The global financial crisis dominated the news media in the second half of 2008. The crisis is certainly negatively affecting the sustainable energy market in the short term. On the other hand, the crisis has generated broad public demand for government investments that create employment and stimulate the economy.
ENERGY YEAR 2008 IN A NUTSHELL
Bruno De Wachter | Leonardo Energy
|The global financial crisis dominated the news media in the second half of 2008. The crisis is certainly negatively affecting the sustainable energy market in the short term. On the other hand, the crisis has generated broad public demand for government investments that create employment and stimulate the economy.|
By Bruno De Wachter, Leonardo Energy
Looking at the sunny or at the shady side?
The year 2008 was a wild ride for energy. Oil prices and the global economy were turbulent throughout the year. The sustainable energy market kept on growing, albeit at a much slower rate of growth in the final six months of the year. For many aspects of the past year, we have to wait and see how 2009 evolves before being able to judge the significance of 2008.
The following are 10 topics and trends of the energy year 2008:
1) Is the financial crisis affecting the sustainable energy market — or not?
The global financial crisis dominated the news media in the second half of 2008. The crisis is certainly negatively affecting the sustainable energy market in the short term. Renewable energy projects are having more difficulties in finding financing and the same is true for renewable energy systems manufacturing plants that want to expand their production capacity.
On the other hand, the crisis has generated broad public demand for government investments that create employment and stimulate the economy. This is certainly the case for renewable energy and energy savings projects. For private companies, investments in sustainable energy have the advantage that little risk is involved — although the IRR may be lower nowadays due to lower oil prices. In this respect, it was a sound move by the EU to reconfirm its 2020 climate change abatement targets. This at least implies that government support for renewable energy will last through the next decade — barring an unforeseen reversal in policy.
2) High oil price volatility
The evolution of the oil price in 2008 was without precedent. The price of Brent crude oil rose from approximately US$ 90 a barrel at the beginning of the year to a peak of nearly US$ 150 a barrel by the beginning of July. It then fell back to less than US$ 50 a barrel in December.
There has been a great deal of debate regarding the amount of influence the oil price has on the sustainable energy market. The wild rise in the price experienced during the summer was generally welcomed as a stimulus for sustainable energy. It gave hope that grid parity for certain type of renewable systems was approaching. But some critics have warned that it could also motivate oil companies to open up new oil fields, resulting in increased oil production in the medium term.
Today, opinions differ widely in respect to the degree that falling oil prices pose a threat to the sustainable energy market. In each case, the past year has proven that the oil price is highly unpredictable. This uncertainty could stimulate companies and governments to become more energy independent, creating opportunities for the sustainable energy market. However, this same uncertainty could also prevent companies from making long term investments.
3) Energy efficiency a high priority for the EU
In November 2008, the EU proposed its Second Strategic Energy Review, in which it highlighted the fundamental role of energy efficiency. According to this review, all European energy systems should be submitted to a complete overhaul focussing on energy efficiency. The EU document also included a large number of proposals to reinforce the energy efficiency legislation already in place and to stimulate investments in efficient, low carbon systems.
4) The first implementation of the eco-design directive measures
The first regulatory measures implementing the eco-design directive were endorsed this past year.
The EU directive 2005/32/EC on the eco-design of Energy-using Products — often simply called 'the eco-design directive' or 'the EuP directive' — provides a framework on how to create coherent EU-wide rules for eco-design. It was adopted by the European Parliament and the Council in July 2005.
The first two proposals to fit into this framework were endorsed by the Member States in November 2008. One proposal concerns the efficiency of office, industrial, and street lighting. The other one is about set-top boxes for converting digital television broadcast signals. Other eco-design regulatory proposals are expected soon.
5) Mandatory energy labels for buildings established in several EU countries
The year 2008 saw five more EU countries — Austria, Finland, the Netherlands, Portugal, and the UK — adopting a mandatory label for the energy performance of new buildings. Several other European countries had already introduced such a certification scheme earlier.
Actually, the EU Energy Performance of Buildings Directive (EPBD) has imposed this energy certification for new buildings since January 2006. However, the directive makes an exception for Member States 'that were missing qualified or accredited experts', which could postpone the implementation to 2009. A significant number of countries made use of this exceptional clause.
The new Code for Sustainable Homes that came into force last year in the UK deserves special mention. After inspection, it assigns all new dwellings a label between 0 (a house that only meets current minimum regulations) and 6 (a zero carbon-emission house). By 2010, all newly built homes will have to meet Level 3 requirements. By 2013, they’ll have to meet Level 4 and by 2016 Level 5.
6) Wind turbines keep on growing in size and efficiency
In many countries, suitable on-shore sites for wind turbines are becoming scarce. To continue the current wind market growth rate, other opportunities for capacity increase will have to be addressed.
During the past year, the repowering of wind turbine sites has seen a breakthrough, mainly in the countries that were early adopters of wind energy (Denmark, Germany, and Spain). Older wind turbines are being replaced by new ones with increased output and efficiency.
Another major market potential can be found in off-shore wind farms. In 2008, the first full-scale floating wind turbine was built in Norway. Floating wind turbines could significantly enlarge the number of potential off-shore sites, especially in countries with deep coastal waters like Norway.
Another potential growth sector for wind energy is building integrated wind power. The first utility-scale building integrated wind turbine was inaugurated in Bahrain this past year.
7) After bulk wind power, there is also bulk solar power
Initially, renewable energy sources were virtually synonymous with small-scale, distributed generation. This situation has started to change over the past six years. Wind farms are being built on the scale of conventional power stations. Examples are the offshore wind farms of Horns Rev (160 MW, 2002) and Nysted (165.6 MW, 2003) in Denmark, and the Horse Hollow Wind Energy Centre in Texas, USA (735 MW, 2006).
Likewise, the past year saw a major breakthrough in bulk solar power. Concentrated photovoltaic power (CPV) and concentrated thermal solar power (CSP) allow for utility-scale solar power plants. Many new CSP and CPV projects were started in 2008, mainly in California and Spain. The planned capacities of these new power stations range between 150 and 500 MW. To level off the variable output, Spain has established a regulation that CSP plants must have a storage capacity to ride through the night. This gave an important boost to the development of thermal storage technologies.
8) Asia keeps growing fast in renewables
While the renewable energy market in Europe and North-America stagnated in the second half of 2008 due to the financial crisis, this market kept on growing in India and China. India now occupies fourth place in the ‘renewable energy country attractiveness ranking’ by Ernst & Young, while China has risen to fifth place.
Under the impulse of its Minister for New and Renewable Energy, India has set a target to raise its share of renewables in the energy mix from the present 5% to 15% by 2030. In China, the share of renewable energy today is only slightly over 1% if large hydroelectric power plants are not taken into account, but the country has opted to increase this share in the future. With this ambition in mind, the country has become one of the most successful adopters of small hydroelectric facilities (plants up to 25 MW) as a means of achieving carbon emission free rural development.
9) Reality dawns for large-scale integration of renewables
Ever since climate change abatement gave a boost to the renewable energy market, one nagging unanswered question has never been far away: how can intermittent power from renewable sources be effectively integrated into the electricity grid system? Until recently, this question was primarily a theoretical one, given the general lack of significant amounts of renewable sources.
Today, however, reality is starting to dawn on this issue. In the past year, for example, California reached a capacity of 12% electricity from renewable sources, not including existing large hydroelectric power sources. Denmark now gets 20% of its electricity from wind power, and has set the target of reaching 50% in the near future. Denmark is proposing some innovative solutions to enable such a large scale integration of intermittent renewable power into its electricity system. It will be very interesting to see which ones work.
10) Microgrids are being intensively studied and tested
The year 2008 saw a growing number of technical publications on microgrids. Those studies included analytical modeling, computer simulations, demonstrations at various scales, and pilot projects.
In the microgrid concept, one or more DG units, a few loads, and preferably a storage unit are connected in such a way that they can operate as a subsystem, separate from the main grid. Such a microgrid allows for local control of the DG unit, thereby reducing or eliminating the need for central dispatch. It enables a higher penetration of DG units onto the grid and has the potential to provide a higher local reliability than provided by the power system as a whole.
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