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Industry soldiers on in the face of adversity

Of the countries bordering the Mediterranean that are most active in wind-power generation, a few are well established, but the majority are still emerging markets, as summarised below.

Big decisions...investment in Italy rests on announcements
Big decisions...investment in Italy rests on announcements
Even more recent activity is taking place in Croatia, now with 90MW of operating capacity and more projects on the way. Slovenia got going with 2MW in 2010, and Montenegro and Bosnia & Herzegovina are likely to have their first turbines turning by 2013, with Malta following shortly after. Serbia is further behind, with a couple of projects in early development.

The prospects for the embryonic markets to the east and south of the Mediterranean are harder to predict. Continued unrest in Syria is affecting Lebanon, causing further economic woes, while construction of a 60MW project in strife-torn Libya is on hold. Algeria looks a brighter prospect — helped by a relatively buoyant economy, the government has made enough concessions to stave off unrest so far and repeated its commitment to increase the share of renewables in its energy mix.

SPAIN

Industry slows under diluted targets and uncertainty
Status: established market

Spain was Europe’s biggest annual market in 2010, with 1.5GW of new capacity installed, bringing the cumulative total to 20.7GW, writes Michael McGovern. Nevertheless, in its draft renewable-energy plan for 2011–20, the central government has levelled off growth at 1.6GW annually, setting a 35GW onshore target and a mere 0.75GW offshore. This growth plan is significantly lower than the 3.5GW installed in 2007 and 2.5GW in 2009.

The government says this ensures market volumes higher than most European countries. However, last year it failed to approve a pay scheme for new capacity coming online after 2012. Given this uncertainty, projects beyond 2012 are not drawing finance or investors, according to the Spanish national wind association AEE.

Meanwhile, the government’s 7.2GW cap on new capacity for 2009–12 included projects already underway, leaving just 1.7GW to build 2011-12, says AEE. Accordingly, an estimated 10,000 jobs have been lost. In the first half of this year, Spain put up just 482MW, some 34% down on the same period last year. The pace cannot pick up much because of the cap and AEE expects no more than 1GW of new capacity by the end of the year.

ITALY

Progress despite doubts over incentives and grid
Status: established market

Italy’s installed wind-power capacity could rise roughly 1GW this year to just below 7GW, despite concern about the future incentive scheme, writes Heather O’Brian. Uncertainty has been a fixture of the market for over a year. Investors hope to complete projects before 2013 when the new, but as yet undefined, system comes into effect. Legislation is expected soon, but under a transitional programme, green certificates will be issued to plants in operation by the end of 2012. This will continue until they switch to a fixed-tariff scheme in 2016.

There has been progress on project authorisation, with the approval last year of new national guidelines for siting wind farms. But if Italy is to meet its 2020 goal of 12.68GW, both grid improvements and binding wind targets for each region are seen as key.

FRANCE

Offshore tender helps to balance out new restrictions
Status: established market

France has nearly 6GW of installed capacity and aims for 25GW by 2020, including 6GW offshore. However, recent changes to the regulatory framework put these targets in doubt. Most worrying are the stipulations that new wind farms must comprise at least five turbines, and that all turbines will be subject to onerous rules covering industrial installations that are considered to be a risk to the environment and public health.

On the other hand, in July, the government launched a long-awaited tender for five offshore projects totalling 3GW. The winners will be announced early next year and the first turbines could start turning in 2015.

TURKEY  

Auctions under way but grid issue must be addressed
Status: emerging market

Turkey is a fast-growing market for wind energy, having reached 1.4GW of installed capacity by March this year compared to 17MW in 2003, writes Hale Erkoc.

The first half of 2011 has been the most active period for the Turkish market. Last December a new renewable-energy law guaranteed purchase prices for electricity from renewable sources — $0.073/kWh for wind, more if the components are manufactured locally, which may encourage the major turbine manufacturers to build plants in the country. Although all producers so far sell on the wholesale market, the price guarantees are important in securing financing.

Later this year licences began to be granted for applications submitted in November 2007. Single application licences for substation capacity were granted directly, those for multiple applications were granted through auctions held by the Turkish Electricity Transmission company. By June this year, projects totalling 3.65GW had won the right to be granted licences, with auctions for 1.25GW more being held this month.

By the end of 2011, Turkey will have more than 8GW of licensed projects, but these will still have to undergo a technical evaluation to assess their impact on defence systems. The likelihood of projects being rejected is unknow, as is the cost of solutions offered or when the evaluations will be finalised.

The government aims to reach 20GW of installed wind-power capacity by 2023 — around 18% of its target of 110GW for total installed renewables capacity. However, even this is not seen as a realistic expectation, as there is no concrete schedule for improving transmission-system capacity, a major problem for Turkey. An additional problem could be in supplying the number of turbines required.  

GREECE

Some encouragement for wind amid financial gloom
Status: emerging market / market under stress
Surprisingly, wind is experiencing a mini-boom in Greece, with up to 350MW of new capacity to be added in 2011 — more than double the average of recent years. However, these projects reached financial closure around a year ago, before the financial crisis really hit. The full impact of this will probably not become apparent until next year, but Greece needs to build at least 600MW a year to reach its target of 7.5GW installed capacity by 2020, including 300MW offshore.

The crisis struck just as things were looking up for wind in Greece. The 2010 renewable-energy law promised to speed up the permitting process. It also increased incentives for wind farms built on remote islands and those where the operator pays for an interconnection.

Offshore development, meanwhile, came to a halt with the introduction of competitive bidding in pre-determined zones. The authorities are now trying to work out which zones are suitable.
In April, China’s turbine manufacturer Sinovel announced plans for a factory in Greece. And there are major projects in the pipeline. If all goes well, "there is a high probability that up to 2GW of new capacity could be added by 2015," says Dr Panagiotis Papastamatiou, president of the Hellenic Wind Energy Association.

The big unknown, of course, is finance. While the energy sector has fared better than most, banks are increasingly reluctant to provide loans. Some large companies with their own funds continue to invest, but everyone is anxious to see what happens over the coming months.

EGYPT

Pressing ahead with state-funded wind growth
Status: emerging market / market under stress

Egypt’s energy sector is holding up relatively well in the face of political and economic uncertainty. In June, energy minister Hassan Younes confirmed plans for an additional 2.5GW of wind energy by 2016, heading for a long-term goal of 7.2GW by 2020. This compares with 550MW turning today.

Just over 1GW of the additional 2.5GW capacity will be funded by the state and international development banks. Traditional donor agencies, such as the World Bank and French Development Agency, have pledged to support the government and, particularly, the energy sector, in the wake of the revolution. Another positive sign was the decision in July to contract Spain’s turbine manufacturer Gamesa to build a 200MW facility on the Red Sea coast. Site works are expected to start early next year, with commissioning planned for 2014.

Delays are more likely to hit private-sector projects. The energy minister has identified 1.37GW to be built by independent power producers by 2016 through a combination of competitive bidding, bilateral agreements, partnerships and tariff deals. The second round of bidding, for 250MW due to have been launched this summer, is now expected in the autumn.

Pre-qualification rounds for a further 500MW are also expected by the end of the year.
Italgen, the power unit of Italian cement manufacturer Italcementi, is waiting to complete the permitting process for 120MW, while the planned opening of a factory by Middle East component manufacturer El-Sewedy Electric is also on hold. "We are waiting for the right market conditions now to go ahead and start production," says the company. When that will be depends on when the promised elections take place and whether they succeed in ending the unrest.

MOROCCO
 
Progress expected through joint public-private drive
Status: emerging market

With strong political support for renewable energy, ambitious targets and world-class winds, Morocco looks the most promising of the southern Mediterranean markets. Installed capacity stands at 286MW, but the government is aiming for around 7GW by 2020.

This will be achieved by a mix of private-sector and public investment, as outlined in the government’s Integrated Wind Energy Programme, launched in June 2010. The programme identifies five sites with a combined capacity of 1GW to be built as public-private partnerships by 2020. A first tranche of 150MW, at Taza, has been put out to tender, while state utility the Office National de l’Electricité (ONE) and French producer Theolia have signed a memorandum of understanding to develop 300MW at Koudia Al Baida, near Tétouan, including repowering the existing 50MW facility.

A further 720MW is to be funded by the private sector and should be operating by 2014. ONE should be signing a 20-year power purchase agreement this year with local conglomerate Nareva and the UK’s International Power for a 300MW plant at Tarfaya. The first 200MW phase should be commissioned in 2013. Nareva also hopes to start work soon on a 200MW facility at Akhfenir, and 50MW near Laayoune. Morocco will also add a third power network interconnection of 700MW to Spain, allowing the export of wind and solar energy to Europe.

The only project to be completed this year will be 5MW built by Italgen at Laayoune. The power will be fed directly to the neighbouring cement works.

TUNISIA
 
Wind largely on track but private players hold back
Status: emerging market / market under stress

Tunisia is aiming for 505MW of installed capacity by 2016 and 2.7GW by 2030. The interim government appears to be standing by these targets, but it remains to be seen what will happen when there is an election.

Despite the upheavals, wind-power development has continued pretty much on schedule over the past year. A 120MW project at Bizerte, built and equipped by Gamesa with Spanish funding, should be commissioned as planned this year. The Spanish firm has also started work on a 70MW extension, due for completion in 2012.

Plans for private-sector investment are making less headway. There’s no sign yet of the second round of an international renewables tender, due earlier this year, which involved at least 100MW of wind energy under the Elmed project. Located at El Haouaria on the Nabeul peninsula, the project also includes an undersea grid connection to Italy being developed jointly by the Tunisian Electricity and Gas Company and Italian transmission-system operator Terna.
Likewise, the tender for 60MW to be offered to large industrial, agricultural and tertiary-sector users at Thala is on hold as the energy ministry works to revise the regulatory framework. However, the authorities hope to complete this fairly soon.

Italy’s Moncada Energy Group, on the other hand, is waiting to see how the national picture evolves before proceeding further with its 500MW project at El Haouaria. The company also plans to build a 600MW merchant line to export green electricity to Italy.

CYPRUS, ALBANIA AND ISRAEL  
 
Progress dependent on attractive tariffs
Status: emerging markets

Cyprus’s first 82MW wind farm went online in 2010 and another 54MW should be completed this year, bringing the island country’s 2013 target of 165MW within reach, writes Heather O’Brian. Developers have been attracted by high prices for the first 165MW of wind capacity and are awaiting details of the tariff above that level.

Albania Italian developer Moncada is progressing with the first 100MW of a planned 500MW project. Electricity from the first tranche is expected to be destined for Albania’s grid, although Moncada expects to launch a tender shortly for construction of a merchant line to transmit power from the project to Italy.

Israel has been working out details of a planned feed-in tariff for wind power this summer. There is little visibility on how the government could reach its target of up to 800MW by 2014. Advanced projects ready for construction in the short term could bring total capacity to just over 200MW by then.

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