilities, the Federal Electricity Commission (CFE) and the Central Light and Power Company (LyFC). The exceptions to these rules are for Independent Power Producers and Self Supply Generation plants. Mexico’s proven oil reserves of around 12 billion barrels are estimated to last the country about 9 more years at current production levels, a fact which has allowed for slower transformation to renewable sources. The state oil company PEMEX has experienced a daily decline of 300,000 barrels per day since 2005, however high international oil prices have allowed it to continue offering subsidized energy to the public. PEMEX provides about a third of the government’s revenue making its reform a high priority for President Calderon. These reforms could further open the energy market to renewables.
Although the Mexican energy market can be difficult to enter due to the constitutional requirements and existences of PEMEX, there are other methods a private firm can follow to produce energy or supply parts in the country.
Mexico’s Independent Power Producers (IPP) - plants privately financed, built, and owned - are plants permitted to produce electricity for exclusive sale to the Federal Electricity Commission (CFE) or for export abroad. The IPP refers to plants with over 30 MW, although they often constitute over 200MW, of capacity and is allowed under the Public Service Law of Electric Energy. Independent Producer status is granted by the CFE after a bidding procedure.
Another option for private power generation is through the “self supply” category. A business, industry, or community may apply to utilize self supplied energy. Again, licenses for this type of production must be procured from the CRE. In 2007, the CRE granted the state oil company CEMEX and the supermarket chain Soriana self-generation permits for their wind-energy plants. These plants will initially produce 250 and 120 MW respectively, and additional electricity may be sold back into the grid at a reduced price if unused. Many companies are looking into this possibility in order to reduce their long- term electric bills and carbon footprints alike.
According to the Energy Regulation Commission (CRE), as of June 2008 there have already been over 13,000 MW worth of contracts awarded between Private Power Generation, Self Supply Generation, Cogeneration, and other methods outside of the electric grid since these contracts began. The graphs above also show the number of permits granted by the CFE, by type, and the number of GWh these independent electric sources are producing.
Wind Energy: The Mexican market for wind powered turbines, blades, and other wind powered equipment has experienced solid growth through the first four months of 2008. U.S. exporters continue to control the market with a 75% share. The National Renewable Energy Laboratory (NREL) in the United States mentions that conservative estimates of
45 the wind-energy market in Mexico are in the range of 5,000 MW, but NREL’s own estimates of the potential just within the La Ventosa region of Oaxaca are around 33,000 MW.7 In March of 2007, President Calderon inaugurated the 80 MW La Venta II wind farm co-built by Spanish firms Gamesa Eolica and Iberdrola, increasing the capacity of the previous 1.5 MW La Venta I pilot farm in the La Ventosa area. In addition to these two plants, the Guerrero Negro plant in Baja California produces around 1 MW and raises Mexico’s current total installed capacity to over 85 MW.
Following its previous success, the Mexican Government has begun a new 100 MW La Venta III project, utilizing a 25 million dollar grant from the World Bank. The Federal Commission of Electricity also plans on the installation of six new wind farms in the La Ventosa region by the end of 2014 with a total capacity of around 590 MW. The regions considered to have the best potential for wind power, besides La Ventosa, are in the Coast of the state of Quintana Roo, around Pachuca, Hidalgo, in the south of the state of Coahuila, in the south of the Baja California peninsula, and in the Northeast of the state of Zacatecas.
Solar Energy: The Mexican solar energy market has been slower to develop than the wind sector. No large scale government production exists like the La Venta plants to help the nascent sector along, but it has created demand through its promotion of solar energy in rural areas. With the government’s help, multiple opportunities are becoming available in the Mexican market today. The Thermal Solar sector has increased due to the additions of solar water heaters both in rural areas and in urban areas like Mexico City. The Photovoltaic market has also increased, mainly in rural communities not covered by the electric grid. Opportunities for growth in both of these markets exist in Mexico given its abundant year round sunshine.
Thermal Solar: Federal Electricity Commission (CFE) statistics show that in 2006 electricity service was provided to only 97.33% of the population, leaving 53,321 communities unserviced. Of those communities without service, almost all had populations under 100. These small rural communities and ranches, often far from the electric grid, represent opportunities for both Thermal and Photovoltaic markets. Mexico’s abundant sunlight makes the solar market’s capacity for growth very enticing. Mexico’s solar possibilities are among the best in the world, with a gross solar potential estimated at over 5 KWh/m2 and over 2 million km2 of territory.13 The states with the best solar potential are Baja California, Chiapas, Quintana Roo, and Sonora.
The thermal solar market has increased due to the growth of solar water heaters throughout Mexico. U.S. exports in the market grew at around 60% each year from 2005- 2007 and had already crossed that benchmark by April of 2008 according to the most recent statistics available from the World Trade Atlas. One reason for this increase is Mexico City’s passing of new norms in 2006 that all new business establishments are to install water heaters driven by solar energy. With a population estimated at over 8 million within the city limits, and estimated around 25 million in the greater metro area, this new law will offer significant growth opportunities for solar water heaters in the future.
46 Photovoltaic: The market for Photovoltaic energy in Mexico has seen sustained growth for years. In this market, PV assembly plants have been around the U.S.-Mexico border for years, but there is no domestic production of PV cells in Mexico. The largest amount of imports in dollar terms is in the sector of HS Code 8541.40. These are solar PV cells and systems, including panels and modules, Light Emitting Diodes, dice, wafers and chips. Through the first four months of 2008, this sector has already increased its exports to Mexico by over 15% from 2007. The HS Code 8541.90 also shows promise for growth. This section includes PV parts, including diodes and transistors. Through the first four months of 2008, U.S. exports in this sector increased over 400% from 2007. The HS Code 841919, which encompasses solar water heaters and instantaneous water heaters, is also experiencing strong growth through the first four months of 2008.
The current opportunities in the photovoltaic market often exist in smaller-scale projects, providing electricity to rural communities living large distances from the electrical grid. Their main uses are for telecommunications, refrigeration, water heaters, schools, and to farmers for water pumps. The Mexican Secretary of Energy, SENER, hopes to have 30 MW and 18 GWh/year of photovoltaic capacity installed by 2013. This is up from the approximately 20 MW that exist today. They estimate the needed investment for this expansion to be around $24 to $36 million. One application of PV technology is in progress in Mexicali. The Baja California government sponsored an initiative to construct 500 low income houses with a grid-connected array of 1 kW each. The first phase of the project built 220 houses. With Mexicali’s location in a desert valley, the PV arrays are expected to provide relief from peak electricity rates from the grid. Each house will have the ability to use “net metering”, where stored electricity can be sold to the grid when there is extra and purchased when they are lacking. Another application for PV in Mexico is through hybrid generating plants. CFE currently has a hybrid plant in Juanico, Baja California, powered by 17 kW of PV array, a 70 kW wind turbine cluster, and an 80 kW diesel generator. The CFE of Mexico, the Arizona Public Service Company, and the National Renewable Energy Laboratory were all instrumental in the design of this system. This should not be the last PV project the government supports for low-income housing, and the future possibilities in this market look bright.
Hydropower: The total capacity of all hydroelectric power produced for SENER in Mexico increased by 5% from 2006 to 2007, and 14% since 2004. The actual production, as seen above, has grown at a slower rate. The government’s goal, using the World Bank’s financial financing, to produce small-scale renewable energy has led to multiple new mini-hydroelectric projects recently. And with CONAE’s estimate of a possible 15,000 MW remaining unexplored19, hydroelectric power offers a strong future market. Since 2006, the CRE has authorized 9 new hydroelectric projects throughout Mexico. These new plants are situated in Baja California, Jalisco, Puebla, Veracruz, and are intended for a range of uses from industry to small-producer, to municipal power. These new producers range between a 1.6 MW plant in Veracruz to a 30 MW facility still under construction in Puebla. They are to be constructed with a total authorized capacity of 90 MW and 585 GWh/year.20 Location of Mexico’s Hydroelectric facilities The installation costs vary for these projects. SENER estimates the investment ranges to be between 800 and 1,800 dollars per installed KW with generation costs ranging between 3 to 20 cents
47 (U.S.) per KWh.21 Although the total potential of mini-hydroelectric has yet to be determined, CONAE has identified over 100 sites for its use. In the region where the states of Veracruz and Puebla meet for example, CONAE sees a possible generation of up to 3,570 GWh/year, an equivalent of 400 MW.
Geothermal: Mexico is the world’s third largest producer of geothermal energy, but there has not been much growth in the sector for some time. Due to the government’s desire to increase electricity production and geothermal’s potential, the sector offers significant possibilities in the future. Mexico currently has 960 MW of installed geothermal capacity, which produces just over 3% of the country’s electric energy. The Energy Regulation Commission (CRE) has identified over 1,400 sites in 50 different geothermal zones where new geothermal plants can be built. According to the CRE, Mexico has around 1,300 MW of proven reserves and 4,500 probable reserves remaining. Possible future plans include both the construction of new plants and the amplification of existing sites.
Biomass: The Mexican market for biomass production should benefit from the recent passing of the bio-energy law (Ley de Promocion y Desarrollo de los Bioenergeticos) in early 2008. The law is intended to help diversify Mexico’s energy portfolio, the majority of which consists of oil from the state oil company PEMEX. In article 5, the law creates a market for ethanol by mandating that in principle urban areas, at least 10% of gasoline must be ethanol based. Article 7 speaks of the application of fiscal and economic stimuli to make biomass productive and competitive. The government’s new support for the industry should prove very beneficial for multiple sectors in the biomass market. While the growth in the overall energy produced by the biomass industry for SENER has been slow in recent years, the market for sugar cane and sorghum (bagasse) based fuel has increased. A CRE report sees the possible capacity of sugar cane reaching 1,000 MW.
Another biomass sector with a good possibility for growth is the incineration or gasification of solid wastes and sewer gases. Many metropolitan areas in Mexico have already begun to study the possibility of establishing incineration plants to produce energy and help with their waste management. So far the municipalities of Monterrey, Mexico City, Tlalnepantla, Cancun, Naucalpan, Puebla, Queretaro, Aguascalientes, Guadalajara, and Tijuana have either constructed incineration plants or are looking into doing so. The CRE estimates a possible gain of 400 MW in Mexico City, and another 150 MW in Guadalajara from these processes. Other possibilities in the biomass sector revolve around both plants using landfill waste, where the CRE estimates possible capacity of 150MW, and methane plants generating energy from bovine waste.28 Unlike in the wind and solar sectors, the CRE has authorized very few self generation or IPP plants in recent years using any type of biomass. Contacting the individual municipalities is recommended for further information.
48 Norway
Overview Norway and its Nordic neighbors are considered world leaders in the use of renewable energy, clean technology and alternative fuels. The governments are inclined to invest in energy research, providing tax benefits, funded expansion plans, electricity certificate programs and production incentives for the increased use of alternative fuels and renewable energy. Norway has accepted a number of international commitments to reduce emissions (including carbon dioxide, such as the Kyoto Protocol). These numerous commitments have proven to be a challenge for Norway, given its role as the world’s fifth largest exporter of oil and the third largest exporter of natural gas. However, in a political agreement in January 2008 between the Norwegian Government and the opposition parties in the Norwegian Parliament, the following ambitious climate change goals were stated:
• Norway intends to cut the global emissions equivalent to 100% of its own emissions by 2030, aspiring to become a carbon neutral nation. • By 2020, Norway plans to reduce global greenhouse gas emissions by the equivalent of 30% of its own 1990 emissions. • Norway will strengthen its Kyoto commitments by 10 % points, corresponding to nine percent below the country's 1990-level.
Norway has a higher share of renewable electricity than any of the EU member states, and the Ministry of Petroleum and Energy indicated a domestic target of 90% renewable electricity by 2010. This calls for significant renewable electricity production increases. Norway has the world's largest per capita hydropower production, and is the world's sixth largest hydropower producer. In a year with normal precipitation, hydropower generation is around 120 TWh, corresponding to approximately 99% of Norway's total power production. Norway considers itself a global environmental champion and is on the leading edge of several clean energy technologies, especially concerning carbon capture and storage (CCS). Production of power and other use of fossil energy are the largest sources of greenhouse gas emissions. Capture of CO2 and storage of CO2 in oil/gas reservoirs and geological formations emerge as potential measures to reduce global emissions. Norway aims to make full-scale CCS a reality.
The Norwegian Government's CCS goals are ambitious. The commitment to develop gas- fired power stations with CCS in Norway is a centerpiece of Norway’s energy policy. If successful, Norway will achieve a more secure energy supply and through technology development contribute to reductions in greenhouse gas emissions. The Government has also set a long-term collective goal of 30 TWh of increased renewable energy production and energy efficiency from 2001 to 2016. There is considerable interest in building wind power stations, and there are a number of smaller hydropower projects ready for development. This commitment is good news for the growing number of firms creating cutting-edge technology in the areas of hydrogen, solar, wind, tidal and osmotic power, as well as biofuels. Developing and marketing these products will demand a coordinated approach and attention from both the public and private sector.
49
Hydropower: Norway has considerable hydro resources and has over the past 100 years constructed more than 330 dams. There are still new niche developments and technology potential associated with hydropower.
Wind power (onshore and offshore): This renewable energy source is where most investments are focused and is also the source closest to commercial viability (incl. StatoilHydro, Sway, Scatec, Statkraft).
Solar power: This is one of the fastest-growing sectors of the global energy market. Norway has ambitions and several leading solar technology companies (including REC Group, Elkem, Norsun) participating in developments across the entire value chain.
Tidal power and wave energy: This sector also has rising developments - based largely on Norway’s offshore capabilities, with current projects also involving osmotic power (salinity gradient energy based on seawater). Geothermal energy is another renewable energy source, also tied to Norway’s oil and gas production expertise.
Opportunities There are a number of Government-funded programs for renewable and environmentally friendly energy. Some of these programs manage government funding for the testing and demonstration of technology for removing greenhouse gas emissions from power production. As a major producer of fossil fuels Norway considers that it has an important role in contributing to technology development. To develop the technologies necessary to meet the twin challenges of energy security and climate security, the Norwegian Government believes that it must use a mix of political incentives/ persuasion and market mechanisms. In 2007, Norway embarked on a major new research, development and demonstration project with a view to building the world’s largest full-scale CCS facility in connection with a combined gas-fired heat and power plant at Mongstad. The plant, located on Norway's west coast, is projected to be fully operational by 2014. This is a cooperative venture between the Norwegian Government and the oil and gas company StatoilHydro. The Norwegian Government expects the Mongstad project to stimulate international technological cooperation, which it considers critical for coherent, urgent and broad-based action on climate change. It should be noted that the funding model of the project caused problems with regard to regulatory approval from the European Union. Nevertheless, the government has pledged to go forward with Mongstad.
The Norwegian Government has decided that all new gas fired power plants shall be based on CCS technologies. The government strategy to achieve this goal involves a combination of technologies and processes, financial support and regulations. Gassnova, a government entity, was established in July 2007 with the mandate to manage governmental interest and support technology development within the area of CCS management. The Norwegian Government has also allocated $ 3.3 billion (NOK 20 billion) for a fund set up to strengthen efforts on renewable energy and energy efficiency. The state owned agency Enova will manage the yield from the fund. Enova will establish a support system for district heating infrastructure, and manage a support system for
50 renewable electricity. In connection with the downturn in the financial markets, the Norwegian Government has also announced stimulus packages with significant implications for the renewable energy sector.
Resources
• Norwegian Government – Energy initiatives http://www.regjeringen.no/en/topics/Energy.html?id=212 • http://www.regjeringen.no/en/The-Government/stoltenberg-ii/The-Big- Issues/Bindingclimate-policy.html?id=446708 • Norwegian Ministry of Trade and Industry http://www.regjeringen.no/en/ministries/nhd.html?id=709 • Norwegian Ministry of Petroleum and Energy http://www.regjeringen.no/en/ministries/oed.html?id=750 • Norwegian Ministry of Environment http://www.regjeringen.no/en/dep/md.html?id=668 • Norwegian Pollution Control Authority www.sft.no • Gassnova http://www.gassnova.no • Enova www.enova.no • Norwegian Water Resources and Energy Directorate http://www.nve.no
Poland
Overview Poland has very favorable technical and economical factors for renewable energy. Since 2004 Poland has begun to experience a shift of political and public support away from traditional fossil fuels and toward the development of renewable energy resources. Poland has established a target of 10.4 percent of energy production from renewable sources by 2010, and will continue with this target till 2014. These targets were set forth in the Ministry of Economy regulation of November 3, 2006. Utilities are required to purchase electricity from renewable sources, and prices are regulated by tariffs. Producers of green energy can apply for green certificates that are tradable on global energy stock exchange markets.
Biomass and wind appear to be the most promising renewable energy resources for development in Poland, with an estimated potential of about 4,000 MWe each. Both liquid and solid biomass is considered to be the main sources of renewable energy in Poland, for both electricity and thermal energy production. Biomass technologies and supply sources are relatively mature, and the investment costs are lower than for other maturing renewable energy technologies. Poland also has some of the best documented wind resources in Central and Eastern Europe with areas reaching up to 1,000 W/m2 in power density.
Biomass: Biomass is the most promising source of renewable energy in Poland. The technical potential of biomass amounts to 755 PJ/year. The greatest opportunities for biomass technology implementation are in the forestry, wood processing and agriculture
51 sectors. The majority of current biomass use is for heat. Small and medium scale boilers in industrial settings most commonly use fuel such as wood pieces, sawdust, and wood shavings. Combined heat and power (CHP) plants using organic waste from pulp and paper operations, and straw and wood fired heating plants are also in operation. Biogas production from landfill gas and municipal waste is also available. In 2006 there were approximately 25 landfill gas installations producing 22.3 GWh of electricity and 100 TJ of heat. Biogas production from municipal waste resulted in about 38 GWh of electricity and 450 TJ of heat. About 47% of the land area of Poland, (approx. 14 million ha), consists of arable and agricultural lands. Nearly 9 million ha is forested, approximately 28%. It is estimated that the total forest cover in Poland will reach 32% in the next 15 years. There are very good opportunities for biomass development in Poland. The areas with the most potential for biomass / biogas projects are those in the northern and western regions, rural and mountainous regions, as well as the eastern border of Belarus.
Wind power: In Poland, wind turbines installed by June 30, 2008 have a combined capacity of around 350 MW. According to the European Bank for Reconstruction and Development, Poland is one of the most promising wind energy markets in Europe. The country possesses many potentially profitable locations and great development possibilities. Much of Poland has favorable conditions for wind energy production. The average wind speed varies between 5.5 and 7.0 m/s at a height of 50 meters. The productivity of one 2MW turbine may be equal to as much as 5,000 MWh per year. Poland’s existing wind power capacity includes 188 wind turbines of varying capacity (average capacity = 1.52 MW) installed at nine professional wind power stations. The largest ones are:
• Tymien – 50 MW – major investor INVEnergy of the USA • Losina – 48 MW – major investor Mutsui and J-Power of Japan • Kisielice – 40.5 MW – major investor Iberdrola of Spain.
According to investors, the ROI of wind power investments is approximately 10-12 years. This favorable profitability rate is the result of the high price of electric power produced from RES which the market currently supports. When selling 1 MW of power, a wind farm owner can obtain up to $140 MWh. Wind energy projects are strongly supported by the Polish government and the European Union funds. Funds for wind energy projects can be sourced from the 9.4 activity of the Operational Program “Infrastructure and Environment”.
Best Products/Services • 8402 wood-fired boilers, fluidized-bed boilers and straw-fired boilers • 8407 spark ignition engines generating electricity from biogas at waste water treatment plants and from landfill gas • 841280 wind turbines
Opportunities Poland is one of the European Union countries that committed to a 20% reduction of CO2 emission, a 20% goal of renewable energy in the total energy balance, and a 20%
52 increase in the effective use of energy, all by the year 2020. Polish Biomass Chamber together with local governments and under auspices of the Polish Ministry of Agriculture and Economy promotes the national program “Biogas 2020” which aims at reaching 2000 MW of electric power by the year 2020 within scattered cogeneration. Within the framework of this program Poland targets to build and install 2020 agricultural biogas facilities with capacity of 0.5-2.0 MW by the year 2020. Each community should have such a facility. Necessary acreage of biomass needed is approx. 800 thousand hectares and the value of the program and is estimated at €3 – 6 billion. This program will create about 10,000 new jobs at those facilities as well as 40,000 – 60,000 new jobs in farming. Government plans for 2010 are to reach a total installed generating capacity in wind power equal to the MW level of 2000. This level would give the wind power sector an approximately 2.3% share of Poland’s total electricity consumption. In order to achieve these targets, Poland must install 1600 MW of new wind power capacity in 2009 and 2010. Projects now underway will generate an additional 300 MW.
Resources • Ministry of Economy http://www.mpips.gov.pl/english/ • Ministry of Environment http://www.mos.gov.pl • Polish Chamber of Commerce for Renewable Energy http://www.pigeo.org.pl/ • Polish Wind Energy Association http://www.psew.org.pl/ • Polish Biomass Chamber http://www.biomasa.org.pl • Institute for Renewable Energy http://www.ieo.pl/eng/start.html • National Fund for Environmental Protection and Water Management http://www.nfosigw.gov.pl Commercial Specialist: [email protected]
Portugal
Overview Energy efficiency/renewable energy (RE) continues to be a priority and strategic sector for the Government of Portugal (GOP), as it has the potential to increase competitiveness of the national economy and generate a greater degree of energy security. Over the last couple of years, various measures have been approved to promote, develop and achieve proposed targets of 39 to 45% of electricity produced from RE by 2010 - one of the most ambitious RE goals among the 27-member European Union Portugal turned to reduce its huge dependence on imported fossil-based fuels – currently over 87% - and meet its international commitments to reduce carbon dioxide emissions.
The objectives defined by the GOP include the following:
• Increase installed wind power capacity to a total of 5100MW by 2012 • Achieve 250MW in biomass installed capacity by 2010 • Reach a target of 10% of bio-fuels integrated into road fuels by 2010 • Achieve 100MW of biogas installed capacity for anaerobic waste processing • Actively promote microgeneration; reach 50,000 installed systems by 2010;
53 • Create a pilot zone capable of reaching 250MW capacity for technological development of new wave energy prototypes.
The GOP has given special attention to microgeneration, which has become popular as a sub-sector in Europe’s strong market for renewable energy, allowing any individual access to his or her own system of energy connected to the electricity grid, with the possibility of selling excess energy generated. The market for microgeneration in Portugal includes applications for micro-wind, solar thermal, PV in buildings and geothermal heating. According to the GOP, large RE investments in renewable energy in Portugal from 2006 to 2012 will total more than $11 billion. It is important to highlight that most of these projects have already been planned and licenses have been awarded. The RE industry in Portugal includes companies that operate as developers, equipment manufacturers, operators, utility and maintenance service providers. Some companies are active in more than one area and may develop, operate and maintain sites. U.S. firms should enter the Portuguese market with partnerships, services and equipment supply.
Given the GOP’s commitment to accomplishing the above-mentioned goals, demand for products and services in Portugal is expected to continue to grow. U.S. suppliers of products will find significant sales opportunities in micro generation equipment, wind turbines, wind cables and conduits, wind coatings and composite materials, photovoltaic modules, power inverters, alternative fuel conversion systems and dispensers, vegetable and algae oil extraction technology, wave energy technology, energy efficiency products and biomass technology including waste to energy. There is also a strong interest in services in the areas of project development, maintenance and finance.
Wind Energy: Wind power is well established in Portugal and has almost doubled in capacity annually for the past few years. In June 2008, Portugal had 2,526 MW of installed capacity. The average annual growth rate in installed capacity between 2001 and 2007 was around 62.6%. In 2005, the Portuguese Government reviewed its objectives and set a target of 5,100 MW of installed wind capacity by 2012. There are currently more than 1,000 MW under construction and about 5,000 MW which have been licensed and should be online by early 2013. The districts of Viseu, Coimbra, Lisbon, Castelo Branco, Vila Real, Santarem, Leira and Braga have the highest installed rated power (March 2007) and districts with the greatest resources in 2006 were Bragança, Coimbra, Porto, Vila Real, Viana do Castelo, Guarda, Castelo Branco and Aveiro. As in other European markets, financing wind projects has become an attractive business for banks. These include major Portuguese banks such as Caixa Geral de Depositos, MillenniumBCP and Banco Espirito Santo.
Pursuant to its policy of wind power capacity expansion, Portugal issued a tender in 2006 with a twofold objective: to use wind power to leverage the creation of a new industrial sector, and to improve the efficiency of wind power exploitation. The creation of wind clusters will be fully completed in 2008, and includes an industrial complex developed by ENOP - Eólicas de Portugal Group. This group is composed by ENERCOM, a German manufacturer of wind turbines, and four major Portuguese wind energy developers: Finerge, Generg, EDP and TP - Térmica Portuguesa. The total investment is valued at
54 $2.5 billion (€1.7 billion), of which $236 million (€161 million) is for the industrial park and $2.16 billion (€1.47 billion) is for 1,200 MW of new wind farms.
Portugal's utility, EDP, is also a major investor in Portugal’s wind and hydro sectors, both through existing assets and projects currently under construction. Recently, the Portuguese group made a play to get into the US market by acquiring American developer Horizon Wind Energy for $2.15 billion. The utility has gone from a local leader to a global giant in one fell swoop – and is now one of the top five wind developers in the world.
The European Union is also financing research and development in wind energy, which is expected to result in the manufacture of wind turbines 10 times more powerful than the most advanced examples currently operating. These are expected to come on-stream in Portugal in the near future. The EU project is known as Upwind and is budgeted at $32 million (€22 million), partially funded by EU.
Wind energy decisively contributes towards a reduction in CO2 emissions in Europe. Installed Wind power prevents the emission of around 80 million tones of CO2 every year. By 2010, wind energy is expected to save around 140 million tons annually, the equivalent of more than 30% of the EU’s total Kyoto Protocol obligation. It delivers the energy security by mitigating economic and supply risks associated with a reliance on imported fuels.
Solar Energy: Portugal boasts one of the highest levels of solar radiation in Europe. Sunshine on mainland Portugal varies between 1,800 and 3,100 hours per year. The total of direct solar radiation and diffuse sky radiation varies between 140 and 170 (kilocalories per square centimeter - kcal/cm2). There is vast potential for the application of thermal solar power in Portugal, estimated at around 2.8 million square meters of panels. Thermal solar power for low temperature water heating is advantageous, both from an energy and environmental viewpoint, representing a significant contribution in reducing greenhouse gases. In addition, Portugal enjoys excellent conditions for photovoltaic conversion, with generating indices of between 1,000 and 1,500 kilowatt- hours (kWh) per year for each installed kilowatt-peak (kWp).
The average annual growth rate in installed capacity between 2001 and 2007 was around 49.5%. The goal for photovoltaic is 150 MW capacity by 2010. In recent years, Portugal constructed two of the largest solar photovoltaic power plants in the world: the completed 11 MW Serpa Solar Power Plant comprised of 52,000 photovoltaic modules; and the 62 MW Moura PV Power Station with over 376,000 solar panels currently under construction. The Serpa project was an excellent example of a joint venture with a U.S. financial institution and a Portuguese project developer. It provides enough electricity to supply over 8,000 homes and cost $75 million (€51 million) to install.
Biomass: Portugal has high potential for biomass in the form of forest residues and wood waste. Portugal’s goal regarding biomass is to reach a total of 250 MW of electricity generating capacity by 2010. In 2006 the government launched a public tender to award
55 15 licenses for forestry biomass power plants which represent a total of 100 MW at an estimated investment of around $330 million (€ 225 million), promoting linkages with forestry resources. Preference has been given to two types of biomass power plants; up to 12 MW permitting economies of scale in electricity generation and ensuring a larger forestry biomass collection area and up to 6 MW permitting the development of small local development units. Portugal currently has two thermoelectric power plants connected to the national grid, using forestry biomass as their main fuel - the EDP power plant located in Mortágua and Centroliva located in Vila Velha de Ródão - plus nine cogeneration power plants installed in forestry sector industries such as Portucel, Amorim Revestimentos, Stora Celbi, Soporcel, SIAF and Companhia de Celulose do Caima which take advantage of biomass for heat production.
Biofuels: Biofuels represent an area of diversification in the supply of fuel to the transport sector, which has recorded the highest growth rates in terms of energy consumption. In Portugal, the transport sector’s energy dependency on oil, which is responsible for 42% of total imported oil consumption, is extremely high. The objectives defined by Portugal in regards to biofuels are to achieve a target of 10% of biofuels to be included in road fuels by 2010 and to promote national agricultural strands for biofuels. A fiscal exemption from the ISP - Imposto sobre os Produtos Petrolíferos (tax on oil products) was also introduced by the Portuguese government and was designed to promote the use of biofuels in the transportation sector. This will reduce Portuguese dependency on petroleum and comply with EU directive to replace 10% of conventional fuels used in the transportation sector with alternatives by 2020. Small dedicated producers also have access to fiscal exemptions.
Biofuels production investments have been announced by companies such as Iberol, Martifer (Prio Fuels), Sunenergy, Torrejana and Biovegetal. The Martifer (Prio Fuels) 8,000 square meter refinery, a $36 million (€ 25 million) investment, is located alongside two other Martifer plants in Aveiro. The refinery’s Bio-diesel output is to be around 100,000 tons per year, generating a turnover of $102 million (€ 70 million). The project is designed to supply the Iberian market and will use raw materials such as soy.
Hydropower: Hydropower is a priority and one of the national energy’s policy commitments, with the objective of exceeding an installed rated power of 7,000 MW by 2020. Portugal has developed about 5,000 MW of hydro thus far, covering about half of the country’s potential. It is also important to mention that hydro in Portugal is dependent on annual rain fall and Spanish management of rivers that flow into the country. It is a challenge to build new hydro facilities in Portugal, mostly due to the fact that the best spots are developed and developing new projects is complex. Europe's largest man made reservoir is located in the Alentejo region of Portugal at Alqueva. The Alqueva hydro power plant’s installed capacity is 240 MW and produces about 269 GWh annually. Its reservoir can reach a maximum quota of 250 square-km. The plant was completed in 2002 and at a total cost is valued at $2.6 million (€1.8 million). Looking ahead, EDP has at least two dam projects in the works ranging between 100 to 200 MW.
56 Wave Energy: While solar, wind and hydro all have commercial projects now in operation; Portugal has enormous energy potential offshore. Every day, waves come rolling in from the Atlantic, crashing on the country's 500 km of western mainland coastline. Portugal's unique sea conditions - its continental shelf drops to 50-100 meters only three to six miles off the coast - make it difficult for offshore wind development but ideal for wave power technologies. Portugal has some natural advantages over Europe's other great wave spot - Scotland. Its swells are not as strong, storms not as big, about 80% of Portugal's electricity consumption occurs within 50km of coast. Also, getting power offshore and into the grid is supported by existing infrastructure near the shoreline. The first wave energy project in Portugal was developed in Pico, located on the Azores islands. The Pico OWC (Oscillating Water Column) plant was completed in 1999 and involved several Portuguese companies and institutions such as EDP, EDA, EFACEC, Consulmar, Irmãos Cavaco, INETI, IST and WEC.
More recently, a project to develop and launch the world’s first commercial wave farm has been initiated by Enersis (owned by Babcock & Brown) and involving the Scottish firm Pelamis Wave Power Ltd. The device is called Pelamis and is a snake-like unit comprised of cylinders and linked by hinged join, which ride 'head first' into waves and generate power using hydraulic motors via smoothing accumulators. This investment of about $12 million (€8 million) totaling 2.5 MW offshore in northern Portugal also benefits from a feed-in-tariff and will sell electricity into the grid for € 0.24 per kWh. Micro generation
The Portuguese Government strategy to promote micro generation was developed a few years ago with the creation of a legal framework for energy efficiency requirements in buildings and lately with new legislation on micro generation that outlines production and compensation conditions. The concept of micro generation is growing in popularity as a sub-sector in Europe’s strong market for renewable energy. Energy companies and government support for micro generation provides consumers with real incentives to invest in this new green technology. The market for micro generation in Portugal includes applications for micro-wind, solar thermal, PV in buildings and geothermal heating. There are already a number of interesting projects emerging for solar thermal heating for which the US has relevant technologies. Portugal is also looking to benefit from expertise in project design and integration of micro generation into buildings. According to the latest legislation on micro generation, any individual can have access to his or her own system of energy connected to the electricity grid, with the possibility of selling excess energy generated. These systems may be powered by small scale wind turbines, mini hydroelectric plants, photovoltaic solar systems, ground source heat pumps, or a combination of the above. Portugal’s climatic conditions are especially good for solar and wind installations.
Micro generation systems may be autonomous, using batteries with stored electric charge, or connected directly to the regular electricity grid. Although a direct connection to the electricity grid is not essential, it helps decrease costs by allowing financial recompensation schemes, also known as net metering. Under net metering, a system owner is reimbursed for a portion of the electricity that they generate. Portuguese law has
57 established the following compensation scheme and conditions for micro generation: In order to install a micro generation system/unit, an individual must first apply and go through an inspection and certification process managed by the Registration System of Micro production (SRM) under the Directorate-General of Energy and Geology (DGEG) in Portugal. Once this process is complete, it will be determined whether the system meets requirements to connect to the Public Service Electricity Grid (RESP) on the general or incentive scheme.
Other restrictions include:
• System owners may not input more than 50% of the amount of energy consumed for the electrical installation and utilization. • It is obligatory to provide thermal solar containers for water heating with a 2m² area container minimum. • In the case of installations in condominiums or apartments, the system owner must have an energy contract with the building that contains and identifies all implemented measures of energy efficiency.
Opportunities The existing market for renewable energy in Portugal is characterized by the following positive factors:
• Portugal has a national obligation under EU agreements to cut greenhouse gas emissions with firm deadlines in 2010 and 2020; • There is a shared policy interest between diversifying energy sources and increasing energy independence; • Policymakers and private firms see an excellent opportunity for the development of a high-tech industry in the renewable energy sector and are open to international cooperation; • Tax reductions are available; • Fixed feed-in tariffs per kWh exist for PV, wave energy, small hydro, wind power, forest biomass, urban waste and biogas, encouraging the development of renewable energy and its use; • There is broad market demand from utility companies, firms in other sectors, investors and private individuals alike; • The exchange rate of the U.S. dollar to the Euro still favors U.S. manufacturers. A broad range of policy measures have been implemented to encourage the use and development of renewable energy in Portugal. In September 2007, new incentives for micro generation of renewable electricity were approved as part of a package for reducing carbon emissions. By 2015, national micro generation capacity will be around 200 MW.
The above factors determine the dynamics of Portugal’s existing renewable energy market development. Through at least 2015, a window of opportunity exists for:
58 • Producers of renewable energy generators (solar panels, wind turbines, heat pump systems, etc.) and all related accessories, materials and services; • Providers of biomass (e.g., wood pellets); • Providers of wave energy technology; • Producers or developers of any products and services that may directly or indirectly contribute to the reduction of greenhouse gas emissions. With the negotiation of a successor to the Kyoto protocol after 2012 highly likely; developments in sustainable renewable energy are part of a long-term trend towards pollution control, energy diversification and energy security in Europe.
Given this sustained growth of the renewable energy market in Portugal, its broad market base and numerous associated developments, we urge U.S. companies to consider the opportunities that the Portuguese market presents. A sustained local presence, product exposure or track record in this industry will also serve as a major asset as the market develops and matures. We encourage U.S. RE companies to touch base with the different RE-focused groups and institutions to explore areas for collaboration. This industry is very receptive to advances in technology, which present opportunities for entry via a collaborative research or partnering approach with a local company. Obtaining up-to-date information on market dynamics is very important, given the fast developing nature of the industry and the continuing introduction of new technologies.
Resources • Pedro Ferreira – Commercial Specialist: http://www.buyusa.gov/portugal/en/our_team.html • Instituto Nacional de Estatistica: http://www.ine.pt • Direcção Geral de Geologia e Energia – DGGE: http://www.dgge.pt • Adene – Agencia para a Energia: http://www.adene.pt • REN – Rede Electrica Nacional, SA: http://www.ren.pt
Spain
Overview Spain offers good opportunities for U.S. companies that specialize in renewable-energy products. The Spanish Government encourages the use of renewable energy based on its Renewable Energy Plan (PER - Plan de Energías Renovables).The PER set specific goals for 2010. Opportunities exist in market niches requiring technological developments. In the services area, opportunities exist in engineering services to design, build, manage and operate renewable energy networks (through agreements with Spanish utilities), and for construction and consulting firms. There are also good prospects for joint venture/licensing agreements for the local production of power generation equipment, accessories, automation instruments and parts. Most of the renewable energy equipment in Spain is developed and manufactured locally under licensing agreements. Since 2003 the Spanish government has actively supported the deregulation of the energy sector (two years ahead of the EU), thus allowing consumers to freely shop for electricity. The goal of the government’s national renewable energy plan is to have at least 12 % of primary energy consumption in Spain to be derived from renewable energy sources, such as wind,
59 photovoltaic and thermal solar, waste-to-energy, mini-hydro, etc. by 2010. The PER sets specific goals for 2010:
• Wind: Improve electric infrastructure & wind energy production management • Hydro-Electric: Promotion of public & private investment • Solar (Thermal): Technical Building Code • Solar (Photovoltaic): Installed surface annual increase by 700,000 m2
Promote R&D Spain is currently the second largest producer of renewable energy in the EU15 after Germany. Spain depends heavily on foreign energy suppliers; 80% of the energy sources are imported. Due to this fact and given the good geographical and atmospheric environment, Spain has been actively supporting and promoting renewable energy production in country. In 2007 renewable energy production represented 7% of all energy use in Spain, a 0.5% increase from the year before. The renewable energy sector generated a total of 61,951GWh. This rise in production stems from dramatic increases in the photovoltaic, wind, and biofuels sectors as energy sources. This corresponds to just over half of the required percentage to reach the 12% renewable energy use target of the EU by 2010 and Spain’ s objective under the PER. It also indicates that an annual increase of 1.3% in renewable energy is needed to achieve this goal. Spain’s energy needs are met by oil (48%), natural gas (21.6%), coal (13.7% ), nuclear (9.7%) and renewable (7%). In addition to the Renewable Energy Plan 2005-2010, Spain’s long-term objective is to produce at least 20% of the total energy needed from renewable sources by 2020. To reach this objective, an increase of at least 4% in renewable energy production is needed to cover the electricity, heating and refrigeration and transport sector energy demand. Of the total electricity produced in 2007, 19.8% was from renewable sources, surpassing nuclear electricity production which was 17.7%.
Of the total electricity installed capacity in 2007, Spain generated 34,794 MW from renewable sources: of which 18,373MW was from hydraulic (including hydraulic plants of more than 50MW); 785 MW from biomass, biogas and solid urban waste; 15,145 MW from wind; and slightly more than 500 MW from photovoltaic.
Electric utilities are the main promoters of renewable energy projects in Spain, since they possess the resources and technology to develop them. Federal, regional and local governments are also very active in renewable energy development, and offer incentives to attract investment. Since there is a large variety of renewable energy equipment, import duties from the U.S. cannot be determined unless the specific kind of equipment is known. Duties apply for most energy equipment; duties should be checked on a case-by- case basis. Additional detailed information on Customs duties may be obtained at www.taric.es. Information is available in English and Spanish. In general, foreign products are imported by irrevocable letter of credit. When a relationship is established between exporter and importer/distributor, other forms of payment can be negotiated. Contract Agreement: In general a representation/distribution agreement is governed by the conditions agreed upon between the parties. Spain applies the “freedom of contract theory” by which the contracting parties may establish any stipulation, condition or undertaking provided that it does not violate Spanish law, morals or public policy.
60 Additional information on marketing U. S. products and services in Spain is contained in the “Country Commercial Guide” for Spain, which is available through U.S. Export Assistance Centers and at the website http://www.export.gov/
Wind energy: The Spanish Renewable Energy Plan sets a target of 20,155 MW of primary energy demand to be covered from wind energy by 2010. In 2007, Spain reached 15,145MW installed capacity for electricity generation, and 9,653 MW were generated that year from wind energy. By comparison, Germany generated 17,743 MW, with an installed capacity of 22,247 MW. The U.S. reached a total installed capacity of 16,970 MW in 2007 from this renewable source. The European wind industry is the world leader in this technology and has a world market share of 90%. Installed capacity of wind energy in Spain has grown steadily, with good prospects in years to come. In 2007, installed capacity increased by 3,374 MW, a 29% increase for that year and following a 16% increase in 2006. Spain aims to double its installed wind capacity by the year 2012. This growth has put Spain in the lead worldwide, in terms of annual MW wind energy production, with a 25.3% of the world market share. Total investment in wind energy in Spain is over €5 billion.
Solar energy: From 2002 to present, Spain has been second, behind Germany, in producing photovoltaic energy in Europe. Photovoltaic solar energy continues to be a growing sector in Spain (54% annually), driven by the assistance programs of IDAE (Instituto para la Diversificación y Ahorro de Energía – Energy Diversification and Saving Institute). The main autonomous communities to contribute with photovoltaic energy are Navarra and Catalonia. More recently, IDAE has created programs to promote the development of additional plants and other means to utilize this type of energy in Spain. Currently, IDAE has a budget of €12 million, solely to promote the construction of new photovoltaic energy plants. In 2006, 169 GWh were generated for electricity use. In 2007, new capacity grew 341MW.
The Spanish Government has just approved a new Royal Decree enabling Spain to reach 3,000MW of installed photovoltaic capacity by 2010. With the approval of the Building Technical Code in 2006, solar thermal will also be promoted. This Code forces all new buildings and the ones to be renovated to cover between 30 and 70% of the homes hot water demand from solar thermal. This percentage is dependant upon the estimated hot water demand and geographical location of the buildings.
Hydro-electric: According to the objectives of the 2002 Plan de Fomento (Development Plan), energy from mini-hydro (less than 50MW) sources needs to grow at a steady pace over the next few years to reach 2,230 MW goal by 2010. In order to reach this number, the annual installed power would almost need to double the current annual installed capacity. In order to speed up installation and meet the objectives of the plan, administrative barriers and long processes to gain concessions will need to be amended or removed. An increase of 1.7% in the hydroelectric sector in 2007 was a driving force in increasing the overall share renewable energies held in energy consumption. Spain saw a growth of new mini hydropower installations of 31MW, reaching 16% of its 2006 annual goal and 2007 saw an even higher capacity level of 59MW.
61
Biomass: Fifty-five new MW were created in 2006 and this figure is expected to grow dramatically in the coming years. Biomass energy technologies generated 2,454GWh during 2006, reaching 4% of the 2010 goal. Spain is still far from achieving its goal of 1,695 MW of potential, out of which 973MW would be for electricity production and 722MW for combined combustion.
Biofuels: At present, 35 million m3 of biofuel (bioethanol and biodiesel, mainly) are produced in the EU. The EU Directive 2003/30 sets the objective of covering 5.75% market share of the transportation sector with biofuels and other renewable fuels in Europe by 2010. Spain’s PER sets the objective of reaching 5.93% of fuel for transport from biofuel. Spain produced 445,577 TOE of biofuel in 2006 (72% bioethanol, 321,000 TOE; 28% biodiesel, 124,577 TOE). There are 16 biofuel production plants in Spain (12 for biodiesel and 4 for bioethanol).
Opportunities. There are no barriers for U.S. products and services in Spain. The liberalization of Spain’s energy sector has created a good market for U.S. companies. Opportunities exist in market niches requiring technological developments. In the services area, opportunities exist in engineering services to design, build, manage and operate renewable energy networks (through agreements with Spanish utilities), and for construction and consulting firms. There are also good prospects for joint venture/licensing agreements for the local production of power generation equipment, accessories, automation instruments and parts. Most of the renewable energy equipment in Spain is developed and manufactured locally under licensing agreements.
Switzerland
Overview The Swiss market for renewable energy was valued at $926 million in 2007, with imports from the U.S. registering $28 million. The overall renewable energy market is expected to grow marginally in the months ahead due to the bleak economic outlook. However, because renewable energy is a vital industry sector, the Swiss market bears potential for U.S. suppliers to further solidify their position or to penetrate. The term "renewable energy" refers both to conventional hydropower and to other "new" forms of renewable energy to include solar/PV, wood, biomass, wind and geothermal/ambient heat. Today, almost 60% of Switzerland’s overall electricity production stems from renewable sources, with hydropower by far the biggest contributor, garnering a 54% stake.
Production from “new” renewable forms of energy was divided up as follows in 2007:
• Waste incineration 81.8% • Wind 1.3% • Drainage 9.9% • Solar 1.9% • Biomass 5.1%
62 Although Switzerland is a relatively small consumer of power, it plays an important role in importing and exporting energy in order to provide “peak energy” to neighboring countries through the power supply lines that crisscross the country. In line with the current trend in Europe, Switzerland will be facing an electric power shortage unless there is substantial investment in new generating facilities (estimated requirement is for $20-30 billion) over the next 15-20 years.
As a country devoid of raw materials, Switzerland has no direct access to fossil energy resources and is therefore heavily reliant upon imports. Indigenous renewable energy sources are offering a decisive contribution toward the overall energy production and consumption. Historically, Switzerland's longest-serving and most significant source of renewable energy has been hydropower. But "new" renewable energy sources play an increasingly important role in Switzerland’s energy mix. The long-term potentials of domestic renewable energy indicate that the prospects for electricity and heat are intact. However, chiefly due to economic reasons, it will only be possible to fully utilize the major potentials of photovoltaics or geothermal energy in approximately 30 years. Other renewables to encompass wood and biomass, ambient heat, electricity from small-scale hydropower plants – and to a modest extent -- wind, are available now and are already economically viable.
The federal government bases its future energy policy on the following four pillars:
• Improvement of energy efficiency; • Promotion of renewable energy sources; • Replacement of existing and construction of new large-scale power stations; • Increased international cooperation.
Switzerland’s companies involved in renewable energy/power are continually seeking equipment to streamline and upgrade operations, and demand will continue to grow for power management systems (IT), switching and distribution equipment. Of the power produced in Switzerland, 40% is generated from five nuclear power plants, and the other 60% is mostly generated from hydropower, the latter of which is distributed to surrounding countries, especially Northern Italy, in order to stabilize the European grid during periods of peak demand. Hydroelectric facilities still have a limited potential for expansion but will fall short of growing demand. Other sources of renewable energy in Switzerland are in their infancy with some efforts to promote solar, geothermal and wind energy.
The three chief renewable energy sources, which bear excellent growth potential, encompass the following:
• Heat from heat pumps, solar thermal power/PV, geothermal power and biomass; • Electricity from hydropower, wind power, geothermal power and biomass; • Gas and liquid fuels extracted from biomass.
63 Switzerland is heavily reliant upon oil, importing over 11 tons in 2007. A total of 60% of the total imports was used for motor vehicles, 32% for heating and 8% for kerosene. Switzerland imports more oil than most other industrialized countries (oil is also the source for some 77% of Switzerland’s CO2 emissions). This notwithstanding, Switzerland views renewable energy as a vital component to comply with the Kyoto Protocol on reducing greenhouse gas emissions. Technology and financial incentives are the other pillars of the solution sought by the Swiss federal government. Over $ 163 million in government funds at all levels are allocated per annum for R&D activities. In addition, annual private sector investments allocated basis to spur renewable activities are forecast to lie in the $ 300 million ballpark, thereby driving market demand for equipment and technologies used in renewable energy. U.S. suppliers are encouraged to exploit opportunities in the Swiss market. A fairly large number of enterprises serving the renewable energy market source technology from a numerous U.S. small, medium or large suppliers, which combined garnered a market share of 8% of the overall import market in 2007. In spite of the dampening of the overall market in line with the slowing economy, U.S. suppliers are expected to retain or increase market share due to a more favorable U.S. dollar/Swiss franc exchange rate, which will make U.S. suppliers more competitive than current European suppliers (including those from France, Germany, Denmark, and Finland. Receptivity of U.S. technology is high among Swiss buyers; consequently, the Swiss market bears excellent opportunities for U.S. suppliers to consider.
Best Products/ Services • Energy efficient heating pumps; • Consulting engineering services, including management and financing in renewable energy related projects; • Geothermal energy systems; • Biomass-based systems and processes for heating purposes, fermentation, etc.; • Photovoltaic panels and complete systems, including relevant controls • Wind turbines; • Methane gas powered generating systems; • Process controls for energy efficiency; • Systems and processes to improve energy efficiency; • Instrumentation and control systems.
Thailand
Overview The market demand for renewable/alternative energy equipment in Thailand is growing in correlation with the country’s renewable energy demand and economic growth. A recent increase in the use of renewable/alternative energy for both electricity generation and fuels has been on the rise. Thailand's Energy Ministry plans to increase the proportion of alternative energy consumption in the country to 14% from the previously projected 11% level.
64 Production of renewable/alternative energy is expected to increase to about 3,276 megawatts (MW) from the 1,621 megawatts available now. The current energy supply from renewable and alternative energy in 2007 was 17,031 ktoe, an increase of 2.2% from 2006 in types such as solar, wind, biomass, biogas, municipal sewage waste, bio- diesel and ethanol. The total renewable energy consumption was 10,993 ktoe in 2007, an increase of 1.6% from 2006, and accounted for 17.4% of the total energy consumption. Even though firm evidence is limited, there is far greater potential for the use of renewable energy in the long term than can be verified and modeled today as the current market for such equipment is on the rise. There are more substantial environmental benefits from renewable energy, such as decreasing greenhouse effects, and reducing gases such as carbon dioxide, methane, and nitrous oxide and many other industrial chemicals.
The Ministry of Energy has revised up the proportion of renewable energy in the country’s total energy consumption in 2011 from 11% to 14% from 2006 to 2007, respectively - in line with the study by the ministry, which found strong potential for renewable energy and predicted the continuing upward trend of oil prices over the next several years.
Wind: There is considerable potential for wind energy on a larger scale in Thailand, especially in the center and in the Western regions of the country. The wind current in Thailand is rather light, thus it has been frequently overlooked. Unlike large wind turbines manufactured for the European and U.S. markets; the country needs small-sized wind turbines to comply with local conditions. The present capacity of low speed wind turbines in Thailand is 400-1000 watts. The two major obstacles in using such turbines is the cost per unit of electricity generation and the lack of investment in Thailand for the low speed turbines. However, Thailand does forecast a large increase in use in the near future as these issues will be overcome. The types of equipment currently in demand are low wind turbines (horizontal and vertical). Thailand is in vast need of large wind turbine suppliers, as they cannot produce such equipment alone. Major suppliers of large wind turbines include: Finland, Australia, Spain, and Germany.
Hydro: The government has been sponsoring development projects of small hydro power plants for a new planned capacity of 350 MW. The Department of Alternative Energy Development and Efficiency (DEDE) and the Provincial Electricity Authority (PEA) are the main institutions involved with mini- and micro-hydro power plants. DEDE has also installed many village-level hydropower plants, and there is considerable potential for village-scale small hydro in east and central Thailand.
Biomass: Though there are many and diverse sources for biomass that could be used for energy, in many cases the businesses that have biomass residue streams are likely unaware of the potential opportunities for their businesses. For example, there are agricultural residues such as tree leaves, corn cobs, hay, and rice husk and other residues such as wood chip and saw dust that all can be used as fuel in the biomass power plants for electricity generation. Also, wood furniture alone from industrial factories can be recycled to produce over 10,000 tons per annum. All these residues can be used to
65 produce electricity in plants using the pyrolysis/gasification technology. Equipment for such technology includes: wood chippers, gas filters, gasifiers, and generators. With commercial viability possible even without any subsidies and at capacities exceeding 2000 MW, the now established targets and subsidies for biomass and renewable energies are expected to deliver at least 900 MW of new biomass capacity by 2011.
Solar: Thailand currently uses solar cells for electricity generation and solar thermal unites for thermal. Although the use of solar energy is not big in the country for reasons of cost, it does see a future rise in its use as fossil fuels are becoming increasingly scarce by the years. Local administration organizations in every province, municipalities, Provincial Administration Organizations (PAO), and Tambol (sub-district) Administration Organizations (TAO) are paying particular attention to solar cells as they are becoming increasingly important in rural remote areas, where there are no electricity transmission lines known as off-grid connections. The cells can undoubtedly be used for electricity generation for lighting systems on roads and energy for wastewater pumping in wastewater treatment systems. Potential penetration in the Thai market has seen a particular interest in the new technology known as Concentrated Solar Power (CSP) from the U.S.
Best Products/ Services Thailand is the country with the biggest agenda set up specifically for renewable and alternative energy and is continuously giving large amounts of support to such projects. A growing number of best prospects for fuels, oil, hydropower, wind power and diesel equipment and technology are in demand as there are developing plans underway. Specifically, generators and accessories, plant machinery and equipment are in high demand as the government along with government agencies and state owned enterprises such as the Ministry of Energy and the Department of Alternative Energy Development and Efficiency (DEDE) are investing high amounts as they see a bright future for renewable and alternative energy.
Opportunities The DEDE has invested 201 million Baht in the three southernmost provinces of Yala, Narathiwat and Pattani as part of its attempt to boost the proportion of alternative fuels consumption.
However, funding must be provided by the central government as well to include the main projects such as:
• A hydropower project in Narathiwat and Yala • A wind power project in Patttani • Biodiesel projects in Narathiwat, Yala and some 20 communities
Additionally, due to a recent boost for palm oil, which is a major resource used for biofuel, the Ministry of Energy and the Bank for Agriculture and Agricultural Cooperatives have made a preliminary agreement to establish an 8- billion-Baht soft loan
66 package. Under the scheme, the total area for palm plantation will increase 500,000 rais or 80,000 hectares a year.
EGAT- the Electricity Generating Authority of Thailand is currently developing an extensive amount of research and development from waste-to-energy systems supporting all projects which deal with generation of electricity through renewable energies. EGAT is also looking to invest in small wind turbines for wind energy. Bangkok Biofuel signed an agreement with Universal Absorbents and Chemicals in early 2008 to invest one billion Baht, through a new 70:30 joint venture company called Bangchak Biofuel, to build a biodiesel production center in Bang Pa-in, Ayuddhaya. Furthermore, the biodiesel plant will supply 300,000-liter/day. If the government’s campaign to promote gasohol and biodiesel is not disrupted, gasohol and biodiesel consumption will account for 15% of the country’s total oil consumption in 2008.
Ukraine
Overview Ukraine’s use of renewable energy sources accounts for about 8% of its electricity generation but less then 3 % of the total energy consumption with the main part of about 75% being contributed by large hydro-power plants. Meanwhile Ukraine has a huge potential of Renewable energy resources of almost all the types (solar, wind, biomass, biofuel, geothermal and micro hydropower). Tapping this resource promise a great potential in line with worlds trend for using Renewable energy and in consideration of Kyoto protocol, which was signed by Ukraine among other countries.
Ukraine government has made several crucial steps to recognize the Renewable energy potential by declaring in 1996 a program targeted at achieving by 2010, 10% of total Ukraine energy consumption being produced by means of Renewable and “non- traditional” energy. Following it there was a presidential bill signed in 2001 providing taxation rebate for the companies developing solar, wind and geothermal projects. The current national program envisions achieving the use of Renewable energy sources at the rate of 10 billion kWh of electricity by 2010, which is comparable with targets set by some of European countries. Though high bureaucracy, lack of financing and transparency in energy sector remain the main impediments for Renewable energy sector development there is an obvious tendency of Ukrainian government for developing this field with Ukrainian Parliament working on developing a law on tax incentives for using renewable and energy-efficient technologies.
Wind Power: Ukraine as most of industrial countries observes development of wind energy usage in the large and medium capacity windmills installation. Compared with any other Newly Independent States, Ukraine is way ahead in wind power usage. Total installed capacity has now reached over 51 MW, and installation is still continuing with domestic manufacturing facilities being established. Over 80 million kWh of electricity have been produced since the first Ukrainian wind farm came into operation. A strong wind power industry support was given by a Ukrainian government Law issued in 1996 in the form of Complex Wind Farms Construction Program with a target of 1990 MW of
67 capacity to be installed by 2010. Twenty three Ukrainian plants are involved in production of the USW 56-100, with the Yuzhmash factory responsible for the assembly. The turbine is based on a design from the American company US Wind power, which successfully installed many thousands of similar machines in California during the 1980s and early 1990s. Still new generation technologies are required to enhance higher efficiency of wind power generators. Ukraine is striving for 100% components for windmills are manufactured in the country giving a big opportunity for launching manufacturing on the basis of Soviet industrial parks. Nowadays 10 turbines of USW 56- 100 are produced monthly in Ukraine. Among operating wind power stations are Donuzlav WPS with installed capacity of 10.7 MW, Saki WPS – 2.5 MW, Novoazovsk WPS – 3.3 MW and Truskavets WPS – 0.75 MW.
Another potential segment for wind power generating is installing small-capacity windmills up to 20 kW for the needs of agriculture sector which is estimated to have the potential to cover all agriculture and upcountry land electricity demands. The most promising areas for locating windmills are those with the average wind speed of 5 meters per second, namely: Black Sea and Azov Sea coastline, Odesa, Kherson, Zaporizha, Donetsk, Luhansk, Mykolaiv regions as well as in the mountainous regions of Carpathinans and Crimea. The Crimean coasts make Ukraine second after Norway among countries possessing shallow water areas that are suitable for large wind farms and can account for 1,000 MW out of total 5,000 MW capacity of wind generation potential estimated in Ukraine. Crimea potential alone is sufficient to generate more than 42 billion kWh/year of electricity. Still if Ukraine covers targeted capacity of 1900 MW by 2010 it will constitute only a part of what is being produced by many of European countries.
Solar Power: Period of sun shining at the territory of Ukraine is 1900-2400 hr/yr, and total average annual solar radiation varies from 1070 kWh/m in northern part of Ukraine to 1400 kWh/m in southern part. Existing programs for energy development envisages increasing use of solar energy mainly for local hot water supply in summer season. Potential of solar energy for heat production is estimated at about 32 TW. Climatic conditions of Ukraine allow also to use solar energy for the heating of buildings, creation of year-round centralized district heating systems with seasonal heat storage. Such technical solutions have been already realized in many countries located much more to the North than Ukraine. When using solar collectors (counting 3.9 m /capita) and 400 kWh annual heat production by 1 m of solar collector, potential of solar energy for heat production is almost 75 TW/year. In present investigation rate for the installation of solar collectors for the period till 2030 is accepted in accordance with accelerating rate in 2030-2050.
On the contrary to wind energy generators the photovoltaic systems could be installed on all the territory of Ukraine as Ukraine has a quite favorable solar harvesting climate with the average solar insulation per square meter per day of 1.5 to 2.7 kWh increasing from northwest to southeast. The most effective areas are located at Crimean peninsula, especially at eastern coastline.
68 Nowadays, though, there is a limited use of direct solar energy in Ukraine. There are about dozen enterprises in Ukraine producing solar collectors. It is estimated that the total solar collector surface installed in Ukraine is around 10,000 square meters with installed capacity of 5-8 MW/h. Most of them are flat plate collectors for water and space heating and preheating saving 8 to 10% of energy in multi-store buildings, farms and manufacturing facilities. The main barrier for using solar energy is an economic one. The Ukrainian economy can’t mobilize any considerable investments in some projects on using solar energy. At the same time there is a growth on the national level of understanding of the fact that under conditions of own resources shortage it is necessary to develop the alternative energy sources.
Still there is big potential for solar energy use in private residential and small recreation business. Private construction boom in Kyiv suburbs with cottage cities number growing significantly provides a good potential for using solar collectors and photovoltaic as gas price increased 3 times for the last four years and installing electrical heating systems in cottages is limited by cottage city electric grid capacity. In Ukraine technical potential of solar energy for power production is estimated at about 16 TW/yr that makes up in average about 3.3 m² of PV batteries per capita with the production of about 100 kWh/m²/year. Provided that a dwelling is equipped with modern and promising energy saving household appliances, indicated volume of power production could satisfy necessary household needs.
Small hydropower: By potential hydro resources Ukraine is not on the leading place among the CIS countries, but the extent of developed hydropower economical potential is rather high. Average annual hydropower generation in Ukraine amounts to 10.7 billion kWh, meeting 7% of the power system demand in electricity. Existing Hydro Power Plants operating in Ukraine are listed in the table. Still the potential of small Hydro- Plants (with capacity below 30 MW) is estimated of 2300-2400 MW (or 12 to 12.5 billion kWh) excluding the potential of using micro hydro-systems and potential of technical water supply systems. This constitutes about 28% of total hydro-potential of all Ukrainian rivers. Besides being cheap the way of producing energy by hydro-plants is characterized by positive economic and ecologic effect as it excludes burning processes. Major part of hydro resources (including small HPPs) is concentrated in the Central and Western Ukraine on the Dnieper, Dniester, Yuzhny Bug and Tisa Rivers. The Dnieper river basin is the most developed. Programs of small hydropower development in Ukraine include reconstruction and renovation of previously constructed small HPPs, adding small HPPs to water management projects with already existing water-retaining structures with the aim of utilizing waste releases.
Biomass: At present, the contribution of biomass to Ukraine’s energy supply is about 0.5%. Only about 0.7 million toes (tons of oil equivalent) are currently used primarily firewood for domestic purposes as well as for fuel in forestry and wood processing enterprises. However, studies have suggested that biomass sources could provide at least six times more to Ukraine’s energy mix and potentially ten times or greater. The Institute of Engineering Thermodynamics of the National Academy of Sciences of Ukraine in Kyiv, for example, has suggested that biomass in Ukraine could satisfy as much as nine%
69 of the country’s primary energy use. In fact, almost all energy now produced from biomass comes from the combustion of wood residues, including that used in domestic wood stoves and wood-fired boilers at Ukrainian timber enterprises. During the past five years, a small number of modern biomass plants have begun operating such as the 5 MW steam wood-fired boiler at the Odek Ukraine plywood factory in the town of Orzhiv. However, no biomass plants are yet operating in Ukraine to produce power for the electrical grid or large district energy systems - a fact due in part to the high cost of boilers purchased from foreign manufacturers and the still limited availability of significantly less expensive, domestically produced equipment. One firm “Zhitomirrempischemash” in the town of Zhitomir, though, is producing hot water wood- fired boilers in the range of 40-820 kW that cost one-sixth the price of similar boilers of foreign producers. Ukraine is well positioned to grow biomass commercially.
With some of the best farmland in the world, Ukraine has the natural resources to produce a variety of energy crops that could be used for direct combustion as well as conversion into ethanol and biodiesel fuels. Commercially grown energy crops offer a win-win-win situation. In addition to expanding the agricultural market and economically stimulating rural Ukraine, biomass production would reduce reliance on energy imports and farmers’ vulnerability to speculative seasonal energy prices while yielding fuels that burn cleanlier. For instance, boilers converted for the combustion of husks of sunflower seeds are already in operation at some oil extraction plants. Another crop, straw, can be used as a fuel in farm boilers, small district heating plants (e.g., (0.1 - 1 MW) and combined heat and power facilities. The energy potential of straw available for energy production has been estimated to be 20 Mt/a, if not considerably higher.
Biogas: In addition, the energy that could be provided by biogas derived from the manure of cattle, pigs, and poultry simultaneously has been estimated to be in the same range (i.e., 1.1 - 1.6 million toe). Energy analysts have suggested that it is possible to construct about 3000 biogas plants in Ukraine - each with an average digester volume of 1000 cubic meters, including 295 biogas plants at hog raising plants, 130 biogas plants at poultry plants, and 2478 biogas plants at cattle raising farms and other food industry enterprises. “Agro-Oven” pig farm in Dnepropetrovsk area is the only operating biogas station producing electricity from biogas. Launched in 2003 it has an installed capacity of utilizing 80 tons of pigs manure daily. Another big area for biogas technologies is extracting biogas from waste fields of major cities. A pilot project is launched in Luhansk solid wastes field where 3 boreholes produce 90 cubic meters per hour with methane share of 60 %. The total field area allows 30 boreholes to be drilled and predicted gas output suggests building an electricity generation plant of 1.5 MW capacity. The total potential of wasteland gas on Ukrainian solid wastes fields is estimated to be 288 million cubic meters. Ukraine cities produce around 10 million tons of solid wastes per year, which is accumulated on the countryside 10-20 kilometers from the cities. Out of 140 biggest wastelands 90 biggest are the most promising in terms of extracting and utilizing of wasteland gas.
Bio-fuel: A special attention is given to manufacturing liquid fuels out of biomass. The growth for mineral oil price observed during 2005 made bio-fuels manufacturing quite
70 competitive and this appears to be one of the most potential untapped Renewable energy sources for Ukraine. In December 2006 the Cabinet of Ministers of Ukraine has approved the program for development of biodiesel in Ukraine. Program is targeted to create sources of supplying Ukrainian agrarians with stable prices fuel, form agrarians vegetable recourses guaranteed sale market and shorten energy sources import. Program main tasks are promotion of diesel biofuel plants construction, creation of intensified rape growing zones, assuring of agrarian’s rape (necessary for biofuel output) guaranteed sales and rape cultivation lands optimization. In the nearest future Ukraine can leave behind all NIS countries, having realized new born projects on the development of biodiesel industry. Experts say that as much as 30% of automotive fuel could consist of all additives to traditional gasoline. Analysts singled out rapeseed, a crop with high oil content, as one of the best prospects for biofuels in Ukraine.
Agricultural conditions for harvesting rapeseed in Ukraine are nearly ideal. Accordingly, earlier this year, Ukrainian government officials outlined preliminary plans to produce up to two million tons of rapeseed by 2008 (compared to 148,880 tons in 2004 and only 50,900 tons in 2003) and to construct processing plants to produce biodiesel. Recently, the Vynnytsia-based firm, KMT, was reported to be holding talks with foreign investors interested in constructing a biodiesel plant in Ukraine - an investment which could total tens of millions of dollars. KMT currently refines rapeseed into rapeseed oil, which it exports to European biodiesel producers. There is information that three plants to convert rape oil into biodiesel fuel are going to be built in the Vinnitsa Oblast. The project is going to be realized by regional administration jointly with the bank “Forum”. Each plant will have a capacity to produce 20,000 tons of the fuel annually and they will cost around 30 million € to build. Profit margins are estimated at 15% and all the resulting biofuel will be sold locally.
The Vynnytsia region consequently could become a center for Ukraine’s incipient biodiesel industry. The planting area of rapeseeds in the region has been quadrupled this year to meet the growing demand in rapeseed oil. The American holding company Harvest Moon is building a similar plant in the Poltava region, where corn and rapeseed will serve as the raw materials. Construction of two biodiesel production plants with 100,000 tons of annual capacity was announced by Agrarian Policy Ministry last year. The land for the construction of both plants has already been allocated in Zhitomir and Sumy Oblasts. The cost for each of the plants is projected to be approximately $35 million and will be financed from both budgetary and private investment funds. Finally, in early 2006, the Drohobych-based Oil and Chemical Plant Galol announced plans to launch a pilot project in the L’viv region to produce 15,000 tons bio-diesel from rapeseed as a possible prelude to more extensive biodiesel production. Taken together, these may prove to be the first efforts to tap what is potentially a major market for biofuels in Ukraine. Building on these efforts, though, will require resolving a number of technological, economic, and administrative barriers, which hinder the further development of biomass energy.
Geothermal Energy: Ukraine possesses considerable resources of geothermal energy with a total potential estimated of 438 billion kWh per year, which is an attractive
71 resource for using geothermal energy for space and water heating and cooling for residential, public and industrial purpose. At present thermal water is used for municipal heat supply and in agriculture in the western and central part of Crimea (Iljinka, 1 MW; Sizovka, 1 MW; Kotelnikovo, 2 MW; Novo-Alexeyevka, 3 MW; Yantarnoye, 5 MW). Separate wells are used in the Transcarpathian region for supplying thermal water in swimming pools or as an additional source of heat for the local boiler houses. Total installed capacity of heat supply systems 13 MW. It is intended to increase the volumes of using thermal water by 2005 up to 200 MW, by 2010 up to 250 MW according to the State program of using renewable energy sources.
There are three geothermal areas with the heightened geothermal gradient at the territory of Ukraine. They have different geological-geothermic and hydro-geological conditions. The geothermal resources at Crimea peninsula are presented by thermal waters of artesian basins located in the sedimentary rocks of foothills depressions along the northern slope of Crimean Mountains. The average and low-temperature water-bearing reservoirs containing comparatively low and average salt waters are disposed in the upper part of sedimentary basins at the depth up to 2 km, and the deepest parts of the basins contain geothermal brines with temperature up to 200ºC. Medium temperature (60-90ºC) water- bearing layers that are easy to access for mastering are located in the western part of Crimea near Yevpatoria at a depth of 1.5-2km. The theoretical potential of medium temperature water in Crimea is estimated as 63.5 MW with free flow maintenance, more than 1000 MW using downhole pumps, and is in some times higher with full re-injection. High-temperature reservoirs were discovered by some oil-prospecting wells and are poorly studied. The inflows of geothermal brines were obtained from some wells; the maximum temperature 158ºC was recorded at a depth of 2.5 km.
In the Transcarpathian region geothermal reservoirs were found in the terrigenous and volcanic rocks of intermountain valleys and in the flat western region adjacent to Pannonian basin. Small inflows of mineralized water with temperature up to 90 ºC were obtained from a separate well with a depth of 1-2.5 km. The maximum temperature 210 ºC was recorded at a depth of 4050 m in the parametric well Zaluzhskaya–3, however the obtained inflow of geothermal brine was small. On the whole the study of thermal water in this region is insufficient for the reliable evaluation of resources. Inflows of geothermal brines with temperature 125 – 168 ºC were obtained in the flat part of Ukraine (Kharkiv and Poltava regions) from many oil-prospecting and operating wells at a depth of 3-4.5 km. The further investigations of hydro-geological characteristics of thermal water-bearing stratums are necessary for the evaluation of possible utilization of these wells for extracting the thermal water. GHP Systems is another perspective field, which attracts more interest among population after substantial increase of gas price last year. There are a few companies suggesting geo-heat pumps on the market and the main challenge lies in a very low population awareness of GHP systems and prospects of a low-grade geothermal energy usage.
72 United Kingdom
Overview The UK’s renewable energy equipment and services market was estimated to be worth $44 billion in 2008. The largest sub-sector of the renewables market is wind power. It currently accounts for about 37% of the market. Over the next 7 years, the wind power market is expected to grow by between 7 and 10% per year, driven by the government’s desire to see installed wind capacity grow to 40 gigawatts by 2025, about one third of envisaged power generation capacity. Geothermal energy products account for about 30% of the renewables market and are expected to grow more slowly than wind at 5 to 7% per year. The biomass and photovoltaic renewable energy sub-sectors each account for about 15% of the market and are expected to grow by between 5 and 8% per year. Hydro, wave and tidal power generation, and renewable energy consulting are small parts of the market, and despite reasonable growth, are expected to stay proportionately small.
Driving market growth is UK legislation that introduces the world’s first long-term legally binding framework to tackle climate change. The Climate Change Bill was introduced into Parliament on 14 November 2007 and became law on 26th November 2008. The Bill sets a legally binding target for the UK of at least an 80% cut in greenhouse gas emissions by 2050, to be achieved through action in the UK and abroad. It also sets a reduction in CO2 emissions of at least 26% by 2020. Both these targets are against a 1990 baseline. The government intends to use a range of mechanisms to achieve these targets. Renewable energy is seen as one of the most important means of achieving the challenging CO2 reduction targets.
Best Products/Services • Supply of components for large and small wind turbines – e.g. cowlings, blades, electrical and mechanical components, control systems, and blade feathering equipment. • Wind farm power integration systems, power distribution systems, and maintenance services. • Biomass energy furnaces for domestic applications. Complete residential geothermal energy systems. Photovoltaic cells.
Opportunities The energy sector in the UK is privatized and all opportunities in the market will come from the private sector. In the short term, the main opportunities will come from large scale wind farm developments – both onshore and offshore. In the longer term, there are potential wave and tidal projects. While the government is determined to encourage private sector investment in renewables, the current economic climate and the difficulty in accessing finance may act as a brake on new investment and developments in the sector.
73 Uruguay
Overview Renewable energy sources will play an important role in the future of Uruguay. The country needs to strengthen its energy security in order to avoid a recurring energy crisis. Import statistics may be somewhat misleading, as the country has not imported much equipment but projects in the pipeline justify paying attention to the local market. The Government of Uruguay (GOU) strives to reduce energy costs and reduce the overwhelming dependency on imported resources. Uruguay has no known oil resources and must import 100% of its fuel needs. It also imports energy from Argentina and Brazil. Although the majority of the energy in Uruguay is hydraulic, recent and recurring draughts have caused major energy crises.
The major targets of the current administration (2005 – 2010) have been:
• To focus on production and consumption efficiencies as well as on the security and quality of energy supply. • To cover basic energy requirements both in terms of quantity and quality for the entire population (3.3 million inhabitants). • To focus on diversifying energy sources, including the capacity to include natural gas and renewable resources.
The main objective is to develop a matrix that will allow the use of different and/or combined technologies and resources. Improving and increasing the electrical interconnection with Brazil is another priority. The government is currently analyzing the use of coal, and strongly encouraging the production of bio-diesel and ethanol. The government is also in the process of designing a wind map. First estimates show that the country could install between 200 to 300 MW of wind energy. Biodiesel and ethanol production provide an opportunity to leverage efforts to achieve energy independence in support of the country’s agricultural sector. Import duties are applied to CIF values. For renewable energy, generators and equipment classified as capital goods do not pay import duties. In other cases, a 14% duty is applied to products that are not from the MERCOSUR member countries (Argentina, Brazil, Paraguay and Uruguay).
Best Products/Services Import statistics are almost non-existent because Uruguay has not imported much equipment for renewable energy. Existing biodiesel plants have been manufactured locally with some imports from the region. However, all of the projects in the pipeline, both public and private, predict a high growth rate with a definite need for imported equipment. Potential buyers are turning to U.S sources since the Brazilian industry is focused only on sugarcane and the equipment available is too large for the Uruguayan market. Government policies will drive further equipment sales to meet requirements for 5 % biodiesel and 5 % bio ethanol motor fuel blends by 2012 and 2014 respectively. The GOU currently is focused on promoting the installation of small power plants throughout the country. A tender for 60 MW was opened with up to 20 MW from each source; wind, small hydro electric and biomass generation.
74
Best prospects are (in alphabetical order, not ranked): • Boilers (local manufacturing exists) • Research, design and project mgmt. • Centrifuges • Security devices • Distillery • Seed press • Drying units • Settlers • High efficiency transformers • Signal conditioners • Installation and maintenance training • Spare parts and accessories • Off-grid generation products/equip. • Storage steel tanks • Plant safety • Turn-key projects for bio-diesel and • Power generation eq. & components ethanol plants • Pumps • Washing equipment • Reactors
Resources • Embassy Contact: Lilian Amy, Sector Specialist – [email protected]: http://www.buyusa.gov/Uruguay/en • Ministry of Industry Energy and Mining: http://www.miem.gub.uy • National Directorate of Energy: http://www.dnetn.gub.uy
75 V. Trade Events
Trade events, such as trade shows, trade missions and catalog shows, offer excellent opportunities for face-to-face interaction with foreign buyers and distributors. Of the many U.S. and international events held throughout the year, some are vertical (single industry theme) and some horizontal (many industries represented). The events organized or approved by the U.S. Departments of Commerce or Agriculture can be especially useful for first-time or infrequent participants – they require less lead time to register and typically involve more handholding.
The Trade-Event Scheduling Web sites listed below allow selective searches for upcoming events by industry, location, type and date. They typically provide the event organizer, event descriptions and costs, and people to contact for more information. To find upcoming events for U.S. Renewable Energy, use industry search terms relating to Solar, Hydro energy, or wind energy.
Schedules for U.S. Government Organized or Sponsored Events
Domestic USDOC Events: http://www.export.gov/comm_svc/us_event_search.html International USDOC Events: http://www.export.gov/comm_svc/us_event_search.html USDA (Food & agriculture) Events: http://www.fas.usda.gov/scripts/agexport/EventQuery.asp
Schedules for Commercially Organized Events
BizTrade Trade Show Directory (http://www.biztradeshows.com) TSNN (http://www.tsnn.com/) ExpoWorldNet (http://www.expoworld.net/) Exhibition Center - Foreign Trade Online (http://www.foreign-trade.com/exhibit.htm)
76 VI. Available Market Research
Renewable Energy
The reports listed below are country-specific market surveys relating to Renewable Energy written by resident U.S. commercial staff in each country. Many of these reports analyze demand trends, the competition, business practices, distribution channels, promotional opportunities, and trade barriers.
All the reports can be obtained on-line at no cost from http://www.buyusainfo.net/adsearch.cfm?loadnav=no
CENTER FOR INTERNATIONAL TRADE DEVELOPMENT 13430 Hawthorne Blvd, Hawthorne, California 90250 USA Phone: (310) 973-3173 Fax: (310) 973-3132 E-mail: [email protected]
The Bio-fuels Industry Argentina 6/13/2008 Renewable energy Austria 2/25/2008 The renewable energy market Belgium 6/2/2008 Wind Power Growth Opportunities Brazil 3/20/2009 Solar Energy Update Brazil 1/12/2009 The Brazilian Biofuels Industry Brazil 9/20/2007 Renewable Energy Market in Bulgaria Bulgaria 6/12/2008 Wind Energy China 10/29/2008 Biodiesel Energy China 10/22/2008 Wind, Hydro, Biomass, Solar Czech Republic 2/11/2009 Wind Power generation Egypt 3/25/2007 Renewable Energy Market Brief Finland 2/02/2008 Renewable Energy Market Overview Germany 1/11/2008 Wind Energy Germany 8/22/2008 The Photovoltaic Industry Germany 2/3/2009 Renewable energies- Forecast 2020 Germany 4/7/2009 Opportunities in the Energy Sector Ghana 11/15/2007 Energy Market For Greece Greece 11/5/2008 Geothermal Development Indonesia 10/31/2008 Biofuel Development Indonesia 8/29/2008 Overview of Renewable Energy Sector Ireland 12/20/2007 Italian Energy Italy 9/17/2008 Solar Energy Japan 8/1/2007 Mexico: Renewable Energy Mexico 8/22/2008 Renewable Energy opportunities Morocco 3/15/2007 Renewable Energy Equipment Netherlands 1/22/2009
77 Pakistan Renewable Energy Market Pakistan 8/18/2007 Wind Power Picks Up Speed In Poland Poland 12/29/2008 Renewable Energy and Microgeneration Portugal 9/16/2008 Renewable energy and alternative fuels Slovakia 3/1/2007 Korea's New And Renewable Energy Industry South Korea 12/30/2008 Renewable Energy Industry South Korea 7/10/2007 Renewable Energy in Spain Spain 2/3/2009 Switzerland's Nuclear Power Plants Switzerland 10/15/2008 Renewable Energy Switzerland 12/2/2008 Renewable/ Alternative Energy Equipment Thailand 11/21/2008 Renewable energy- Current trends Ukraine 4/18/2008 Renewable Energy Outlook Ukraine 9/19/2007 The renewable energy market United Kingdom 5/11/2007 Wind Energy Uruguay 3/31/2009 Market Opportunities for Renewable Energy Eq. Uruguay 9/10/2007 Uzbekistan Power Generation Sector Overview Uzbekistan 2/13/2008
78 Appendix
Products in Renewal Energy by Schedule B Code (10 digits) & HS Code (1st 6 digits) - __ Items
Schedule B/HS Code Description 8412 90 9080 Wind turbine blades
85023100 Wind-powered electric generating sets
Hydraulic turbines and water wheels of a power not 84101100 exceeding 1,000 kW
Photosensitive Semiconductor Devices, Including 854140 Photovoltaic Cells; Light-Emitting Diodes
79