A draft European Commission communication on renewable energy, expected to be published later this month, said EU member states need to share renewables across borders with the help of improved infrastructure and underlined the urgency of agreeing on new laws to guide investment.

The EU is a pioneer in green power and officially is on track to reach a goal of increasing the share of renewables, such as solar, wind and wave, in its energy mix to 20 percent by 2020.

For the future, however, progress could be much harder to achieve as member states squabble over policies to replace existing targets and as subsidies for renewable energy fall victim to the region’s economic crisis.

The emergence of China as a leader in green technology is also challenging the ability of the European sector to export technology and expertise as Chinese rivals threaten to grab market share.

“All in all, renewable energy export opportunities will strongly depend on the elimination of trade barriers in and free access to key emerging renewable energy markets such as in China, India and Brazil,” an impact assessment accompanying the a Commission communication on renewable energy said.

China’s Vice Premier Li Keqiang visited Brussels this week for talks on energy cooperation.

“We hope that the EU will exercise more flexibility in exporting higher technology to China. Therefore, we can benefit from each other’s strengths,” Li said in an address.

Some in the European solar industry have been agitating for action to fight off competition from cheaper Chinese products, perhaps through trade moves and defensive duties.

Others have said a better way to save European jobs could be for EU firms to learn from China, whose strength is in producing on a large scale.

SINGLE MARKET

The draft communication on renewable energy said the way forward is to ensure a single, open EU energy market as well as access to markets outside the 27 member states.

EU policy has created “cooperation mechanisms” to lead to greater trade in renewable energy, but so far only two member states said they would use these mechanisms to achieve part of their 2020 goals, it said.

At the same time, 10 member states expect to have a surplus of renewable power, it said without naming them.

To help achieve the Commission dream of a single energy market with a rising share of renewable power, an estimated 100 billion euros ($131.1 billion) needs to be spent on electricity transmission lines alone.

Investments are far more likely if the Commission, the EU’s executive arm, can achieve speedy agreement on what policy should follow its 20 percent target in the years after 2020.

The communication lists a set of options for moving on from the 2020 target, ranging from firm goals, with financial support agreed across the EU, to no targets at all.

Some business leaders are keen for more binding targets to be agreed, while others resist regulation. Member states also have various objections, with coal-reliant Poland the most high-profile opponent of low-carbon goals.

The European Commission has strongly backed green growth as a way out of recession, and the draft documents seen by Reuters said a strong renewables sector could generate more than 3 million jobs.

At the same time, the impact assessment said the cost of financial support for renewable power could result in higher energy prices, affecting consumers and energy-intensive industries.

Other risks include public resistance. Although the public has largely accepted renewable power, some campaigners have raised issues about land use and the environmental effects of proposed infrastructure.

www.uk.reuters.com

The Commission routinely does not comment on leaked drafts.

Renewable Energy Outlook Uncertain

With all kinds of economic struggles and uncertainty in Europe, the 2012 outlook for renewable energy in the region is not as bright as in 2011.

“The sovereign debt crisis continues to stifle renewable energy investment in the Eurozone, along with Governments scaling back their ambitions for the sector,” Ernst & Young writes.

“Simultaneously capital scarcity and increased competition from Asia will continue to put pressure on developed markets for the foreseeable future.”

“Early indications for 2012 are that it will be more challenging for stakeholders, with mature markets getting softer due to continued liquidity constraints and the ongoing withdrawal of government incentives,” Gil Forer, Ernst & Young’s Global Cleantech Leader, says.

“The perfect storm of Basel III, banking downgrades and Eurozone instability has increased the underlying costs to banks of lending, especially long-term,” Ben Warren, Ernst & Young’s Energy and Environmental Finance Leader, summarizes.

“With Basel III to be fully implemented by 2019 we feel it is likely that there will be further impacts on costs of bank funding from the legislation during 2012 and therefore additional increases in margins and reducing availability of long-term bank debt.”

Renewable Energy in Asia Still Hot… but Complicated

“However within emerging markets we continue to witness growth in the levels of capacity, as energy security concerns and demand for jobs drive increased government commitments to renewable energy,” Forer notes.

But the researchers find a mix of increasing solar energy targets and underdeveloped grid infrastructure that limits usefulness of new wind power projects.

US Wind Support Now Gone

As you well know, US policy support for the wind industry, especially in the case of the Production Tax Credit (PTC), has dropped off a cliff at the federal level, leaving the industry worse off than it was in 2011. 2012, thus, is looking to be a less exciting year for renewable energy fans in the US.

Germany on the Line

Germany has been a solar powerhouse for years now. But proposed changes to its feed-in tariff program for solar that are on the table right now could have a dramatic and negative effect on that industry.

“The German solar photovoltaic (PV) market expanded in 2011 with more than 7GW installed, but if currently proposed reductions and restrictions in photovoltaic (PV) feed in tariffs pass the German government in March, this would significantly suppress market activity in 2012 and beyond,” Ernst & Young note.

Middle East and North Africa (MENA) May Be Ready for a Growth Spurt

Despite waning and uncertain renewable energy support from the leaders mentioned above, the Middle East & North Africa (MENA) region offers up a bit of relief, as it looks set to start booming (as reported here on CleanTechnica a few times this year).

“An abundance of solar and wind resources are expected to attract a significant amount of investment in the short to medium term, particularly in more economic and politically stable markets. Many countries in the region are seeking to significantly increase the proportion of renewable energy in their generation mix as they look to diversify their predominantly hydrocarbon fuel supply and to meet the ever-increasing consumer demand.”

Consolidation Inevitable

As written here on CleanTechnica several times in the past several months, consolidation within maturing renewable energy sectors (especially solar) make consolidation of cleantech companies inevitable. Company mergers and acquisitions are likely to continue to a high degree throughout 2012.

Source: www.cleantechnica.com

Speaking on the sidelines of his visit to Beijing Oil Industry University, Gholamreza Rashed said the two countries will take practical steps to launch joint educational and industrial projects before October 2012.

He added that the two sides have agreed to carry out joint research on oil and gas industries and launch post-graduate (PhD) courses in relevant fields of study.

Rashed also signed an agreement with president of the Beijing Oil Industry University, Zhang Laibin who said Iran had as an important role in supplying energy to developing countries.

Iran’s Oil Industry University is currently working with similar universities in France, Canada and Australia and holds joint educational courses with them.

Iran is OPEC’s second largest oil producer and the fourth largest crude oil exporter.

The country holds the world’s third-largest proven oil reserves and the second-largest natural gas reserves.

Source: www.tehrantimes.com

The reason for this dramatic turnround? Shale gas. It has been known for decades that gas exists in shale rock, says Andy Steinhubl, co-head of the North American oil and gas practice at Bain, but it was only recently with advances in the technology of hydraulic fracturing (fracking) and horizontal drilling – and an increase in energy prices – that it became viable to extract it.

The shift in the US market, where gas prices have fallen from $10-$13 per million cubic feet to $4-$5/mcf, has led to great excitement in other parts of the world as governments savour the prospect of reducing their energy dependence and perhaps building an export industry of their own.

Significant shale reserves have been discovered in Europe, Australia and China, among others. In Europe, the biggest reserves are believed to be in Poland, Ukraine and France, and a significant source has also been discovered in the UK.

It has also led to fears that the discovery of this new source of gas will hit investment in other, cleaner forms of energy such as nuclear and renewables.

However, there are a number of reasons to be cautious about the likely impact of shale outside the US, where a number of factors combined to help the industry take off.

The country had 2,000 land rigs involved in drilling in declining oil fields and thus readily available to switch to shale gas exploration, a dense service sector and a highly skilled workforce, along with supportive economics, says Luis Barallat, head of gas and LNG at Boston Consulting. “Almost none of this applies in Europe,” he adds. “There are fewer than 50 rigs operating in Europe today. The amount of resources in terms of drilling rigs, human capital and know-how are not comparable with the US.” Similar considerations apply in Asia and Australia.

Another stumbling block is property rights. “In the EU, landowners do not generally own rights to the subsurface so the willingness for landowners to permit the carrying on continuous drilling could well prove an impediment as compared to the US, where the landowners share in the financial benefits of the development through royalty payments and similar arrangements,” says Martin Stewart-Smith, a partner at law firm Morgan Lewis.

In addition, the geology of most reserves outside North America is less conducive to development because deeper drilling is required. Drilling for shale gas requires a large number of wells, which is more problematic in densely populated Europe than in the US.

“And if anyone thinks China is suddenly going to emerge as a major shale gas producer, just look at where their shale gas basins are,” points out Ben Caldecott, head of European policy at Climate Change Capital. “They are in the most water constrained parts of the country. The Tarim basin, for example, is literally underneath a desert.”

Finally, environmental fears over drilling may also hold back the development of the industry. There have been concerns about fracking fluid getting into the water table and France, for example, has imposed a moratorium on shale gas exploration. However, this stance may have more to do with the preponderance of nuclear power in its energy mix than safety concerns.

The safety concerns have been overstated, suggests Elizabeth Shepherd, head of environment at law firm Eversheds. “Hydraulic fracturing has been conducted in developed countries since the late 1940s and it has never been found to contaminate underground sources of drinking water. The technology has been safely applied so far to more than 1.2m individual wells, mostly in North America, but also in thousands of wells (including geothermal energy wells) across Europe.”

Nonetheless, Europe is still some years away from developing shale gas at significant scale, says Ronan O’Regan, a director at PwC. “Most of the work happening at the moment is around drilling to establish the size of the resource and there has been no real confirmation of the quality or quantity of resources.”

But if the growth of the industry will not be as rapid as in the US, it will develop in time into a significant source of supply with implications for energy markets. However, its main impact will be on other fossil fuel sources such as LNG, Russian gas and coal rather than on renewable energy and it will largely hit individual markets.

“We think Poland will be among the countries with the best opportunities for shale gas development,” says Rafa? Dudzinski, vice-president of PGNIG, the Polish oil and gas group. Poland is keen to develop shale gas both to move it away from dependency on Russian gas and to help it shift its power sector, which is 95 per cent coal-powered, to less polluting gas. It has the additional advantage that in the areas where its shale reserves are located, population density is much lower than in western Europe.

Spending on clean energy is unlikely to be affected because it is so linked to national and EU climate targets, backed up by incentives such as feed-in tariffs. “At an EU level I don’t think shale gas will have a negative impact on renewable investment as the primary drivers for renewable investment is government commitment to renewable energy as a means to achieving carbon reduction,” Mr O’Regan says.

But if it brings down gas prices, shale gas will compete directly with nuclear as a supplier of baseload power, that is generation capacity that runs continuously, and at an expected lower cost, so it may add to the pressures on the nuclear industry.

The bigger danger from the point of view of meeting emissions targets is that fossil fuel production gets “locked in” for another 20-30 years because of the advent of this new source of supply.

“In Europe there is a real risk that we lock in more gas infrastructure than is desirable” on the basis that gas prices will be permanently low, warns Mr Caldecott, even though it is more likely that lower prices in the near term will give way to rising prices in the longer term “given global demand and supply fundamentals”, he says.

However, Mr O’Regan says shale gas supplies could help the transition from fossil fuels to low carbon energy by switching from the provision of baseload power to being used as back up for intermittent power sources such as solar and wind as these sources make up a larger part of the energy mix. “If gas plants built in the 2015-2020 period are designed to run baseload and convert to more flexible operation in later life, this will minimise the risk of lock in,” he says.

Source: www.ft.com

China will raise development targets for renewable energy such as wind power and solar energy for the five-year period through 2015. China is targeting 3GW of roof-top solar energy capacity by 2015 and 25GW by 2020, according to a Chinese press report. China is targeting 3 gigawatts of roof-mounted solar power generating capacity by 2015 and 25 GW by 2020. If the goals are confirmed, they suggest a third of China’s solar power capacity would be roof-mounted by 2015 and a half by 2020, making rooftop solar panel installations a key direction in solar power expansion.

China had only about 300 megawatts of rooftop solar power capacity at the end of 2010. Other main solar power installations include ground-mounted, utility-scale photovotaic power stations and concentrated solar thermal power plants.

China has doubled its target for installed solar power capacity over the next five years to 10 GW by 2015 and 50 GW by 2020, state media reported.

The country aims to have 100 gigawatts (GW) of on-grid wind farm generating capacity by the end of 2015 and to generate 190 billion kilowatt hours (kWh) of wind energy annually, the China Securities Journal reported, citing a government plan. The goal was higher than a target of 90 GW proposed earlier by the National Energy Administration.

Of the planned 10 GW of solar power capacity in 2015, photovoltaic power installations will account for 9 GW and concentrated solar thermal power capacity will make up the rest, the report said.

Last month, the country set unified grid feed-in tariff for solar power generation for the first time ever, giving clearer guidance for solar power project developers when making investment decisions.

Source: www.evwind.es