THE ENERGY INDUSTRY TIMES - JUNE 2017 4 Americas News Car firm gears up for storage Mercedes’ collaboration with Vivint Solar is a key element of Daimler’s electrification strategy. Siân Crampsie Germany’s Mercedes-Benz has formed an alliance with Vivint Solar in a move that will strengthen its position it in the growing home energy storage market. The two companies have announced plans to introduce a joint offering to the US market that combines Mercedes’ battery technology with Vivint’s expertise in designing, installing and servicing solar energy systems. The collaboration is the first for Mercedes Benz Energy in the US solar market and is a further indication of the growing interest of the motor market in electrification and related technologies. Last month, Mercedes’ parent company Daimler laid the foundation stone for a €500 million, 20 hectare battery production facility near Dresden, Germany. The facility will quadruple Daimler’s battery production capacity in Germany and help it to rival Tesla, which has built its own giant battery facility in Nevada, USA. Tesla has also gained a foothold in the home energy storage and solar power markets with the launch last year of its Powerwall device and the takeover of SolarCity. Vivint is one of the largest solar energy installers in the USA and the collaboration with Mercedes is its first in the storage sector. The company hopes that the move will broaden the appeal of solar energy to customers. “With energy storage to complement rooftop solar, Vivint Solar customers will be able to have more control over the renewable energy they generate,” the company said in a statement. “In addition to providing a backup power source if the grid goes down, the new combined solution may help customers reduce energy costs.” Vivint will offer energy storage systems of up to 20 kWh, comprised of modular 2.5 kWh batteries. It will initially offer the system to customers in California, which is a key market for solar panels and where customers have time-of-use tariffs and will be able to use storage devices to cut energy costs. The falling cost of batteries – achieved in part by the onset of mass production facilities – is making them a viable technology for homeowners and businesses. Daimler last year launched a home battery storage offering in Europe and the expansion of its production facilities and Mercedes’ tie-up with Vivint are key elements of its electrification strategy. Investors will plough around $4 billion into Brazil’s electricity sector after the country’s energy regulator auctioned 31 licenses for new power transmission lines. The regulator, Aneel, said that it sold 31 out of 35 available licenses at the April auction and that the process was highly competitive thanks to a recent increase in the allowable rate of return on transmission investments. Winning bidders included Sterlite Power, which secured two projects worth a total of $200 million. The company is thought to be the first Indian power company to make a major investment in Brazil. The auction is a key part of Brazil’s plans to boost investment in key infrastructure such as roads, ports and energy transmission. In the electricity sector, increasing amounts of renewable energy capacity is creating a need for new transmission lines. The April auction follows a successful auction in 2016, which saw licenses awarded to companies such as Brookfield Asset Management, Equatorial Energia and EDP Energias do Brasil. The 31 concessions sold in April equates to just over 7000 km of new power lines and substations with a total capacity of 13 132 MVA. They will be built in 19 states with operators holding licenses for 30 years. Sterlite Power will construct a 114.4 km, 230 kV transmission line in the state of Rio Grande de Sul, and a 145 km, 230 kV line in the state of Pernambuco. It bid at a 58 per cent discount to the bid price for the first project and 28 per cent for the second, according to its CEO, Pratik Agarwal. According to Brazil’s Mines and Energy Ministry, Brazil added 9.5 GW of new electricity generating capacity to the grid in 2016, 90 per cent of which was renewable. Brazil’s electricity generating capacity now stands at 150 GW, including 10.1 GW of wind and 14 GW of biomass. Hydropower still has the lion’s share of the generating mix with almost 97 GW of installed capacity. A major new hydropower project was recently put on hold, however, after a federal court suspended its operating license. Norte Energia, developer of the 11.2 GW Belo Monte hydropower project in Para, has failed to properly execute the delivery of basic sanitation works and its license was suspended in early April. It now expects the $26 billion project to be fully operational in January 2019. The US onshore wind sector had one of its most successful quarters ever at the start of 2017. The American Wind Energy Association (AWEA) says that 2000 MW of new wind generating capacity was installed in the US in the first quarter of 2017, the strongest quarter since 2009. It is expecting activity to remain strong in 2017, similar to 2015 and 2016, it added. Texas and Kansas are the two leading states, AWEA said in its US Wind Industry First Quarter 2017 Market Report. Activity in the offshore wind sector is also expected to ramp up. Make Consulting said in May that some 2.2 GW of offshore wind is expected to be installed in US waters by 2026, with the first full-scale projects reaching commercial operation in 2021. According to Make, the increase in the offshore wind capacity will be mostly supported by robust statelevel policies in the northeast region, with Massachusetts setting the goal of 1.6 GW of commissioned offshore wind capacity by 2027, and New York proposing to add 2.4 GW of offshore wind power to the energy mix by 2030. In the onshore wind sector, the industry is now in the third year of a five-year phase-out of the production tax credit (PTC), the main support mechanism for wind. There are now 41 US states with utility-scale wind power plants, and the total installed wind capacity in the country is 84.1 GW, according to AWEA. AWEA also says that there is now over 9 GW of wind power capacity under construction, and almost 12 GW in advanced development. Some 42 per cent of this activity is in Texas and the Plains states, and 37 per cent in the Midwest. In May, US Democratic Senators Edward Markey, Sheldon Whitehouse, and Congressman Jim Langevin reintroduced legislation that would extend tax credits for the offshore wind industry beyond 2019. The Offshore Wind Incentives for New Development (Offshore WIND) Act would extend the 30 per cent Investment Tax Credit for offshore wind through 2025. The legislation would help developers move forward with new offshore projects, where planning and permitting times tend to be longer than for onshore projects. The industry remains concerned about the potential impacts of President Donald Trump’s energy policy, however. Georgia Power, owner of the Vogtle nuclear power plant in Georgia, USA, says that work is continuing on the project while it finalises a new agreement with Westinghouse. The two companies have agreed an interim deal that will enable Georgia Power, a unit of Southern Company, to take over the project management of Vogtle’s new units from Westinghouse, which has filed for bankruptcy protection. Last month, media reports indicated that Georgia Power had agreed to cap Westinghouse’s liabilities on the delayed nuclear plant project, a move that will help to ease the financial stress of Westinghouse’s parent company, Toshiba. The agreement would peg Toshiba’s guarantees for the unfinished Vogtle plant at about $3.6 billion, payable over at least three years, Reuters reported, citing people familiar with the matter. The deal would also depend on the owners of the V.C. Summer Nuclear Station power project in South Carolina reaching a similar deal with Westinghouse, Reuters said. In a statement last month, Georgia Power said that it would “take all actions necessary to hold Westinghouse and Toshiba accountable for their financial obligations”. It added: “Georgia Power will continue work to complete its full-scale schedule and cost-to-complete analysis and work with the project Co-owners (Oglethorpe Power, MEAG Power and Dalton Utilities) and the Georgia Public Service Commission to determine the best path forward for customers.” Westinghouse is building four new AP1000 nuclear reactors in South Carolina and Georgia under fixed price engineering, procurement and construction (EPC) contracts, with guaranteed completion dates and associated liquidated damage provisions that materially shift the risks of future cost overruns and delays to Westinghouse. Both projects are behind schedule and over budget – Vogtle 3 & 4 by around $7 billion and VC Summer 2 &3 by around $5 billion. Brazil auctions transmission licenses Wind energy marches on in US Georgia Power takes on Vogtle Brazil added 9.5 GW of new generating capacity in 2016
Energy Industry Times June 2017
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