THE ENERGY INDUSTRY T I M E S August 2017 • Volume 10 • No 6 • Published monthly • ISSN 1757-7365 www.teitimes.com Special Supplement Incentivising energy storage With digitalisation and decentralisation becoming more widespread in the energy sector, cyber attacks are on the rise. The success or failure of storage programmes in the US may inform the decisions of other regulators as they formulate their own policies. Page 14 News In Brief UK support for storage seen as “game changer” The UK has moved to shake-up the way electricity is produced, used and stored with the announcement that it will invest £246 million in battery technology over the next four years, alongside new reforms to govern a flexible energy system. Page 2 Australia split over energy recommendations A set of recommendations aimed at delivering a blueprint for the future of Australia’s electricity market policy has split the country’s Coalition government. Page 5 Dutch aim for subsidy-free wind farms The Netherlands is to hold an auction for 700 MW of offshore wind energy capacity for developers interested in building the developments without subsidy support. Page 6 AES, Siemens exert influence in storage sector AES and Siemens have become the latest companies to seal a strategic deal in order to gain traction in the growing global energy storage market. Page 9 Energy Outlook: Renewables change landscape for gas Although the current market outlook for gas fired generation is at a low in Europe, generators can help themselves by valuing their flexibility and adjusting their trade strategies in a market increasingly dominated by renewables. Page 14 Technology: Frequency response goes offshore A wind-battery storage hybrid system being installed at the Burbo Bank offshore wind farm is expected to pave the way for rapid frequency response services to ensure grid stability. Page 15 Advertise advertising@teitimes.com Subscribe subscriptions@teitimes.com or call +44 208 523 2573 Final Word The IEA’s World Energy Investment 2017 reveals a slump in global energy investment but there are reasons to be cheerful, says Junior Isles. Page 16 Electricity sector investment overtakes oil and gas Varro: wind and solar have been doing “very well” The electricity industry is leading global energy investment as the sector continues to transform to low carbon generating sources. Junior Isles Electricity sector investment has overtaken investment in oil, gas and coal supply for the first time, driven by the global clean energy push and a continued drop in upstream oil and gas spending. The International Energy Agency (IEA) noted, that the electricity sector’s share (including networks) in overall energy investment – grew 12 percentage points in 2016 to 43 per cent of the overall energy spend. According to the World Energy Investment (WEI) 2017 report launched by the IEA in mid-July, total energy investment worldwide was around $1.7 trillion in 2016, 12 per cent lower than 2015 in real terms. The lower investment is largely attributed to lower costs in sectors such as wind and solar PV, as well as in upstream oil and gas. Global electricity investment was nearly flat (down just 1 per cent) at $718 billion, with growing network spending mostly offset by fewer coal fired power plant additions. Notably, investment in renewablebased power capacity was the largest area of electricity spending. Although renewable investment fell 3 per cent to $297 billion, it will generate 35 per cent more power thanks to cost declines and technology improvements in solar PV and wind. The report finds that progress in technology and project management are driving down solar and wind costs, reflected in low generation contract prices. Solar PV unit capital costs fell 20 per cent in 2016, partly offsetting a 50 per cent rise in additions. Launching the report, Laszlo Varro, the IEA’s Chief Economist said: “The biggest area of power generation investment generation. Wind and solar power have been doing very, very well and 2016 was a record year. We can expect 200 TWh of electricity from the wind and solar investment made in 2016.” Coal fired generation, however, continued to suffer with Laszlo saying that the days of coal as a major power generating source were numbered. G20 stands firm on climate pact is renewable, low carbon Continued on Page 2 Despite the US withdrawal from the Paris Agreement, all of the other G20 members maintain the climate accord is “irreversible” in a joint statement issued after last month’s summit in Hamburg, Germany. After lengthy negotiations, the final joint statement noted US President Donald Trump’s withdrawal from the Paris deal while stating that the world’s other major economies all still support the international effort to slow dangerous global warming. The communiqué stated: “We take note of the decision of the United States of America to withdraw from the Paris agreement,” adding, “The leaders of the other G20 members state that the Paris agreement is irreversible” and “we reaffirm our strong commitment to the Paris agreement”. The US did, however, successfully manage to insert text referencing fossil fuels which read: “The United States of America states it will endeavour to work closely with other countries to help them access and use fossil fuels more cleanly and efficiently.” The German chancellor, Angela Merkel, said she “deplored” the US exit from the agreement and added that she did not share the view of British Prime Minister Theresa May that the US could decide to rejoin the pact. The strongest proponents of the climate deal, including Merkel and the French president, Emmanuel Macron, have attempted to shore up support for the Paris deal among countries following Trump’s decision to exit the agreement. Saudi Arabia and Indonesia were reportedly considering watering down their commitment to the deal but they ended up reiterating their support at the G20 summit. During the summit, Germany played down a threat from Turkey to abandon the Paris Agreement amid fears that countries could start using the US decision to quit the global deal to demand more money from wealthy nations. More than 150 countries have formally ratified or joined the accord that came into effect last November but Turkey is one of around 40 nations yet to take such a step. Turkey’s President, Recep Tayyip Erdogan, surprised G20 summit members when he told reporters his country may be less inclined to ratify the Paris agreement following the US decision, suggesting it could jeopardise funds promised to developing countries. Barbara Hendricks, Germany’s environment minister, downplayed Erdogan’s remarks saying “it’s about access to international financial mechanisms”, rather than a fundamental rejection of the Paris accord. The leaders of the world’s 20 wealthiest economies also released the Climate and Energy Action Plan for Growth at the meeting. It calls for continued efforts to mobilise private sector investments in renewable energy and to tackle the challenge of integration of greater volumes of green energy into the energy systems. The document also says that the energy transition should happen not only in power generation but also in the heating and cooling, transport, and industry sectors. The action plan notes that flexibility options such as interconnection and transmission capacities, demand side management, smart grid technology and energy storage, among others, are key elements of a reliable and resilient energy system. G20 members say they will also work to improve the functioning, transparency and competitiveness of gas markets, as natural gas also has a role to play in the energy transition, including for providing increased flexibility for the integration of variable renewable energy. THE ENERGY INDUSTRY TIMES is published by Man in Black Media • www.mibmedia.com • Editor-in-Chief: Junior Isles • For all enquiries email: enquiries@teitimes.com
Energy Industry Times July 2017
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