Green energy: the colour of money

International electrical production stands in the region of 15,800 GW, and is growing by five per cent every year. With the burden of climate change to deal with, how can the planet continue to meet the needs of a growing population while building a power infrastructure that is clean and sustainable? Nicholas Charity looks into the world’s most promising renewable energy markets and asks what role these markets could play in future global development.

The International Energy Agency projects a steady growth rate of 1.4 per cent in global power consumption, which is likely to remain consistent until 2035. Combined with calls for national energy security as prices continue to soar, along with the ambitious greenhouse gas reduction targets set by governments, the role that renewable energy can play in filling the gap is becoming ever more prominent.

While advocates of renewable energy have long been criticised as idealists, their vision of sustainable power generation is now being taken seriously, with many countries now finding renewable energy parity, and green power swiftly becoming the only logical solution to future stability. According to Global Status Report, Renewables 2011, produced by REN21 (Renewable Energy Policy Network for the 21st Century) – renewable energy accounted for around half of all new power applications last year, and now provides 25 per cent of the world’s combined power generation.

Hydropower – a green frontrunner

At present, hydroelectric power is the world’s frontrunner for clean energy, producing over 1,000 GW of power globally, and according to a recent report by British research company, Visiongain, the annual market is worth around US$57 billion. Unlike many other renewables, hydropower has the gift of age – having matured over more than a century – and already provides 16 per cent of the world’s energy, and 70 per cent of applied renewables.

The world’s largest hydroelectric project, The Three Gorges dam, “embodies the great industrious spirit of the Chinese nation,” according to former President of China, Jiang Zemin. And if judged by size and output alone, this much is certainly true; the plant has a full capacity of 22.5 GW – more than 30 times that of an average nuclear power plant.

On the River Congo, development is set to commence on a new hydropower complex at Grand Inga. In partnership with South Africa, the Democratic Republic of Congo seeks to replace its current plant operations with the Grand Inga dam, powering 52 turbines, and potentially generating 40,000 MW. So far, US$13 million has been invested in a JV between EDF and Aecom to conduct feasibility studies for the dam, which could support the electricity needs of 500 million people on the continent.

The downside to such developments is that, while creating no direct waste products, a hydroelectric complex can still have serious implications for the environment. The Three Gorges, for instance, has increased the danger of earthquakes in the surrounding area and caused a permanent flood along 600 kilometres of the Yangtze River. Aside from causing 150 major landslides in the first six months of production alone, the reservoir itself has destroyed some 1,300 cultural and archaeological sites and forced the relocation of 1.3 million people. As noted in the International Rivers, Three Gorges Factsheet, “China will deal with the project’s legacy for years to come.”

Recent hydro projects to court controversy include the Belo Monte development in Brazil, with celebrities such as Arnold Schwarzenegger and filmmaker James Cameron adding their voice to the protest movement, in support for the indigenous Kayapo people. Initiation of the project has now been blocked twice by federal judges, and the plans continue to hang in limbo.

Gone with the wind

According to the World Wind Energy Association, the global market for wind power grew by 24 per cent in 2010, reaching a market value of US$55 billion. Over that period, 115 GW of wind power has been installed by the market’s top four players – China, the US, Germany and Spain. In 2010, China single-handedly accounted for half of new installed capacity, adding 19 GW to its grid power over the course of the year. However, observers warn that the green giant is having a serious impact on the world power market – according to the WWEA, the global market outside of China has decreased by US$15 billion since 2009, mostly due to the shift in business to the East, and substantial price drops.

The geographical spread of wind projects is increasing, with Ethiopia, the Dominican Republic, Venezuela and Honduras joining the list of 83 countries that already incorporate the renewable into their energy mix.

The US and China continue to dominate the large onshore wind farm sector, with what is set to be the world’s largest project currently under development in Oregon. The 845 MW Shepherds Flat Wind Farm, which is being built by Caithness Energy using GE’s 2.5 MW turbines, will boost the US state’s economy by an estimated US$16 million per year, and is slated for completion in 2012. Another country investing heavily in the industry is Canada, with a 4.7 GW capacity at present, and plans to boost this to 55 GW by 2025.

Offshore wind application, although accounting for only a small proportion (two per cent) of the overall installed wind capacity at present, is developing into an industry in its own right, presenting the possibility for far greater investment and relying on a great number on marine services and technical skills. Currently led by the UK, trends in growth over the past five years have seen acceleration and in 2010 the market grew by 59 per cent – considerably more than the sector as a whole.

The most notable offshore development could be the UK’s London Array, 17 miles off the coast of southeast England. The project has already begun construction of phase one, which will comprise 175 Siemens wind turbines by the end of 2012, with a starting capacity of 650 MW. Work was completed on the station’s two offshore substations in June 2011. “This is a fantastic achievement for us and a real sign of progress as we look to build the first phase of what will be the world’s largest offshore wind farm,” said Mr Richard Rigg, Project Director at the new wind farm, which will produce a cool gigawatt upon completion of the second construction phase (expected to commence in 2013).

So near, solar

Solar power was, by far, the fastest growing technology last year, with photovoltaic (PV) growing by 72 per cent and concentrated solar thermal power (CSP) by 77 per cent, but it is yet to compete with wind power and hydroelectricity in terms of scale. The market doubled in size and production increased to meet demand comfortably. As production shifted to Asia and prices hit rock bottom, the world responded with a peak in new developments led by Europe – especially Italy and Germany.

Low commodity prices in solar PV have increased efficiency (standing at US$1.09 per watt), while a frontrunner in concentrated photovoltaic (CPV), Concentrix (a subsidiary of French company Soitec), has reported record sunlight to electricity conversion, with yields currently at 26 per cent and expected to rise to 37 per cent by 2015.

Meanwhile, major CSP developments can be seen in the MENA region, with the world’s largest plants to be built in Morocco and Israel – projects such as Brightsource Energy’s Solar Energy Development Centre in the Negev Desert, comprising a 1 GW CSP complex.

It is perhaps no surprise that African markets have taken a shine to solar power, with an over-abundance of the sun’s rays all year round. Governments are universally pushing for rural electrification schemes, and finding that off-grid solar-PV best suits the needs of a widely dispersed population. This year, East Africa saw the commission of its first domestic solar panel production line, with the opening of the Ubbink East Africa factory in Kenya, helping the continental community to support its own solar industry.

Solar PV has seen some substantial R&D investment in recent years, with new developments in heat resistant solar cells. However, one of the biggest problems faced by solar power producers is their diminished efficiency under intense heat. One new innovation that has sought to deal with the problem head on – dubbed ‘Floatovoltaics’ – addresses issues of overheating by placing solar panels on top of large stretches of still water. Developed by California-based SPG Energy, the innovation comes alongside similar offerings from the Australian start-up, Sunengy, and the patented ‘Aquasun’ Concentrated Photovoltaic technology from Solaris currently implementing its technology on the reservoir of a hydroelectric dam in southern France.

By the bio

An estimated 62 GW of biomass power was operational by the end of 2010, making biomass the unsung hero of renewable energy. Biomass heat markets are expanding steadily, with strong growth, particularly in Europe, although it is the US that leads the market worldwide. There has been a rise in the consumption of biomass pellets for both heat and power, with an emphasis on biomass co-generation plants, especially in centralised district heating systems. The format is also favoured by industrial companies wishing to take their generation off-grid, or to turn factory space into feed-in revenue.

The EU has experienced a good take-up of biomass activity, with Germany, Sweden and the UK leading the continent with 50 per cent of the region’s market share. Gross biomass production increased by 10.2 per cent by the end of 2010 with a major trend towards solid biomass. Over 70 per cent of all output came from this sector of the market, which has had a far better response than biogas.

Weathering the storm

Emerging markets are going to have an increasingly important role to play in the renewable energy story, with the development of Smart Grids representing a crucial component in ensuring continuous energy supply from a variety of resources. According to research by Technavio, Smart Grids will represent a US$4.5 billion market by 2014.

But while significant cost reductions, particularly in wind turbines and solar modules, have been spurring growth in green industries, these markets are still hugely reliant on governmental support and times could be about to get tougher. A recent report by Ernst and Young forecast that the global market for renewables is likely to fall, with a governmental funding gap of US$45 billion by 2015 if the Eurozone crisis continues along its present path. Juan Costa Climent of Ernst and Young said: “The enormous projected gap revealed by this report suggests continuing economic uncertainty is pushing a low carbon economy further out of reach.”

In Europe, recent government cuts in solar feed-in tariffs range from 15 per cent in Germany to 70 per cent in the UK. And while there is no getting around the fact that additional investments in renewable energy are needed to achieve the transition to a low-carbon economy, it is likely that risk management will become a preoccupation for green energy companies in the years ahead, in order to encourage the much-needed private sector investment that can fill the void left by cash-strapped governments.