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energy transition

GWEC Market Intelligence has released its updated market outlook concluding that an additional 330 GW of wind energy capacity will be installed from 2019 to 2023, an increase of 9 GW from its market outlook published in Q1 2019. Main markets driving this volume increase are the US and Chinese onshore markets, which will both experience an installation boom over the next two years with 6.5 GW and 10 GW added capacity respectively from the Q1 2019 market outlook. The growing role of offshore wind in the global energy transition is a major reason for boosting overall growth, and will make up approximately 18% of total wind energy capacity by 2023, up from 9% in 2018. The continued growth of wind energy globally will be driven by the increasing cost competiveness of wind energy as well as market-based mechanisms such as auctions, tenders, and bilateral PPAs.

According to the updated market outlook released by GWEC Market Intelligence, an additional 330GW of new wind energy capacity will be added to the global energy market from 2019 to 2023, bringing total capacity to over 900 GW. The outlook has been increased by additional 9 GW from the outlook published in Q1 2019 in GWEC’s annual Global Wind Report.

From 2019 to 2023, the global wind energy market will grow at an annual rate of 4%, reaching a total capacity of over 900 GW by 2023. This growth rate means that an average of approximately an additional 14 GW will be added each year globally over the next five years compared to 2018 growth levels.

Through analysis of the developments of wind markets across the world, two main trends have been identified that will drive growth beyond 2023; the increasing share of so-called subsidy-free projects, and an increasing number of bilateral PPAs. Together, these two mechanisms will contribute to the cost competitiveness of wind energy and provide assurance for large-scale project development and the continued growth of wind energy globally.

Although there was a decrease in the outlook for India and Germany due to their challenging market conditions including the execution of their auctioned capacity, the growth in other markets more than make up for this deficit. With China going subsidy free by 2021 for onshore wind and the Production Tax Credit phasing out in the US, there will be an installation rush over the next two years in these two leading onshore markets.

The forecasts for emerging markets in Latin America, South East Asia, Africa and the Middle East have all been increased as well due to positive market developments. Additionally, it must be acknowledged the importance of offshore wind for driving growth, as it is set to take off globally over the next few years with a compound annual growth rate of 8% between 2019 and 2023, double that of onshore wind.

Wind energy is now one of the most cost-competitive energy sources available, so it is no surprise we will continue to see volume growth as global energy demand continues to increase. On average, 60 GW of onshore wind and 8-10 GW of offshore wind will be added worldwide until 2023. Even when not considering the two key growth markets of US and China, it will still be seen installation growth levels similar to those of the 2009-2010 wind energy boom in the other markets and regions. Although this outlook is very positive, it is not enough to meet the renewable energy targets needed to keep global warming under 1.5 C°.

Total new installations by year for onshore and offshore wind

2018: 50.12 GW
2019: 71.97 GW
2020: 76.43 GW
2021: 61.32 GW
2022: 62.02 GW
2023: 61.83 GW

Changes by region from Q1 2019 (onshore only)

North America: +6.5 GW
Latin America: +2 GW
Europe: -5.9 GW
Africa and the Middle East: +0.8 GW
Asia Pacific: +5.7 GW

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i-DE, the new branding for Iberdrola’s distribution activity in Spain is extending the possibilities of its smart and digitalised network with investments totalling over 600 M€ during the next ten years aimed at helping the country’s main urban areas to move forward in their transition towards becoming smart cities.

 

The investments in this project will be mainly earmarked for improved grid developments in order to integrate key energy resources for the development of a smart city, as well as going towards raising the intelligence of the distribution grid by boosting digitalisation and thereby improving the quality of information and service.

Optimunm smart city model for more than 40 spanish cities

i-DE, which is already working on this initiative with a number of Municipal Councils and Autonomous Regions, expects to extend the project to over 40 Spanish towns and cities during 2019, including provincial capitals and cities of over 100,000 inhabitants, in the regions where it operates as distributor.

The work of i-DE, in collaboration with local and regional administrations, is centred on 4 strategic areas for a smart city, from the perspective of the electricity grid, which include electric mobility, grid infrastructures, efficient energy use and raising public awareness: mobility, energy and culture.

Monitoring and assessment of the impact of electric vehicles on the grid
Iberdrola’s distribution arm’s initiatives to promote a cleaner, more efficient and sustainable energy model also favour the integration of the electric vehicle.

i-DE has integrated Electric Mobility Control Centres into its 6 Distribution Control Centres in Spain with which to monitor and assess the impact of electric vehicles on its distribution network.

In line with its smart city strategy, the Electric Mobility Control Centres will allow i-DE to work with Municipal Councils and Autonomous Regions, providing them access to local information about the development of electric vehicles in their communities.

Smart grids and the energy transition
Electricity distribution networks are the circulatory system of the new energy model and the platform necessary for the transition toward a decarbonised economy based on renewable and competitive energy.

The transformation of networks towards a smart, more reliable and safer infrastructure will provide a response to the challenges of this transition towards the electrification of the economy, with a higher presence of renewables, sustainable mobility, smart cities, decentralised consumption (self-generation) and a consumer with greater decision-making capability and connectivity.

Iberdrola has installed almost 11 million smart meters in Spain together with their supporting infrastructure, as well as adapting around 90,000 transformer centres, where remote management, supervision and automation capabilities have been incorporated.

I-DE smart electricity grids
The activities of i-DE – the new name for Iberdrola’s electricity distribution arm – include the planning, construction and maintenance of power lines, substations, transformer centres and other infrastructure, as well as operating the system in a way that efficiently distributes energy among the various agents that produce and consume it.

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In a world first, Siemens Gamesa Renewable Energy (SGRE) has today begun operation of its electric thermal energy storage system (ETES). During the opening ceremony, Energy State Secretary Andreas Feicht, Hamburg’s First Mayor Peter Tschentscher, Siemens Gamesa CEO Markus Tacke and project partners Hamburg Energie GmbH and Hamburg University of Technology (TUHH) welcomed the achievement of this milestone. The innovative storage technology makes it possible to store large quantities of energy cost-effectively and thus decouple electricity generation and use.

The heat storage facility, which was ceremonially opened today in Hamburg-Altenwerder, contains around 1,000 tonnes of volcanic rock as an energy storage medium. It is fed with electrical energy converted into hot air by means of a resistance heater and a blower that heats the rock to 750°C. When demand peaks, ETES uses a steam turbine for the re-electrification of the stored energy. The ETES pilot plant can thus store up to 130 MWh of thermal energy for a week. In addition, the storage capacity of the system remains constant throughout the charging cycles.

The aim of the pilot plant is to deliver system evidence of the storage on the grid and to test the heat storage extensively. In a next step, Siemens Gamesa plans to use its storage technology in commercial projects and scale up the storage capacity and power. The goal is to store energy in the range of several gigawatt hours (GWh) in the near future. One gigawatt hour is the equivalent to the daily electricity consumption of around 50,000 households.

The Institute for Engineering Thermodynamics at Hamburg University of Technology and the local utility company Hamburg Energie are partners in the innovative Future Energy Solutions project, which is funded by the German Federal Ministry of Economics and Energy within the “6. Energieforschungsprogramm” research programme. TU Hamburg carries out research into the thermodynamic fundamentals of the solid bulk technology used.

By using standard components, it is possible to convert decommissioned conventional power plants into green storage facilities (second-life option). Hamburg Energie is responsible for marketing the stored energy on the electricity market. The energy provider is developing highly flexible digital control system platforms for virtual power plants. Connected to such an IT platform, ETES can optimally store renewable energy at maximum yield.

Source: Siemens Gamesa

Today the average car runs on fossil fuels, but growing pressure for climate action, falling battery costs, and concerns about air pollution in cities, has given life to the once “over-priced” and neglected electric vehicle. With many new electric vehicles (EV) now out-performing their fossil-powered counterparts’ capabilities on the road, energy planners are looking to bring innovation to the garage — 95% of a car’s time is spent parked. The result is that with careful planning and the right infrastructure in place, parked and plugged-in EVs could be the battery banks of the future, stabilising electric grids powered by wind and solar energy.

EVs at scale can create vast electricity storage capacity, but if everyone simultaneously charges their cars in the morning or evening, electricity networks can become stressed. The timing of charging is therefore critical. ‘Smart charging’, which both charges vehicles and supports the grid, unlocks a virtuous circle in which renewable energy makes transport cleaner and EVs support larger shares of renewables,” says Dolf Gielen, Director of IRENA’s Innovation and Technology Centre.

Looking at real examples, a new report from IRENA, Innovation Outlook: smart charging for electric vehicles, guides countries on how to exploit the complementarity potential between renewable electricity and EVs. It provides a guideline for policymakers on implementing an energy transition strategy that makes the most out of EVs.

Smart implementation

Smart charging means adapting the charging cycle of EVs to both the conditions of the power system and the needs of vehicle users. By decreasing EV-charging-stress on the grid, smart charging can make electricity systems more flexible for renewable energy integration, and provides a low-carbon electricity option to address the transport sector, all while meeting mobility needs.

The rapid uptake of EVs around the world, means smart charging could save billions of dollars in grid investments needed to meet EV loads in a controlled manner. For example, the distribution system operator in Hamburg — Stromnetz Hamburg — is testing a smart charging system that uses digital technologies that control the charging of vehicles based on systems and customers’ requirements. When fully implemented, this would reduce the need for grid investments in the city due to the load of charging EVs by 90%.

IRENA’s analysis indicates that if most of the passenger vehicles sold from 2040 onwards were electric, more than 1 billion EVs could be on the road by 2050 — up from around 6 million today —dwarfing stationary battery capacity. Projections suggest that in 2050, around 14 TWh of EV batteries could be available to provide grid services, compared to just 9 TWh of stationary batteries.

The implementation of smart charging systems ranges from basic to advanced. The simplest approaches encourage consumers to defer their charging from peak to off-peak periods. More advanced approaches using digital technology, such as direct control mechanisms may in the near future serve the electricity system by delivering close-to real-time energy balancing and ancillary services.

Advanced forms of smart charging

An advanced smart charging approach, called Vehicle-to-Grid (V2G), allows EVs not to just withdraw electricity from the grid, but to also inject electricity back to the grid. V2G technology may create a business case for car owners, via aggregators, to provide ancillary services to the grid. However, to be attractive for car owners, smart charging must satisfy the mobility needs, meaning cars should be charged when needed, at the lowest cost, and owners should possibly be remunerated for providing services to the grid. Policy instruments, such as rebates for the installation of smart charging points as well as time-of-use tariffs, may incentivise a wide deployment of smart charging.

We’ve seen this tested in the UK, Netherlands and Denmark. For example, since 2016, Nissan, Enel and Nuvve have partnered and worked on an energy management solution that allows vehicle owners and energy users to operate as individual energy hubs. Their two pilot projects in Denmark and the UK have allowed owners of Nissan EVs to earn money by sending power to the grid through Enel’s bidirectional chargers.

Perfect solution?

While EVs have a lot to offer towards accelerating variable renewable energy deployment, their uptake also brings technical challenges that need to be overcome.

IRENA analysis suggests uncontrolled and simultaneous charging of EVs could significantly increase congestion in power systems and peak load. Resulting in limitations to increase the share of solar PV and wind in power systems, and the need for additional investment costs in electrical infrastructure in form of replacing and additional cables, transformers, switchgears, etc., respectively.

An increase in autonomous and ‘mobility-as-a-service’ driving — i.e. innovations for car-sharing or those that would allow your car to taxi strangers when you are not using it — could disrupt the potential availability of grid-stabilising plugged-in EVs, as batteries will be connected and available to the grid less often.

Impact of charging according to type

It has also become clear that fast and ultra-fast charging are a priority for the mobility sector, however, slow charging is actually better suited for smart charging, as batteries are connected and available to the grid longer. For slow charging, locating charging infrastructure at home and at the workplace is critical, an aspect to be considered during infrastructure planning. Fast and ultra-fast charging may increase the peak demand stress on local grids. Solutions such as battery swapping, charging stations with buffer storage, and night EV fleet charging, might become necessary, in combination with fast and ultra-fast charging, to avoid high infrastructure investments.

Source: IRENA

Buildings account for about a third of total final energy consumption and energy-related emissions globally. They also have very long lifetimes that can impact energy and emissions for decades. But while they are often overlooked, they must play a critical role in the energy transitions. A recent report from the IEA, “Perspectives for the Clean Energy Transitions: The critical role of buildings“, finds there is a risk of a serious lock-in of inefficient buildings as countries without mandatory codes are expected to see an explosion of building construction, half of which by the early 2030s.

The pace and scale of the global clean energy transition is not in line with climate targets. Energy-related CO2 emissions rose again in 2018 by 1.7%. The buildings sector represented 28% of those emissions, two-thirds from rapidly growing electricity use. In fact, since 2000, the rate of electricity demand in buildings increased five-times faster than improvements in the carbon intensity of the power sector.

CO2 emissions need to peak around 2020 and enter a steep decline thereafter. In the Faster Transition Scenario, energy-related emissions drop 75% by 2050. The carbon intensity of the power sector falls by more than 90% and the end-use sectors see a 65% drop, thanks to energy efficiency, renewable energy technologies and shifts to low-carbon electricity. The buildings sector sees the fastest CO2 reduction, falling by an average of 6% per year to one-eighth of current levels by 2050.

Technology can reduce CO2 emissions from buildings while improving comfort and services. In the Faster Transition Scenario, near-zero energy construction and deep energy renovations reduce the sector’s energy needs by nearly 30% to 2050, despite a doubling of global floor area. Energy use is cut further by a doubling in air conditioner efficiency, even as 1.5 billion households gain access to cooling comfort. Heat pumps cut typical energy use for heating by a factor of four or more, while solar thermal delivers carbon-free heat to nearly 3 billion people.

A surge in clean energy investment will ultimately bring savings across the global economy and cut in half the proportion of household income spent on energy. Realising sustainable buildings requires annual capital flows to increase by an average of USD 27 billion over the next decade – a relatively small addition to the USD 4.9 trillion dollars already invested each year in buildings globally. Yet, cumulative household energy spending to 2050 is around USD 5 trillion lower in the Faster Transition Scenario, leading to net savings for consumers, with the average share of household income spent on energy falling from 5% today to around 2.5% by 2050.

Government effort is critical to make sustainable buildings a reality. Immediate action is needed to expand and strengthen mandatory energy policies everywhere, and governments can work together to transfer knowledge and share best practices. Clear policy support for innovation will enable economies of scale and learning rates for industry to deliver solutions with little increase in cost. Policy intervention can also improve access to finance, de-risk clean energy investment and enable market-based instruments that lower the cost of the clean energy transition.

Delaying assertive policy action has major economic implications. Globally, the scale of new buildings likely to be built by 2050 under inadequate energy policies is equivalent to 2.5-times the current building stock in the People’s Republic of China (“China”). Waiting another ten years to act on high-performance buildings construction and renovations would result in more than 2 gigatonnes of additional CO2 emissions from 3.500 million tonnes of oil equivalent of unnecessary energy demand to 2050, increasing global spending on heating and cooling by USD 2.5 trillion.

Source: International Energy Agency (IEA)

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As the cheapest source of electricity in several parts of the world, wind energy has taken a key role in the global energy transition, unlocking growth opportunities in new markets and customer segments for Vestas. To grasp these opportunities, Vestas is executing our strategy to invest in technology and commercial capabilities beyond wind energy technology, enabling us to develop sustainable energy solutions that meet current and future customer demand.

To support Vestas’ strategy and increase our capability to partner with our customers in project development in selective markets, Vestas today announces the acquisition of a 25.1 percent minority stake in SOWITEC with an option to acquire the entire company within three years. Headquartered in Germany, SOWITEC is a leading sustainable energy developer with around 60 wind and solar projects totalling more than 2,600 MW across the globe. By investing in SOWITEC, Vestas enhances our ability to offer full-scope sustainable energy solutions by tapping into SOWITEC’s proven offering within development services.

Juan Araluce, Vestas’ Chief Sales Officer, says “With the acquisition of a minority stake in Sowitec, Vestas gains access to an independent development entity that strengthens our co-development portfolio and improves our solutions and capabilities in strategic markets in Latin America. Vestas is continuing to invest in solutions and capabilities that increase our ability to meet our customers’ evolving needs and to partner with them through the energy transition”.

Frank Hummel, SOWITEC Chief Executive Officer, says “We are proud to have Vestas as a strategic partner that further strengthens our equity and helps us to go further in the value chain. Together with our strong track record in emerging markets and our vast experience in developing utility-scale renewable energy projects, this partnership will help SOWITEC grow faster and give us the chance to profit from Vestas’ worldwide experience and presence”.

Based on SOWITEC’s proven track record within solar PV project development, the acquisition also strengthens Vestas’ offering within hybrid power plant solutions. With sustainable energy’s share of the energy mix set to grow from around 10 percent today to more than 30 percent by 2035, hybrids are a key part of Vestas’ objective to develop sustainable energy solutions with wind at their core. As such, hybrids are emerging as a grid-friendly and cost-effective solution that can store and release renewable energy into the grid when needed, and hereby increase the penetration of onshore wind.

On a stand-alone basis, SOWITEC is expected to report 2018 consolidated revenues of approximately EUR 30 million. The acquisition, which is subject to regulatory approval, is expected to be finalised during the second quarter of 2019 and will have no significant impact on Vestas earnings.

Source: Vestas

As the urgency to take bold climate action grows, new analysis by the International Renewable Energy Agency (IRENA) finds that scaling-up renewable energy combined with electrification could deliver more than three quarters of the energy-related emission reductions needed to meet global climate goals. According to the latest edition of IRENA’s Global Energy Transformation: A Roadmap to 2050, launched at the Berlin Energy Transition Dialogue, pathways to meet 86 per cent of global power demand with renewable energy exist. Electricity would cover half of the global final energy mix. Global power supply would more than double over this period, with the bulk of it generated from renewable energy, mostly solar PV and wind.

The race to secure a climate safe future has entered a decisive phase,” said IRENA Director-General Francesco La Camera. “Renewable energy is the most effective and readily-available solution for reversing the trend of rising CO2 emissions. A combination of renewable energy with a deeper electrification can achieve 75 per cent of the energy-related emissions reduction needed.

An accelerated energy transition in line with the Roadmap 2050 would also save the global economy up to USD 160 trillion cumulatively over the next 30 years in avoided health costs, energy subsidies and climate damages. Every dollar spent on energy transition would pay off up to seven times. The global economy would grow by 2.5 per cent in 2050. However, climate damages can lead to significant socio-economic losses.

The shift towards renewables makes economic sense,” added Mr. La Camera. “By mid-century, the global economy would be larger, and jobs created in the energy sector would boost global employment by 0.2 per cent. Policies to promote a just, fair and inclusive transition could maximise the benefits for different countries, regions and communities. This would also accelerate the achievement of affordable and universal energy access. The global energy transformation goes beyond a transformation of the energy sector. It is a transformation of our economies and societies.

But action is lagging, the report warns. While energy-related CO2 emissions continued to grow by over 1 per cent annually on average in the last five years, emissions would need to decline by 70 per cent below their current level by 2050 to meet global climate goals. This calls for a significant increase in national ambition and more aggressive renewable energy and climate targets.

IRENA’s roadmap recommends that national policy should focus on zero-carbon long-term strategies. It also highlights the need to boost and harness systemic innovation. This includes fostering smarter energy systems through digitalisation as well as the coupling of end-use sectors, particularly transport, and heating and cooling, via greater electrification, promoting decentralisation and designing flexible power grids.

The energy transformation is gaining momentum, but it must accelerate even faster,” concluded Mr. La Camera. “The UN’s 2030 Sustainable Development Agenda and the review of national climate pledges under the Paris Agreement are milestones for raising the level of ambition. Urgent action on the ground at all levels is vital, in particular unlocking the investments needed to further strengthen the momentum of this energy transformation. Speed and forward-looking leadership will be critical – the world in 2050 depends on the energy decisions we take today.

Source: IRENA

CMBlu Energy and Mann+Hummel have signed an agreement for the joint development and industrialization of energy converters for organic redox flow batteries. The aim of both partners is to support electric mobility through the development of the charging infrastructure and offer the energy sector a sustainable and highly cost-efficient storage technology for a successful energy transition.

From the idea to the laboratory, then series production

The business idea for redox flow batteries with organic electrolytes derived from lignin (‘Organic Flow’) was already conceived in 2011 and since 2014, CMBlu has carried out intensive research and development. These batteries essentially consist of two tanks of liquid electrolyte and an energy converter, which consists of a large number of adjacent rows of cells and is therefore also referred to as a battery stack. The liquids are pumped through the battery stacks and is charged or discharged as required.

The technology developed by CMBlu has now reached the prototype stage. The further development and industrialization of the battery stack is regulated in the long-term cooperation agreement with Mann+Hummel. For this purpose Mann+Hummel has created a spin-off named i2M, which is dedicated to the development and commercialization of innovative technologies. In the next step Mann+Hummel will build a complete production line in an European plant. CMBlu will realize special pilot projects with reference customers in the next two years. Starting in 2021, CMBlu plans to market the first commercial systems.

Benefits of organic flow batteries

Similar to the principle of conventional redox flow batteries, CMBlu’s organic flow batteries store electrical energy in aqueous solutions of organic chemical compounds derived from lignin that are pumped through the energy converter, i.e. battery stack. The special feature of the flow batteries is that the capacity and electrical output can be scaled independently. The number of stacks defines the output of the batteries. A higher number of stacks multiplies the output. The capacity of the battery is only limited by the size of the tanks. This allows flexible customization to take into account the respective application area. For example, solar power can be stored for several hours and then fed into the grid at night.

In order to achieve cost-effective mass production, the most important components in the stack were adjusted to the organic electrolyte. In this process, almost the entire value chain for the stacks can be supplied locally. There is no dependency on imports from other countries. In addition, the battery stacks do not require rare-earth metals or heavy metals. The aqueous electrolytes in the system are not combustible or explosive and can be used safely.

Variety of applications in the grid

Organic flow batteries are suitable for numerous application areas in the power grid such as the intermediate storage of power from renewable energy generation or in connection with the balancing of demand peaks in industrial companies. An additional application area is the charging infrastructure required for electric mobility. The batteries enable a buffer storage to relieve power grids which do not have to be upgraded for additional loads. It enables simultaneous fast charging of electric vehicles. Ultimately, a decentralized charging network for electric vehicles will only be possible in connection with a high performance and scalable energy storage system.

Nature as a model for energy storage

The concept is based on the mode of energy in the human body. In the citric acid cycle the body also uses a redox reaction of organic molecules. CMBlu has now succeeded in applying this principle to large-scale storage of electrical energy. For this purpose the company use the mostly unused resource of lignin, which is readily available in unlimited quantities and accrues in amounts of millions of tons annually in the pulp and paper industry. CMBlu’s technology enables a very large and cost effective energy storage system. The battery stack is the core of the system and requires the highest quality and process reliability in the production process.

The manufacture of electrolytes includes a number of filtration steps, which Mann+Hummel performs using new special membranes. This technology further expands its product range and at the same time contributes to build the infractruture needed for electric vehicles.

Source: CMBlu Energy and Mann+Hummel

LCOE global de referencia: fotovoltaica, eólica y baterías. Fuente BNEF. / Global LCOE benchmarks – PV, wind and batteries. Source: BloombergNEF.

Two technologies that were immature and expensive only a few years ago but are now at the center of the unfolding low-carbon energy transition have seen spectacular gains in cost-competitiveness in the last year. The latest analysis by research company BloombergNEF (BNEF) shows that the benchmark LCOE for lithium-ion batteries has fallen 35% to $187 per megawatt-hour since the first half of 2018. Meanwhile, the benchmark LCOE for offshore wind has tumbled by 24%.

Onshore wind and photovoltaic solar have also gotten cheaper, their respective benchmark LCOE reaching $50 and $57 per megawatt-hour for projects starting construction in early 2019, down 10% and 18% on the equivalent figures of a year ago.

BNEF’s analysis shows that the LCOE per megawatt-hour for onshore wind, solar PV and offshore wind have fallen by 49%, 84% and 56% respectively since 2010. That for lithium-ion battery storage has dropped by 76% since 2012, based on recent project costs and historical battery pack prices. Looking back over this decade, there have been staggering improvements in the cost-competitiveness of these low-carbon options, thanks to technology innovation, economies of scale, stiff price competition and manufacturing experience.

The most striking finding in this LCOE Update, for the first-half of 2019, is on the cost improvements in lithium-ion batteries. These are opening up new opportunities for them to balance a renewables-heavy generation mix. Batteries co-located with solar or wind projects are starting to compete, in many markets and without subsidy, with coal- and gas-fired generation for the provision of ‘dispatchable power’ that can be delivered whenever the grid needs it (as opposed to only when the wind is blowing, or the sun is shining).

Electricity demand is subject to pronounced peaks and lows inter-day. Meeting the peaks has previously been the preserve of technologies such as open-cycle gas turbines and gas reciprocating engines, but these are now facing competition from batteries with anything from one to four hours of energy storage, according to the report.

Offshore wind has often been seen as a relatively expensive generation option compared to onshore wind or solar PV. However, auction programs for new capacity, combined with much larger turbines, have produced sharp reductions in capital costs, taking BNEF’s global benchmark for this technology below $100 per MWh, compared to more than $220 just five years ago.

Although the LCOE of solar PV has fallen 18% in the last year, the great majority of that decline happened in the third quarter of 2018, when a shift in Chinese policy caused there to be a huge global supply glut of modules, rather than over the most recent months.

Source: BloombergNEF

In order to make the energy transition possible, the Red Eléctrica Group, through its subsidiary Red Eléctrica de España, will invest a total of 3,221 million euros nationwide in the development of the high voltage transmission grid and in electricity system operation. This figure represents just over half (53%) of the total investment of 6 billion euros that the Company plans to make in the coming years as part of its new 2018-2022 Strategic Plan and that will focus on the integration of renewables.

Of the more than 3,000 million euros that have been earmarked for the energy transition, 1,538 million will be focused on the integration of clean energy (47%), 908 million on bolstering the reliability of the transmission grids and strengthening security of supply, 434 million will be allocated to continue implementing cutting-edge technological and digital tools, 215 million to boost energy storage projects and 54 million will be earmarked for energy control systems.

Both as the transmission agent and system operator, we work to respond to the needs of the energy transition, providing the technology that enables a smarter system in order to further guarantee the security and quality of supply with a higher share of intermittent renewable generation, and at the same time be able to manage an electricity system that is increasingly more complex and which makes it possible to integrate a greater number of energy sources distributed nationwide.

With regard to the development and strengthening of the transmission grid, the road map for 2019 onwards encompasses a great number of projects, many of which are already in the implementation phase. Many of them are key for achieving the European Union’s targets set out in their energy and environmental policy: for example, the interconnection with France across the Bay of Biscay in order to continue making progress towards reaching the cross-border interconnection capacity target with France set at 10%, or many other projects scattered nationwide focused on integrating new renewable generation and that seek to contribute to achieving a share of 32% of carbon-free energy in the generation mix by 2030.

2018 has seen the start of many of projects aimed at facilitating the energy transition. In this regard and with this objective in mind, the total investment made by the Company in transmission grid development in the last twelve months has amounted to 378.2 million euros.

In 2018, some particularly relevant projects were undertaken:

  • The Canary Islands Wind Energy Plan. This plan encompasses the development of the transmission grid in order to provide it with sufficient connection points and capacity to evacuate new wind energy generation.
  • The Arenal – Cala Blava – Llucmajor axis (Majorca). A project aimed at improving support for electricity distribution in the central area of the island of Majorca and facilitating the integration of renewables.
  • The San Miguel de Salinas – Torrevieja line (Alicante). This project helps provide better electricity supply to Torrevieja, as well as contribute to supporting the distribution network and increasing security of supply.
  • The Cañuelo – Pinar axis (Cádiz). This project helps support the electricity distribution network in the area and helps deal with the high level of demand coming from the Port of Algeciras and the Campo de Gibraltar.
  • The 400/220 kV La Farga substation and the associated incoming and outgoing feeder lines (Girona). This project helps strengthen the existing 220-kV grid by connecting it to the 400-kV grid in order to guarantee the security of supply and to support the electricity distribution network in the province of Girona.
  • The Arbillera line (Zamora). This project is designed to provide power for the high speed ​​train in the Zamora-Ourense railway section.
  • The incoming and outgoing feeder lines of the Moncayo substation (Soria). This project facilitates the evacuation of installed renewable generation capacity in the area and strengthens the guarantee of supply in the province of Soria.

2018 has also brought with it other relevant data that reflect the efforts being made by the Company to help make the energy transition a reality and, in particular, the integration of renewables nationwide. Thus, peninsular electricity generation that produces zero CO2 emissions reached a share of 62.5%, compared to 57% in 2017, representing an increase of 5.5 percentage points. This increase in clean generation resulted in 15% less emissions: going from 63.8 million tonnes in 2017 to 54.2 million tonnes in 2018. With regard to combined cycle and coal-fired technologies, these have decreased their share in the generation mix by 22% and 18%, respectively, compared to the previous year.

Nuclear energy (20.6%) continues to be ranked in the top position within the generation mix, nonetheless, in 2018 it was followed closely by wind energy (19%). As a whole, renewable generation has gone from 33.7% to 40.1% in the peninsular system, representing an increase of 6.4 percentage points. In the complete set of renewable energy technologies, wind represented 49%, hydro 34%, solar 11%, and the other renewable technologies represented 5%. All this data is taken from the ‘Spanish Electricity System – Preliminary Report 2018’ published by Red Eléctrica.

The five pillars of the 2018-2022 Strategic Plan

Facilitating the energy transition is just the first of the pillars of the new Strategic Plan of the Red Eléctrica Group. Although the Company is especially focused on this area, in keeping with its key role as transmission agent and operator of the electricity system, there are other goals that it is also undertaking: expanding the telecommunications business to become a strategic global telecom infrastructure operator; expanding its activity abroad in the electricity and telecommunications sectors; becoming a reference in technological innovation in the fields associated with the activities it carries out, and strengthening its operational efficiency and financial soundness.

In order to achieve these goals, the Company will invest a total of 6 billion euros over the next five years based on a balanced business model between the Company’s regulated activities and those operations subject to market risk and by diversifying business in a controlled manner, thereby boosting the expansion of operations in Spain as well as in the international arena. In addition, an improved business structure will be defined and implemented within the Group and the resources of its various subsidiaries will be strengthened.

This new Strategic Plan is the Company’s response to the challenges posed by the transformation of the production system model, marked by sustainability and the technological disruption. Electricity, telecommunications and talent are considered today as the new raw materials of economic development and are also the distinguishing features of Red Eléctrica’s new strategy.

Source: Red Eléctrica de España

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