Category Archives: Energy & Utilities

“Transforming Wind Power: Technological drivers and critical challenges” interview with Rod Poublon

What is the current outlook for the wind power industry?

Wind power has become the most affordable and versatile form of renewable energy, and has reached vastly diversified sites, from agricultural land to mountains, from sea to desert, from single units to gigawatt plants, from industrialised to developing countries around the globe. More than 51GW were installed in 2014 to reach 370GW in total, China having installed almost half of the new global capacity, followed by Europe with a quarter, and North America with almost a sixth. The growth has been sharp and steady over the last 15 years, and should carry on, with new dynamic areas in emerging markets such as China, Brazil, Turkey and Chile compensating for phases of regional slowdowns such as in many European countries (for example, Spain, France and Italy) due to a change of regulatory framework.

What technological innovations will transform both the installation and the physical form of wind turbines?

The transformation of the installed turbine has been related more to scale rather than to the form itself, at least in power-plant scale facilities: hybrid towers (see below) higher than 160m; blades longer than 80m thanks to new profiles, materials and moulding technologies; generators able to produce more than 8MW per unit. Nevertheless an increasing number of segments have appeared to deliver solutions with a specific blend of the core features matching special requirements such as complex topography, low or turbulent wind resource, limited accessibility, far sea, and specific regulatory or technical frameworks. In the future, the diversity of the available machines will further increase, the bar being raised in terms of size for sites that require it. The deepest physical transformation is perhaps to be seen under water, as the support structure (between the turbine and the foundation in the sea belt) is a major area of innovation and technical breakthrough, with a panel of currently available solutions ranging from monopole to tripod, lattice, gravity, and floating structures being in development.

New logistical concepts are being developed to bring ever larger turbines to increasingly difficult sites e.g. in mountains or at sea. Hybrid concrete and steel towers, typically for hub height greater than 100 meters, enable the transportation of heavy steel sheets for the upper part of the tower only, while having the bulky tower base locally produced in concrete. In offshore sites, much is done in the harbour to avoid difficult and risky works at sea. In mountains, on the contrary, parts are brought by new, smaller and more agile trucks and assembled on site. New cranes enable us to build higher, faster, and in a more mobile fashion in order to be ready sooner for the next turbine.

How will the wind power industry evolve to overcome financial obstacles and the issue of unpredictability and intermittence in power supply?

The goal of the industry is to achieve sustainability with as little financial and regulatory support as possible. This depends on the design of the power market, decided by the regulator and government of each country, pushing wind power in or out, depending on whether it honours the availability of power or the production of energy.

The integration of wind power into the current energy-driven market designs requires a power production that would be dispatchable in reasonably predictable volumes convenient for consumption and trading (like conventional power plants). Amongst the various options explored to achieve this goal, the bundling of several facilities of various technologies into virtual power plants (the flexible facilities such as hydro or biomass plants smoothening the less actionable wind power curve) and the addition of energy storage systems combined with smart grid integration, are the most promising.

What is the position of wind power in the future global energy market compared to alternative renewable energy sources?

The advantages of wind power (e.g. high installed power with reduced land use, price) make this technology very versatile and compatible with the current land use of a large number of areas close to energy needs around the planet. It will continue to play a dominant role in terms of new installed capacity, and even more in terms of produced energy. According to EIA, wind power should surpass hydro power within 25 years in terms of installed capacity, becoming the first source of clean power in the world. Solar power should grow at a higher rate but starts from a much smaller base.

 

 

What will be the top opportunities and challenges faced by global clean energy market in 2015?

The sharp and sudden fall in international oil prices in recent months has generated a radical change in the global energy market. With low oil prices equations are rearranged and new winners and losers emerge along the entire value chain, not only of petroleum products but also of substitute products and secondary energy markets.

In recent years, clean energy sources have gained importance in the global energy scene; clean energy has achieved broader participation in energy portfolios around the world. However, in order to identify opportunities and challenges that arise in this industry globally, it is important to make two clear distinctions: First, it is not possible yet to speak of a global clean energy market, as it happens with other primary energy sources such as oil, coal or some refined products. In this regard, clean energy still does not constitute a global market as such; ie markets of clean energy remain local and in few cases regional. Second, it is important to point out what is considered as clean energy; in other words, there is still no consensus of the energy sources that are considered clean energy. In general nuclear energy is considered clean energy, although there are detractors that still do not consider it as clean energy. Also, in the case of biofuels there is a strong debate on the environmental effects of biofuels along its entire life cycle.

Considering the above, it is difficult to establish general recommendations and points of view for a clean energy industry as a whole. Nevertheless, it is possible to point out some general rules of thumb. In the case of renewable energies, such as wind and solar, currently these sources are almost entirely focused on power generation that in most cases are direct competitors of other conventional power generation technologies, such as natural gas or fuel oil. On the opportunities side, the sale of renewables and other clean energy, these sources are often favoured for their zero variable cost, so they are the first to be dispatched and therefore gets the highest kw/hr rate.

Strategically speaking, in the case of hydroelectric or nuclear power, in many cases these represent strategic and national security investments that vary from country to country. Their investments constitute decisions that take into account levelled generation costs that are modulated by the cost of the externalities associated with the project and their role in public policy.

As mentioned before, in general terms, the challenges and opportunities for clean energy depend largely on regional or local conditions. In the case of countries in which low oil prices have a negative effect on their economies, it is expected that their levels of public investment and economic activity be affected. Economic constrains can lead to austerity programs and general savings that can cut subsidies and opt for electricity generation projects with the best economic options in the short term. Furthermore, some renewable projects, in many cases have to be developed together with additional backup generation capacity, which implies extra costs. Nevertheless, opportunities arise with projects such as distributed power generation projects that in many cases increase reliability and bring cost reductions. In this sense, renewable energy projects represent a viable alternative that replaces or complements other transmission and distribution projects for remote or difficult areas to access.

On the other hand, countries in which their economies are favoured by low oil prices, opportunities emerge as result of greater economic activity and industrial development, which results in greater electricity demand, expansion, and the development of less vulnerable systems to external volatility.

The consumption of electricity around the world keeps growing, although at lower rates, but this together with the current energy market situation, represents a clear opportunity to evaluate the high vulnerability that today’s oil-driven economy is facing. Now, more than ever, a balanced portfolio of clean energy represents a viable alternative to establish energy models with less susceptibility and focused to the long term growth, that also takes into account the reduction of greenhouse gases.

Which trends will impact the gas trading industry in 2015?

The global natural gas industry is in a period of great change and growth, driven in part by growing demand in Asia. Liquified Natural Gas (LNG) will play an increasingly important role in supplying these markets, and new players from North America are competing to deliver some of that supply. Europe is in a period of uncertainty, with missed transition to renewables being complicated by fears of supply uncertainty due to Russia’s recent conflicts with Ukraine and supply deals with China.

  • Asian Growth Is Driving Demand
    • Post-tsunami Japan is the world’s largest LNG consumer with over 75 million tons per annum (Mtpa) as nuclear plants remain idle
      • Some nuclear plants may be restarted, but demand will remain high
    • Together, Japan and Korea account for about half of the world’s LNG imports
    • Global LNG market is expected to double from 35 Bcf/D to 74 Bcf/D (240 to 500+ Mtpa)  by 2030
      • China, India, others will drive new growth
        • Pace of Chinese development of domestic unconventional gas and recent supply agreements with Russia could impact LNG demand growth
      • Proposed new projects would oversupply demand, many will not happen
    • “Window” of opportunity may be tight for new contracts, but growth in developing world has been underestimated before
  • LNG Suppliers Are Changing
    • Private suppliers are aiming for a significant share of market
    • Qatar is biggest now at ~ 10 Bcf/D
    • Australia is projected to overtake Qatar by 2016, increasing from slightly over 3 Bcf/D to 10+ Bcf/D
      • Labor costs have spiraled
      • Queensland projects supplied by coal seam gas (CSG) are struggling to meet supply volume targets on time
  • New entrants?
    • United States is poised to enter the market
      • Over 20 projects have been proposed, many are approved and under construction
      • Brownfield conversion of import sites will be the first to enter the market around 2016
      • Gulf Coast, East Coast and Oregon projects are planned
      • Marcellus shale gas needs more outlets from bottle-necked northeast U.S.
      • Alaska is emerging as an option to supply Asia
      • Panama Canal route to Asia is a challenge, what about Europe?
    • Canada wants in on the action
      • 19 projects proposed on BC Coast to take advantage of high-quality resource stranded by loss of U.S. demand for Canadian gas
        • Projects proposed would equal current world market, all will not happen
        • Serious global players like Petronas, Shell, Chevron, Exxon are in mix
        • First significant projects won’t be operational until 2019 or later
        • Canada’s target is Asia, BC has a significant location advantage
        • East coast sites are being considered which would likely use U.S. gas and export to Europe
    • Mozambique offshore discoveries could be fast-tracked for LNG export
  • What About Europe?
    • Demand has levelled off due to growth in renewables
    • Ukrainian crisis heightens concerns over dependence on Russian supplies, as does new Russian commitments to China
    • Can North American LNG be meaningful to European market?
      • Good outlet for Marcellus shale gas
      • Eliminates LNG traffic jam though Panama Canal
    • LNG for power generation could help Europe meet GHG emission targets as bridge fuel
  • Other Factors Worth Considering
    • World LNG prices linked to oil prices seem to be changing
      • Gap between Japan LNG, European, North American prices is glaring
      • Recent dip in oil prices is causing concern for new projects committed to oil index
      • New U.S. contracts in Gulf Coast are being linked to gas trading hub prices
    • Unconventional gas is an untested source of supply for LNG projects
      • CSG is stumbling in Australia
      • U.S. shale gas revolution is foundation for new U.S. supplies, ditto for Canadian unconventional sources, like the Montney formation
      • I think it is reliable and will work, but needs to establish a track record
      • Domestic unconventional gas will displace LNG markets in China over time
    • Natural gas is a good transition fuel for reducing global GHG emissions
      • Evidenced by reduction in emissions in U.S. by displacing coal for power production
      • Will do the same for China and India
      • Will provide good base load generation for combination with growing renewables in Europe

The global natural gas industry is taking shape. It may begin to look more like the global oil industry, with prices tied to global indices, rather than regional hubs. The shale gas “revolution” has allowed North America to enter the global export market, and may ultimately bring competition for those markets as others, like China, start to develop their domestic shale resources. Natural gas has a competitive “bridge fuel” advantage in the short-term as we move towards a future with an increasing supply from renewable resources.

What is the outlook for the shale gas industry outside of the US over the coming 3-5 years?

Victor Hugo’s sentence “Nothing is stronger than an idea whose time has come” also counts the same way for a technology. Even if there are strong market participants, who want to protect their ground for the usage only of conventional natural gas; and even if these are in some countries with some public opinions against shale gas, there will be at least one company in one country who will break this fragile price / quantities construct by using fracking. The consequence will be a continously decreasing price level, down to a point where the demand (maybe of power production) will be strong enough to pick up all the big quantities. 

Fight Against Climate Change – Negative Impact on Business World?

Climate change is by no means fresh news. The negative changes in the world’s atmosphere are common knowledge with equal awareness that the problem is due to centuries of ignorance and neglect. Frequently both national and international talks are taking place amongst governments, organizations and the general public alike to bring about a change in the rapidly failing eco-system. While at first glance solutions such as those embraced by the Kyoto Protcol[1] are the perfect solution, the fight against climate change actually has the potential to harm some industry areas. Continue reading

Financing Ocean Energy Ventures in Today’s Economic Climate

The reality of today’s economic environment, and combined with the world’s insatiable appetite for energy has created enormous financial challenges for the industry, government, and institutional players throughout the supply chain.

The funding necessary to invest in leading-edge & game-changing ocean technologies, fast-track the expansion & grow of companies, and restructure capital requirements for mergers & acquisitions are driving forces behind the need for innovative long-term capital solutions to meet our offshore oil & gas and  renewable ocean energy industry requirements. Continue reading