Steady growth needs strategic thinking

EUROPE: The global growth of wind energy relies on a great deal of research, development and implementation work on technology, policy and finance - and more. Currently, this does not operate as a network of interconnected projects, rather a series of independent trails that, more often than not, do not link with what is going on elsewhere. This makes moving-ahead on all fronts a difficult matter as some areas can lag behind, dragging down the industry as a whole.

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This can be seen in the sluggish rate of transmission network expansion around the globe, which is widely feared to be holding back the pace of onshore and offshore wind. At the big get-together of wind experts at the European Wind Energy Association (EWEA) conference in Copenhagen in April, discussions concluded that heads need to be raised regularly from the job in hand to take in the broad front of developments, not only across the wind industry but also outside it to see that work is efficiently dovetailed with what is happening in other related fields. Neglecting to investigate or coordinate issues now could penalise the wind industry further down the line.

At the broad energy policy level, a major task for the wind sector is to keep abreast and stay relevant on energy issues. Discussing the EU's climate and energy roadmap to 2051, Danish energy minister Martin Lidegaard asked a high-level roundtable whether the carbon emissions trading scheme currently in operation is merely a cap to cut emissions or "whether it is our main tool to pursue green investments". Some argue that carbon trading should be the backbone of green electricity, making the price of carbon, which is currently very low, crucial. Conclusions to a subsequent debate at the European council of ministers "won't be visible before June 2012", he said, but the wind sector needs to stay on the ball. "Using a renewables incentive for expansion of green energy is cheaper than an across-the-board electricity charge in the form of a CO2 levy," said Ian Mays, CEO of UK renewables company RES.

Solar competition

While carbon trading was given a solid airing at the conference, one topic that missed the opportunity for a much discussion at a wider European level was the potential conflict with what could become its chief competitor, photovoltaic electricity.

Wind and solar energies are expected to form the backbone of Europe's future electricity supply. Germany's fast growth in solar capacity to around 25GW by the end of 2011 - approaching wind's 29GW - is demonstrating what large amounts of photovoltaic generation can mean for the electricity sector. It looks high time for the wind and solar sectors to go further and combine their political strengths more explicitly.

Already, political calls for more competition between the different types of renewables are becoming louder.

If implemented at national or European level, the consequences could be particularly detrimental for expensive offshore wind. No wonder offshore wind sector representatives at the conference were among the many wind experts stressing that reducing their "cost of energy" has to be top priority.

Perhaps the most dramatic instance of asynchronous developments at the conference - albeit of lesser overall significance - was at a session on the outlook for project finance over the next three years. Initially, participants were cheered by news that pension funds could bring welcome large-scale investment to the wind sector. But the smiles disappeared when the alarm was raised that Solvency II rules as applied to insurance funds could in future also hit pension funds.

Solvency II

The Solvency II European directive of 2009 set out EU-wide requirements on capital adequacy and risk management for insurers, aimed at providing better protection for policyholders. It requires them to hold more capital to cover the risks that they are exposed to, increasing the cost of capital. In response, experts urged EWEA and the wind finance industry to enter discussions with the European Commission on the issue of pension fund investment in infrastructure such as wind farms.

Fortunately, the lobbying still has a chance to be effective, with the commission issuing its discussion White Paper on sustainable pensions in February. The extent to which arrangements in the pension sector should mirror those in insurance is still up for debate.

The EWEA conference revealed other areas where progress in different fields is not speed synchronised, including power storage and cable technology. On storage, Scandinavia hydro power facilities are widely seen as a potential buffer for surplus wind energy from offshore wind farms in the North Sea. But Scandinavia itself will have developed an annual electricity surplus of 50TWh per year by the period 2020-25, pointed out Oystein Leseth, chief executive of Swedish state-owned energy company Vattenfall, indicating that offshore wind sector expectations may not be in line with Scandinavian electricity sector developments.

Grid architecture

On the cable technology side, industry proponents such as Matt Cunningham of GE Energy Power Conversion talked enthusiastically of a "direct-current grid architecture" and the benefits of high-voltage direct-current (HVDC) technology for offshore wind systems. But whether direct-current electricity can be brought to market with the same cost, flexibility and ease with which power traders are used to handling the standard alternating-current remains an unknown. Edward McGarrigle of University College Cork in Ireland indicated that this may not be easy.

Discussing electricity systems with a large amount of wind power, McGarrigle highlighted the problems of HVDC links into the relatively small whole-of-Ireland electricity grid. The connectors are non-synchronous connections, he pointed out, and therefore the DC links are not locked into the synchronous system with its standard nominal frequency. This means they do not contribute to so-called synchronous inertia (the surge of energy when the rotational energy of the generator is converted to electrical energy when a machine is slowing down) and therefore cannot help to stabilise network frequency during unexpected fluctuations.

"Flexibility is not a straightforward definition, but the functionality of a DC grid must and can fulfil similar requirements as an AC grid," Erik Koldby, a senior engineer at ABB in Denmark, said about modernisation of the European network infrastructure.

Muddling through on wind developments can mean not only that technical progress in various fields is not harmonised. It can also mean that the change in mindset needed for the switch from a conventional to renewable-energy-based system is not sufficiently recognised. Assumptions that were appropriate under a fossil-fueland nuclear-based system can unwittingly be carried over to the renewable-energy landscape and block thinking towards necessary change.

As a case in point, "using electricity to directly generate heat has been considered immoral," said Ulrik Stridbaek of Dong Energy. He urged discussion to change this mindset in order to smooth the path for surplus wind or solar-generated electricity to be "stored" by using it to heat water for district heating systems, for industry use or for households.

This view of bad use of electricity to generate heat has developed out of a number of criticised practices such as households in France being encouraged to use electricity for space heating rather than invest in heat insulation, in order to use nuclear power station output in non-peak demand hours. Night storage heaters are also seen as an inefficient use of energy. Further, electricity used for heat production can reduce efficient coalor gas-fired combined heat and power generation.

Keeping a close eye on such issues would improve coordination and, ultimately, reduce the overall cost of the transition to a renewables-based electricity supply. Regular industry meetings such as the EWEA conference in Copenhagen are a chance to update but may need wider energy-sector input to broaden the wind sector's horizons.

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