Friday 23 January 2009

New energy drives dynamic jobs growth

Canberra Times
Thursday 22/1/2009 Page: 5

wind turbine nacelleOne million people will be employed in the world wind-power industry by the end of the decade, despite the impact of the financial crisis, it was forecast this week. Amid predictions that the world would need to install one new turbine every 25 minutes to reach global renewables targets, energy experts at the World Future Energy Summit in Abu Dhabi said the sector had maintained an almost 30% annual growth rate in 2008 and was heading for further success. The secretary general of the Global Wind Energy Council, Steve Sawyer, said, "It has been another record year for the industry.

People say these growth rates can't go on forever, but they keep on going on." There had been "dramatic" increases in the United States and China, with the former overtaking Germany as the country with the most installed capacity, he said.

There were now 400,000 people working in the wind-energy sector worldwide and this would increase enormously in future. "We would expect it to reach one million by the end of the decade at least." But the upbeat message came at the same time as a warning from investment bank Goldman Sachs that both wind and solar energy companies faced financial difficulties caused by the continuing crisis. It said that a lack of available financing for wind and solar projects would reduce or delay demand and affect volumes, pricing and profitability.

Goldman said it continued to favour investment in the wind industry in Europe rather than the solar industry, given the former's greater level of maturity, its advantages in terns of scalability, and the future economics of electricity generation. "We believe that the most important thence in 2009 within alternative energy will be a move from severe undersupply to one of at least a more balanced market and potentially serious oversupply," Goldman analyst Jason Channell said.

Goldman's pessimism was not shared by Andrew Garrad, of the wind-power consultancy Garrad Hassan, who was at the Abu Dhabi conference. He said it had been "gobsmacking" to see new schemes in China. One location he had visited was putting in place up to 5GW of new capacity. It was fair to say, he said, that "Europe's domination of wind is over".

Also at the conference, Frank Mastiaux, head of climate and renewables at power utility E.ON, warned that planning problems continued to blight the industry. Only one in five projects that were put forward to authorities in central Europe ended up being built, he said. And while E.ON had been putting up one new turbine every 10 hours on its own, he warned that the world needed one every 25 minutes if it were to reach targets on tackling climate change.

Powers of strength rise in windy sea

Canberra Times
Thursday 22/1/2009 Page: 1

offshore windfarmIn the world's largest offshore wind farm the blades stretch as high as 135m,and even in a gentle wind turn at 3201wind farm on the horizon. I was on the sand dunes at Holkham in Norfolk, eastern England, when the sky cleared and suddenly, in the far distance, stood dozens of turbines. This, it turned out, was the new Lynn and Inner Dowsing Offshore Wind Farm, in the shallow waters of the Wash, just off the coast of Lincolnshire. Completed on time and on budget last year, its 54 turbines have a capacity of 194 MWs, enough to power 130,000 homes.

Britain is now the world's leading generator of offshore wind energy, recently overtaking Denmark (other countries have greater onshore capacity). The power generated by offshore wind is still relatively modest but its potential is enormous. Turbines are quadrupling in size, vastly increasing their efficiency and the power they can harvest. And Britain is the windiest country in Europe, its west coast in particular buffeted by punchy, energy-giving winds.

Recently a report for the British Government by the independent Climate Change Commission found that wind generation could be a "major source" of electricity and suggested it could meet as much as 30% of Britain's needs by 2020. Critics, however, have dismissed the figure as unrealistic. While the first few wind farms were tourist attractions, since then wind energy has had a rough time of it. Some people living near turbines complain about noise and sleeplessness. Many conservationists judge their eyesores on the land and a menace to local wildlife, particularly birds.

I certainly felt ambivalent about the appearance of this massive wind farm on a horizon I treasured for its restful sense of unlimited space. So I took a boat trip from Grimsby in eastern England with the utility company Centrica, the owners of the faun, to take a closer look. The North Sea was grey-brown and not until we were virtually on top of them did the turbines loons out of the sea. Then, in one of those miraculous climatic changes that happen at sea, the cloud disappeared: in the sunshine they shone, like spindly white flowers planted in neat rows.

It was only when the boat went directly beneath them that you could appreciate their size. Each turbine is 135m high. You could stand inside their delicate (hollow) blades at their root. Not that you would: even in a gentle wind, with the blades turning deceptively slowly, the speed at their tip approached 320km/h.

This farm cost more than £300 million (now about $A640 million) and was built in depths of up to 18m in less than two years. Steel foundation tubes were hammered 25m into the chalk below the sandy seabed and the trunk of the turbine was added in two parts. The blades - in this case made in Denmark from balsa wood and fibreglass - have to be phenomenally strong: if the wind speed is 18m a second, 100 tonnes of air pass through the blades every second.

Offshore wind technology seems miraculous and slightly bonkers. Why put turbines in the sea? What happens if the sea level rises with climate change? The main reason to place the farms at sea is so they catch more wind. In the boat, at sea level, I couldn't feel much wind; at turbine height there is much more. Part of the attraction is also the assumption that offshore farms attract less criticism and less Nimbyism.

"I suspect people thought there would be fewer stakeholders offshore and it would be easier, but there are actually more," says Alan Thompson, head of renewables at Centrica. These include not only coastal home-owners and local councils, but fishermen, environmentalists, maritime authorities, coastguards, sailing clubs and, most problematically around the county of East Anglia, the British Ministry of Defence, which has complained that turbines interfere with air defence radar. Fishermen made strong protests against Lynn and Inner Dowsing.

On the day I visited, however, there were eight mussel boats fishing between the two groups of turbines. Research from Denmark suggests that the artificial reefs created by the farms may actually provide useful new habitat for shellfish. Another reservation about offshore power is a claim that farms are proving much more expensive to maintain than expected.

Centrica's maintenance costs are fixed for the first five years, thanks to British Government investment; it says it is too early to judge if maintenance costs will prove prohibitive. Maintenance is, at least, creating jobs - boats are staffed by former fishermen - and engineers are routinely sent to Lynn and Inner Dowsing from Grimsby's port. wind energy, sceptics also claim, is intermittent and unreliable. Thompson says these turbines generate power 85% of the time. Each turbine produces about 40% of its potential capacity over a year, although in the windier north-west of Britain this can rise to above 50%.

And sea-level rise? The turbines are designed to withstand rises of just 250mm but are predicted to have a 20-year lifespan, such is the strain of constantly moving parts in strong winds. It doesn't sound long, but power companies expect to "repower" the farms with updated turbine technology in a couple of decades. Having built foundations and laid power cables back to the land, it makes sense to keep using them.

Lynn and Inner Dowsing will not hold its world title for long because turbine capacity is increasing so quickly. While the 20 turbines at Centrica's Glens of Foudland onshore farm, which opened in 2005, each produce 1.3MW of power, its proposed second offshore Lincolnshire farm, recently given planning approval, could feature 5MW machines, with the whole plant producing 250MW in total.

The chill wind of recession, however, is slowing down the offshore revolution. Even though it now has consent for the second fare in the same area, Centrica admits it is calculating whether it can proceed in such difficult economic conditions. Many energy companies complain that Britain's renewable energy subsidies are not generous enough: Shell, for instance, last year pulled out of the proposed London Array wind farm. The British Government's target is for 33GW of offshore wind by 2020; so far it has taken seven years to get consent for 3GW of offshore power.

I will look on the turbines more affectionately when I am next on Holkham Beach, but our willingness to embrace wind energy may still be moving too slowly to solve our looming energy crisis.

Penola's measured resource lifts hot rocks explorer Panax

Courier Mail
Thursday 22/1/2009 Page: 69

HOT rocks explorer Panax Geothermal geothermal has reported an inferred resource of 41,000 petajoules at its Penola tenement in South Australia. The company said 5% of the inferred resource could be classified as a measured resource sufficient to operate a 200MW geothermal base-load power plant for 30 years, subject to a full feasibility study. Panax Geothermal aims to have Australia's first grid-connected geothermal power plant operational by 2011.

Its application for a $7 million drilling grant from the Federal Government had also been upgraded to a full merit assessment, executive director Kerry Parker said. Mr Parker said the group was "quietly confident" of grant approval which would see drilling at Salamander-1 in the advanced Penola Project, part of the company's limestone Coast geothermal project in SA, start by mid-2009.

He said Panax Geothermal was the only hot sedimentary aquifer project in Australia to reveal a measured resource, highlighting Panax Geothermal's advanced status. (Hot fractured rock explorer GeoDynamics has Australia's most advanced project near Innamincka in the state's far north.) "The measured resource is quite significant. The small amount of measured resource more than clearly demonstrates the advanced nature of the project," Mr Parker said.

The company would proceed, either with a grant or alternative funding, with production tests. It aims to make Salamander-1 part of a 5-10MW grid connected, commercial geothermal power plant up and running by 2011. The Penola project had excellent access to infrastructure, with the main National Electricity Market Management Company grid traversing the entire project area, it said.

Thursday 22 January 2009

Brumby to fast-track key projects

Summaries - Australian Financial Review
Wednesday 21/1/2009 Page: 1

Victorian Premier John Brumby says the government may use its discretionary planning powers to fast-track capital works, saying 'this is not a period in time in which we would want projects to be unnecessarily delayed.' Mr Brumby also said the government would push to make the state the carbon trading hub for the nation.

The push to host the national carbon market regulator and registry for permits is likely to face strong opposition from NSW, which is home to the Australian Securities Exchange. Unemployment in Victoria is slightly above the national average at 4.6%, and Access Economics recently said that the coming recession is likely to hit Victoria than all other states except NSW. Premier Brumby is also facing political challenges, and he, along with Deputy Prime Minister Julia Gillard, recently sanctioned the reconstitution of Victoria's Labor Party factions in a bid to prevent fighting over preselections.

Scientist's massive cut

Daily Telegraph
Wednesday 21/1/2009 Page: 7

A Sydney scientist has won a massive cash prize for his cutting edge work on solar energy. Professor Martin Green was the runner-up in the Zayed Future Energy Prize in Abu Dhabi in the United Arab Emirates for his achievements in photovoltaic solar energy research - worth over $530,000.

Wednesday 21 January 2009

Race is on for carbon offset work

Tuesday 20/1/2009 Page: 25

AT least 20 new IT projects potentially worth millions of dollars are on the table as the Department of Climate Change prepares for online trading of emissions permits and establishes an environmental watchdog agency with responsibility for the carbon pollution reduction scheme. Tenders for the CPRS auction platform and architecture, systems integration, financial management, identity/access, business intelligence systems, web portal design and hosting services will be announced as soon as this month.

Our overall procurement strategy is still being developed, but the design and build will be co-ordinated within the department, using a range of suppliers," department spokeswoman Vicki Kapernick said. "The projects just listed on our procurement plan are an indication of the work likely to be undertaken in preparation for the establishment of the CPRS and the regulator." The new agency, the Australian Climate Change Regulatory Authority, will assess organisations' liability under the National Greenhouse and Energy Reporting Act, enforce compliance and manage the auction or allocation of permits, including collection of revenue.

The Kyoto-compliant national emissions registry completed just before Christmas represented the first phase of the CPRS system, Ms Kapernick said. US-based environmental consultant Perrin Quarles Associates, along with local companies Strategic Data Management and AussieHQ, won a $600,000 contract to supply the registry, which is linked to the UN International Transactions Log. Countries signing up to the Kyoto Protocol are assigned a number of carbon emission units, and must set up a registry to track and record all trades.

Minister for Climate Change Penny Wong said having the trading registry operating was an important milestone". "We need these units to meet the target of limiting our average annual emissions over the period 2008-12 to 108% of 1990 levels," Senator Wong said. The registry will now be further developed to support the introduction of the CPRS by July 1 next year. Ms Kaperniek said a healthy response to the first tender indicated a number of companies were likely to bid for this work.

Some $37 million over four years was allocated for the creation of an emissions trading scheme in the last budget, but Ms Kapernick said the new projects related to the regulator's office, announced last month. "Obviously, a lot of detail is yet to be worked out." The department has to provide an IT infrastructure before the authority's establishment through passage of the scheme's enabling legislation. Final costs for the scheme will be published in the 2009-10 federal budget.

Meanwhile, decisions on contracts for a call centre and future support of the department's main business interface, the Online System for Comprehensive Activity Reporting, are expected early this year. Data from OSCAR and, eventually, the CPRS, will be fed into the National Greenhouse Energy Reporting System, which is being expanded to handle increased mandatory reporting. Businesses can hope for a reduction in red tape, with the department developing standard approaches to energy data sets.

A spokeswoman for Senator Wong said industry reporting requirements were being considered by federal, state and territory governments, with some "positive outcomes" expected by midyear. "Streamlining federal programs has already commenced," she said. "Legislation under the Energy Efficiency Opportunities program has been aligned with the new NGERS. From July 1, corporations will only have to submit data once through a single IT reporting system to cover both reporting obligations."

Centre taps more sun at solar energy farms

Northern Territory News
Tuesday 20/1/2009 Page: 6

Alice Springs could be home to two major solar energy generation farms by this time next year. Alice Solar City general manager Brian Elmer said the growing program should have both the Alice Springs Airport and Ilparpa solar farms up and running by the end of 2009. After a successful year for the program's residential and commercial arias, this year seems set to continue the progress of the project. Solar Cities will also be involved in the design and construction of an unusual form of harnessing solar energy at the Araluen Arts Centre. The centre would use parabolic solar troughs that heat oil.

Emissions trading puts ZeroGen in doubt

Courier Mail
Tuesday 20/1/2009 Page: 24

THE viability of Queensland's $125 million clean coal project is under serious doubt because of the Rudd Government's plans for an emissions trading scheme. The ZeroGen Project plans to capture CO2 emissions and bury them underground, but has complained that the trading scheme would not only fail to inspire investment for projects like the one proposed for central Queensland, but its system of licensing emissions would unfairly penalise it.

In a letter to Resources Minister Martin Ferguson, pictured, ZeroGen chief executive Anthony Tarr said the company would be forced to pay for permits to emit CO2 during its development stage whereas "the dirtiest coal generators in Australia are given permits for free". ZeroGen refused to comment yesterday as the question marks over the project took on a political edge, with the Opposition claiming the scheme was on the brink of collapse.

"The Rudd Labor Government's promises to support clean coal technology have been exposed as a sham," Opposition Leader Malcolm Turnbull said. "Labor has refused to provide ZeroGen, Australia's only commercial clean coal project, with a level playing field on emissions permits, driving the central Queensland venture to the brink of collapse."

A spokesman for Mr Ferguson said ZeroGen was one of several Australian low emission coal projects potentially eligible for assistance from the Government's $500 million Low Emission Coal Fund and the Global Carbon Initiative.

Geodynamics eyes funding

Adelaide Advertiser
Tuesday 20/1/2009 Page: 29

GeoDynamics is looking at a range of options to fund its $300m, 50 MW Cooper Basin power station, including applying for an $80 million-$90 million Federal Government renewable energy grant. With 30% farming partner Origin Energy, the hot rocks explorer will decide at the end of the year on how to raise the remaining funds. The company has a number of strong cornerstone investors and was not looking for any joint venture opportunities to raise the funds managing director Gerry Grove-White said. "We have a substantial equity base at the moment, and we'll know the quantum of capital to be raised only by the end of the year," he added. "We hope to be successful in getting the federal grant."

Tuesday 20 January 2009

The answer is blowin' in the wind

West Australian
Saturday 17/1/2009 Page: 19

blowin' in the windWind energy in WA has yet to take off, despite ideal conditions on our coastline "Thar she blows" is a familiar refrain of Albany's not-too-distant past, when, in the words of Herman Melville, our own Nantucketers used to reside and riot on the sea and scour the deep in search of the leviathan. The whale hunt has since disappeared, but the expression remains oddly apt for another distinctive local industry.

"In Albany, the wind is very good - about seven to eight metres per second," says Chem Nayar, professor of electrical energy at Curtin University. "Western Australia is one of the most effective places in the world to have wind farms." WA's first wind turbine was built on Rottnest Island in the 1980s, but the 12 turbines in Albany, stretched over about 4km of howling coastline, make it one of the State's biggest wind farms. It belts out up to 26.1 MWs, which was enough to power 70% of the town when it was completed in 2001. Rapid growth in demand has seen that proportion drop to about 50%, but it is hoped another six turbines will be swizzing by 2011 to bring the total wind energy up to 80%.

As impressive as Albany's numbers are, wind energy still accounts for a paltry 2% of WA's total electricity generation, despite natural conditions that should make us the Saudi Arabia of renewable energy. The biggest facility is at Walkaway, a 54-turbine, 90Mw monster owned by Babcock and Brown Wind Partners. WA has other outposts with smaller operations that feed into the main grid, such as Kalbarri and Bremer Bay, while remote locations including Hopetoun, Coral Bay, Denham and Esperance have turbines off the main grid to supplement diesel power stations.

Only about 65 household systems exist Statewide, including those in remote areas where necessity and more obliging neighbours make turbines more attractive. Perhaps unsurprisingly, the obstacles are largely economic. rather than technical. "I think the biggest issue why it is not picking up that much is that the electricity cost in Australia generally is low, especially compared with Europe," Nayar explains. "In Europe, somebody pays 30 or 40¢ per kW hour. Here, we pay only 12¢ per kW-hour." Plentiful coal mined at Collie and burnt in local thermal power stations continues to give WA very cheap electricity and no obvious incentive to invest in cleaner alternatives.

"There are more than 10,000 wind turbines on the system now in Germany alone," says Daniel Thompson, Verve Energy's manager sustainable energy projects. "And they enjoy being interconnected with other countries so they can export across the border." Denmark, Germany and Spain - world leaders in wind-power production - have driven development by using a "fixed feed-in tariff", where anyone who produces wind or solar electricity can sell it at a guaranteed price.

"The power purchase price is fixed for 10 to 15 years, so the financial risk for the developer is reduced," Nayar says. "A feed-in tariff would be really attractive in Australia." India has introduced one, and the wind industry has boomed. Australia, by contrast, has no fixed feed-in tariff, higher start-up costs, cheaper fossil fuels, and provides a subsidy only for solar rather than wind.

"I want to install a turbine in my house, but unfortunately, it is not attractive because I can't get any government subsidy on that, whereas if I install solar, I get a subsidy," he says. Despite the hulking shadow of coal, the wind industry appears to be growing. Several major new wind farms are in the offing, including three that are bigger than Walkaway. The biggest, planned for Merredin, will add another 270Mw, which would more than double the State's total capacity.

Isis of plenty

West Australian
Saturday 17/1/2009 Page: 16

Top of a wind turbineIn the past 10 years, one Danish island has cut its carbon footprint by a staggering 140%. Now, with a simple grid of windfarms, solar panels and sheep, it's selling power to the mainland and taking calls from oil multinationals.

JORGEN TRANBERG looks a farmer to his roots: grubby blue overalls, crumpled T-shirt and crinkled, weather beaten features. His laconic manner, blond hair and black clogs also reveal his Scandinavian origins. Tranberg farms at Norreskifte on Samso, a Danish island famed for its rich, sweet strawberries and delicately flavoured early potatoes. This place is steeped in history - the Vikings built ships and constructed canals here - while modern residents of Copenhagen own dozens of the island's finer houses.

But Samso has recently had a remarkable transformation, one that has given it an unexpected global importance and international technological standing. Although members of a tightly knit, deeply conservative community, Samsingers - with Tranberg in the vanguard - have launched a renewable-energy revolution on this windswept scrap of Scandinavia. Solar, biomass, wind and wood-chip power generators have sprouted up across the island, while traditional fossil fuel plants have been closed and dismantled. Nor was it hard to bring about these changes. "For me, it has been a piece of cake," Tranberg says. Nevertheless, the consequences have been dramatic.

Ten years ago, islanders drew nearly all their energy from oil and petrol brought in by tankers and from coal powered electricity transmitted to the island through a mainland cable link. Today, that traffic in energy has been reversed. Samsingers now export millions of kW hours of electricity from renewable energy sources to the rest of Denmark. In doing so, islanders have cut their carbon footprint by a staggering 140%. And what Samso can do today, the rest of the world can achieve in the near future. it is claimed.

In 2007, carbon dioxide reached a record figure of 384 parts per million - a rise of about 35% on levels that existed before the Industrial Revolution. The Intergovernmental Panel on Climate Change has warned that such changes could soon have a dramatic impact on the world's weather patterns. Already, Arctic sea ice is dwindling alarmingly and scientists say the world has only a few years left to make serious carbon-output cuts before irreversible, devastating climate change ensues.

Samso suggests one route for avoiding such a fate. Everywhere you travel on the island you see signs of change. There are dozens of wind turbines of various sizes dotted across the landscape, houses have solarpanelled roofs, while a long line of giant turbines off the island's southern tip swirl in the wind. Towns are linked to district heating systems that pump hot water to homes. These are either powered by rows of solar panels covering entire fields, or by generators which burn straw from local farms or timber chips cut from the island's woods. None of these enterprises has been imposed by outsiders or been funded by major energy companies.

Each plant is owned either by a collective of local people or by an individual islander. The Samso revolution has been an exercise in self-determination - a process in which islanders have decided to demonstrate what can be done to alleviate climate damage while maintaining a comfortable lifestyle. Consider Tranberg. As he wanders round his cowsheds, he scarcely looks like an energy entrepreneur. Yet the 47-year-old farmer is a true power broker. Apart from his fields of pumpkins and potatoes, as well as his 150 cows, he has erected a giant one MW wind turbine that looms over his 120ha dairy farm.

Four other great machines stand beside it, swirling in Samso's relentless winds. Each device is owned either by a neighbouring farmer or by a collective of locals. In addition, Tranberg has bought a half share in an even bigger, 2.3Mw generator, one of the 10 devices that guard the south coast of Samso and now help to supply a sizeable chunk of Denmark's electricity.

The people of Samso were once the producers of more than 45,000 tonnes of carbon dioxide every year - about 11 tonnes a head. Through projects like these, they have cut that figure to minus 15,000. (The minus figure comes from the fact that Samsingers export their excess wind energy to mainland Denmark, where it replaces electricity that would otherwise be generated using coal or gas.) It is a remarkable transformation, wrought mainly by Samsingers themselves, albeit with the aid of some national and European Union funds and some generous guaranteed fixed prices that Denmark provides for windderived electricity.

The latter ensures turbines pay for themselves over a six or seven-year period. After that, owners can expect to rake in some tidy profits. "It has been a very good investment," Tranberg admits. "It has made my bank manager very happy.

But none of us is in it just for the money. We are doing it because it is fun and it makes us feel good." Nor do his efforts stop with his turbines. Tranberg recently redesigned his cowshed so it requires little straw for bedding for his cattle. Each animal now has its own natty mattress. Instead, most of the straw from his fields is sold to his local district heating plant, further increasing his revenue and limiting carbon dioxide production. (Carbon dioxide is absorbed as crops grow in fields.

When their stalks - straw - are burned, that carbon dioxide is released, but only as a gas that has been recycled within a single growing season. By contrast, oil, coal and gas are the remains of plants that are millions of years old and so, when burned, release carbon dioxide that had been sequestered eons ago.) Samso's transformation owes its origin to a 1997 experiment by the Danish government.

Four islands, Laeso, Samso, Aero and Mon, as well as the region of Thyholm in Jutland, were each asked to compete in putting up the most convincing plan to cut their carbon outputs and boost their renewable-energy generation. Samso won. Although it lies at the heart of Denmark, the nation's fractured geography also ensures the island is one of its most awkward places to reach, surrounded as it is by the Kattegat, an inlet of the North Sea.

To get to Samso from Copenhagen, you have to travel by train for a couple of hours to Kalundborg and then take one of the twice daily ferries to Samso. A total of 4100 people live here, working on farms or in hotels and restaurants. The place is isolated and compact and ideal for an experiment in community politics and energy engineering - particularly because it is low-lying and windswept. Flags never droop on Samso.

The job of setting up the Samso experiment fell to Soren Harmensen, a former environmental studies teacher, with thinning greyish hair and an infectious enthusiasm for all things renewable. Outside his project's headquarters, at the Samso Energiakademi - a stylish, barn-like building designed to cut energy consumption to an absolute minimum - there is an old, rusting petrol pump parked on the front steps. A label on it says, simply: "No fuel. So what now, my love?" Step inside and you will find no shortage of answers to that question. Harmensen is a proselytiser and proud of his island's success. However, achieving it was not an easy matter.

It took endless meetings to get things started. Every time there was a community issue at stake, he would arrive and preach his sermon about renewable energy and its value to the island. Slowly, the idea took hold and eventually public meetings were held purely to discuss his energy schemes. Even then, the process was erratic, with individual islanders' self-interest triggering conflicts. One Samsinger, the owner of a cement factory, proposed a nuclear plant be built on the island instead of wind turbines. He would then secure the concrete contract for the reactor, he reasoned. The plan was quietly vetoed.

"We are not hippies," Harmensen says. "We just want to change how we use our energy without harming the planet or without giving up the good life." Eventually the first projects were launched, a couple of turbines on the west coast and a district heating plant. "Nothing was achieved without talk and a great deal of community involvement," Harmensen says, a message he has since carried round the planet.

"I visited Shropshire recently," he says of the English county. "A wind-farm project there was causing a huge fuss, in particular among the three villages nearest the proposed site. The planners would soothe the objections of one village, only for the other two to get angry - so local officials would turn to them. Then the first village started to object all over again. The solution was simple, of course. Give each village a turbine, I told them.

The prospect of cheap electricity would have changed everyone's minds." Needless to say, this did not happen. On another visit - this time to Islay, off the west coast of Scotland - Harmensen found similar problems. "I was asked to attend a public meeting to debate the idea of turning the island into a renewable energy centre like Samso. But nearly all the speakers droned on about ideals and about climate change in general. But what people really want is to be involved themselves and to do something that can make a difference to the world. That point was entirely lost.

"Later I found that a local Islay distillery was installing a new set of boilers. Why not use the excess water to heat local homes, I suggested. That would be far too much bother, I was told. Yet that was just the kind of scheme that could kick-start a renewable-energy revolution." Of course, there is something irritating about this Scandinavian certainty. Not every community is as cohesive as Samso's, for one thing.

And it should also be noted that the island's transformation has come at a price: roughly 420 million kroner - about $115 million - that includes money from the Danish government, the EU, local businessmen and individual members of collectives. Thus the Samso revolution cost around $23,000 per islander, although a good chunk has come from each person's own pockets. Nevertheless, if you multiply that sum by 60 million-the population of Britain-you get a figure of around £600 billion ($1370 billion) as the cost of bringing a similar revolution to Britain. It is utterly impractical, of course-a point happily acknowledged by Harmensen.

"This is a pilot project to show the world what can be done," he says. "We are not suggesting everyone makes the sweeping changes that we have. People should cherry pick from what we have done in order to make modest, but still meaningful, carbon emission cuts. "The crucial point is that we have shown that if you want to change how we generate energy, you have to start at the community level and not impose technology on people. For example, Shell heard about what we were doing and asked to be involved - but only on condition they ended up owning the turbines.

We told them to go away. We are a nation of farmers, of course. We believe in self-sufficiency." Jesper Kjems was a freelance journalist based in Copenhagen when he and his wife went to Samso for a holiday four years ago. They fell in love with the island and moved in a few months later, although neither had jobs. Kjems started playing in a local band and met Harmensen, its bassist, who sold him the Samso energy dream. Today Kjems is official spokesman for the Samso project.

Outside the town of Nordby, he showed me round its district heating project. A field has been covered with solar panels mounted to face the sun. Cold water is pumped in at one end to emerge, even on a gloomy day, as seriously hot water - about 70C - which is then piped to local houses for heating and washing. On particularly dark, sunless days, the plant switches mode: wood chips are scooped by robot crane into a furnace which heats the plant's water instead. The entire system is completely automated. "There are some living creatures involved, however," Kjems says. "

A flock of sheep is sent into the field every few days to nibble the grass before it grows long enough to prevent the sun's rays hitting the panels." Everywhere you go, you find renewable-energy enthusiasts like Kjems. Crucially, most of them are recent recruits to the cause. Nor do planning rows concerning the sight of "eyesore" wind turbines affect Samsingers as they do Britons. "No one minds wind turbines on Samso for the simple reason that we all own a share of one," says electrician Brian Kjar.

And that is the real lesson from Samso. What has happened there is a social, not a technological, revolution. Indeed, it was a specific requirement of the scheme, when established, that only existing, off-the-shelf renewable technology be used. The real changes have been those in attitude. Kjar's house near the southern town of Orby reveals the consequences. He has his own wind turbine, which he bought second-hand for $36,000 - about a fifth of its original price.

This produces more electricity than his household needs, so he uses the excess to heat water that he keeps in a huge insulated tank that he also built himself. On Samso's occasional windless days, this provides heating for his home when the 21m turbine outside his house is not moving. "Everyone knows someone who is interested in renewable energy today," he says. "Something like this starts with a few people. It just needs time to spread. That is the real lesson of Samso."

Clearing the Air

Sydney Morning Herald 

Saturday 17/1/2009 Page: 1

Clearing the Air Our addiction to cheap coal is under pressure as the climate debate rages and business tries to profit from alternatives. Clancy Yeates reports.

WHEN Sydneysiders flick on the power, there's every chance some of the electricity has come from a couple of coal-guzzling power plants in the Hunter Valley. Eraring power station's 200-metre-high chimneys tower over Lake Macquarie, while further west, the Bayswater station is set against beef and dairy country near Muswellbrook.

Drawing on the region's vast coal fields, these state-government owned giants share the title of biggest stations in the country, and supply about half the power in NSW. They also have the dubious distinction of being among the country's biggest polluters, and are a hot spot for environmental protesters. After entering service in the 1980s, their drab grey chimneys spew out more than 20 million tonnes of carbon dioxide a year. That's equal to the emissions of 4.6 million cars.

A US study last year said they were among the world's 100 biggest polluters, in a survey of some 50,000 stations. Amid the growing concerns over climate change, one might assume these plants were fast becoming industrial relics from a bygone era. But just last year the State Government approved an expansion of the Eraring plant to shore up its dwindling power supply, further inflaming environmental tensions.

The Nationals' Senate leader, Barnaby Joyce, this week showed the political stoush over cutting emissions has a long way to go, when he reignited fears of the economic impact. But as thousands of bureaucrats descend on Copenhagen this year to discuss greenhouse gas reductions, decisions such as the Eraring extension should become increasingly rare. It's much less clear, however, where our future electricity will come from.

Power generators - responsible for about half the country's emissions - are at the centre of this change. They have just decades to develop cleaner ways of providing electricity and are already placing bets on methods with potential. In just one illustration of the scale of the challenge, the consultancy Energetics calculates that meeting Sydney's needs alone would require some 77 square kilometres of solar panels. That's three times the area of the CBD, and it would still pose problems after dark.

The consultancy's managing director, Tony Cooper, says the Prime Minister, Kevin Rudd's decision to cut emissions by just 5% by 2020 is "disappointing" but at least it's a start. "Given all the economic doom and gloom, he could have said we'll push it back to 2020," he says. "lt's the thin edge of the wedge but money will start to flow through and change will start to occur a little faster than it has to date." But where this money will flow, and what type of changes it will stimulate, are unclear.

Every energy company boasts a commitment to "sustainability" but what are they doing to balance their books and still cut emissions? How they manage this monumental change has widespread effects across corporate Australia, and this has caught the eye of the financial sector. The number of carbon departments and consultancies is exploding as businesses cotton on to the potential cash to be made from this new industry. But the big end of town is also watching closely because of the business impacts of cutting carbon emissions from energy. Not only will it raise power prices, the energy sector is also the first and largest test case in the unprecedented push towards a low carbon economy.

Power companies haven't always grabbed so much market interest. The plodding utilities were traditionally sought out by conservative funds looking for safe rather than spectacular returns, such as superannuation managers. Power stations have an investment life of about 30 wars and produce fairly predictable earnings. The stunning rise and fall of Enron in the US went a fair way to changing this perception. And although the circumstances are different, the Babcock and Brown satellite Babcock and Brown Power has exposed local investors to utilities that appear to have put deal-making before running power plants.

Nevertheless, going green won't be easy for the electricity industry. It sources 84% of its power from coal, and emission-free, or renewable energy, makes up just 7% - the vast majority of it from hydro-electricity. But after months of corporate disaster scenarios about potential incentive not only because it will start low, but impacts of a carbon emissions trading scheme, having to cut emissions won't stop the companies in their tracks or leave them stranded with worthless assets. "It's not the absolute amount of carbon that you produce when you generate, it's the relative amount compared to everyone else," says an analyst at UBS, David Leitch. "When the price of carbon comes up, are you hurt more than some other guy, or less than some other guy?"

This leaves room for different approaches among the local rivals. 'The biggest listed power companies, Origin Energy and AGL, are competing to convince the markets they can cut their emissions most profitably. B&B Power may have more pressing concerns, after putting its assets up for sale after a review found it needed to slash debt. The other main generators are the British-listed International Power and TRUEnergy, which is owned by the Hong Kong-listed CLP Group.

TRU, based in Victoria, has committed to cutting its 1990 emissions by 60% by 2050 and ruled out building any more coal plants. International Power is backing a "clean coal" project at the Victoria station, Hazelwood, which was built in the 1960s using '50s technology. Many of the country's remaining power stations are in public hands but tend to be run as profit-seeking corporations.

From July next year, these generators will have to factor a price for their future carbon emissions in to their plans. Although they will initially receive many emissions permits free of charge, the Federal Government's carbon pollution reduction scheme should provide a long-term incentive to cut emissions. All of the generators except Origin Energy have coal assets, so they will receive a share of the $3.8 billion set aside to compensate the coal sector.

Origin Energy's executive general manager of corporate affairs and public policy, Carl McCamish, says every player is busily researching likely drivers of the future carbon price. The 5% target set out in the Government's white paper for the carbon pollution reduction scheme - which is likely to result in a carbon price of $25 a tonne - will encourage investment in gas generators but it won't spark a rush of investment into emissions-free, renewable energy.

"In the short term, the 5% target, in and of itself, will make very little difference to whether people build wind or geothermal or solar," McCamish says. Companies say the carbon price is a weak incentive not only because it will start low, but because of high uncertainty thereafter. A big influence on the domestic carbon price is the price of carbon in overseas markets, because the white paper allows carbon credits to be imported. This means even movements in the exchange rate could change the carbon price. Instead, the main incentive for green investment is the mandatory renewable energy target.

A draft of the policy last month said it would require 20% of electricity to come from renewable sources by 2020. "In dollar terms, that creates a much clearer and more immediate signal for people like us than the carbon price," McCamish says. Failure to comply incurs a fine, so market analysts are carefully assessing where the energy rivals place their bets. "The key factor for us is to look at the impact of the emissions trading scheme on these companies, when combined with an expanded mandatory renewable energy target," a Citi analyst, Marie Miyashiro, says.

The legislation would require the construction of 45,000 gigawatt hours of renewable capacity, worth up to $27 billion. Wind turbines provide the cheapest new green energy and are likely to make up most of the new investment. Despite these incentives, specialist green energy companies are seen as speculative ventures. The Economist reported that amid the looming recession, money spent on clean energy projects around the world was down 25% in the third quarter of last year.

Instead, established energy companies draw cash from their main businesses to take smaller stakes in renewables that look promising. McCamish calls it a "portfolio of options". "You get involved, you build skills and you learn more about the technology and if it looks like one in particular is becoming cheaper, you invest more in that as you go along," he says.

Of the local players, AGL has placed the largest bet on clean energy, with 27% of its company's capacity in renewables. TRUEnergy has a joint venture with the Hydro Tasmania known as Roaring 40s, which operates 226 MWs of wind energy and says it wants to become the country's biggest green developer by 2010. Origin Energy's main domestic game is gas but its 51.4% stake in New Zealand's Contact Energy has a large proportion of green energy. It is developing some wind and solar assets and has a 30% joint venture interest in the main project of the geothermal developer, GeoDynamics.

The chief economist and head of corporate affairs at AGL, Paul Simshauser, describes a completely renewable system as an "eventual utopia" but the incentive to back green energy is growing considerably. "Wind remains, certainly for the foreseeable future, likely to be the most scale- efficient renewable technology available today," says the ex-chief of B&B Power.

AGL also has coal assets, which he says still have a role in meeting power demand: "I think it will be a long time before we wind down the thermal [coal] fleet in Australia, because if we turned them off tomorrow, it would take the better part of 20 years just to replace them all." However, building more coal plants is highly unlikely, and some of the country's highest-emitting plants could be switched off in next five years, he says. "To actually 'put money -into a coal power station as a stand-alone investment decision would certainly test the minds of the executive team and the board."

The growing role for green energy is a small but encouraging start in addressing our carbon dependence but there's no shortage of challenges ahead. The chief executive of the Clean Energy Council, Matthew Warren, warns against focusing purely on wind. He says the group's members, which include fossil fuel generators, are concerned that design of the renewable energy target could discourage investment into more adventurous options in the longer term.

Mature wind projects appear safe but "if you come into the market in say 2016 or beyond, you've got a much narrower time to get a return on your investment", he says. "We want it to create a pathway for those new and emerging technologies, we want to be surprised by what they can end up doing, and we want to be given the time to be able to do that." Rushing into one technology can be risky for companies, too. Some analysts say AGL's bet on wind could be a long-term concern if a new, cheaper technology emerged.

But AGL's Simshauser points to the company's other renewable investments and says electricity prices should continue to rise, protecting the value of wind farms. "Provided you spread your investments out, you usually do OK in the long run," he says. Despite companies' warm and fuzzy clean energy slogans, their more immediate bet is on gas - a fossil fuel. Last year's bonanza in Queensland coal seam gas projects - worth more than $15 billion - was partly to meet surging gas demand from growing Asian markets.

More deals are likely in the coming years but even gas has its risks. The director of NabCapital's Carbon Solutions Group, Sean Lucy, says the likely wave of gas investments are bets that in 25 years a more efficient, cleaner generation method won't have arrived. "The challenge is that you are making in- vestments in an area of evolving policy and scientific understanding and you are also taking a view about how fast the world is going to feel it needs to move with emissions," he says.

A final business gripe is the effect of cutting carbon on retail margins. The executive director of the Energy Retailers Association of Australia, Cameron O'Reilly, says state-run price regulation of electricity prices could prevent them passing on higher prices. State energy ministers have acknowledged the issue, and it looks likely to be resolved. JPMorgan says Origin Energy and AGL's retail business will also benefit in the early years of emissions trading because the compensation to generators will limit the volatility in wholesale markets. As with any extra cost, business lobby groups are frantically pointing out possible risks.

However, an exodus from polluting fuels remains a long way off, reflecting the Government's slow start to cutting emissions. True to the industry's safe reputation, the big players are unlikely to gamble any more on clean fuels than they see as profitable. Even the managing director of renewable-heavy AGL, Michael Fraser, did not rule out buying NSW coal power assets when they were possibly up for sale last year, though he said it was "not a preference for the company".

Amid the burgeoning interest in carbon there's a rare positive story, of sorts. While the rest of the economy falters, a thriving industry of consultants has sprung up within the big financial and advisory firms. Banks have been expanding their carbon trading desks and are eyeing the potential windfall from advising the thousand businesses that must record and, eventually, pay for their emissions. But this attention is more than the banks spotting commissions. Large companies are tracking how the energy sector adjusts, because electricity is a cost that few businesses can avoid, though it has often been taken for granted.

The white paper released last month said electricity prices would rise by about a third, with generous compensation for households, which use about a quarter of all power. Businesses use nearly all the rest and are preparing for the rise. "The one thing that seems very certain about it all is that the electricity price is going to go up, and somewhere along the line that is going to put a lid on consumption growth," says UBS's Leitch. To deal with the rise, energy efficiency - using less energy to get the job done - is becoming a much bigger focus.

As unlikely as it may sound in any other industry, the retailers are trying to convince their customers to use less of the product they sell. This might mean switching to a different type of light bulb, or co-generation: using a heat engine to produce electricity and heat to drive down power costs. AGL did this with the brewer Coopers, building a plant that supplies electricity and steam to the brewery, with surplus electricity sold to the grid.

NabCapital's Lucy says it could be relevant to businesses with banks of computers that need large stable power supply. "We're seeing more and more people coming and talking to us about how can they improve their carbon efficiency or productivity by investing in their own generation assets." Listed companies' greenhouse and energy performance is also under greater shareholder scrutiny. The executive director of the Investor Group on Climate Change, Joanne Saleeba, says fund managers increasingly cross-examine companies about reducing their emissions or their energy use.

The group's members, fund managers responsible for $550 billion, are putting pressure on corporate chiefs to provide "long-term scenario planning" over what they think carbon or energy prices will be and how they will react. Saleeba is unaware of investors ditching a stock or sector purely because of poor carbon performance but the pressure is on companies to become carbon literate. "If the investor knows more about the risks and opportunities to the business than the business itself, then that's a risk," she says.

And it seems many of the country's businesses still have a lot to learn about carbon. In November 2007, a PricewaterhouseCoopers survey of more than 300 Australian businesses with an annual turnover of more than $150 million found only 20% were factoring a carbon price into their capital expenditure decisions. Energy companies were better prepared than most, it said, but even in the last year carbon has become a burning issue too large for businesses of all shapes to avoid. If they haven't already hired a carbon consultant to do it for them: financial chiefs across town will be closely watching as the energy sector takes the first steps in changing.

Woodside calls temporary halt to California offshore gas plans

Weekend Australian 

Saturday 17/1/2009 Page: 25

Woodside Petroleum has delayed its innovative attempt to deliver Australian LNG to the US, citing "changed energy market conditions". The project involved mooring an LNG tanker off the coast of Los Angeles and connecting to an undersea pipeline to deliver the gas to California's domestic gas network.

Woodside Petroleum Natural Gas president Steve Larson said yesterday that conditions were not right for the proposed development. "We must acknowledge the impact of the current market, and have notified the regulatory agencies we are withdrawing our application for the time being," Mr Larson said. "While the permit process in California and Los Angeles is challenging, we were confident that, with the overall environmental and safety attributes of our design, our application would ultimately succeed"

Woodside Petroleum's move to suspend OceanWay marks one of the first blows the global financial crisis has laid on a major Australia petroleum player, in contrast to the resources sector, which has been in a spin since last year under the pressure of sinking commodities prices and shrinking credit markets. Woodside Petroleum, which declined to reveal the impact of the deferral on its accounts, has been pursuing OceanWay since 2005 and was slowly moving the plan through regulatory approvals under intense scrutiny from Californian environmental activists.

Domestic gas production in the US has increased, in contrast with conditions when Woodside Petroleum initiated the OceanWay project. Mr Larson said Woodside Petroleum saw a future for OceanWay despite the suspension, particularly as Californian Governor Arnold Schwarzenegger continued his campaign to reduce carbon emissions. "As the state's climate change policies continue to evolve, they will only strengthen the role for natural gas as part of California's clean air solution," he said. "We still believe in the long- term value of liquefied natural gas as a source of clean, reliable and secure energy for Los Angeles"

UBS senior energy analyst Gordon Ramsay said the suspension of OceanWay was unsurprising. "It is a project that has gone quiet lately and has been deferred, not cancelled indefinitely," Mr Ramsay said. "The US gas price is particularly weak," he said. The deferral was based on the conclusion that the market was not there at the moment. The postponement came as the Australian arm of Japanese gas firm Inpex - in partnership with French major Total- announced it had awarded the contract for front end engineering and design (FEED) to a joint venture of engineering and design firms .JGC Corp, KBR and Chiyoda Corp.

The FEED milestone puts an end to hopes - particularly from the West Australian Government - that Inpex would review its decision to abandon WA as the processing site for gas from its Ichthys field in favour of Darwin's Blaydin Point. lnpex president Naoki Kuroda reaffirmed that the project was moving ahead despite volatile market conditions. " Despite the current global financial environment, Inpex remains firmly committed to advancing the Ichthys project," Mr Kuroda said.

Inpex expects the $US20 billion project, scheduled to begin loading LNG in late 2014 or early 2015, to produce 8 million tonnes of LNG a year and 1.6 million tonnes of LPG a year as well as 100,000 barrels of condensate a day. Darwin's Blaydin Point site can support two initial LNG trains, with the capacity for additional trains to accommodate future expansion. Woodside Petroleum shares fell 52c to close at $33.53 yesterday.

Australia needs to go nuclear: engineers

Canberra Times
Saturday 17/1/2009 Page: 5

Australia will probably have to go nuclear to tackle climate change, engineers and scientists say. They say nuclear energy is the only reliable, proven source of electricity with a minimal carbon footprint. They're tipping 15% of the country's electricity will come from nuclear reactors by 2050. And the first plant could swing into action just 10 years after approval is given. The Australian Academy of Technological Sciences and Engineering, which represents more than 700 experts, has issued a report calling for nuclear energy to be on the table.

The report's lead author, John Burgess, said the problem with coal and gas-fired power was that it emitted carbon pollution, which caused climate change. But renewable energy, often touted as the solution, was either not baseload power or not proven. "We need power that runs for 24 hours a day, as opposed to just when the sun shines or the wind blows," Dr Burgess said. "[Nuclear power] is an existing technology which is operating quite safely." He said public hostility to nuclear energy could fade as concerns about climate change grew.

The report said Australia was well-placed to go nuclear because of an abundance both of uranium reserves and remote sites for dumping waste. There are more than 440 nuclear energy reactors in the world, in 31 countries. The report said Australia would probably have a "generation 3 plus" style of nuclear reactor, which was safer and more fuel-efficient than current plants. A plant would produce between 2 and 10 cubic metres of waste a year, a small amount compared with some other technologies, the report said.

But the Australian Conservation Foundation was not having a bar of the engineers' nuclear push. The foundation's nuclear-free campaigner, David Noonan, said, "It's completely unrealistic of them, they're on a hiding to nothing." He said Australians did not want nuclear energy or nuclear waste. Renewable energy was the way to tackle climate change, and it could be a cheap, baseload source of power, Mr Noonan said. And if Australia opted for nuclear energy, it could send a message to other countries that nuclear weapons would also be developed.

The Federal Government opposes domestic nuclear energy. Energy minister Martin Ferguson reiterated the message when questioned on the academy's report yesterday. "It is the Government's view that nuclear energy is not needed as part of Australia's energy mix given our country's abundance and diversity of low-cost renewable energy sources," he said. "The Government has a clear policy of prohibiting the development of an Australian nuclear energy industry." The report, which looked at the best ways for Australia to generate electricity in a climate-friendly way, said a technological revolution was needed. Emissions trading was a good start but would not do enough to encourage low-emission technologies.

It said $6 billion should be spent by 2020 on researching greener electricity generation. New technologies must be deployed on a massive scale, and there should be ''relentless'' work on energy efficiency programs.

Monday 19 January 2009

Solar funds a ray of light for research

Canberra Times
Friday 16/1/2009 Page: 3

worldclass solar laboratory in CanberraA $5 million Federal Government grant will help establish a worldclass solar laboratory in Canberra, which researchers hope will put Australia back on the cutting edge of solar development. The grant is part of the Government's $100 million election commitment to expedite solar research in Australia. The facility, planned to start operations in one year, will be built at the Australian National University to adjoin the university's existing solar laboratories. Associate Professor Maus Weber, from the college of engineering and computer science, will be one of the key researchers working within the new facility.

Professor Weber said he hoped the project would be the beginning of a far more productive era for Australia's solar industry. "We've been in a position in Australia where, in the last few years, there was comparatively little funding compared with overseas research institutions," he said. "Basically the standard of our laboratories has declined relative to what is available overseas, which makes it more difficult to remain internationally competitive. "What we want to do with this project is to get back to that level and have something that's right up there with the best facilities."

Researchers will carry out Australian Solar Institute research programs within the facility as well as existing programs. Resources and Energy Minister Martin Ferguson launched the Australian Solar Institute in Newcastle yesterday. Mr Ferguson said the new institute would provide support for researchers in the field of solar photovoltaics and concentrating solar thermal energy to help solar energy become cost competitive. "The Government believes cost competitiveness is achievable and that solar energy is a commercially viable energy option for the Australian community," he said.

Researchers at the ANU will continue to work on combined photovoltaic thermal systems, which are systems that generate electricity and heat, within the new facility. Normally when using a photovoltaic solar panel, at least 80% of incoming sunlight is converted to heat. The researchers are trying to capture and make use of this heat for applications such as heating water.

Professor Weber said the new facility would mean these kinds of projects could go "a lot further, a lot quicker. In other cases, it will allow its to come up with much more streamlined processes for getting towards the end product." The ANU will contribute $1.4 million to extend the Link Engineering Building to make space for the new facility. The extension will include a 360sqm concrete slab roof with solar access for outdoor testing and 400sqm of extra solar laboratory space.

Business development manager Igor Skryabin, from the ANU Centre for Sustainable Energy Systems, said training new researchers at their new laboratory would beat the top of their agenda. "Now it's very difficult to find a good solar researcher," Dr Skryabin said. "They're in very high demand in Australia and overseas. We are looking worldwide for the best brains to be attracted to Australia and now we will be in a much better position to do so."

BG power plant halt a setback for NSW

Summaries - Australian Financial Review
Friday 16/1/2009 Page: 13

British energy company BG Group has cancelled plans to build a $750 million gas-fired power plant in NSW's Hunter Valley region. The project would have created around 3 percent of the states current electricity capacity, and the National Electricity Market Management Company projects a power reserve shortfall in NSW by 2014-15. The NSW Business Chamber said the decision posed a risk to the state's medium-term electricity supply as it would take at least six years to gain approval and build another plant. NSW Energy Minister Ian McDonald blamed the global financial crisis for BG Group's decision to shelve the project.

US renewables sector can meet Obama challenge – analysts
New York, 15 January:

The US renewable energy sector is capable of meeting President-elect Barack Obama's pledge to double US production within three years, but the ongoing financial crisis will challenge the industry in 2009, analysts and industry experts said.

Currently, renewable energy sources comprise 7% of the US energy supply, according to the US Energy Information Administration. In a speech last week, Obama reiterated his pledge to make development of the sector a major part of his economic stimulus package. "I think it's a very admirable goal and I do believe the industry can step up to the plate and achieve that goal," said Charles Dewhurst, a Houston-based partner and leader of the national energy industry practice at consulting firm BDO Seidman.

However, meeting Obama's goal will require the industry to overcome several challenges, primarily the economic crisis that slowed the sector's growth in the second half of 2008. Financing of new renewable energy capacity at the global level declined from $23.9 billion in the first quarter of 2008 to $19.3 billion in the third quarter, according to New Energy Finance.

"The economic crisis will cause a decline in renewable energy project activity through 2009," said Milo Sjardin, at New Energy Finance in New York. "The stimulus package may boost it a little bit, but there's certainly going to be difficulty getting project financing." It is also uncertain how much of Obama's proposed $825 billion stimulus package will be devoted to the renewable energy sector. Estimates of the energy portion range from $30 billion to $50 billion, not all of which will be directed to renewable energy, according to Citi Investment Research.

Revamping the production and investment tax credits that have underpinned recent strong growth in US renewables has also been widely discussed, with renewable energy lobbyists advocating making the credits refundable. This would make the incentives more attractive, as most companies expect to pay lower taxes, undermining the value of tax credits. The number of active tax equity investors has dropped from 20 to five, but making the credits refundable would spur more tax equity investment, they argued.

In the absence of any changes to the tax structure, it will be difficult for companies to take advantage of the credits because of financing challenges, said Seth Tennant, a New York-based associate of the alternative energy group of Citi Investment Research. The wind, solar and geothermal sectors are all expected to benefit from Obama's commitment. US solar photovoltaic demand, for example, could increase by about 1,750MW to 2,000MW, increasing the US installed base by 150-200%, according to Citi.

"It's really going to be low-cost, low-carbon producers" who will benefit most, said Jack Robinson, president of Winslow Management Company in Boston, which has been involved in green investing for more than 25 years. All three sectors can triple production "with no difficulty", he said. The impact of the stimulus package on other low-carbon energy sources is less clear. Despite safety concerns, nuclear energy has to be part of the conversation because of its limited greenhouse gas emissions, although there is no timeframe for new capacity coming online, Tennant said.

Green companies expected to benefit from Obama's commitment include First Solar and Energy Conversion Devices, both of which are well positioned to quickly ramp up solar production, Robinson said. Wind turbine maker and technology companies Vestas and American Superconductor and geothermal company Water Furnace Industries can also quickly utilise any advantages provided by the stimulus package, he said.

Dewhurst at BDO Seidman also expects to see a continuation of major oil companies establishing and expanding separate business units specifically focused on wind and solar development.

Clean energy investment limps over $150bn in ‘08
London, 15 January:

Investment in clean energy companies and projects grew by 4.4% in 2008, to breach $150 billion for the first time, according to figures from New Energy Finance (NEF). But strong growth - of 40% year-on-year - in the first half of 2008 gave way to a drop of 23% in the second half of the year, compared with the same period in 2007. Preliminary 2008 figures from NEF released in December anticipated a fall of 4%.

Nonetheless, the slightly improved final numbers compare dismally with 60% growth in investment between 2006 and 2007. However, the London-based analysis company suggests that, after a "subdued start" to 2009, policy developments in the US particularly could restore the sector's momentum later in the year.

A total of $155 billion was invested last year, with investments directly in renewable energy assets reaching $97 billion (up from $84.5 billion in 2007) and by venture capital (VC) and private equity (PE) players in clean energy companies hitting $13.0 billion (up from $9.8 billion). However, investments via the public markets shrank, to $10.3 billion, from $23.4 billion in 2007. NEF said that the rise in VC and PE investment took up some of the slack from the public markets, where sharp falls in share prices in 2008 made it difficult for clean energy firms to raise fresh capital.

"It is encouraging to see that clean energy investment was so strong in 2008, despite everything that was going on in the world economy," said Michael Liebreich, chairman and chief executive of NEF. "Having said that, the big change late in the year was that debt and tax credit finance for renewable energy projects became much harder to find because of the problems of the banks.

This meant that investment in wind farms, solar plants and the like slowed fairly dramatically in the second half." He added: "The dearth of debt finance will continue into 2009. In addition, public stock markets remain fragile, and this will deter clean energy firms wanting to launch IPOs or secondary issues." NEF is predicting that the first half of 2009 will see lower investment than last year.

"What happens after mid-year will depend on two things: whether the banks start to translate historically low central bank rates into lending to companies and projects, and whether administrations around the world deliver on their promises to make a push for clean energy part of any fiscal stimulus packages," said Liebreich.

The company sees clean energy "moving from supply-constrained markets in 2007-08 to demand- and finance-constrained markets in 2009". It adds that renewable energy is continuing to become cheaper, but the trend has been obscured by high commodity prices and supply chain bottlenecks, that new industrial capacity is set to unblock.

China blasts through wind energy target
Kunming, 15 January:

China more than doubled its wind energy capacity in 2008, installing 4.66GW of additional capacity and passing the government's 10GW target two years ahead of schedule. China's wind energy industry, dominated by the 'big five' state-owned electric power companies, increased the country's total installed wind energy capacity to approximately 12.8GW by the end of 2008, according to a 5 January report from industry group China Electricity Council (CEC), a 127% increase over 2007.

The explosive growth, widely projected by observers, was driven by an 88.10% year-on-year increase in capital investment, said the report. The increase reflects the success of China's policies to promote renewable energy, which include the mandated target of 10GW by 2010 and a renewable portfolio standard that requires "non-hydro renewables" to account for 3% of the installed capacity of large power companies by 2010, and 8% by 2020.

China's central economic planning body, the National Development and Reform Commission (NDRC), has also set a target for 30GW of wind energy capacity by 2020. But last year's growth has observers projecting the industry outstripping the 2020 mark a decade sooner. Ma Lingjun, deputy general manager of the Chinese Renewable Energy Industries Association, said the group unofficially projects that 25-30GW of wind energy capacity will be installed by the end of 2010.

However, Ma said, it was unlikely that the government would increase the 2020 target, as it did the 2010 target last year, because, "there is some concern by NDRC that wind energy is growing too fast, so maybe they will use the [low target] as a way to emphasise the sustainable development [of the sector] and quality control." Rapid growth has led to high incidence of wind turbine unreliability and underperforming installations, a problem the industry is addressing, she said, "by doing more and more innovation and testing before installation".

"But since this industry is still in the early stage it is not a surprise we are having problems," she added. Last year also saw increased investment in China's electrical power grid, according to the CEC report, with 50.5% of capital invested in the power sector devoted to grid improvements, expansion and repair. Despite this investment, Ma estimated that 20% of installed wind energy capacity is not currently connected to the grid.