Feature

Full version: Renewable energy project monitor


Ian Stokes

Our regular column, written by the Energy Industries Council, reports on project development in the renewable energy marketplace...the latest installment covers developments in January and February.

The renewable energy sector continues to show steady activity and a positive start to the year. In January and February 103 renewable energy projects were added to EIC DataStream representing a total potential investment value of US$50 billion.

EIC DataStream tracks over 9000 of the most significant projects across the global energy industry. There are currently 943 active renewables projects and a further 1065 projects are proposed for future development. It should be noted that there will always be a proportion of proposed projects that do not gain planning consent and the requisite finance.

Key January developments

In January, 60 renewable energy projects were added to EIC DataStream representing a total potential investment value of US$31.9bn. Just under half of this value came from wind projects with 40 onshore and offshore wind farms added to the database, while similarly, just under half of the value came from solar projects.

The largest project announcement in January was the US$10.4bn TuNur concentrating solar power project in Tunisia with a total capacity of 2 GW. The project will be built in 10 construction phases, each with a capacity of 200 MW, using solar tower power plants instead of parabolic trough technology.

The TuNur project is being developed by Nur Energie in cooperation with Top Oilfield Services with the first 200 MW phase due to begin construction in 2014, and the first electricity exports expected to reach Europe by 2016. The project has been designed to reduce water requirements to a bare minimum by using a dry, air-based cooling system. Terna S.p.A. has offered the project a grid connection to central Italy for the complete capacity.

In Oman Terra Nex Financial Engineering AG announced plans for the construction of a US$2bn, 400 MW solar photovoltaic (PV) power plant. The project will be undertaken in collaboration with the Middle East Best Select (MEBS) Group of Funds, which has launched the Solar Energy-Photovoltaik in Oman private investment fund with an initial investment of US$200 million. The fund will finance the first solar PV plant within the project, with further financing expected to be covered by loans from European financiers.

In Germany, there has been a lot of activity, with developments being made at four offshore wind farms with a total value of just under US$7bn.

In the German North Sea developer WPD AG has applied to build the US$2.1bn Kaikas offshore wind farm comprising of 83 turbines with a total capacity of 415 MW. The project will be located 110 km off the coast in waters up to 41 m deep. The submission, along with an environmental impact study and a maritime traffic risk assessment, have been sent to the Federal Maritime and Hydrographic Agency BSH. Construction works not likely to start until after 2014.

In the hydro-electric sector, the largest project development was made in Indonesia with the US$1bn PLTA Karama hydropower plant in West Sulawesi inviting bids for the 2 GW hydropower tender. The tender is to be held in the second half of this year with an estimated construction timeline of 7 years, scheduled to start in 2014. The feasibility study is being prepared by the regional administration of West Sulawesi in cooperation with the Gezhouba Group International Engineering Co Ltd of China.

Overall, January saw a solid start to the new year with plenty of renewable energy projects seeing developments.

February action

Plenty of activity was also noted in February, with 43 renewable energy projects added to EIC DataStream with a combined value of US$17.7bn. Hydro-electric power led the way in terms of value, accounting for over half of the total potential investment value of projects.

A key project announcement this month was for the future US$8bn Inga 3 hydropower project, which will see the construction of a hydroelectric dam on the River Congo near the Inga Falls. The project, scheduled to come on line in 2018, will produce 3.5–7 GW and will involve building a low-impact river style hydropower station and dam. The River Congo already has two dams – Inga 1 and Inga 2, with capacities of 351 MW and 1,424 MW respectively. Inga is located 225 km south-west of Kinshasa, the capital of the Democratic Republic of Congo.

The dam's power supply had originally been planned to power a new aluminium smelter, with the surplus power being fed to the southern African power grid. However, February saw BHP Billiton abandon its plans for this after reviewing construction costs. The DRC Government remains confident of finding backing for the project, and is now seeking alternative solutions.

In Russia, the US$1bn Nizhne-Kureika Hydropower Plant has gained Government approval. The construction of the 150 MW plant will be located in a permafrost region in the Turukhan district of Russia, and will be some distance from existing infrastructure, making CAPEX costs high.

RusHydro has signed a memorandum of understanding (MoU) for the development of the plant with the Government of Krasnoyarsk. RusHydro has also signed a power purchase agreement (PPA) with a single off-taker, Turukhanskenergo. The preliminary PPA provides for a one-part selling price of RUR16/kWh valid until 31 December 2042, and ensures a 15-year payback period for the project. RusHydro expects to receive project financing from Vnesheconombank (VEB) for the construction of the plant with VEB currently assessing the proposal.

In the solar sector, the Mount Signal solar power project valued at US$951m saw a joint development contract signed between 8minutenergy Renewables solar subsidiary 82LV 8ME and AES Solar to develop the 200 MW project. The project will be located in Imperial Valley, California and is expected to come on line in mid-2013.

The project will be linked to the Imperial Valley substation of San Diego Gas & Electric (SDG&E) and the energy from the project will be transferred over the Sunrise Powerlink transmission line, a 1 GW high voltage power transmission line bringing renewable energy into San Diego County. The Mount Signal solar power project will use solar PV modules, power electronics and a tracking system. The project is expected to provide almost 1000 jobs in California.

China has seen plenty of positive activity in the renewables sector this month also, with four wind projects totalling US$2bn seeing developments in February.

Projects in China include the US$705m Zhuhai offshore wind farm with a 198 MW capacity, which is scheduled to start construction this year. A contract has just been signed for the supply of wind turbines from the Ming Yang Wind Power Company. Also there is the US$600m, 200 MW Zhanjiang offshore wind farm demonstration project with the Ming Yang Wind Power Group having signed a strategic cooperation agreement with Guangdong Yudean Capital Group for the supply of 3 MW, 5 MW and 6 MW Super Compact Drive (SCD) wind turbine generators – both projects are located in the Guangdong Province.

Highlighting China's commitment to cleaner energy, on 23 February 2012, the country established its first national renewable energy think tank – the China National Renewable Energy Centre (CNREC). CNREC will conduct research as well as develop and promote programmes and policies on renewable energy as part of the country's efforts to deal with climate change and carbon emissions. It will also draft industry standards and carry out international cooperation programmes.

The centre also draws on previous cooperation with Denmark, which established a renewable energy development programme in 2009. Denmark is providing financial and technology support for the new centre.

As we move further into 2012 cleaner energy will remain a key focus, providing opportunities across the global energy supply chain. To this end, collaborative dialogue between regulators, energy producers, developers and financiers will be essential to continuing the expansion and contribution of renewable energy to the global energy market.

About the author: Ian Stokes is chief executive of the EIC (Energy Industries Council).

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