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Climate change: business risk or opportunity?

As governments and customers start asking more specific questions about a company’s sustainability and emissions performance, those that can answer them are likely to have a distinct advantage.

When hearing about the science of, or human response to, global climate change, there is sometimes a temptation to just ‘switch off’.

The issue is no longer novel and the days when Al Gore was presenting ‘An Inconvenient Truth’ and receiving the Nobel Prize were almost ten years ago. In 2015, as much as awareness of the problem remains high, there is a sense that the political, policy and economic responses continue to lag.

This is a dangerous mindset; climate change, much like the Internet, is here to stay, and with each day, it only gets worse, not only because of the growing scientific evidence and lived experience of its effects, but also because changes in policy by government and others have the potential to either save or cost a business money.

This December, at ‘COP 21’ in Paris, nations have been tasked with negotiating an international climate agreement. The agreement has the potential to generate a cascading effect through the global economy, with all significant businesses being asked by government and civil society the extent to which they are helping or hindering emissions reduction.

It is potentially the most significant international meeting on global climate change since the first Earth Summit in 1992.

Ten years ago, I was working at 10 Downing Street as the senior advisor to the British Prime Minister on climate change and sustainability. It was critical then, and it is critical now that people understand that climate change is far more than an environmental problem. With the dynamics that lead to emissions growth, global warming and a heightened risk of severe climate events being intrinsic to economic activity, it is vital that economic actors understand how they can reduce emissions and improve wider sustainability performance.

Each year, there is a growing body of evidence that the global climate problem is far more than a future environmental challenge. Whether it is

  • the costs associated with severe weather events such as Hurricane Sandy which devastated New York in 2012;
  • the destruction wrought by Typhoon Haiyan killing more than 6,000 people in the Philippines in 2013;
  • the emerging policy environment as China and the United States agree on bilateral approaches to reducing the risks of climate change, or
  • President Obama establishing powerful domestic policies to promote clean energy,

climate change is far more than an issue of concern to environmentalists. We are now at a stage where any major business seeking to grow in new markets must consider whether, and how much, they might contribute to emissions.

And as the evidence of climate change being a clear and present risk becomes more evident, consumers and environmental groups are increasingly concerned about the environmental performance of global businesses.

Look at major agribusinesses operating in Southeast Asia such as Syngenta, which is implementing their ‘good growth plan’ or Unilever, which is seeking to address human development goals and reducing the risks of climate change at the same time.

Tackling climate change is no longer a niche concern among just a few firms, for corporations, measuring, understanding and reporting on emissions performance is part of building and maintaining their corporate reputation and positioning as ambitious players in the global economy.

I am much looking forward to being in Singapore in November to be part of the Responsible Business Forum. It is a conference taking place at the right time – just before December’s climate change conference in Paris – with the right people involved, and in the right place, Singapore. The city is at the heart of Sutheast Asia, the region predicted by the Organisation for Economic Co-operation and Development to enjoy strong average growth of 6.5 per cent a year between 2015 and 2019.

Whether this growth will worsen the global climate problem or be a chance for Southeast Asian firms to demonstrate that development can be achieved sustainably, is a matter of choice, for many businesses operating in southeast Asia responding to the risk of climate change could be a powerful opportunity. As governments and customers in distant markets start asking more specific questions about a company’s sustainability and emissions performance, those that can answer them are likely to have a distinct advantage.

Source: eco-business


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How a green business group is transforming the way utilities sell renewables

The Corporate Renewables Partnership offers the opportunity to build a new clean energy marketplace

Some of the most important names in renewable energy and environmentalism are turning to the business community and electric utilities to help stave off climate change and transition to a clean energy future.

The Corporate Renewables Partnership (CRP) is being put together by four non-governmental, not-for-profit organizations: The World Wildlife Fund (WWF), the World Resources Institute (WRI), the Rocky Mountain Institute (RMI), and Business for Social Responsibility (BSR).

Among the corporate partners are some of the biggest names in business, including include General Motors, Volvo, Hewlett-Packard, Cisco, Target, Walmart, Hilton, and Kaiser Permanente. Their first utility collaborators are the Berkshire Hathaway Energy (BHE) companies, owned by Warren Buffett, including MidAmerican Energy, PacifiCorp, and NV Energy.

“There is a synergy between interests from the for-profit and non-profit worlds when both are pursuing the common goals of increased renewables and decreased greenhouse gas emissions,” explained BHE Legislative and Regulatory Affairs Vice President Jonathan Weisgall.

“Policy alone doesn’t work and capital alone doesn’t work,” he said. “Policy and capital need each other. An organization like this brings the policy and capital together.”

How the collaboration began

While consulting with businesses in 2013 on achieving corporate sustainability goals, the four NGOs began to see untapped potential to grow renewables and attack emissions, explained RMI Managing Director Hervé Touati, a former EON senior executive.

The opportunity, Touati said, would come from meeting the corporate buyers’ renewable energy demand by matching them with independent power producers who wanted sell the output of their wind and solar projects, and with utilities looking to hold on to the corporate clients that are their biggest power customers.

That was the origin of the RMI-driven Business Renewables Center (BRC).

“For action, it is necessary to have the desire, the opportunity, and the means,” Touati explained. Already, two-thirds of Fortune 100 companies and 43% ofFortune 500 companies have sustainability goals, and the remaining big companies are under increasing pressure from shareholders and customers to adopt their own, Touati said, so the desire is there.

The 400 U.S. renewables project developers with high quality solar and wind projects in their pipelines create ample opportunity, he went on. To facilitate that, the BRC simply has to qualify the projects, catalog them, and make the information available to corporate buyers.

“The question is the means,” Touati said. “We are talking about tools. Buyers need to know how to do a deal.”

A September 2013 meeting generated two requests from the 30 buyers, sellers, and renewables brokers in attendance. One was an online platform to streamline transactions.

Renewables contracts, project assessment, risk evaluation, and pitching the project in-house are complicated, Touati explained. The BRC used the experience of members who have completed transactions, including deal brokers Altenex, Renewable Choice Energy, and Customer First Renewables, and codified that knowledge to create a platform for buyers.

The BRC, which includes the deregulated renewables subsidiaries of NRG, EDF, EON, and NextEra, is aimed at streamlining and accelerating transactions in unregulated markets between corporate buyers and IPPs. Its fee-paying members built 1.2 GW of renewables in 2014 and 1.4 GW through July, 2015. Its goal, Touati said, is to add 60 GW of renewables in the U.S. by 2030.

The Buyers’ Principles

The other marketplace need targeted in the original meeting was a clear definition of what buyers are looking for. They wanted a guide for IPPs in project development and a guide utilities and utility regulators could use in designing program rates and rules, according to WRI Electricity InitiativeDirector Letha Tawney.

That need evolved into the Buyers’ Principles — six key criteria presented in July 2014 that make more corporate investment in renewables possible:

  1. Greater choice in procurement options,
  2. More access to cost competitive options,
  3. Longer- and variable-term contracts,
  4. Access to new projects that reduce emissions beyond business as usual,
  5. Streamlined third-party financing, and
  6. Increased purchasing options with utilities.

Under the CRP umbrella, a group of 34 corporates that represent some 20 million MWh of annual demand formed around the Buyers Principles, Tawney explained. Led by WRI and WWF, the Buyers Principles group is aimed at engaging the investor-owned utilities (IOUs) in their regulated markets.

“The sixth principle is specifically focused on utilities,” Tawney noted. “It is a declaration that these buyers prefer to act in collaboration with their utilities.”

The Buyers Principles “are like an RFP,” Tawney went on. “They say, ‘We want to be able to buy cost-effective renewable energy with low transaction costs, and we want to work with our utilities to do it.’”

To nurture the collaboration, the group holds Utility Leadership Forums in which utilities’ representatives and buyers’ representatives spend half a day exploring the Principles as a basis for how a particular utility can provide a renewables product that matches the buyers’ needs.

“We are where the green tariff programs come from,” Tawney said. The programs are designed specifically for regulated markets where corporate buyers may want to locate, but can’t contract directly with IPPs.

“Green tariffs offer bundled energy and renewable energy credits (RECs) that together have some of the benefits of a long-term fixed-price power purchase agreement (PPA) but maintain the customer’s relationship with its utility,” Tawney explained.

The number and scope of the Buyers Principles group gets the attention of utilities, Touati said.

“The conversation between an NGO without that leverage is short, but if the NGO comes with representatives of Fortune 500 companies, the discussion gets the attention not just of the utility, but of the PUC, and of the governor,” he said.

Engagement so far

The Buyers Principles group has had four Utility Leadership Forums as well as conversations with other utilities. From those engagements, five green tariffs are emerging, involving Dominion Power in Virginia, Duke Energy in North Carolina, NV Energy in Nevada, Rocky Mountain Power in Utah, and Puget Sound Energy in Washington.

The interest of the BHE utilities is “to work with our customers and our regulators to explore direct renewable energy procurement options for these large energy customers in order to increase the use of renewable generation in regulated markets,” Weisgall explained.

Each green tariff program is specific to the utility’s market, buyers, and the territory’s resources. Perhaps the one common feature is they allow a utility to market a renewables product to multiple corporate customers.

“The key question will be how to better aggregate smaller loads so there can be more participation in this marketplace, and the important thing to realize is that utilities are by definition load aggregators,” explained WWF U.S. Climate and Renewable Energy Policy Director Marty Spitzer. “The goal is for utilities to see the smaller corporate loads and aggregate them and deliver renewables to them so they can also meet sustainability goals.”

Some of the green tariffs, and in particular the one recently proposed by Puget Sound Energy, are very similar to community solar offerings in that the utility develops a project or signs a PPA and subscribes customers to it, Tawney said. “There may or may not be a premium.”

The NV Energy–Apple deal is another way corporates and utilities have forged a deal, Tawney said.

“Apple brought the project to the utility,” she said. “NV Energy agreed to facilitate a pass-through from the developer to Apple. A contract rider makes it legal in the regulated state but it looks a lot like a traditional PPA.”

Arizona Public Service has also been working with large buyers on renewables, Tawney added, and Duke Energy works renewable energy dealsfor big customers in its service area as well.

It is early for this emerging opportunity, and new models to make the arrangement work are still being created.

“Now is the moment,” Tawney said. “Those who get on board will be first movers.”

Looking ahead

“Creating customer choice within the construct of a regulated market is new,” Tawney said. “Nobody has ever done it before.”

Spitzer and WWF have been interacting with the Edison Electric Institute and that National Association of Regulatory Utility Commissioners, trying to get the concept across at a high level.

Tawney and WRI have been working with BHE and other regulated utilities “to get some ideas out there and prove they serve the customers.” Even the one-to-one deals MidAmerican Energy has made in Iowa with corporations “have been groundbreaking,” she said.

While the BRC measures its goal in gigawatts by 2030, the work in regulated markets will be slower.

“It is white space,” Tawney said. “We are inventing. We would be very pleased if we helped the 34 companies in the Buyers Principles group meet their 20 million MWh demand by 2020 with renewables.”

And, she added, that MWh number is going to keep going up as more companies join. “We know it is just the tip of the iceberg because less than half of the Fortune 500 companies have sustainability goals,” Tawney said.

Because the second principle specifies “cost competitive options,” Tawney believes, increasing access to renewables through the BRC and the Buyers Principles group will drive prices down and expand opportunity for corporations, developers, brokers, the supply chain, and all the stakeholders.

What remains, she said, is “the hard work in the trenches, in the regulatory proceedings, and the deal-making, to prove the ideas in the marketplace.”

Tawney anticipates resistance because it challenges the assumption by both utilities and regulators that they have put in place the least cost, most reliable power system. “But that is not good enough. We also want it to be clean. And we want it to be clean faster than state mandates or regulatory proceedings can make that happen.”

This is a huge opportunity for utilities, Spitzer said, but it is a slower road because the system that is in place doesn’t reward innovation and that is exactly what utilities need.

After a corporate executive at a recent meeting described the kind of renewables deal his conservative, Fortune-level company was looking for, Spitzer recalled, a utility executive replied “we hear what you need, but we can’t move that fast.” To which, according to Spitzer, the buyer said, “but I have to move fast. I have goals to meet.”

At this stage, those interactions are kind of the point, he said.

“Both were sincere,” Spitzer said. “They were learning from each other.”

Source: utilitydive


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The new ‘arms’ race? These 5 countries are vying to be Africa’s first green ‘superpower’ and the winner is…

Through to 2050, the world needs an addition $36 trillion in clean energy, or nearly 15 times Africa’s nominal GDP.

US President Barack Obama Monday unveiled a final set of rules to cut greenhouse gas emissions in a big initiative which would form a major plank of his legacy as he winds down his term in office.

In what has been termed the strongest action ever taken in the United States to combat climate change, the rules will see the country’s hundreds of coal-fired—and polluting—power plants gradually shift towards cleaner energy sources such as natural gas, and significantly, renewables.

The change adds to the global push towards using more clean energy in an attempt to limit global temperatures to two degrees above pre-industrial levels to head off the worst effects of climate change, which include food and water shortages and unpredictable and more intense floods and droughts.

Such scenarios hold big implications for Africa, which  is worst hit despite being the least polluter with 3% of carbon dioxide emissions (even this is relative—a lot of the haze over the Indian Ocean is believed to be from cooking fires run on fuelwood and charcoal, but by international agreement are not counted as their raw material is renewable).

major meeting in Paris in December is expected to provide a deal on global climate change and which would take effect in 2020.

But as the developed world lurches towards a greener future, Africa will struggle to keep up even with this disjointed pace, starved of the funds needed to adapt. UNEP’s Africa Adaptation Gap Report has estimated that adaptation costs for Africa alone could reach approximately $350 billion annually by 2070

The continent already has a major energy deficit, which it has identified as the biggest impediment to its growth. Fossil fuels in Africa are, like the rest of the world, big business, but on the continent they represent a more existential problem. Power generation from oil and coal (and the lower-carbon but still-polluting natural gas) brings about much-needed economic expansion, including through fuelling key industries such as transport and manufacturing, in the process creating millions of jobs.

African oil importers, who are the majority, would also be eying the economics of the fallout in the developed world: less fossil fuel use means they get it at a cheaper price. One scenario forecastsdemand for oil products, and for coal, from sub-Saharan Africa as doubling in the next 25 years.

Green energy, despite its increased desirability and cheaper running costs, is also expensive to start up. The International Energy Agency (IEA) estimates that to have an 80% chance of maintaining the warming limit through to 2050, the world needs an addition $36 trillion in clean energy, or nearly 15 times Africa’s nominal GDP.

As such, requiring African countries to apply the squeeze on fossil fuels is, to put it mildly, a big ask. The general sentiment has been that feeding its citizens now is a bigger priority than focusing on the shift to clean energy, even if the benefits, and consequences of not doing so, are apparent.

The outgoing president of the African Development Bank (AfDB), Donald Kaberuka, voiced this in March when the bank’s decision to continue financing power plants that use dirtier coal was questioned.

“It is hypocritical for western governments who have funded their industrialisation using fossil fuels, providing their citizens with enough power, to say to African countries, ‘You cannot develop dams, you cannot develop coal, just rely on these very expensive renewables,’” Kaberuka said. “African countries will not listen.”

“To every single African country, from South Africa to the north, the biggest impediment to economic growth is energy, and we don’t have this kind of luxury of making this kind of choice.”

Read: African Development Bank defends lending to support coal power over ‘expensive’ solar, wind

But some African countries have however been taking on the challenge for more predictable renewables, even if for disparate national reasons. Ethiopia for example has no oil or coal, and with agriculture employing the vast majority of its people, building a climate-resilient economy has become a top priority for the government.

The new ‘arms’ race? These 5 countries are vying to be Africa’s first green ‘superpower’ and the winner is…

LEE MWITI

Through to 2050, the world needs an addition $36 trillion in clean energy, or nearly 15 times Africa’s nominal GDP.

Two thirds of sub-Saharan Africa's wind potential is concentrated in just five countries. Harnessing it could change growth trajectory.
Two thirds of sub-Saharan Africa’s wind potential is concentrated in just five countries. Harnessing it could change growth trajectory.

US President Barack Obama Monday unveiled a final set of rules to cut greenhouse gas emissions in a big initiative which would form a major plank of his legacy as he winds down his term in office.

In what has been termed the strongest action ever taken in the United States to combat climate change, the rules will see the country’s hundreds of coal-fired—and polluting—power plants gradually shift towards cleaner energy sources such as natural gas, and significantly, renewables.

The change adds to the global push towards using more clean energy in an attempt to limit global temperatures to two degrees above pre-industrial levels to head off the worst effects of climate change, which include food and water shortages and unpredictable and more intense floods and droughts.

Such scenarios hold big implications for Africa, which  is worst hit despite being the least polluter with 3% of carbon dioxide emissions (even this is relative—a lot of the haze over the Indian Ocean is believed to be from cooking fires run on fuelwood and charcoal, but by international agreement are not counted as their raw material is renewable).

major meeting in Paris in December is expected to provide a deal on global climate change and which would take effect in 2020.

But as the developed world lurches towards a greener future, Africa will struggle to keep up even with this disjointed pace, starved of the funds needed to adapt. UNEP’s Africa Adaptation Gap Report has estimated that adaptation costs for Africa alone could reach approximately $350 billion annually by 2070

The continent already has a major energy deficit, which it has identified as the biggest impediment to its growth. Fossil fuels in Africa are, like the rest of the world, big business, but on the continent they represent a more existential problem. Power generation from oil and coal (and the lower-carbon but still-polluting natural gas) brings about much-needed economic expansion, including through fuelling key industries such as transport and manufacturing, in the process creating millions of jobs.

African oil importers, who are the majority, would also be eying the economics of the fallout in the developed world: less fossil fuel use means they get it at a cheaper price. One scenario forecastsdemand for oil products, and for coal, from sub-Saharan Africa as doubling in the next 25 years.

Green energy, despite its increased desirability and cheaper running costs, is also expensive to start up. The International Energy Agency (IEA) estimates that to have an 80% chance of maintaining the warming limit through to 2050, the world needs an addition $36 trillion in clean energy, or nearly 15 times Africa’s nominal GDP.

As such, requiring African countries to apply the squeeze on fossil fuels is, to put it mildly, a big ask. The general sentiment has been that feeding its citizens now is a bigger priority than focusing on the shift to clean energy, even if the benefits, and consequences of not doing so, are apparent.

The outgoing president of the African Development Bank (AfDB), Donald Kaberuka, voiced this in March when the bank’s decision to continue financing power plants that use dirtier coal was questioned.

“It is hypocritical for western governments who have funded their industrialisation using fossil fuels, providing their citizens with enough power, to say to African countries, ‘You cannot develop dams, you cannot develop coal, just rely on these very expensive renewables,’” Kaberuka said. “African countries will not listen.”

“To every single African country, from South Africa to the north, the biggest impediment to economic growth is energy, and we don’t have this kind of luxury of making this kind of choice.”

Read: African Development Bank defends lending to support coal power over ‘expensive’ solar, wind

But some African countries have however been taking on the challenge for more predictable renewables, even if for disparate national reasons. Ethiopia for example has no oil or coal, and with agriculture employing the vast majority of its people, building a climate-resilient economy has become a top priority for the government.

Kenya recently struck oil, but had drawn up a growth blueprint that identified electricity as key to its execution, informing its earlier focus on alternative energy sources that are faster developed, while other countries like rich but oil-scarce Morocco have few options. Sometimes it is almost by accident: The biggest foreign direct investment in Ghana’s history, approved last week, will be in costlier offshore natural gas, which has been untapped in favour of ground oil and hydro, challenges with which led to debilitating load shedding.

But in addition to the consequences to Africa’s agriculture-heavy economy of doing little to mitigate, green energy is increasingly good business. It cuts fuel costs, and is said to have a greater job-creation potential than fossils.

The IEA projects that renewable energy will make up nearly half of sub-Saharan Africa’s power generation by 2040.

The global shift to cleaner energy is also expected to spark a boom for renewable energy—investors are looking for green investments— including a potentially billion-dollar trade in pollution credits. Whoever gets the mix right could feasibly become a continental energy powerhouse.

We take a look at what the leaders are doing:

Ethiopia

Only 25% of the country’s 94 million are connected to the national grid, while its fast-growing economy(pdf) needs to ramp up its electricity output, currently at just over 2,000 MW, by at least 20% annually to just keep up.

With its famed Grand Renaissance dam due for completion in 2017, the country is seeking alternatives to boost generating capacity from 2,300 MW. It has the potential to generate 45,000 MW, the second-highest after the DR Congo, but under its 25-year national strategy the plan is to generate 37,000 MW by 2037, with a cost tag of $100 billion.

The Horn of Africa country last month opened the 153-megawatt (MW) Adama wind farm, currently the largest wind-farm in sub-Saharan Africa, but only the latest of three giant wind farms.

Adama, which can power an estimated 10 million efficient light bulbs, was built within two years—a third of the time required to put up the 6,000 MW Renaissance Dam that had also earlier run into environmental concerns. Another wind farm is expect to be located near its north-eastern border with Djibouti, and would produce 300 MW.

The country also has a geothermal project in its central Oromia region, with developer Corbetti saying $2 billion would be needed to generate the full 500MW by 2023. The Ethiopia government in the wake of Obama’s visit agreed to buy power from the plant, the first by private countries in the tightly-controlled country.

Ethiopia has set itself a target of cutting its carbon emissions by almost two-thirds by 2030—the highest national target yet of those presented to the December UN climate change conference.

Kenya

The first African country to build geothermal energy sources, this stream now accounts for 51% of the country’s electricity needs, making it Africa’s largest producer and freeing it from over-dependence on dams. Kenya aims to expand its installed capacity to 6,700 MW by 2017, the bulk of it from renewables, from just 1,700 MW in 2013, as it anticipates a peak demand of 15,000 MW by 2030.

In 2010, geothermal accounted for only 13% of Kenya’s power, now it holds a 5% share of the global installed capacity. This has seen its electricity bills shrink by 30% since 2014, according to the World

Its Olkaria project is one of the largest in the world, with the plan to raise production to 740 MW by 2018, as part of the east African country’s fast-tracked green energy growth plan. It has a geothermal capacity of 5.5 Gigawatts.

Geothermal energy, generated from natural steam from the earth, some reaching up to three kilometres underground is not affected by weather changes, unlike hydro. Together with Ethiopia, the two countries have 80% of the continent’s untapped geothermal power.

Last month president Uhuru Kenyatta flagged off the 310-MW Lake Turkana Wind Power project, which when complete would become Africa’s largest wind power plant. First production is scheduled for late 2016, with the full project coming on board by mid-2017.

The country is also rich in solar energy, with US-based microgrid developer Powerhive set to offer off-grid electricity to more than 200,000 homes following a successful pilot that saw people pay for the energy using their mobile phone. First Solar, the biggest US solar panel producer, made an undisclosed investment in Powerhive in 2013.

Morocco

Morocco’s Tarfaya wind farm has 131 turbines compared to the 365 turbines that will power Kenya’s Turkana project, but at completion will generate 301 MW, pipping the Kenya project.

This year its “Nour 1” thermo-solar plant was to begin going online, with the first capacity of 160 MW and at a cost of 600 million euros ($657 million), and at completion would total 510 MW, or about 8% of the country’s 6,700 installed capacity.

The oil and gas-scarce North African country is aiming to be a world-class renewable energy producer, including exporting clean power to nearby Europe. It expects to build five new solar plants by 2020, which would have a combined output of 2,000 MW and cost $9 billion, and the general project is the largest of its kind in the world.

It has also planned a string of wind farms along its Atlantic coast, with a target of 2,000 MW by 2020 which would lift its renewable energy production to 42% of its total power mix in that year.

South Africa

South Africa’s Cookhouse wind farm was the biggest in Africa before Ethiopia’s, with 138 MW provided by some 66 turbines, and which started coming online in late 2014. A $300m wind energy project is also set for the eastern cape, in addition to plans for smaller initiatives.

South Africa has been putting up renewable energy systems as it seeks to reduce its overwhelming reliance on coal, which places it among the top 15 producers of carbon dioxide globally.

The country, at 30,000 MW, accounts for about 45% of Africa’s electricity, but it is generated on ageing coal-fired plants, causing it to struggle to meet demand. It is however adding to this with the construction of Medupi, which at 4,746 MW of higher-capacity power will be the largest dry cooled coal power station in the world.

According to the government, renewables have added some 4,300 MW of cheaper capacity in the last four years, with the government projecting that 9% of annual electricity would be from renewables by 2030, which researchers say is too little. In 2010, just 1% of energy was from renewables, and almost all of it hydro.

It is also set to buy up to eight new fixed-cost nuclear plants from Russia, which would cost an estimated $84 billion (in addition to attendant concerns over waste management) as it looks to add 9,600 MW of nuclear power to its creaking grid.

A new study by Stellenbosch University released last week found that renewable energy in the country would be cheaper by at least half than nuclear.

Djibouti

The unlikely country of just 850,000 people currently depends on Ethiopia for 65% of its electricity needs, but has set its sights on becoming completely reliant on renewable energy by 2020.

The country has been on infrastructure expansion drive and needs cheaper power to attract investment and create more jobs for an economy dependent on services based on its strategic location at the entrance of the Red Sea, and which puts it almost at the centre of the world’s energy transport trade.

Its Vision 2035 growth plan foresees it as the largest logistics hubs in Africa but needs more than the 173 MW of power—75% produced by diesel— it currently produces. It has identified 13 potential geothermal sites and will next year drill four wells to size up capacity.

Boiling water underneath its desert landscape was first detected in 1970 but the lack of technology hindered exploitation, in addition to a civil war and the effects of the global financial crisis on western partners.

This has since changed—it is now a one-party dominant state while investors have been lining up to take a punt.

Solar and wind projects are also in the pipeline, with renewables the only viable source of energy for its grid, according to the International Renewable Energy Agency.

In addition, given its lower targets relative to the size of its (highly-urbanised) population and market, possibilities of economies of scale are deep, suggesting the country could very well become Africa’s first green “superpower”.

Source: mgafrica


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Southern Africa energy ministers to mull renewables research hub

Energy ministers from the Southern African Development Community will discuss plans for a renewable-energy research centre as countries throughout the region battle chronic blackouts.

The centre will focus on “practical implementation” of clean-energy technologies, Wolsey Barnard, deputy director- general for energy programmes at South Africa’s Department of Energy, said Tuesday in Johannesburg. Its start date, budget and location will be part of the discussion, he said.

SADC’s 15 member states suffer electricity shortages because generation falls short of demand and grid capacity is limited. Some including South Africa, whose five-round programme of clean-energy tenders has awarded more than 5,000 megawatts of projects since 2011, are now looking to renewables to help plug the gap.

The United Nations Industrial Development Organization and the Austrian Development Agency will provide funding to the centre for its first three years.

Source: moneyweb


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New solar energy projects come to South Africa

Enel Green Power, a renewable energy company, has begun the construction of three new solar energy projects in South Africa. The country is becoming more interested in clean energy for economic and environmental purposes, and the three new projects will help South Africa make progress towards its sustainability goals. The three projects will produce a combined capacity of 231 megawatts and will represent a significant portion of South Africa’s renewable energy infrastructure.

Country aims to bring 313.5 megawatts of solar power online in the coming years

The new projects are part of a larger initiative from Enel Green Power that will involve the development of 313.5 megawatts of new solar capacity. The initiative was sparked by South Africa’s Renewable Energy Independent Power Producer Procurement Program, which aims to support renewable energy developers and their projects. The three projects from Enel Green Power will be located in the Western Cape Province, the Northern Cape Province, and the Limpopo Province.

Energy projects will bolster local economies and help South Africa become more environmentally friendly

The first project, called Paleisheuwel, will generate approximately 82 megawatts of electrical power. The other two projects will produce 82.5 and 66 megawatts, respectively. These projects are expected to bolster activity in the local economy, providing jobs for those that need them and reducing the country’s need for foreign sources of energy. Enel Green Power has also been awarded a contract to build an 82.5 megawatt solar energy project, but construction on this project has not yet begun.

South Africa continues to pursue various types of clean energy

South Africa is home to a great deal of solar energy potential. The country’s exposure to solar radiation means that it could see significant economic benefits by focusing its efforts to support this form of renewable energy. The country is currently developing several clean energy projects in order to reduce its energy expenses and achieve its sustainability goals in the relatively near future. Among the forms of clean energy that South Africa is supporting, fuel cells have gained a significant degree of support.

Source: Hydrogenfuelnews.com


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Clean, renewable power makes good business sense

By Edna Molewa

In December last year, one of the largest solar energy plants in Africa was connected to the national grid. The Sishen Solar Energy Facility will have the highest level of electricity output of all the operational photovoltaic plants in Africa — an equivalent of 100,000 households’ consumption.

Its significance lies in three “Cs”: construction time, cost and carbon footprint.

Despite its size, it took 16 months to build. The cost of the facility is about R2bn — versus an estimated R91bn for an average-sized coal-fired power station.

Clean energy will be used at the plant. According to Acciona Energia, the technology being used at the facility will avoid about 208,000 tonnes of CO² emissions.

The plant came online as the Council for Scientific and Industrial Research (CSIR) released the results of a study into the increasing financial benefit of renewables in SA. It found that energy from SA’s (first window) wind and solar (photovoltaic) projects created R800m more financial benefits to the country than they cost during 2013. This amounted to a financial benefit of R3.7bn in diesel and coal fuel cost savings.

These figures give pause for thought to naysayers who argue that renewables are light years away from achieving the baseload capacity needed. If one considers that these first projects have generated about 3,922MW of renewable power — with an additional 4,000MW expected to go online by the end of the next window, what has been achieved is impressive.

Developing baseload should and does happen incrementally — and over time. Our achievements are all the more impressive if we take into account that this has taken place over a mere two and a half years.

Renewable energy is becoming cheaper, faster and cleaner.

Bloomberg New Energy Finance forecasts that the growing need for power in Africa will see about 1.8GW of renewable energy capacity being commissioned in the region this year — more than the amount that came online during the past 14 years combined.

With or without subsidies or incentives, renewable energy sources retain a competitive advantage over fossil fuel sources.

Technology costs are also falling.

Over the first three project windows in SA, prices have steadily dropped; with photovoltaic tariffs decreasing by about 68% and wind dropping 42%, in nominal terms. By the fourth window, they are expected to drop even further.

According to the CSIR, the cost per kilowatt hour of renewable energy for new projects is now far less than R1 for solar photovoltaic and 60c-80c for wind projects — thereby “keeping the net financial benefits of renewables positive, even in a future with a less constrained power system”.

Unlike many other countries, there is no policy or regulatory uncertainty. In last year’s state of the nation address, President Jacob Zuma emphasised the importance of a sustainable energy mix.

The Integrated Resource Plan clearly outlines the vision for a sustainable energy mix for SA that includes the use of fossil fuels, renewables, alternative energy and nuclear. It is a vision further supported by the National Development Plan.

In a Guardian Sustainable Business article last year, analysts cited SA as a “good role model on renewables” because of its competitive tendering process that both “align(s) with the long-term goals of government and also creates sustainable jobs locally”.

Although the World Bank has noted that renewable energy projects have resulted in improvement in economic development commitments, particularly as this relates to benefiting rural communities, those responsible in the public sector should ensure that this translates into real benefit for South Africans: both in terms of job creation, as well as localisation. As local renewable energy projects steadily increase their contribution to stabilising the grid, several businesses, among them several JSE-listed firms, are producing their own energy, much of it produced as part of industrial processes, such as sewage processing, sugar refining and paper making.

They are working with us, as the government, as co-generators of energy through the Renewable Energy Independent Power Producers Procurement Programme.

For example, sugar giants Tongaat Hulett and Illovo produce energy from sugar bagasse and trash at their milling plants.

Paper producer Sappi uses pine-tree resin removed before the pulp-and-paper production process to fuel boilers that supply steam to its turbines, enabling the company to meet about 50% of its own energy needs. Companies are able to sell the surplus to Eskom by means of power purchase agreements.

Others are reportedly researching biogas. A local company, Bio2Watt, is already generating energy from methane collected from waste at one of the country’s largest feedlots. These businesses are innovating in response to the collective energy challenges we all face: taking the lead in investing in their own energy in ways that are both cost-effective and green.

Their initiatives should be both welcomed and emulated.

We, as the government, are not far behind. Late last year, Zuma opened Environment House, the Department of Environmental Affairs’s new headquarters.

Not only does the building harness solar energy, it has state-of-the-art water-saving mechanisms, as well as an onsite grey-water treatment works — setting the standard for the type of government buildings that we hope to have in the future.

The Department of Public Works is tasked with the implementation of the government’s Energy Efficiency Programme in all government buildings. This will see, among other things, existing buildings being retrofitted.

Although not all sectors are able to generate their own energy, we are leading by example.

Because, ultimately, energy saving is everyone’s responsibility.

Independent generation using clean energy sources makes business sense. It is cost-effective, reduces uncertainty caused by often unpredictable power cuts, and reduces demand on the national grid.

As lack of access to stable electricity continues to hamper economic growth in Africa, renewable energy holds immense transformative potential.

The climate is ripe for this kind of investment. The number of renewable energy investments SA has attracted in the past three years outstrips those undertaken across the entire continent in the past 20 years.

The International Energy Agency predicts the sub-Saharan African economy as a whole could be boosted by as much as 30% by 2040 under certain conditions, namely greater investment in the power sector, more co-operation on cross-border energy projects, and better resource and energy revenue management.

Addressing this country’s energy challenges that we collectively face requires lateral thinking, innovation and vision.

Falling global oil prices should not delay a transition to cleaner energy, by putting low-carbon projects on the back burner in favour of traditional coal-and diesel-powered electricity.

Working with the private sector, we ultimately aim for such innovative renewable energy initiatives to become mainstream — so that they become the norm, as opposed to the exception.

Molewa is Minister of Environmental Affairs.

Source: BDayLive


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juwi South Africa to build biggest single solar project in the company’s history

juwi Renewable Energies (Pty) Ltd., the South African subsidiary of the international juwi group, is to build the Mulilo Sonnedix Prieska PV solar park in the Northern Cape Province/South Africa for Independent Power Producer (IPP) Sonnedix.

The PV power plant has a total generation capacity of 86 MegaWatts (MW.) Financial close was achieved on December 11, 2014. The commencement of construction is scheduled for the first quarter of 2015. For the juwi group, the utility-scale project in the Northern Cape is the company’s largest single solar EPC-project in the world. juwi is also providing Operation and Maintenance (O and M) services for the plant.

“We are proud to realize this milestone project and delighted to be playing a key role in adding substantial amounts of clean energy to the South African electricity grid,” says Greg Austin, juwi South Africa managing director. Over the past years, juwi Renewable Energies has realized four utility-scale PV projects in South Africa and has built up a substantial reputation as a specialist for green energies in the country.

The Prieska project was selected by the Department of Energy of South Africa under the third bidding window of the Renewable Energy Independent  Power Procurement Programme (REIPPP) in October 2013. “We are also very pleased that our efforts in designing the economic development aspects of the project brought the desired outcome,” Austin continues.

Of all six projects in bidding round three, the Mulilo Sonnedix Prieska PV solar park had the highest economic development score. juwi will also provide O and M services for the plant.

Commenting on the closing, Franck Constant, President of Sonnedix said: “This first closing in South Africa is a considerable milestone for our company. It confirms the growth strategy and added value of Sonnedix in new markets where clean renewable electricity is in high demand and cost effective compared to conventional power.”

Olivier Renon, Sonnedix South Africa Country Manager, adds: “We are happy to be working with juwi, one of the world’s most experienced EPC providers in the field of renewable energies to build our solar park. We feel confident that our project construction is in very good hands.”

Source: Cape Business News

Airline offers new optional green fee

The low-cost airline Mango has joined the International Air Transportation Association (IATA) Carbon Offset Program with a new R6 “green fee” option on their flights, which aims to ‘neutralise’ their carbon offset by helping poorer communities gain access to clean energy sources.

The Mango voluntary offset program is launched on Wednesday, 17 December, with a flat-rate “Green Fee” of R6 which is payable as an extra option for any flight booked on the airline’s network.

With the contribution made, the carbon footprint of the flight journey will be ‘neutralised’ by helping various disadvantaged communities across South Africa to gain access to clean energy sources.

Whilst focusing on the production of clean energy and consequent carbon offsets on the one hand, the project also contributes to job creation and skills development in communities on the other. The project aims to plays a role in the reduction of energy costs to disadvantaged South Africans.

Nico Bezuidenhout, Mango’s Chief Executive Officer says, “The participation of Mango in the IATA carbon offset scheme demonstrates just how deeply committed the aviation industry is to sustainability“. He says, “Mango is an airline for all South Africans and we are firmly positioning ourselves as the airline that aims to positively touch the lives of everyone in our country, whether they do business with us or not. Initiatives such as joining the IATA Carbon Offset Programme and the Climatecare Low Pressure Solar Water Heating project add to our impetus.”

Tony Tyler, IATA’s Director General, also believes this plan is a “winning proposition for passengers, the environment and local communities”.

Source: Traveller 24

Renewables Could Revolutionize African Energy

Africa is experiencing a revolution towards cleaner energy through renewables but the story has hardly been told to the world, says Achim Steiner, Executive Director of the United Nations Environment Programme (UNEP).

Steiner, who had been advocating for renewable energy at the U.N. Climate Change Conference in Lima, said Africa is on the right path toward a low carbon footprint by tapping into its plentiful renewable resources – hydro, geothermal, solar and wind.

“There is a revolution going on in the continent of Africa and the world is not noticing it. You can go to Egypt, Ethiopia, Kenya, Namibia, and Mozambique. I think we will see renewable energy being the answer to Africa’s energy problems in the next fifteen years,” Steiner said in an interview with IPS.

Sharing the example of the UNEP headquarters in Nairobi, Kenya, Steiner told IPS that the decision was taken that “if UNEP is going to be centred with its offices in the African continent on the Equator, there can be no reason why we are not using renewable energy. So we installed photovoltaic panels on our roof which we share with UN Habitat, 1200 people, and we produce 750,000 kilowatt hours of electricity every year, that is enough for the entire building to operate.”

He noted that although it will take UNEP between eight and 10 years to pay off the installation, UNEP will have over 13 years of electricity without paying monthly or annual power bills. “It is the best business proposition that a U.N. body has ever made in terms of paying for electricity for a building,” he said.

According to Steiner, the “revolution” is already happening in East Africa, especially in Kenya and Ethiopia which are both targeting renewable energy, especially geothermal energy.

“Kenya plans to triple its electricity generation up to about 6000 megawatts in the next five years. More than 90 percent of the planned power is to come from geothermal, solar and wind power,” he said.

Kenya currently runs a geothermal power development corporation which invites tenders from private investor bids and is establishing a wind power firm likely to be the largest in Africa with a capacity of 350 megawatts of power under a public-private partnership.

In Ethiopia, expansion of the Aluto-Langano geothermal power plant will increase geothermal generation capacity from the current 7 MW to 70 MW. The expansion project is being financed by the Ethiopian government (10 million dollars), a 12 million dollar grant from the Government of Japan, and a 13 million dollar loan from the World Bank.

Renewable energy has costs but also benefits

Phillip Hauser, Vice President of GDF Suez Energy Latin America, told IPS that geothermal power is a good option for countries in Africa with that potential, but it comes with risks.

“It is very site-dependent. There can be geothermal projects that are relatively cost efficient and there are others that are relatively expensive. It is a bit like the oil and gas industry. You have to find the resource and you have to develop the resource. Sometimes you might drill and you don’t find anything – that is lost investment,” Hauser told IPS.

Steiner admitted that like any other investment, renewable energy has some limitations, including the need for upfront initial capital and the cost of technology, but he said that countries with good renewable energy policies would attract the necessary private investments.

“We are moving in a direction where Africa will not have to live in a global fuel market in which one day you have to pay 120 dollars for a barrel of crude oil, then the next day you get it at 80 dollars and before you know it, it is doubled,” he said.

“So if you are in Africa and decide to exploit your wind, solar and geothermal resources, you will get yourself freedom from the global energy markets, and you will connect the majority of your people without waiting for thirty years until the power lines cross every corner of the country,” Steiner added.

A recent assessment by the International Renewable Energy Agency (IRENA) of Africa’s renewable energy future found that solar and wind power potential existed in at least 21 countries, and biomass power potential in at least 14 countries.

The agency, which supports countries in their transition to a sustainable energy future, has yet to provide a list of countries with geothermal power potential but almost all the countries around the Great Rift Valley in south-eastern Africa – Uganda, Ethiopia, Kenya and Tanzania among others – have already identified geothermal sites, with Kenya being the first to use a geothermal site to add power to its grid.

IRENA Director-General Adnan Z. Amin told IPS that the agency’s studies shows that not only can renewable energy meet the world’s rising demand, but it can do so more cheaply, while contributing to limiting global warming to under 2 degrees Celsius – the widely-cited tipping point in the climate change debate.

He said the good news in Africa is that apart from the resources that exist, there is a growing body of knowledge across African expert institutions that would help the continent to exploit its virgin renewable energy potential.

What is needed now, he explained, is for countries in Africa to develop the economic case for those resources supported by targeted government policies to help developers and financiers get projects off the ground.

The IRENA assessment found that in 2010, African countries imported 18 billion dollars’ worth of oil – more than the entire amount they received in foreign aid – while oil subsidies in Africa cost an estimated 50 billion dollars every year.

New financing models for renewable energy

According to Amin, renewable energy technologies are now the most economical solution for off-grid and mini-grid electrification in remote areas, as well as for grid extension in some cases of centralized grid supply.

He argued that rapid technological progress, combined with falling costs, a better understanding of financial risk and a growing appreciation of wider benefits mean that renewable energy would increasingly be the solution to Africa’s energy problem.

In this context, Africa could take on new financing models that “de-risk” investments in order to lower the cost of capital, which has historically been a major barrier to investment in renewable energy, and one such model would include encouragement for green bonds.

Green bonds are the recent innovation for renewable energy investments,” said Amin. “Last year we reached about 14 billion dollars, this year there is an estimate of about 40 billion, and next year there is an estimate of about 100 billion dollars in green finance through green bonds. Why doesn’t Africa take advantage of those?” he asked.

During the conference in Lima, activist groups have been urging an end to dependence on fossil fuel- and nuclear-powered energy systems, calling for investment and policies geared toward building clean, sustainable, community-based energy solutions.

“We urgently need to decrease our energy consumption and push for a just transition to community-controlled renewable energy if we are to avoid devastating climate change,” said Susann Scherbarth, a climate justice and energy campaigner with Friends of the Earth Europe.

Godwin Ojo, Executive Director of Friends of the Earth Nigeria, told IPS that “we urgently need a transition to clean energy in developing countries and one of the best incentives is globally funded feed-in tariffs for renewable energy.”

He said policies that support feed-in tariffs and decentralized power sources should be embraced by both the most- and the least-developed nations.

Backed by a new discussion paper on a ‘global renewable energy support programme’ from the What Next Forum, activists called for decentralized energy systems – including small-scale wind, solar, biomass mini-grids communities that are not necessarily connected to a national electricity transmission grid.

Source: Oil Price.com

21st Century Coal – Report: International Energy Agency

Green Business Journal 9 (2013)

Coal: currently supplying more than 40 percent of the world electricity consumption, providing an essential 70 percent input of world steel production, and representing approximately 30 percent of the global primary energy supply. Why is coal such a widely utilised resource today? It is cheap, abundant, easily accessible, widely distributed across the globe, and easy energy to transport, store and use. For these reasons, coal is predicted to be used extensively in the future. But, being a non-renewable resource, its production and use inevitably results in various issues across the value chain.

The primary mandate of the International Energy Agency (IEA) is to promote energy security amongst its member countries through collective response to physical disruptions in oil supply, and to provide authoritative research and analysis on ways to ensure reliable, affordable and clean energy for its 28 member countries and beyond.

In doing so, a report was researched and created by IEA which focuses on the technology path to near-zero emissions (NZE). The phrase “21st Century Coal” was adopted by the US and China to describe the importance of strategic international partnerships to advance the development of NZE technology and the report demonstrates the reasons for confidence in coal’s ability to provide a solution to the global objectives of economic sustainability, energy security, and NZE, and is broken up into four areas of consideration.

1. Coal and the CO2 challenge

Discussed here are the benefits of and the need for coal, issues associated with coal use especially related to carbon dioxide (CO2) emissions, as well as roadmaps to improve coal use and continue on a path toward zero emissions. With the increase in the global demand for energy comes the increase in the release of CO2 emissions. The IEA has found that with attempting to mitigate greenhouse gas (GHG) emissions, the costs of achieving climate goals are significantly reduced when carbon-capture and storage (CCS) technologies are implemented. This, along with increasing the thermal efficiency, can effectively lower carbon emissions from fossil-fueled power plants. The development and deployment of advanced coal with CCS technologies that is needed to achieve substantial carbon emission reductions will require extensive research, development, and demonstration investment.

2. Evaluation of advanced coal-fuelled electricity generation technologies

The IEA report provides insights into groundbreaking technology innovations for advanced coal plants to improve efficiency and reduce emissions including CO2. The report finds that there are multiple types of coal-fueled power plant technologies that exist or are being developed, but considerable advancement still needs to take place in this regard. More advanced, future technologies are definitely capable of further improving efficiency. In particular, fuel cells hold the potential of achieving increases in efficiency of up to 60 percent.

3. Carbon capture, utilisation and storage (CCUS)

Focus is drawn to the potential for enhanced oil recovery (EOR) to enable the economic viability of CCS, together with the need for and status of CCUS demonstrations. CCS demonstrations are needed most often on power plants as these plants play major roles in releasing carbon emissions. But, significant government support is needed for these demonstrations to be carried out. The utilisation of enhanced oil recovery (EOR) seems to be the way forward as additional streams of revenue assists the feasibility and capability of the projects. The IEA has found that methods to increase carbon storage in conjunction with EOR may further increase the capacity to store.

4. Flexibility of coal-fuelled power plants for dynamic operation and grid stability

The essential features of fossil fuelled power plants are assessed on their ability to operate dynamically on grids with intermittent wind and solar. Improving the flexibility of existing and developing coal plants can be accomplished through various strategies which involve both technical and operational improvements. These include implementing coal plant flexibility as early in the design process as possible, when it is most effective; optimising use of the capabilities of existing control systems; and collecting and using lessons learned to establish better operating practices.

Conclusions

It is technically possible today to incorporate equipment to capture CO2 in all types of new coal fuelled power plants. Depending on available space and other considerations, such equipment also can be retrofitted to existing coal fuelled plants. The importance of retrofit should not be underestimated based on the large number of new coal units being added.

Unfortunately, today’s CO2 capture technology is very costly. A recent review by the IEA of a variety of engineering studies conducted by a range of organisations that showed the cost of electricity from a new coal power plant with CO2 capture was estimated to be from 40 to 89 percent higher than a new coal plant without CO2 capture.

Ultimately, in order to get over the hurdle and achieve the cost reductions brought by technology maturity, it will be necessary for governments to specifically support CCS demonstration projects with capital grants as well as support for the power prices. Even if additional revenues can be obtained from the sale of CO2 for EOR, they may not be sufficient to allow full financing in all cases.

While coal use remains significant, its continued use has been challenged by growing environmental concerns, particularly related to increases in anthropogenic CO2 emissions. Adding technologies that can reduce CO2 emissions from coal (primarily by using CCS or CCUS) is possible but adds considerable cost, risk, and complexity to coal fuelled power plants, particularly at their current stages of maturity.

Coal remains an important and prevalent fuel for the production of electricity. Its low cost, abundance, and broad distribution make it attractive for power production, particularly in emerging countries such as China and India, where coal fuelled power has increased dramatically in recent years as demand for energy and the higher standard of living it brings have grown along with the population.