Monday, 31 July 2017

NS Emera proposes 1.2GW of Canadian wind exports to New England, by Karl-Erik Stromsta, Recharge News, 31 July 2017

Canadian utility Emera has proposed exporting power from 1.2GW of future onshore wind farms in eastern Canada via a subsea cable to Massachusetts, to help the New England state meet its mandated renewables target.
Emera’s Atlantic Link project would harness seven as-yet-unbuilt wind farms in the provinces of Nova Scotia and New Brunswick, backed by a range of both large international developers like RES and EDF-RE as well as smaller players like Natural Forces and SWEB.
The largest of the seven proposed wind projects is the 403MW Salmon River development in southeastern New Brunswick, owned by Germany’s Enercon and Nova Scotia-based Natural Forces. If built today, Salmon River would be the largest wind farm in Canada, topping EDF’s two-phase 350MW Rivière-du-Moulin in Quebec.
The Atlantic Link is one of a group of proposed transmission projects that have been put forward under Massachusetts’ Clean Energy tender. The land-constrained state seeks to import 9.5 million MWh of renewable power annually – and will provide developers with coveted long-term contracts.
Massachusetts’ clean-energy tender represents one of the largest opportunities for developers of renewables and transmission projects in the region today – and a lifeline for eastern Canada’s once-thriving wind sector, which faces a shortage of domestic opportunities
Massachusetts will announce the winners by January 2018.
Separately, Massachusetts is also seeking 1.6GW of offshore wind contracts by 2027, in the largest offshore wind request for proposal to date in the US.
Among the other transmission projects offered into Massachusetts' onshore tender are Avangrid’s New England Clean Energy Connect, National Grid’s Granite State Power Link, Transmission Developers Inc.’s New England Clean Power Link, and Eversource’s Northern Pass. All are tied to existing renewables capacity or new developments, like the proposed expansion of the Seigneurie de Beaupré wind farm in Québec.
But Emera’s Atlantic Link is perhaps the most audacious of the lot, proposing to run a 1GW high-voltage direct current cable from Coleson Cove, New Brunswick, down through the Bay of Fundy and along the Atlantic coast, ending at Plymouth, Massachusetts – near the state’s retiring Pilgrim nuclear plant.
The Atlantic Link would become the longest subsea interconnector in North America when it came on line in 2022, running for 375 miles (600km).
All told, Emera is offering to deliver about 5.7 million MWh of renewable power each year into Massachusetts at a fixed rate over 20 years, including 4.1 million MWh from the wind farms and the remainder from Canadian hydropower.
In doing so, it would only be utilising 65% of the Atlantic Link’s total capacity, meaning Massachusetts could increase its purchases over time – perhaps fostering additional Canadian wind development.
Emera says it has already executed power-purchase agreements with the wind developers, whose projects would more than double the installed onshore wind base in Nova Scotia and New Brunswick.
The seven wind projects that would initially feed into the Atlantic Link are the:
·        403MW Salmon River project, developed by Enercon/Natural Forces.
·        155MW Yorkshire, developed by EDF-EN Canada
·        151MW Black Spruce, developed by SWEB/Black & McDonald
·        148MW Higgins Mountain II, developed by Elemental Energy/Katalyst/3G Energy
·        148MW Colborne, developed by RES Canada
·        130MW Silver Brook, developed by RES Canada
·        59MW Andy’s Pond, developed by Enercon/Natural Forces

Halifax-based Emera is presently nearing completion of its Maritime Link, which will connect the island of Newfoundland to the North American grid for the first time, via a 500-mile subsea HVDC line running to Nova Scotia.
The Maritime Link is also expected to open opportunities for renewables development in Atlantic Canada – including perhaps the country’s first offshore wind project.

Tuesday, 18 July 2017

Ontario suspends LRP II round, leaving projects in limbo, by Karl-Erik Stromsta, Recharge News, pdated 25 October 2016

In a severe blow to Canada's largest renewables market, Ontario unexpectedly suspended its plan to sign contracts with developers for nearly 1GW of new capacity, citing a desire to hold electricity prices down amid a glut of electricity in the province.
Following the massively oversubscribed first round of Ontario's Large Renewables Procurement process (LRP I) – which saw EDP Renewables, EDF-RE, and other developers winning contracts for 455MW of new capacity earlier this year – Ontario had been in the process of readying an even-larger LRP II round.
The LRP process replaced Ontario's feed-in tariff system, which helped the province emerge as a major market for renewables and attract a number of manufacturers.
With 600MW of wind, 250MW of utility-scale solar and smaller amounts of other renewables capacity up for grabs, LRP II was expected to draw bids from heavyweight developers like NextEra and Recurrent Energy as well as from traditional Canadian energy giants like Suncor.
But on Tuesday Ontario energy minister Glenn Thibeault announced the province has suspended LRP II indefinitely, leaving many well-developed projects across the province in limbo. 
Robert Hornung, president of the Canadian Wind Energy Association (CanWEA), said he was "shocked and extremely disappointed" by the decision.
Thibeault says Ontario does not need 1GW of new generating capacity, and scrapping LRP II will save the province's electricity consumers C$3.8bn ($2.9bn) without leading to any additional carbon emissions.
The province intends to begin consultations on a new long-term energy plan this autumn, with the strategy to be finalised sometime next year.
"Given Ontario's strong energy position, and in the interest of maintaining an affordable electricity system, the government has determined that it will suspend the planned LRP II," Thibeault wrote in a letter to province's grid operator, IESO.
"Our decision to suspend these procurements is not one we take lightly," he added.
But Hornung argues the province is underestimating its future need for clean power, especially as the economy becomes increasingly electrified.
LRP II was seen as the last opportunity for at least a few years to win contracts for large-scale renewables in Ontario.
The province emerged as a major market for wind and solar following the establishment of its feed-in tariff as part of 2009's Green Energy Act, with turbine OEMs like Siemens and GE winning big orders in recent years.
Today Ontario has 18GW of installed renewables capacity, including 40% of Canada's wind and nearly all of its utility-scale solar. The province is home to many of the country's renewables manufacturing facilities – including a Siemens blade plant in Tillsonburg.
Canadian Solar, one of the world's leading PV companies, is based in Guelph, Ontario.
The decision to scrap LRP II will accelerate the westward shift in Canada's renewables market, with Alberta and Saskatchewan having recently emerged as the most promising provinces for development in the medium term thanks to the establishment of new renewables targets.
Much of the future opportunity for renewables development in eastern Canada may be tied to opening the US to greater amount of electricity exports, particularly if the Clean Power Plan is upheld by US courts.

Siemens Gamesa to close Canadian blade factory, by Karl-Erik Stromsta, Recharge News, 18 July 2017

Siemens Gamesa Renewable Energy on Tuesday confirmed it will lay off hundreds of workers and close the blade factory it opened six years ago in Tillsonburg, Ontario, citing the decline of the eastern Canadian wind market and the industry’s shift towards larger rotor blades.
Rumours began swirling after Siemens Gamesa reportedly locked workers out of the factory over the weekend.
On Tuesday the company confirmed that “regretfully” more than 200 of the plant’s 340 employees will be let go immediately, with the remaining workforce to be fired in phases throughout 2017 – and the plant to be closed altogether in early 2018. 
The factory is among the largest employers in Tillsonburg, located roughly halfway between Toronto and Detroit in Ontario's industrial heartland, and was seen as one of the most tangible benefits to come from the province's renewables boom earlier this decade.
“This was a very difficult decision that was taken only after assessing all the options,” says David Hickey, head of Siemens Gamesa’s business in Canada.
“We have a great team of employees at the plant who have produced quality work for the last six years, and we sincerely appreciate all their efforts,” Hickey says.
“However, the harsh reality is that in order to remain competitive we must constantly re-evaluate our global manufacturing footprint.”
The outlook for new wind projects has dimmed considerably in eastern Canada over the past year, with Ontario scrapping its plans for another large-scale renewables tender in late 2016 amid a glut of power in the province. 
Most of the blades made in Tillsonburg have remained in Ontario, although the plant has also sent some output to Quebec and onward to Europe.
As recently as November 2016, Hickey told Recharge the Tillsonburg plant was in a “very strong position” in spite of the weak local market, given its potential to ship blades to emerging wind markets in western Canada and down into the United States.
But Siemens Gamesa’s ability to cost-competitively transport large blades to western Canada was always somewhat doubtful given the logistics and immense distances involved, and the company has struggled recently to win new wind-turbine orders in the US – where it already has factories making blades and nacelles in Iowa and Kansas.
The company noted that its plans to export blades into the US were “delayed due to a combination of factors, including uncertainty around US tax policy” under President Donald Trump.
At the height of Ontario’s wind boom, Siemens was a dominant turbine supplier in the Canadian wind market. But it has also faced recent headwinds in Canada, falling behind German compatriots Enercon and Senvion in the Canadian wind market last year.
In announcing the plant closure, Siemens Gamesa also cited the industry’s shift towards larger blades, saying the Tillsonburg factory “cannot easily be adapted to manufacture this product portfolio”.
“The significant investments necessary to bring the plant in line with current market requirements would result in costs that could not be competitive in the global markets,” the company said in a statement.
The decision to shutter Tillsonburg comes just three months after Siemens completed the merger of its wind business with Spain’s Gamesa.
Germany’s Siemens announced plans for the Tillsonburg blade plant at the beginning of this decade as part of the controversial multi-billion dollar renewables deal South Korea's Samsung struck with Ontario.
The Samsung was given generous off-take deals with the province for big wind and solar projects in exchange for ensuring that four renewables-related factories were built locally – with the other three plants backed by SMA Solar, Canadian Solar, and CS Wind.
As it closes shop for good in Tillsonburg, Siemens Gamesa says it remains “focused on supporting new wind opportunities in Canada” – like the combined 600MW procurements underway in Alberta and Saskatchewan – as well as continuing to support existing customers at the more than 30 wind projects it has supplied to date in the country.
Much of the excitement today in the Canadian wind market is centred on Alberta and Saskatchewan, with many of the supply-chain players in Ontario and Quebec looking for ways to shift their business westward. 
Unlike Ontario, which relied on an overly generous feed-in tariff system in the early years of its renewables boom, both western provinces have adopted competitive tenders, which they believe will allow them to build more sustainable markets.

Wednesday, 12 July 2017

IEA chief economist: fossil giants risk ‘major strategic mistake’, by Leigh Collins, Recharge News, 27 June 2017, Updated 06 July 2017

IN DEPTH | Oil & gas companies need to rethink their corporate strategies as the world moves towards greener transport and heating, Laszlo Varro tells Leigh Collins

For most of its 43-year existence, the International Energy Agency (IEA) has been primarily concerned with the security of fossil-fuel supplies. Now it seems that its core task is helping the world wean itself off fossil fuels.
In a keynote speech at the Eurelectric convention in Estoril, Portugal, last week — which was followed by an exclusive interview with Recharge — the organisation’s chief economist Laszlo Varro was critical about the inertia of the leading oil & gas companies, and highlighted the need for electrification of transport, heating and cooling to the climate effort, as well as the necessity for political action on carbon pricing and fossil-fuel subsidies.
Clearly, increased electrification of the transport, heating and cooling sector would require the generation of huge amounts of clean wind and solar power.
“We have been quite outspoken… that it is a major strategic mistake by energy [ie, fossil-fuel] companies not to incorporate climate change and climate policy into its corporate strategy,” Varro told Recharge. “In fact, several major energy companies, like Total, are on the record as stating that they are assessing the resilience of their investment strategy to the [keeping climate change below] 2C pathway [as laid out in the Paris Agreement].
“Certainly, the future of fossil fuels under climate constraint is a topic that is very much part of our discussions with these companies.
“The large internationally active oil & gas companies are not climate sceptic, they have full awareness of the problems ahead,” he adds, pointing to Total’s purchase of solar manufacturer Sunpower and battery giant Saft, as well as the likes of Shell and Statoil investing in offshore wind projects.
Transport is one of the areas where oil & gas companies could lose out the most.
“There’s a reasonably clear understanding that in order to get to 2C, the two big pillars that we need to hit really hard are improving energy efficiency and vehicles,” Varro said. “Two thirds of the emissions reductions [needed]… are coming from energy efficiency and vehicles.
“By the middle of the century, the dominant propulsion source will have to be electric. Electrification of the vehicle sector will have to be more rapid than [what carmakers are promising]. We have to overachieve.
“I should warn that personal vehicles represent only less than one quarter of total global oil demand. Today oil demand is so rapid in the other parts of the transportation sector, like aviation, that if the market share of electric cars suddenly magically jumped to 50% — so every second car sold is electric, which will be easier said than done — global oil demand would still increase, driven by heavy-duty transport and other sectors.”
The current fleet of batteries simply do not provide enough power or range for trucks, trains, buses and planes, Varro explained. So what are the options?
“Some people promote the idea of biofuels, but we don’t really believe in that, because there are some hard biological constraints on how much sustainable biofuel you can have. And in fact, the amount of biofuels we have in our scenarios is already pretty high.”
Hydrogen-powered fuel-cell vehicles are more likely to be the long-term answer, he said. “We think that fuel cells have missed the boat for personal transport. So we don’t think that fuel cells will play a meaningful role in personal vehicles, but the high-energy density of hydrogen can come into the game for heavy-duty transport where you need much more energy stored in the vehicle.”
With some estimates saying that there will be as many as 18 million electric vehicles on the road by 2020, this segment will be able to offer more than just low-carbon travel — their batteries can help balance the grid.
“We see a really large-scale acceleration of the electrification of transport,” said Varro. “It’s a very interesting situation that the question is not going to be whether we have enough batteries — we will have enough batteries. We will have roughly ten times as much battery capacity as what we would conceivably need, even in the very worst case scenario to integrate a very high share of wind and solar into the power system.
“The question is, how will we use that very large battery capacity, which will be locked into the vehicle fleet? In our view, electric cars can be a fantastic variable asset to the power system, but they can also become part of the problem.
"Uncoordinated non-smart charging — Mr Smith running home and plugging his EV into his house at 7 o’clock in the evening — is part of the problem"
“Uncoordinated non-smart charging — basically Mr Smith running home and plugging [his electric car] into his house at 7 o’clock in the evening — that is part of the problem. A lot of electric car users do that today.
“At the same time, if you have optimised smart charging of electric vehicles, then you can do very, very interesting things, such as charge them during the day when solar output peaks.
“The inherent flexibility of electric cars will enable you to reduce capital investment into substations, it can bypass network bottlenecks and it can [reduce] the investment need into both [static] battery storage and PV generation.
“Our analysis is that investment in electric car chargers pays for itself. So if you roll out the dense electric-car charging network and you operate it smartly, then the net investment need is negative.”
Heating and cooling
Electrification of the heating and cooling sectors is another area that would contribute massively to the climate change effort — and be a huge boost to the renewables sector.
“Today, the buildings on Planet Earth consume 123 exajoules [34,166TWh] of energy [annually] — a lot of gas in the form of natural gas heating and electricity for air conditioning and so on,” said Varro.
“In our 2C pathway, total buildings-sector energy use declines somewhat. This is actually an incredibly radical assumption for energy efficiency, because we are talking about a planet where you would have two billion more people living in the world by the middle of the century.
“Urbanisation right now is running at the speed of a city of London every month — you take the people who leave their villages and move to Lagos, move to Mumbai, move to Jakarta, or move to Chongqing, that’s the equivalent of building a city of London every month.
 “Specifically in India, we’ve seen that around three quarters of the buildings that will stand in India in the middle of the century are yet to be built. So having this massive expansion of the building sector and a slight decline in buildings energy use means that we really, really have to get out of our comfort zone.
“It is not simply that we have to use energy more efficiently in buildings, the structure of the energy use is also completely changing. So the share of electricity in buildings’ energy use is 31% today, and this has to go to almost two thirds. So the majority of the energy use in buildings becomes electricity, that is both heat-pump heating and air-conditioning. This requires reconstruction of millions of building systems, but it also offers a major opportunity to integrate this potentially flexible electricity use into the power system.”
Carbon pricing
Another vital method for reducing climate change is to ensure that the price of fossil fuels includes its costs to the environment, and is not subsidised in any way.
But as Varro says, this will be far from easy.
“We are true believers in carbon pricing, so by all means use every political opportunity that you can get to reinforce carbon pricing,” he told Recharge. “Having said that, under realistic assumptions we are not going to have a situation where we have can have just one carbon price guiding the entire world.”
This means there would have to be several carbon prices in different parts of the world. But wouldn’t that mean that regions with a relatively high carbon price would be at a disadvantage in a global economy?
“This is a major issue for the energy-intensive heavy industry… and something policymakers must pay attention to,” he admitted. “But for a large measure of the European economy, I think that it is not a problem. The energy-intensive heavy industry is only around 2% of European GDP.”
"There has never been a single year for 100 years where fossil fuels did not receive more subsidies than renewables"
Varro said he wouldn’t expect that a higher carbon price in Europe would have a huge impact on the continent’s competitiveness. As he pointed out, BMW has already outsourced its energy-intensive aluminium forging to a company in Canada, due to the cheaper electricity prices there. “So if you buy a BMW, your BMW will contain around €50 worth of Canadian electricity — but it’s a €50,000 car.”
In terms of fossil-fuel subsidies, Varro is clear. “There has never been a single year for 100 years where fossil fuels did not receive more subsidies than renewables.”
Solving this problem will require “a lot of hard work”, as there is “no short-term magic solution”.
However, he says that some countries have already made considerable progress. Indonesia, Mexico and India have taken politically unpopular decisions to reform their fossil-fuel subsidy schemes, which resulted in higher prices for consumers’ petrol and diesel.
“We are very strongly contributing to the G20 in this respect and if you go to our website, you will see our recent work on fossil-fuel subsidy reform, for which we worked together with the Mexican and Indonesian governments, so there is a lot of knowledge-sharing and experience-sharing ongoing. And also there is a lot of work on reinforcing the political momentum behind this. It’s an ongoing programme. Progress is being made.”

Monday, 10 July 2017

Oil exports will help Canada's renewables industry, Carr says, by Karl-Erik Stromsta, Recharge News 24 April 2017

The Canadian government sees no contradiction in supporting the development of its carbon-intensive oil sands while simultaneously touting its push towards a low-carbon power system, says James Carr, Canada’s minister of natural resources.

“You have to develop your conventional resources at the same time that you invest in the low-carbon economy, and it makes a lot of sense to take that wealth in the ground and use the revenues from it to help finance the transition,” Carr said Monday, taking questions at the Bloomberg New Energy Summit. “We think you have to do both at the same time.”
When Prime Minister Justin Trudeau and his Liberal Party took power in late 2015, many expected a sea change on Canada’s energy and climate policies compared to his Conservative predecessor Stephen Harper, a climate sceptic and oil industry ally. More recently, however, Trudeau has disappointed many environmentalists by approving several high-profile pipeline projects that seek to transport carbon-heavy oil from Alberta to markets in the US and Asia.
Trudeau made headlines around the world late last year by announcing a pan-Canadian carbon price, set to go into effect in 2018. Yet last month at an oil industry conference in Texas, Trudeau said: “No country would find 173 billion barrels of oil in the ground and just leave them there.”
Speaking Monday in New York City in front of many leaders of the US renewables industry, Carr, a member of Trudeau's cabinet and Liberal Party, attempted to address the inherent tensions in government’s energy positions – hitting optimistic notes on the shift to renewables while defending Canada’s massive oil export industry.
“As we make our way around the world talking to nation states … the agenda is the same,” he said. “Everybody knows the trajectory is clear – there’s a movement away from fossil fuels – but it’s going to take a long time.”
“My own sense is the pace of change is going to accelerate, but it’s not going to happen overnight,” he added.
The policy of the Trudeau government, then, is “to extract these [fossil fuel] resources more sustainably, move them more safely, while investing in the lower-carbon economy”.
“We have consensus across Canada that that’s the way to go. We don’t have unanimity. These projects are controversial. There are people who want to keep that stuff in the ground. There are people who don’t [want any] regulations.
“But then there are an awful lot of people in between, who say it should come out of the ground sustainably and be moved safely while we look very clearly at the future energy economy.”
Canada installed 702MW of new wind capacity in 2016, less than half of its 2015 additions, according to the Global Wind Energy Council. Still, its performance was good enough to make it the world’s ninth largest wind market.
While important new opportunities for renewables developers are opening up in the western provinces of Alberta and Saskatchewan, the near-term picture looks fairly grim in the historically core markets of Ontario and Quebec. One potential bright spot is the prospect of selling power into the US, where New England states like New York and Massachusetts have aggressive targets for renewables and emissions reduction.
“Canada is interested in further exports to the United States, including in New England,” Carr said. “We think we ought to be working together as governments to take the integrated energy environments we have now and build upon it.”
While the prospect of trans-border electricity trading seemed to dim with the election of “America First”-minded US President Donald Trump, Carr said that having met new US Energy Secretary Rick Perry twice – including two weeks ago – he sees ongoing reason for optimism.
“He said to me both times that he believes the North American energy market is highly integrated – and that that’s in the interest of all three nations,” Carr said. “So that’s a very good place to start.”

Sunday, 2 July 2017

Shell drives forward with its plans for the energy transition, by Leigh Collins, Recharge News, 29 June 2017

The world’s sixth-largest oil company is working hard on preparing a future without fossil fuels — actively building up a portfolio of wind and PV projects, as well as developing a range of emerging technologies, a senior executive tells Recharge.
“Our New Energies group covers a number of activities — solar, onshore and offshore wind, energy integration, strategy innovation and, last but not least, fuels,” says Matthew Tipper, vice-president of new fuels within Shell’s New Energies unit. 
“My role is to develop new fuels for the group, so a particular focus on transportation — literally everything from planes to trains to automobiles. And the fuels that we’re developing most actively are hydrogen, battery-electric vehicle charging, biofuels — both conventional and advanced biofuels — and synthetic fuels made from methane and potentially other materials.
“New Energies is established to ensure that as and when petrol and diesel are phased out, if that ever happens, that we do have alternative sources of energy and energy carriers that we can deploy. The world’s still going to need energy, we don’t accept the premise that we’ll be out of business should fossil fuels be phased out.”
Tipper explains that the New Energies unit is taking an experimental, hands-on approach to new sources of energy.
“We’ve given ourselves until the next two or three years to experiment with a number of technologies, [to] learn by doing. So this isn’t desktop work, this requires investment in different activities, businesses and projects and essentially to bring ourselves to a deeper understanding, to a practical understanding, so that we continue to invest further in 2020 and beyond.”
He says that Shell is taking a three-pronged approach to future energy.
“Essentially, you have a choice: you have liquids, gases and electrons. In the liquids, if it’s not oil, we have biofuels made from biomaterials, plant waste and such like. In gases, there’s really a choice between methane — fossil methane or biomethane — or hydrogen; and then clearly in the electrons, we have renewable power, so wind and solar through to batteries and into vehicles. So we’re experimenting in all of those.
“I’m trying to think of a future fuel that anyone’s taking remotely seriously that we’re not involved in, and I’m struggling.”

Tuesday, 20 June 2017

Denmark's COP to lead development of Newfoundland array by Richard A. Kessler, Recharge News 20 June 2017

Copenhagen Offshore Partners (COP) says it has won a contract to lead both early and late-stage development for what could become Canada’s first offshore wind project – a 180MW array in St. Georges Bay west of Newfoundland.
COP did not release terms of the deal awarded by Danish fund manager Copenhagen Investment Partners (CIP), which last September announced it would invest all capital required to build the facility in partnership with Beothuk Energy, based in the provincial capital of St. John’s.
COP says it will oversee development jointly with Beothuk until finalisation of a power purchase agreement, and then lead the project to financial close and through the construction phase in cooperation with the local company. It was not immediately clear when construction would begin.
Beothuk has talked with potential buyers for the electricity in several Canadian provinces and New England region in the US. It has not set a deadline for completing a power off-take arrangement.
St. George’s Bay could take advantage of Emera’s Maritime Link, a high-voltage subsea transmission project under construction that will connect Newfoundland for the first time with Nova Scotia, New Brunswick and the six-state ISO New England market. It will enable export of 500MW of renewable power.
Beothuk has eyed the US state of Massachusetts as a possible market, which now has a legal mandate to procure 1.6GW of offshore wind energy by 2027. Later this month, electric utilities there are expected to release an offshore wind request for proposals for as much as 800MW of initial capacity, with winners to be announced next year.
CIP, however, is expected to submit supply bids itself after acquiring a strategically located 1GW zone facing the Massachusetts coast last year. In May, it sold a 50% stake in the Vineyard Wind project to Avangrid Renewables.
Beothuk says St. George’s Bay will supply electricity to more than 150,000 households, create more than 500 jobs during the construction phase and establish a new industry in Atlantic Canada.
Beothuk, which has been developing the project since 2011, has held talks with Siemens for supply of unspecified turbines, but no firm contracts have been signed. It lists Siemens as a “strategic partner” on its website.

Canadian pension fund PSP to buy largest stake in Pattern Energy by Karl-Erik Stromsta , Recharge News, 19 June 2017

Canada’s Public Sector Pension Investment Board will acquire nearly 10% of the shares of Pattern Energy, becoming the wind-focused US yieldco’s largest shareholder, in a deal Pattern says underscores growing investor confidence in the renewables sector.
PSP Investments, among Canada’s largest pension investment managers, will acquire 8.7 million shares of Pattern Energy from its privately held sponsor company, worth $206m at their closing price of $23.69 on Friday.
PSP Investments will also co-invest $500m in projects being acquired by Pattern Energy, including stakes in the recently completed Meikle wind farm in British Columbia and the Mont Sainte-Marguerite project in Quebec due for completion later this year.
PSP is part of a growing body of Canadian investment funds and energy companies moving aggressively into renewables. San Francisco-based Pattern, whose shares are listed in both the US and Canada, is a sizeable player in the wind markets of both countries.
Pattern Energy was the 11 th largest owner of US wind capacity at the end of 2016, with 1.8GW, according to data compiled by the American Wind Energy Association. The yieldco owns 2.6GW of renewables capacity overall, and has targeted 5GW by 2020.
“This relationship grants us access to a portfolio of projects and a source of new assets in renewables, and we believe it will provide good and stable returns for our contributors and beneficiaries,” says Patrick Samson, PSP Investment’s managing director for infrastructure investments, noting that renewables are “the fastest growing market of power generation”.
Shares of Pattern Energy rose 3.4% in early trading Monday on the news, to $24.50, their highest point since mid-2015.
For much of the past two years, Pattern's shares have traded below their 2013 initial public offering price of $22, amid persistent investor concerns about renewables yieldcos in the wake of SunEdison's bankruptcy.
But the tides have been turning for yieldcos this year, with Pattern’s shares up more than 28% in 2017.
Pattern Energy invests in Pattern Development 2.0
PSP’s investment comes as part of a flurry of deals and reshuffling within the Pattern family of companies, which includes the publicly listed yieldco Pattern Energy and two privately held developers – Pattern Development 1.0 and Pattern Development 2.0, which are owned by US private-equity firm Riverstone Holdings.
Late last year a single development company – Pattern Development, known as Pattern Energy's "sponsor" – was split into two companies: Pattern Development 1.0 and Pattern Development 2.0.
Pattern Development 2.0 owns the bulk of the early- and mid-stage renewables projects in the development portfolio, while Pattern Development 1.0 has held the controlling stake in Pattern Energy and most of the late-stage projects expected to be sold – or “dropped down” – to the yieldco.
The thinking behind separating Pattern Development 2.0 into its own early-stage development company was that it would be easier to raise capital for new projects and expand the development pipeline.
Since the creation of the separate development companies, Pattern Energy has signaled the likelihood that it would invest directly in Pattern Development 2.0.
On Monday Pattern Energy confirmed it will make an “initial” $60m investment into Pattern Development 2.0 – giving it a 20% stake – with an option to invest up to $300m and acquire the entire company. In doing so, Pattern would tie together the early-stage development and project operations activities into a single publicly-listed company.
As a result of the transaction, PSP will indirectly become an owner of Pattern Development 2.0 through its stake in Pattern Energy.
Meanwhile, Pattern Development 1.0 will "gradually wind up its business", selling its remaining projects to Pattern Energy over time, the company says.
“Pattern Energy’s investment in the development business allows us to improve our margins and secure access to a tremendous pipeline of new projects,” says chief executive Mike Garland, chief executive of both Pattern Energy and the development companies.
Pattern Energy’s direct investment in Pattern Development 2.0 comes alongside a $724m package of long-term capital commitments announced for the developer from an entity managed by Riverstone, which includes money from pension, sovereign wealth, endowments, family office, and investment funds.
Pattern Development 2.0 says it has expanded its project pipeline to 10GW, encompassing wind, solar, transmission and storage projects in the US, Canada and Mexico.

Tuesday, 13 June 2017

Dong completes transformation with oil & gas disposal, by Andrew Lee, Recharge News, 24 May 2017

Global offshore wind pacesetter Dong Energy hailed its “transformation into a leading pure-play renewables company” after agreeing to sell its oil and gas business for up to $1.3bn.
The Danish group struck a deal with the UK’s Ineos that will see the latter take on Dong E&P when the transaction completes in the third quarter of 2017.
Dong first announced plans to divest its fossil-focused assets last year, and the deal will see it receive $1.05bn unconditionally and another $250m depending on developments at certain assets.
The sale will give Dong more firepower to fund its global offshore wind expansion plans, which have already seen it take the lead in the sector.
The company is on track to have 6.5GW in place off Europe by the end of the decade, and last year flagged an ambition to have stakes in 11-12GW of offshore capacity by 2025.
That will see the group move into new markets such as the US and Taiwan – it already has interests in projects in both nations.
Dong recently signalled a new phase for the offshore wind sector when it lodged ‘zero subsidy’ bids for future plants off Germany.
Dong CEO Henrik Poulsen said: “Since the decision in 2016 to divest our upstream oil and gas business, we’ve actively worked to get the best transaction by selling the business as a whole, getting a good and fair price for it and ensuring the optimal conditions for the long-term development of the oil and gas business. With the agreement with Ineos we’ve obtained just that.”
“The transaction completes the transformation of Dong Energy into a leading, pure play renewables company.”
Danish state-controlled Dong – in which investment giant Goldman Sachs also holds a stake – is the most notable example of a fossil-fuel-based operation pivoting towards clean energy.
Norway’s Statoil and Anglo-Dutch group Shell have also entered the offshore wind sector – although not to anything like the same extent as Dong – while France’s Total is a serious player in the solar industry.

Monday, 12 June 2017

Oil giant Shell calls for 10GW offshore megaprojects by Anamaria Deduleasa, Recharge News, 07 June 2017

Megaprojects in the 10GW range built around “anchor tenant” led development consortia will be needed to make offshore wind a global mainstream energy source, according to Shell New Energies executive vice-president, Mark Gainsborough.
The oil supermajor believes this model — adopted from the retail sector where a prestige brand store is given lower rent to attract other tenants — will be a better means of accelerating and upscaling the build-out of offshore wind farms than the current tender model being employed in certain European countries, which are driven by 2030 national targets.
“Shell believes that instead of organising the next tranche of leases and tenders simply on the basis of meeting national targets in 2030, we would propose that the next phase be thought of as a stepping stone, a de-risking exercise, towards a much bigger offshore wind industry that operates at the scale of the potential resource,” Gainsborough told OWE 2017.
“We believe that a few large, integrated projects up to 10GW, with an anchor tenant who takes the biggest risk for about half the project, need to be developed to ensure we all learn how best to do this.
“Think of the cost savings that could be achieved by constructing several hundred wind turbines continuously, like an offshore assembly line.”
According to Gainsborough, upscaling development would lower cost, create value across the supply chain, and stimulate economic growth.
Shell, which has plans to earmark around $1bn a year for investment in renewable energy sources from 2020, is in the early stages of diversifying its portfolio. In the US, the group is a 50-50 joint venture partner in six operating onshore wind projects, and in Europe, in the Netherlands, together with Mitsubishi, Eneco and Van Oord, it won the 700MW Borssele 3&4 offshore tender in last year.
“A cleaner energy future is both desirable and possible... but this will require action in all sectors of the energy system, and will require scaling up opportunities. Long-term integrated policies on climate, energy and economy will be necessary, along with a power market that sends the right investment signals,” he says.

Statoil to use oil and gas expertise to grow in offshore wind by Anamaria Deduleasa, Recharge News, 09 June 2017

Norway’s Statoil is aiming to play on its oil and gas strengths and expertise to grow its renewable energy business, said executive vice president of new energy solutions, Irene Rummelhoff.
Statoil has already made renewables part of its core activity, after realising that “business as usual was not an option”, said Rummelhoff at Offshore Wind Energy in London this week.
She added that, as the company had a lot of experience in offshore installations, operations, modifications, derived from having worked in the oil and gas industry, the change in direction was an “opportunity”.
“All skills were relevant for the offshore wind industry,” said Rummelhoff. “This was an opportunity rather than a threat for an oil and gas company, because we have an industry with immense growth potential in front of us, where we can play on the competences we have already developed. It’s not often these opportunities comes along.”
“Combining offshore wind and gas is a great opportunity that oil and gas companies can work with, in combination with other technologies, like batteries, and potentially also solar,” she said. “This will be a holistic solution going forward that will play to the strengths of like Statoil and Shell and other companies coming from the oil and gas sector.”
As it moved into the clean energy sector, Statoil acquired a 35% in the Dudgeon wind farm off eastern England, and won an auction for commercial development rights off New York.
The company said it now sees renewables as a “fully integrated part of its strategy”, with “new energy” set to account for around 20% of its capital investments by 2030.
In addition, Statoil’s budget for research projects is on an annual base around £250m. By 2020, 25% of it will be invested in low carbon solutions, says Rummelhoff.

Friday, 2 June 2017

Canada's renewable powerhouses are on the march, by Karl-Erik Stromsta, Recharge News, 19 May 2017

IN DEPTH | With a relatively small wind sector north of the border, Canadian renewables companies are increasingly moving into the US market, where they have been enjoying considerable success.

The US renewables market has long been a stomping ground for European heavyweight developers like Spain’s Iberdrola, Portugal’s EDP and Germany’s E.ON which have amassed multi-gigawatt American wind empires. Lately, however, a new breed of foreign developer has been making a big impact on the US market — and this time they’re coming from the north.
Over the past decade, Canada has quietly reared a formidable crop of homegrown renewables champions, fortified by the country’s stable hydro and vibrant wind markets. In many cases, Canadian renewables developers are in stronger financial shape than their American counterparts, and many are acquiring a taste for the massive — if quirky — electricity market south of the border.
Canadian renewables companies are buying US developers, US projects and even entire portfolios. Some are eyeing the nascent US offshore wind market. They are bringing their well-greased relationships with Canada’s big investment houses with them. And there’s every sign they’re just getting started.
The growing aggressiveness of Canada’s renewables sector was highlighted in March when Brookfield Renewable Partners, a Toronto-based hydro operator, outmanoeuvred rival suitors to take control of the TerraForm Power and TerraForm Global yieldcos from their bankrupt US parent SunEdison — catapulting Brookfield into a position of prominence on the global renewables stage.
Another good example is Algonquin Power & Utilities, a renewables developer and regulated utility company based near Toronto. Founded in the late 1990s with a focus on Canadian hydro, Algonquin diversified into Canadian wind development last decade before acquiring a portfolio of US projects from Spain’s Gamesa.
In 2016, Algonquin finished building two large US wind farms — the 200MW Odell in Wisconsin and the 150MW Deerfield in Michigan’s windy “thumb” — and at the end of the year it spent $75m on turbines that will allow it to build as much as 700MW more US capacity over the next few years, all of it eligible for the full production tax credit (PTC).
Canada was an ideal place for Algonquin to grow up, but “we’ve outgrown the market”, explains Jeff Norman, vice-president for business development at Algonquin Power, the company’s competitive generation arm. “We want to continue to grow, and we need to be in the US market to maintain those aspirations.
“We’re still very happy to participate in the Canadian market and view it as valuable. It’s just not our prime market any more.”
Algonquin’s southward march is being mirrored across Canada’s increasingly dynamic and globalised renewables sector. It’s being seen among independent power producers like Calgary’s Capital Power, which is building the 178MW Bloom wind farm in Kansas. It’s happening among Canadian private-equity firms such as Fengate, which last year made its first-ever investment in the US, buying a stake in the 120MW San Juan Mesa wind farm in New Mexico.
Importantly, it’s also happening among Canada’s massive pension funds, which bring the kind of financial heft that can move the needle even in a market as big as the US.
Caisse de Dépôt et Placement du Québec made an early move in 2014, buying a minority stake in Chicago-based Invenergy, North America’s largest privately owned renewables developer. So far this year, Alberta Investment Management acquired a 50% stake in Utah-based developer sPower, while Ontario Teachers’ Pension Plan agreed to back US transmission developer Anbaric, which has a number of huge renewables-related projects under way.
There’s always been a substantial investment flow between Canada and the US, including in the energy markets. But executives agree the trend in renewables has been especially pronounced over the past few years. A number of factors appear to be driving it.
Ontario Teachers' backs US transmission developer Anbaric
To start with, the Canadian wind market is slowing down, and the landing may be rough. Canada now has the world’s seventh-largest installed wind base, nipping the heels of the UK.
But the outlook for short-term development in Ontario and Quebec, the main Canadian wind markets of the recent past, looks grim. Analyst MAKE Consulting believes Canada’s wind installation rate could drop by nearly half over the coming decade compared to the past ten years.
The brightest spots for the Canadian wind market right now are the western provinces of Alberta and Saskatchewan, both of which have recently initiated processes to procure substantial amounts of new renewables capacity by 2030. But industry sources say those markets will not be enough to absorb the ambitions and financial firepower of Canada’s renewables independent power producers (IPPs).
One Canadian renewables executive points out that there’s now more wind capacity spinning in Texas than there is total generation capacity in Alberta.
Even deals in the secondary market for existing projects in eastern Canada may become scarcer in the coming years.
In February, Fengate closed on an acquisition of three utility-scale solar plants totaling 60MW from Canadian Solar in Sault Ste Marie, Ontario, and it would like to buy more wind and solar assets in the province, says Fengate director Andrew Cogan. But much of the fruits of Ontario’s recent renewables boom has been thoroughly picked over.
“A lot of those assets are now in their second or third hands, and by the time they get there, they tend not to change hands too often,” Cogan tells Recharge. “We’ll keep an eye out. But the growth is going to come, I think, from pushing south.”
The US market is “much larger, it’s very sophisticated and it’s really liquid”, he adds. “We’ve got three or four other projects on the go in the States right now, with another six or seven on the near-term horizon.”
At the same time as opportunities are growing scarcer in eastern Canada, Canadian developers are finally — and grudgingly — getting comfortable with some of the complexities of the US market, particularly the PTC and the attendant need for tax equity.
“For years many large Canadian IPPs stayed away from the US,” says John Carson, chief executive of Alterra Power, the British Columbia-based renewables developer that recently handed Vestas the turbine order for its second US wind project, the 200MW Flat Top in Texas.
“It was mostly because of the tax-equity aspect of it, but also because there were a lot of good Canadian deals they could spend their time on,” Carson tells Recharge. “As those deals have dried up, some of them have begun to look south.” And in the meantime, “they’re finally realising tax equity is not the demon they once thought it was”.
Like a number of Canadian developers, Alterra took steps in late 2016 to qualify future wind capacity for the full PTC — in its case as much as 1.7GW — and the company has plans to open a US office.
Canada’s fossil-fuel giants — which have generally embraced renewables more quickly than their US counterparts — are also pressing into the US renewables market. TransCanada, the company behind the controversial Keystone XL oil trunkline, owns a 132MW wind farm in Maine, and pipelines giant Enbridge has become a substantial wind player in the US — including its recent purchase of the 249MW Chapman project in Texas, due for completion this year.
"Developers like Northland are taking what they’ve learned in Canada and bringing it to bear in markets that are at a higher-growth point in their cycle right"
Mike Crawley, Northland Power
The trend of Canadian companies pushing into the US renewables market is universally expected to continue. Indeed, some Canadian developers with lingering reservations about the PTC may actually accelerate their push into the US as the tax credit phases down over the next few years.
Innergex, the Montreal-based renewables IPP, expects to become more competitive in the US market as the PTC winds down, and recently revealed it is considering buying a developer south of the border.
“I’d be happier without the PTC, and I think a Canadian company can do better without the PTC,” says chief executive Michel Letellier. Without the tax credit in place, Innergex will have “a better angle to attack the US market”, he says. Larger, better established US companies have a clear advantage over their Canadian competitors in attracting low-cost tax equity deals.
The US will no doubt remain the largest foreign target for Canada’s renewables sector, but Canadian players are increasingly flexing their muscles even further afield.
Last year, UK-based Cubico Sustainable Investments, which owns a 2GW portfolio of renewables assets across Latin America and Europe, was acquired by two Canadian pension managers — the Public Sector Pension Investment Board and Ontario Teachers’ Pension Plan.
Montreal-based Boralex, meanwhile, has become the largest independent wind developer in France, and Northland Power, the Toronto-based IPP, has made a major splash in the European offshore wind market, most recently by buying the 252MW Deutsche Bucht project in the German North Sea.
The era of the Canadian renewables powerhouse, it seems, has arrived.
“Developers like Northland are taking what they’ve learned in Canada — the skills, the relationships they’ve built — and bringing them to bear in markets that are at a higher-growth point in their cycle right now,”, Northland’s executive vice-president for business development, Mike Crawley, tells Recharge.
Beyond its plans to build more offshore wind farms in Europe, Northland is developing projects in Taiwan and looking to enter the emerging offshore market in the US Northeast.
“There are still growth opportunities in Canada,” Crawley notes. “But there are significant growth opportunities elsewhere.”