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Is IRENA Too Late to the Renewables Party?
Electricity Currents A survey of trends and insights in electricity restructuring
Federal Void Spurs Freelancing on GHG Issue With no clear direction from Congress, the U.S. power industry has been left in the dark as to how and when to curb greenhouse gas (GHG) emissions associated with climate change. While this may seem like a positive break for the power sector, which is dependent on carbon-heavy coal for roughly half of all U.S. generation, the uncertainty about eventual restrictions on GHG emissions cannot simply be assumed away. This has led to adoption of different strategies by different utilities – and more broadly energy companies – on how to prepare for that eventuality, since no one expects the era of zero carbon costs to last forever. Some utilities see natural gas as their short-term salvation while others are investing in energy efficiency and renewable energy. Nuclear energy is favored by a handful, while a few are betting on clean coal technology. It is a uniquely American way to deal with uncertainty, where individual states and companies cope with the paucity of energy and
Continued on page 5
In Electricity Currents This Month: Federal Void Spurs Freelancing on GHG Issue . . . . . . . . . . . . . . . . . . . . . . . . . . Is IRENA Too Late to the Renewables Party? . . . . . . . . . . . . . . . . . . . . . . . . . . . . New World Order Shows China Atop CleanTech Rankings, And India Coming on Strong . . . . . . . . . . . . . . . . . . . It’s Easy to Underestimate Complexity of the Smart Grid . . . . . . . . . . . . . . . . . . . . ‘Zero Net Energy’ Concept Is Capturing Imaginations Around the Globe . . . . . . . . . .
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Electricity Currents is compiled from the monthly newsletter EEnergy Informer published by Fereidoon P. Sioshansi, President of Menlo Energy Economics, a consultancy based in San Francisco. He can be reached at [email protected].
Is IRENA Too Late to the Renewables Party? The International Renewable Energy Agency (IRENA) was created amid great fanfare in 2009 to lead the international development of renewable energy and, equally important, facilitate technology transfer to developing countries sorely in need of green, clean energy. The government of United Arab Emirates (UAE) offered to host the agency in Abu Dhabi. Since then 149 countries have joined Jan./Feb. 2011, Vol. 24, Issue 1
1040-6190/$–see front matter
1
IRENA and 42 have ratified its charter, making it official. Helene Pelosse of France was selected as its first interim director general. All seemed rosy for the new agency. But as is often the case, things are not always as they appear. Pelosse, it turns out, has had a difficult time managing the new organization, making more enemies than friends and alienating her host country to the point of no return. Things finally got so bad that she decided to resign in October amid criticisms of her leadership style, or lack thereof. She claimed financial strains and uncertainties about the agency’s future role among the reasons for lack of progress. As if this wasn’t bad enough, the German politician Hermann Scheer, generally regarded as the main force behind the formation of IRENA, died of a heart attack, leaving the new agency an orphan. A latecomer to the international energy scene, IRENA is currently underfunded compared to its counterparts, the Paris-based International Energy Agency (IEA) and the Vienna-based International Atomic Energy Agency (IAEA). Its proposed budget for 2011, at $18 million, is miniscule compared to $260 for the IAEA. Its supporters reckon at least $100 million will be needed for IRENA to do what needs to be done. But a number of member states, including the U.S. and Japan, are withholding funding pending organizational changes at the agency. It is a classic chicken and egg problem. Another problem beleaguering the nascent agency is the issue of its main role and focus. According to an article in late November in The New York Times, some countries have joined IRENA mainly as a means of influencing its agenda while maintaining a minimalist view of the role of renewable energy to address global energy problems, including climate change. This has apparently been a source of friction within the agency from the beginning. Scheer’s original vision in establishing IRENA, it appears, was far more ambitious than many member countries’ expectations – and this is reflected in the current limited funding level. On a different dimension, it’s not entirely clear what role IRENA should play without duplicating other efforts by member states given the generous funding and subsidies that are going into the 2
1040-6190/$–see front matter
renewable sector in a number of countries as well as private and venture capital funding. Perhaps IRENA has arrived to the renewable party too late, finding too little room to maneuver and too few who wish to play. & doi:/10.1016/j.tej.2011.01.006
New World Order Shows China Atop CleanTech Rankings, And India Coming on Strong Mention low-carbon green energy or CleanTech and many people still think of Germany, the U.S., Denmark, or Spain. They need to think again. The answer is increasingly China, with India seen as the next rising star. In the latest annual survey of renewable energy index, annually updated by Ernst & Young, China is ranked No. 1, displacing the U.S., followed by Germany. India, the surprising rising star, is ranked No. 4 in the 2010 international survey. Major global economies are in an intensifying race to dominate the emerging clean, low-carbon-energy sources of the future, with significant implications for domestic job creation, not to mention export potential. Any future global treaty putting restrictions on carbon emissions, or an explicit price on carbon, would further intensify the pace of the competition. While wind, the front-running renewable energy resource, is approaching maturity in terms of scale and technological advancements, solar energy is still evolving, with intense competition among alternative technologies, including concentrated solar power (CSP), thin film, and more traditional forms of solar photovoltaics (PVs). There is a growing interest in utility-scale CSP plants as energy companies contract with developers to build and operate large-scale facilities under longterm power purchase agreements (PPAs). CSP technologies fall into four major categories: parabolic trough, solar tower, Stirling dish, and linear Fresnel. Ernst & Young projects more than 800 GW of cumulative CSP investment globally by 2050, mostly in the Middle East, Africa, and Asia, where excellent The Electricity Journal
Federal Void Spurs Freelancing on GHG Issue With no clear direction from Congress, the U.S. power industry has been left in the dark as to how and when to curb greenhouse gas (GHG) emissions associated with climate change. While this may seem like a positive break for the power sector, which is dependent on carbon-heavy coal for roughly half of all U.S. generation, the uncertainty about eventual restrictions on GHG emissions cannot simply be assumed away. This has led to adoption of different strategies by different utilities – and more broadly energy companies – on how to prepare for that eventuality, since no one expects the era of zero carbon costs to last forever. Some utilities see natural gas as their short-term salvation while others are investing in energy efficiency and renewable energy. Nuclear energy is favored by a handful, while a few are betting on clean coal technology. It is a uniquely American way to deal with uncertainty, where individual states and companies cope with the paucity of energy and
Continued on page 5
In Electricity Currents This Month: Federal Void Spurs Freelancing on GHG Issue . . . . . . . . . . . . . . . . . . . . . . . . . . Is IRENA Too Late to the Renewables Party? . . . . . . . . . . . . . . . . . . . . . . . . . . . . New World Order Shows China Atop CleanTech Rankings, And India Coming on Strong . . . . . . . . . . . . . . . . . . . It’s Easy to Underestimate Complexity of the Smart Grid . . . . . . . . . . . . . . . . . . . . ‘Zero Net Energy’ Concept Is Capturing Imaginations Around the Globe . . . . . . . . . .
1 1
2 3 4
Electricity Currents is compiled from the monthly newsletter EEnergy Informer published by Fereidoon P. Sioshansi, President of Menlo Energy Economics, a consultancy based in San Francisco. He can be reached at [email protected].
Is IRENA Too Late to the Renewables Party? The International Renewable Energy Agency (IRENA) was created amid great fanfare in 2009 to lead the international development of renewable energy and, equally important, facilitate technology transfer to developing countries sorely in need of green, clean energy. The government of United Arab Emirates (UAE) offered to host the agency in Abu Dhabi. Since then 149 countries have joined Jan./Feb. 2011, Vol. 24, Issue 1
1040-6190/$–see front matter
1
IRENA and 42 have ratified its charter, making it official. Helene Pelosse of France was selected as its first interim director general. All seemed rosy for the new agency. But as is often the case, things are not always as they appear. Pelosse, it turns out, has had a difficult time managing the new organization, making more enemies than friends and alienating her host country to the point of no return. Things finally got so bad that she decided to resign in October amid criticisms of her leadership style, or lack thereof. She claimed financial strains and uncertainties about the agency’s future role among the reasons for lack of progress. As if this wasn’t bad enough, the German politician Hermann Scheer, generally regarded as the main force behind the formation of IRENA, died of a heart attack, leaving the new agency an orphan. A latecomer to the international energy scene, IRENA is currently underfunded compared to its counterparts, the Paris-based International Energy Agency (IEA) and the Vienna-based International Atomic Energy Agency (IAEA). Its proposed budget for 2011, at $18 million, is miniscule compared to $260 for the IAEA. Its supporters reckon at least $100 million will be needed for IRENA to do what needs to be done. But a number of member states, including the U.S. and Japan, are withholding funding pending organizational changes at the agency. It is a classic chicken and egg problem. Another problem beleaguering the nascent agency is the issue of its main role and focus. According to an article in late November in The New York Times, some countries have joined IRENA mainly as a means of influencing its agenda while maintaining a minimalist view of the role of renewable energy to address global energy problems, including climate change. This has apparently been a source of friction within the agency from the beginning. Scheer’s original vision in establishing IRENA, it appears, was far more ambitious than many member countries’ expectations – and this is reflected in the current limited funding level. On a different dimension, it’s not entirely clear what role IRENA should play without duplicating other efforts by member states given the generous funding and subsidies that are going into the 2
1040-6190/$–see front matter
renewable sector in a number of countries as well as private and venture capital funding. Perhaps IRENA has arrived to the renewable party too late, finding too little room to maneuver and too few who wish to play. & doi:/10.1016/j.tej.2011.01.006
New World Order Shows China Atop CleanTech Rankings, And India Coming on Strong Mention low-carbon green energy or CleanTech and many people still think of Germany, the U.S., Denmark, or Spain. They need to think again. The answer is increasingly China, with India seen as the next rising star. In the latest annual survey of renewable energy index, annually updated by Ernst & Young, China is ranked No. 1, displacing the U.S., followed by Germany. India, the surprising rising star, is ranked No. 4 in the 2010 international survey. Major global economies are in an intensifying race to dominate the emerging clean, low-carbon-energy sources of the future, with significant implications for domestic job creation, not to mention export potential. Any future global treaty putting restrictions on carbon emissions, or an explicit price on carbon, would further intensify the pace of the competition. While wind, the front-running renewable energy resource, is approaching maturity in terms of scale and technological advancements, solar energy is still evolving, with intense competition among alternative technologies, including concentrated solar power (CSP), thin film, and more traditional forms of solar photovoltaics (PVs). There is a growing interest in utility-scale CSP plants as energy companies contract with developers to build and operate large-scale facilities under longterm power purchase agreements (PPAs). CSP technologies fall into four major categories: parabolic trough, solar tower, Stirling dish, and linear Fresnel. Ernst & Young projects more than 800 GW of cumulative CSP investment globally by 2050, mostly in the Middle East, Africa, and Asia, where excellent The Electricity Journal