Germany’s slowing market for onshore wind energy and its transition to competitively-priced auctions is the backdrop to Senvion’s decision to reduce its workforce by almost a fifth – or some 780 jobs — which was announced in a statement yesterday. The reduction will allow the German wind turbine maker to save about 40 million euros ($43 million) annually, and to potentially relocate production abroad where costs are lower and growth more promising. Installations of onshore wind capacity in Germany are set to fall in the next few years, from 4.3 gigawatts this year, to 3.2GW, 2.7GW and 2.8GW in 2018, 2019 and 2020, respectively, according to Bloomberg New Energy Finance estimates. Wind turbine makers must supply equipment at increasingly low costs in Germany due to auctions that are squeezing prices for developers, and the presence of large competitors like Siemens Wind Power and Vestas Wind Systems that are able to leverage economies of scale.
Argentina is one country with a fast-growing potential in renewable energy, although limited capacity in transmission infrastructure could hamper the outcome of its next clean energy auction. The government of President Mauricio Macri has lined up four energy auctions this year, which are expected to attract some $7 billion in investment. The renewable energy auctions will be held in July or August, and there will also be an auction for transmission capacity to help accommodate the increasing amounts of wind and solar power set to come online over the next few years, according to Energy Minister Juan Jose Aranguren.
Back in Europe, a Scandinavian company founded by a former Tesla executive wants to answer to the growing need for back-up power on grid networks by building a 4 billion-euro lithium-ion battery factory in Sweden. NorthVolt aims to raise 1 billion euros by 2018 and start construction during the second half of that year, said founder Peter Carlsson — Tesla’s former head of sourcing and supply chains. The Stockholm-based firm has raised $14 million to date, including an investment from Vattenfall, and ultimately expects to produce 32 gigawatt-hours of battery capacity per year from its proposed factory.
Energy storage was also the topic of discussion during an hour-long phone call between Australia’s Prime Minister Malcolm Turnbull and Elon Musk last Sunday. The Tesla chief executive had the week before proposed a remedy to South Australia’s frequent power outages in the form of a Tesla battery storage system. He said he could install it in just 100 days during a Twitter conversation with tech billionaire Mike Cannon-Brookes. Renewables are a contentious topic in Australia, known for its rich resources of coal and gas. However, Turnbull is an advocate of innovation and tweeted after the call that energy storage will “be a priority this year.” In other news, there were a couple of record-breaking announcements last week. Vietnam approved plans to invest $2.2 billion in what would be the world’s largest solar power plant yet. The 2,000MW project would be located in the Central Highlands province of Dak Lak and would be a big improvement on the country’s current level of solar capacity, which is less than 10MW.
Meanwhile, Brookfield Asset Management agreed to acquire SunEdison yieldcos, TerraForm Power and TerraForm Global in a deal valued at a combined $2.94 billion. The transactions represent “the single biggest transfer of operating wind and solar assets, period,” Nathan Serota, an analyst at Bloomberg New Energy Finance, said after the news was announced last Tuesday. Brookfield currently manages around $30 billion in power assets, but the acquisition would boost its holdings in clean energy by more than a third. TerraForm Power owns almost 3,000MW of wind and solar power in OECD countries, while TerraForm Global owns 952MW of similar assets in emerging markets. If the deals are approved by the U.S. bankruptcy court, which is managing the aftermath of the SunEdison insolvency, then Brookfield’s renewables portfolio would increase by around 3GW of capacity.
Q&A of the Week
Land Securities 100% Renewable, Plans UK’s Largest Shopping Center PV Array
Land Securities Group is powered by 100% renewables under a contract with SmartestEnergy, according to Tom Byrne, energy manager, and is now looking to reduce its reliance on the grid by building up its own onsite portfolio of solar and other low-carbon technologies. The UK’s largest commercial property company has a market capitalization of 8.19 billion pounds ($10bn) and a portfolio including 13 retail parks, 13 shopping centers and 23 leisure destinations. In London alone, it has 6.2 million square feet of office and retail space, including 20 Fenchurch Street, a 525ft City skyscraper nicknamed the “Walkie-Talkie.” Last year, Land Securities produced at its buildings some 1.8GWh of low-carbon or renewable heat and electricity, mainly from solar, but also from its hydrogen fuel cell — the first in the City of London — and it has plans for more. “We have two solar PV projects [in our pipeline]” said Byrne, and “combined these will add a further 0.65GWh a year”. One of these projects is set to be the largest shopping center PV array in the U.K., at 785kw.
In March 2017, Land Securities announced it was the first property company in the world to have its greenhouse gas emissions target approved by the Science Based Targets initiative. A partnership between CDP, UN Global Compact, WRI and WWF, the initiative supports target setting in line with the decarbonization required to keep the global temperature increase below 2 degrees Celsius. Land Securities’ goal of a 40% carbon-intensity reduction by 2030 will in part be achieved through grid decarbonization, said Byrne, but also by reducing its own energy demand and that of those tenants for whom it procures power.
On the merit of setting a science-based target, Byrne said that “historically, companies have set targets based on what they think they can achieve”, but the science-based target approach changes that and “generally come[s] up with fairly ambitious goals.” He acknowledges that it is going to take more than one company to meet the climate science target, but there is also a lot of “merit in individual companies doing this themselves for their own business gain.”
The following is an extract from the Bloomberg Clean Energy and Carbon Brief.
Q: What is Land Securities’ emissions target?
A: We have set a target of 40% carbon intensity [in tons of CO2 per square meter] reduction by 2030 compared to a 2013-2014 baseline. This is a science-based target that has been signed off by the Science Based Targets initiative. They are the leading body helping companies set emission targets in line with climate science and also verifying [them] against a strict set of criteria.
Q: Why did you decide to implement an intensity target?
A: We wanted to make sure the target could apply to the entire portfolio. The nature of [the] property [industry] is that portfolios will expand and potentially contract. We wanted to make sure that we could always judge our performance in relation to past portfolios. Having an intensity metric based on meter-squared allows our portfolio to grow without hampering our progress in reducing our carbon emissions…