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.

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.

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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

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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.”

Back Renewables to Hit Climate Goals with GDP Growth, by Andrew Lee, Recharge News, March 20, 2017

The world’s energy sector could slash carbon emissions by 70% by 2050 and eliminate them altogether a decade later – while simultaneously boosting the global economy, according to a new study from the International Renewable Energy Agency (IRENA) and the International Energy Agency (IEA).

The organisations said wider deployment of renewables and energy efficiency measures – allied with large-scale greening of sectors such as transport and buildings – could by 2050 limit warming to no more than two degrees above pre-industrial temperatures.

They estimate the decarbonisation push will need an extra $29 trillion of investment by that date, equivalent to about 0.4% of global GDP.

But the same programme would also deliver a 0.8% increase to global GDP by mid-century, with new renewable-focused jobs "more than offsetting" employment losses in fossil sectors, says the report Investment Needs for a Low-Carbon Energy Transition, which was co-financed by the German government.

By 2060 energy-related CO2 emissions could be totally eliminated, it reckons.

But the study – released to mark the start of the Berlin Energy Transition Dialogue event in the German capital – warns that time is of the essence, with delay translating directly into an increase in the cost of achieving decarbonisation.

“The energy transition has long ceased to be a national project. It is a global task and a mission for all of us, as well as a way to ensure a future of prosperity and stability,” said German foreign minister Sigmar Gabriel, who hosts the Berlin Energy Transition Dialogue.

IRENA director-general Adnan Amin said: “The Paris Agreement reflected an unprecedented international determination to act on climate. The focus must be on the decarbonisation of the global energy system as it accounts for almost two-thirds of greenhouse gas emissions.

“Critically, the economic case for the energy transition has never been stronger,” added Amin. “Today around the world, new renewable power plants are being built that will generate electricity for less cost than fossil-fuel power plants. And through 2050, the decarbonisation can fuel sustainable economic growth and create more new jobs in renewables.”

The study says emissions will need to fall to 9.5 gigatonnes of energy-related CO2 by 2050 if the twodegree target is to be met, down from 32Gt in 2015. It estimates that “90% of this energy CO2 emission reduction can be achieved through expanding renewable energy deployment and improving energy efficiency”.

Renewables need to account for 80% of power generation and 65% of primary energy supply by the middle of the century, up from 24% and 16% now.

The report also sets out a list of other advances needed, ranging from a huge expansion in electric vehicles – which need to be “the predominant car type in 2050” – to high-efficiency electric buildings becoming “the norm”.

 IEA renewable energy head Paolo Frankl told Recharge in an exclusive interview that a wide range of up-and-coming technologies will need to be deployed alongside wind and solar if global climate objectives are to be achieved.

Pattern's Meikle likely to be last B.C. wind farm built for years, by Karl-Erik Stromsta, Recharge News, Feb 27, 2017

Pattern Development has completed its 184.6MW Meikle wind farm in British Columbia, in what is likely to be the last big wind project to come online in the western Canadian province for many years.

Meikle is the largest wind farm ever built in British Columbia, single-handedly boosting the province’s installed wind capacity by 37%, to nearly 674MW. But with electricity demand stagnant in British Columbia even as the 1.1GW Site C hydroelectric project advances, the renewables industry is not counting on much in the way of new opportunities there for the foreseeable future.

The Canadian Wind Energy Association reportedly pulled its regional director out of British Columbia last year, with the intention of focusing on the more obvious near-term opportunities blossoming in Alberta and Saskatchewan.

The government in B.C. has said the controversial Site C will be the last major hydro project built in the province and future demand will be met by wind and solar. But barring a major new source of electricity demand, contracts for new wind farms are unlikely to be awarded any time soon, and perhaps not for a decade or more.

New wind opportunities are also on the decline in Ontario and Quebec, historically the two largest provincial wind markets.

Meikle, completed 33km north of Tumbler Ridge, near British Columbia’s border with Alberta, was built using two types of General Electric turbines, and designed to work with the site’s unique ridgelines in an area that has seen heavy forestry activity. The wind farm sells its power to state-owned utility BC Hydro.

Pattern acquired the project from local developer Finavera in 2013.

Conscious of the economic challenges in the remote area where Meikle was built, San Franciscobased Pattern Development – parent of the US-based renewables yieldco Pattern Energy – spent more than 30% of the value of its construction-related contracts with First Nations-affiliated contractors and other regional firms.

Sixteen O&M personnel will stay on to maintain the C$393m ($301m) project.

“Located in a mountainous region, this project was unique for its construction, design and weather challenges, as well as for our discovery of rare dinosaur tracks during construction, which we donated to the Tumbler Ridge Museum,” says Mike Garland, chief executive of both Pattern Development and Pattern Energy.

Pattern Energy, which is listed in both New York and Toronto, has the right of first offer on Meikle, and is expected to acquire the project at some point.

Roughly one-fifth of Pattern Energy’s 2.6GW of installed capacity is spread across its investments in five wind farms in the Canadian provinces of Ontario and Manitoba.

Colombian bank gears up for renewables with green bond issue, by Alexandre Spatuzza, Recharge News, Feb 16, 2017

 As Colombia’s energy regulator CREG finalises rules for renewable energy tenders, local finance house Bancolombia is ready to lend around $55m to clean-energy projects with money raised via Latin America’s first international green bond issue by a commercial bank.

“We have started disbursing the money and by May we will...announce the projects financed,” Bancolombia’s finance chief Jose Humberto Acosta told Recharge.

Bancolombia finalised the issue of 350bn Colombian pesos ($115m) in January. The bonds were all bought by the World Bank’s International Finance Corporation (IFC) as part of a programme to bolster green bond issues worldwide and help Colombia meet its greenhouse gas reduction target of 20% by 2020.

“About 50% of the issue will be directed to renewable energy,” said Acosta without giving details. The rest will go to other green industries in fields such as construction and sanitation, he added.

The green bond issue comes ahead of the implementation of Colombia’s revamped renewable energy policies, expected to be finalised this year. The country’s power agents, government officials and the energy regulator CREG have until the end of February to conclude a public consultation process to finalise tender rules to contract renewables under 15-year PPAs

Colombia’s Caribbean Sea region of La Guarija has huge wind and solar power potential, but the lack of clear regulations in the 2014 renewable energy bill and the absence of grid connection in the region have delayed the country’s entry onto the global renewable energy scene.

The country has 19MW of wind installed – out of a 16GW of total capacity – but has more than 2GW of wind projects in place, according to the newly-created Colombian Renewable Energy Association (SER). At the same time the government’s 2030 power expansion plan points to around 1GW of wind to be installed and some 300MW of solar.

For Bancolombia, the green bond issue and the partnership with IFC aim to get its clients ready for a growing green technology market.

“For our clients it’s a learning curve and the bank together with IFC will advise its clients on how meet compliance requirements for green projects,” said Acosta.

Another aim of the issue is to mitigate foreign exchange risks for renewable energy projects since the lending will be done in Colombian pesos. Although the government wants renewable energy tenders to be in pesos, energy market players prefer US dollar-denominated auctions.

Even so, Acosta said that the finance will not be significantly cheaper than other loans in Colombia.

For the IFC, Bancolombia’s green bond issue is part of the institution’s programme to support renewable energy and green technology financing in Latin America. Since 2010, the IFC has issued $5.6bn in green bonds worldwide.

The IFC’s manager for the Andean region, Carlos Leiria Pinto, said at the time of the issue that “by investing in the first green bond issued by Bancolombia, we hope to pave the way for other issuers and investors and contribute to the development of the green bond market in Colombia”.

Acosta agreed: “Other banks will follow our footsteps and we ourselves could hold another issue in three years.

Renewables a must-have as shadows lengthen over Big Oil: ONES TO WATCH 2017 | The world's oil giants are all too aware that the tide is turning so expect more activity in wind and solar this year, writes Darius Snieckus, Recharge News, Jan. 10, 2017

Expectations that Big Oil will increasingly move into renewables have been growing as crude prices continue to stagnate and 2017 will see more “old” energy developers begin to detail their play books for wind, solar and storage.

Many eyes will be on Shell this year. The Dutch-Anglo petroleum giant has been angling to bring its offshore oil and gas project nous – and capital (in the ‘crisis’ of 2015, it still had revenues of $265bn) – to bear on offshore wind. After failing at the first attempt it now has a chance to wet its head on a lead-off project: the 680MW Borssele 3&4 zone off the Netherlands, which it won with a low bid of €54.50/MWh ($57.85/MWh).

Chief executive Ben van Beurden last year admitted regret at having pulled out from its earlier position in offshore wind – apart from a share in the 108MW Egmond aan Zeewind farm commissioned in 2006 in the Dutch North Sea – and Shell’s chief energy advisor Wim Thomas told Recharge “the penny has now dropped that this is the new business space [to be committed to]”.

So anticipate more forward strides from Shell in offshore wind in 2017 – and not just on conventional projects. Shell also has stakes in WindFloat, the floating wind power unit now edging towards a first array off Portugal, and even a high-altitude wind energy outfit called KPS, which has a technology development timeline that will see its kite-driven concept flying offshore by the end of the decade.

Total, the French oil company, has shown a commitment to industrial-scale renewables since buying a majority stake in SunPower in 2011. But it was its fell-swoop takeover of battery maker Saft as its “spearhead in electricity storage” that has nailed its solar-plus-storage colours to the mast.

Total chief executive Patrick Pouyanné has made no secret of its renewables ambitions: a top-three solar player within 20 years.

Total is paying the price for its faith. On top of the $1bn deal for Saft, it has had to ride to the rescue of SunPower – after a doubling of the solar giant’s 2016 net loss guidance – with a first aid package that included a cash up-front order for 150MW of PV panels, and “discussions” to buy stakes in SunPower projects in Japan, South Africa, and France.

Total has also developed a venture capital-fuelled technology scouting programme, under the banner of Total Energy Ventures. Look to see more investment in start-ups in 2017, such as US wind leasing specialist United wind, and AutoGrid, a California-based digital grid management solution developer.

The Petroleum Age is ending and Big Oil knows it: investment in renewables has eclipsed that going into oil and gas for the second year running, fuelled by the latest $310bn spend.

Some oil and gas majors are already on their way. Danish state oil and gas company Dong has begun divesting petro-assets in favour of wind and now has a pace-setting 4.4GW under construction off Europe, and virgin acreage off the US – and no interest in the tail-end of North Sea’s black gold bonanza.

Its Norwegian counterpart Statoil will witness a watershed year for its renewable energy business as its second conventional offshore North Sea wind farm, the 402MW Dudgeon, comes online as does its 30MW Buchan Deep project – the world’s first floating array. It will also start work on its recently won 1GW zone off New York state.

Statoil's' own venture capital arm will in the meantime get to grips with its flagship solar power investment, part of an $8m package backing commercialisation of Oxford Photovoltaics ultrahighefficiency perovskite-based PV technology.

Even Italy's Eni – a company that until now had shown little interest in renewables, bar a partnership in a floating wind scheme designed to pump more oil and gas out of offshore fields – has wheels turning on plans to jointly develop large-scale renewables with US industrial giant GE under a framework agreement that encompasses onshore and offshore wind, as well as solar.

The shadow of stranded assets may be growing ever-longer, but for Big Oil investment prospects are also getting darker by the day. Fitch Ratings pointedly warned last year that failing to diversify into renewables could damage access to capital as global demand for petroleum slows.

Renewables are no longer a "nice to have", they are a existential need.