Bloomberg New Energy Finance: Wind, solar almost as cheap as fossil fuels, IEA says

 

 

From: Bloomberg New Energy Finance [mailto:weekinreview@emails.bnef.com]
Sent: Tuesday, September 1, 2015 11:23 AM
To: mbannerman@tnag.net
Subject: Week In Review: Wind, solar almost as cheap as fossil fuels, IEA says

 

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Wind, solar almost as cheap as fossil fuels, IEA says The US government was on a roll last week, as President Barack Obama pledged to provide incentives to support investments in renewable energy, saying the industry will thrive despite opposition by Republicans and fossil-fuel suppliers. The White House has announced a $1bn increase in loan guarantees for renewable energy projects, $24m in new grants for solar research and measures to reduce costs for homeowners to install solar panels. "We're going to make it even easier for individual homeowners to put solar panels on their roof with no upfront cost," Obama said at the National Clean Energy Summit in Las Vegas. The president has set a target of reducing US carbon emissions by 26% to 28% below 2005 levels in 2025, as discussed in the Bloomberg New Energy Finance research note. Meanwhile, the International Energy Agency said the gap between the cost of energy produced from fossil fuels and energy produced from solar or wind is narrowing "significantly". "The costs of renewable technologies — in particular solar photovoltaic — have declined significantly over the past five years," the Paris-based IEA said. "These technologies are no longer cost outliers." The median cost of producing so-called baseload power that is available all the time from natural gas, coal and atomic plants was about $100/MWh for 2015 compared with about $200 for solar, which dropped from $500 in 2010. Those costs take into account investment, fuel, maintenance and dismantling of the installations over their lifetimes and vary widely between countries and plants. The IEA findings come as more than 190 nations prepare to broker a new climate agreement in Paris in December to limit carbon emissions from burning fossil fuels.  Subsidies for renewable energy came under scrutiny in the UK, where the government proposed to end an assistance program for small-scale renewable energy projects as part of a drive to cut the costs to consumers of subsidizing clean technologies. Ministers plan to cap the budget for the assistance and end it for new entrants after March 2019, according to the proposals outlined 27 August on the Department of Energy and Climate Change website. The announcement is a blow to the solar industry, which accounts for more than four-fifths of all UK installations under the programme, according to Bloomberg calculations. Energy Secretary Amber Rudd is in the process of ending or reducing a slew of clean energy programmes, saying her actions are designed to protect consumers who pay for the subsidies on gas and power bills. News of projects continued to trickle from some of the emerging markets. Egypt's Ministry of Electricity has been in talks with Gaz De France Suez, Toyota Motor and Orascom Construction Industries, to build a 250MW wind energy project at Gulf of Suez, according to the Al Mal newspaper. Iran showed it is drawing attention from developers. Development Environment Arvand, a German-Iranian renewables company, signed an agreement to build a 48MW wind farm in southwestern Iran for EUR 40m ($46m). Iran set a target last year to reach 5GW of power generated from renewable energy by 2015, according to the state-owned Islamic Republic News Agency. Miners in Australia became the latest example of the industry embracing clean energy to cut costs, when the DeGrussa copper and gold mine said it will be getting a solar farm. The plant will replace about 5m litres (1.3m gallons) of diesel a year, a fifth of the mine's energy needs. Energy generated by the system may eventually cost about half that of diesel-generated power, according to Sandfire Resources, the deposit's owner. Miners including Rio Tinto are installing new solar plants from Chile to South Africa, betting they'll deliver long-term savings. The global solar-power market for mining companies may grow to about $2bn a year by 2022 from about $42m in 2013, according to Navigant Consulting. In Japan, further change is afoot in renewables. Tokyo Electric Power, Japan's biggest utility, started running its first wind farm in Shizuoka prefecture. The 18MW power station can produce enough electricity for 10,000 homes, the Tokyo-based company known as Tepco said. Japan's Ministry of the Environment is seeking to more than triple the budget for carbon capture and storage projects, such as research for suitable locations, according to a document from the ministry. The ministry wants to set aside JPY 9.1bn for CCS for the year starting in April, compared with JPY 2.5bn for the previous year. The ministry is also seeking JPY 2bn to study ways to reduce cost to set up floating offshore wind turbines and JPY 900m to research tidal power generation. Finally, solar developers in Brazil sold power for 40% more than last year. Brazil sold 833.8MW of solar power at an average price of 301.79 reais ($84.20) per MWh in an auction. That compares with the 215.12 reais fetched by more than 1GW of projects sold last year. BNEF revised up its forecast for wind build in Brazil from 2018, in this analyst reaction. US hybrid electric vehicle sales in Q2 2015 up 24% on Q1 (thousand units) Q&A of the week UPS buys 46m gallons of 'game changer' bio-diesel United Parcel Services, the world's biggest package delivery company, will blend 46m gallons of renewable diesel into its global supply chain over the next three years. "The fuel is fully interchangeable with petroleum based diesel and can be dropped into the supply chain without any modification to existing infrastructure," said Mike Whitlatch, vice president of global energy and procurement at UPS in an interview with Clean Energy and Carbon Brief. The agreement to purchase 46m gallons from producers Neste Oil, Renewable Energy Group and Solazyme, will allow the US-based company to reduce its carbon emissions by 450,000 metric tonnes over the period, as renewable diesel can have a life-cycle emissions reduction of up to 90% on petroleum-based fuel, according to UPS. In 2014, UPS' direct carbon emissions totaled 12m metric tonnes. Whitlatch said the bio-diesel purchase "will fuel about 7,500 UPS delivery vehicles per year," contributing to a UPS goal to shift 12% of its ground fuel to alternative sources by the end of 2017 — the equivalent of 1bn miles.   UPS has also put into place energy saving measures such as its own routing optimisation technology, which calculates the most efficient driving pathway for any given route. The company expects this will save annually 10m gallons of fuel. Clean Energy and Carbon Brief interviewed Mike Whitlatch of UPS about the delivery company's biofuel strategy and energy efficiency goals. Q: Why did UPS buy 46m gallons of bio-diesel? A: The agreement is especially important because it is for an advanced biofuel that meets or exceeds the specifications for petroleum-based diesel. It is fully interchangeable with petroleum-based diesel and can be dropped into the supply chain without any modification to existing infrastructure. That's the game changer — it can be transported on pipelines and co-mingled in terminals — truly a drop-in fuel. Unlike first generation biofuel, there are no blending limitations. We can use it at a 100% concentration if available, or we can put it into an existing diesel tank and blend it at any percentage. It is equivalent to petroleum-based diesel in terms of performance, energy content and flexibility to use in cold weather. Another reason we are looking at renewable diesel is because it has life-cycle emissions reduction of up to 90% depending on feedstock. The 46m gallons worth of renewable diesel will contribute about 450,000 metric tonnes of carbon dioxide emissions reduction over the three years. The purchase will therefore contribute to UPS efforts to reduce its CO2 emissions by 20% by 2020, while helping advance commercialisation of renewable diesel. Fifteen million annual gallons of renewable diesel will allow us to fuel about 7,500 delivery vehicles per year. Most of this bio-diesel will be used in the US where we have an integrated fuel supply chain. We are also looking at some markets in Europe, where we have our own fueling infrastructure available. We have purchased this fuel at a cost neutral price — at or better than conventional diesel economics. Q: Does UPS plan to move into commercial drone deliveries? A: At some point, there will be a use for drones in time-urgent, time-sensitive or unusual shipments. While the concept is not far away, enacting the appropriate regulations is complex. We're currently experimenting with drone use in warehouse facilities, and supporting humanitarian relief efforts, and are providing comments to the FAA... This is an excerpt from the Clean Energy & Carbon Brief published weekly. To subscribe to the Clean Energy & Carbon Brief, click here.​ BNEF services | Contact BNEF | Unsubscribe Copyright © 2007-2015 Bloomberg Finance L.P. All rights reserved. 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