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Posts Tagged ‘Shell’

PETER ASMUS, Pike Research, June 17, 2009

wave-ocean-blue-sea-water-white-foam-photoThe earth is the water planet, so it should come as no great surprise that forms of water power have been one of the world’s most popular “renewable” energy sources. Yet the largest water power source of all – the ocean that covers three-quarters of earth – has yet to be tapped in any major way for power generation. There are three primary reasons for this:

  • The first is the nature of the ocean itself, a powerful resource that cannot be privately owned like land that typically serves as the foundation for site control for terrestrial power plants of all kinds;
  • The second is funding. Hydropower was heavily subsidized during the Great Depression, but little public investment has since been steered toward marine renewables with the exception of ocean thermal technologies, which were perceived to be a failure.
  • The third reason why the ocean has not yet been industrialized on behalf of energy production is that the technologies, materials and construction techniques did not exist until now to harness this renewable energy resource in any meaningful and cost effective way.

Literally hundreds of technology designs from more than 100 firms are competing for attention as they push a variety emerging ocean renewable options. Most are smaller upstart firms, but a few larger players – Scottish Power, Lockheed Martin and Pacific Gas & Electric — are engaged and seeking new business opportunities in the marine renewables space. Oil companies Chevron, BP and Shell are also investing in the sector.

In the U.S., the clear frontrunner among device developers is Ocean Power Technologies (OPT). It was the first wave power company to issue successful IPOs through the London Stock Exchange’s AIM market for approximately $40 million and then another on the U.S. Stock Exchange in 2007 for $100 million. OPT has a long list of projects in the pipeline, including the first “commercial” installation in the U.S. in Reedsport, Oregon in 2010, which could lead to the first 50 MW wave farm in the U.S. A nearby site in Coos Bay, Oregon represents another potential 100 MW deployment.

While the total installed capacity of emerging “second generation” marine hydrokinetic resources – a category that includes wave, tidal stream, ocean current, ocean thermal and river hydrokinetic resources – was less than 10 MW at the end of 2008, a recent surge in interest in these new renewable options has generated a buzz, particularly in the United Kingdom, Ireland, the United States, Portugal, South Korea, Australia, New Zealand and Japan, among other countries. It is expected that within the next five to eight years, these emerging technologies will become commercialized to the point that they can begin competing for a share of the burgeoning market for carbon-free and non-polluting renewable resources.

The five technologies covered in a new report by Pike Research are the following:

  • Tidal stream turbines often look suspiciously like wind turbines placed underwater. Tidal projects comprise over 90 percent of today’s marine kinetic capacity totals, but the vast majority of this installed capacity relies upon first generation “barrage” systems still relying upon storage dams.
  • Wave energy technologies more often look more like metal snakes that can span nearly 500 feet, floating on the ocean’s surface horizontally, or generators that stand erect vertically akin to a buoy. Any western coastline in the world has wave energy potential.
  • River hydrokinetic technologies are also quite similar to tidal technologies, relying on the kinetic energy of moving water, which can be enhanced by tidal flows, particularly at the mouth of a river way interacting with a sea and/or ocean.
  • Ocean current technologies are similar to tidal energy technologies, only they can tap into deeper ocean currents that are located offshore. Less developed than either tidal or wave energy, ocean current technologies, nevertheless, are attracting more attention since the resource is 24/7.
  • Ocean thermal energy technologies take a very different approach to generating electricity, capturing energy from the differences in temperature between the ocean surface and lower depths, and can also deliver power 24/7.

While there is a common perception that the U.S. and much of the industrialized world has tapped out its hydropower resources, the Electric Power Research Institute (EPRI) disputes this claim. According to its assessment, the U.S. has the water resources to generate from 85,000 to 95,000 more megawatts (MW) from this non-carbon energy source, with 23,000 MW available by 2025. Included in this water power assessment are new emerging marine kinetic technologies. In fact, according to EPRI, ocean energy and hydrokinetic sources (which includes river hydrokinetic technologies) will nearly match conventional new hydropower at existing sites in new capacity additions in the U.S. between 2010 and 2025.

The UN projects that the total “technically exploitable” potential for waterpower (including marine renewables) is 15 trillion kilowatt-hours, equal to half of the projected global electricity use in the year 2030. Of this vast resource potential, roughly 15% has been developed so far. The UN and World Energy Council projects 250 GW of hydropower will be developed by 2030. If marine renewables capture just 10% of this forecasted hydropower capacity, that figure represents 25 GW, a figure Pike Research believes is a valid possibility and the likely floor on market scope.

The demand for energy worldwide will continue to grow at a dramatic clip between 2009 and 2025, with renewable energy sources overtaking natural gas as the second largest source behind coal by 2015 (IEA, 2008). By 2015, the marine renewable market share of this renewable energy growth will still be all but invisible as far as the IEA statistics are concerned, but development up to that point in time will determine whether these sources will contribute any substantial capacity by 2025. By 2015, Pike Research shows a potential of over 22 GW of all five technologies profiled in this report could come on-line. Two of the largest projects – a 14 GW tidal barrage in the U.K. and a 2.2 GW tidal fence in the Philippines — may never materialize, and/or will not likely be on-line by that date, leaving a net potential of more than 14 GW.

By 2025, at least 25 GW of total marine renewables will be developed globally. If effective carbon regulations in the U.S. are in place by 2010, and marine renewable targets established by various European governments are met, marine renewables and river hydrokinetic technologies could provide as much as 200 GW by 2025: 115 GW wave; 57 GW tidal stream; 20 GW tidal barrage; 4 GW ocean current; 3 GW river hydrokinetic; 1 GW OTEC.

About the author: Peter Asmus is an industry analyst with Pike Research and has been covering the energy sector for 20 years. His recent report on the ocean energy sector for Pike Research is now available, and more information can be found at http://www.pikeresearch.com. His new book, Introduction to Energy in California, is now available from the University of California Press (www.peterasmus.com).

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TERRY MACALISTER, The Guardian/UK, November 7, 2008

BP has dropped all plans to build wind farms and other renewable schemes in Britain and is instead concentrating the bulk of its $8bn (£5bn) renewables spending programme on the US, where government incentives for clean energy projects can provide a convenient tax shelter for oil and gas revenues.

The decision is a major blow to the prime minister, Gordon Brown, who has promised to sweep away all impediments to ensure Britain is at the forefront of the green energy revolution. BP and Shell – which has also pulled out of renewables in Britain – are heavily influential among investors.

BP has advertised its green credentials widely in the UK and has a representative on the ruling board of the British Wind Energy Association (BWEA). But it said difficulty in getting planning permission and lower economies of scale made the UK wind sector far less attractive than that of the US.

“The best place to get a strong rate of return for wind is the US,” said a BP spokesman, who confirmed the group had shelved ideas of building an onshore wind farm at the Isle of Grain, in Kent, and would not bid for any offshore licences.

BP has enormous financial firepower as a result of recent very high crude oil prices. Its move away from wind power in Britain follows a decision by Shell to sell off its stake in the London Array project off Kent, potentially the world’s largest offshore wind farm.

Shell gave the same reasons as BP for that move, saying the economics of UK wind were poor compared to those onshore across the Atlantic, where incoming president Barack Obama has promised to spend $150bn over 10 years to kick start a renewable energy revolution .

BP said about $1.5bn would be spent next year on US wind projects and the company expected to spend the $8bn up to the year 2015.

BP is still proceeding with some limited solar, biofuels and other schemes, but the vast majority of its time and energy is now being concentrated on wind. By the end of 2008, BP expects to have one gigawatt of US wind power installed and plans to have trebled this by 2010.

The BWEA shrugged off BP’s decision. “The offshore wind market is evolving and getting stronger. Different investors will come and go at different stages of the development cycle. But whoever the players are, we know that the offshore industry will be generating massive amounts of electricity for the UK market in the next few years,” said a spokesman.

Britain is not the only country to miss out on BP’s largesse. The company said yesterday it was also pulling out of China, India and Turkey, where it had also been looking at projects.

BP had formed a joint venture with Beijing Tianrun New Energy Investment Company, a subsidiary of Goldwind, China’s largest turbine maker. The two companies had signed a deal in January under which they planned 148.4MW of wind capacity in Inner Mongolia, China’s main wind power region. BP had also started building two wind farms in India and was considering schemes in Turkey. It is now expecting to sell off the Indian facilities and halt work in Turkey.

Green campaigners have been highly sceptical about BP’s plans to go “beyond petroleum” and feared that the company’s new chief executive, Tony Hayward, would drop this commitment, started under his predecessor, John Browne.

The company has always insisted it remained keen to look at green energy solutions and has been investing in biofuels operations in Brazil. BP is also in the middle of a major marketing campaign, with huge posters on the London Underground boasting of its moves to diversify into wind and other energy sources.

The Carbon Trust, a government-funded organisation established to help Britain move from carbon to clean energy, recently published a major report warning ministers that the costs of building wind farms offshore was too high. There was speculation that BP was a major influence on that study, which proposed that turbines should be allowed to be placed much nearer to the shore.

The Crown Estate, which has responsibility for UK inshore waters, is still confident that a long-awaited third offshore wind licensing round in the North Sea will attract a record number of bidders. It has already registered 96 companies, although it has not released names and BP and Shell will clearly be absent.

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LEWIS PAGE, The Register, May 1, 2008

Oil giant Shell has pulled out of the world’s biggest wind farm project, in a move which has cast doubt over the scheme’s future. The £2bn London Array, intended to be built in the Thames Estuary, will need to find a new backer in order to proceed.

For the London Array Project, Shell was partnered with UK power operator E.ON and Dong Energy, the firm behind much of the substantial Danish wind power base. E.ON chief Paul Golby has suggested that Shell’s pullout could torpedo the scheme. “Shell has introduced a new element of risk into the project which will need to be assessed,” said Golby. “The current economics of the project are marginal at best,” he added, citing steel costs and supply bottlenecks – and this despite the fact the UK government renewable energy quota system is currently said to be offering a bonanza for wind power operators.

Offshore wind farm projects like the London Array are thought by renewables advocates to be the main answer to the UK’s energy needs. They could allow the construction of taller windmills than would be practical ashore; and would potentially be able to reap the benefit of more predictable winds, less affected by terrain and surface phenomena.

The London Array would be the biggest ever, filling the channel in the outer Thames Estuary between the Kentish Knock and Long Sands banks with up to 341 turbines. This is one of the few areas of the estuary where it wouldn’t be in the middle of a heavily used shipping lane, though looking at typical vessel movement in the immediate area you’d have to say there’s still some risk of collisions.

When fully operational, it would make a substantial contribution to the UK Government’s renewable energy target of providing 10 per cent of the UK’s electricity from renewable sources by 2010… it is expected that the project would represent nearly 10 per cent of this target. The entire Array would generate one per cent of the UK’s electricity. Wind farm planners like to describe their capacity in terms of maximum possible output, assuming all turbines spinning at best speed – this is the 1,000 megawatts referred to above.

In reality, the wind is seldom blowing at just the right speed. Sometimes the turbines stop altogether, due to flat calms or strong gales; mostly they run at much less than max output. The Array, on average the project would put out 3,100 gigawatt-hours per annum, equating to average output of 354 megawatts rather than 1,000. The London Array at full power could have delivered 0.88 per cent of that; on current trends, by the time it’s built you’d be looking at 0.77 or so.

Still, it sounds better to say “we will deliver nearly 10 per cent of the government’s target” than “we will deliver a fraction of a percentage point of the UK’s electricity”.

And electricity is just one of the ways we use energy. There’s also transport fuel, gas, heating oil, etc. The UK actually used a total of 2,700 terawatt hours of energy in 2006. The conversions between tons of oil and gigawatt-hours are at the back.) That’s a ballpark figure for how much we’d need in order to switch to electric or hydrogen transport, stop using gas heating, to generally stop emitting carbon and be ready for the inevitable post-fossil-energy future.

In other words, the mighty London Array, fully operational, would deliver roughly a thousandth of Blighty’s energy needs. You can see why Shell doesn’t view it as a critical part of its future business.

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BBC, May 8, 2008

Centrica, one of the UK’s biggest energy generators, has warned that the prospect of making money from wind farms is looking “marginal”.

The company says that the rising cost of off-shore wind farms could end up ruining the government’s renewable energy targets. The comments come a week after Shell withdrew from a project that was set to become the world’s largest wind farm. The government wants 33 gigawatts of offshore wind capacity built by 2020.

Mr Sambhi, Centrica’s director of power business unit, says the firm is still planning to build three new wind farms in the UK, but believes that current conditions are making the government’s renewable plans look very ambitious. “The economics at the moment make the returns marginal.” “The worrying trend is that if the manufacturing costs continue to increase, then I think that the wind target is under threat,” said Mr Sambhi.

Wind Farm Expansion

This week Centrica’s Lynn and Inner Dowsing project will deliver power to the National Grid.

The opening of the wind farm comes at a time when the economics of off-shore wind generation are coming into question. But the wind farm off the coast of Skegness has doubled in price in the last three years because of the rising cost of steel and copper. There are effectively only two companies that produce wind farms for the UK market – Vestas of Denmark and the German company Siemens. Both have a huge order book, with Vestas alone having nearly £4bn worth of orders yet to be delivered. The turbine manufacturers point to the rising cost of raw materials and the difficulty they have in securing the parts they need.

Big Projects

Uncertainty over the future of the 1,000 megawatt London Array wind farm off the coast of Kent has increased tension in the industry.

Shell, one of the three major partners in the London Array – meant to be the world’s largest wind farm, last week pulled out of the project.

Lynn & Inner Dowsing Facts:

  • Each turbine can power 2,500 homes
  • Turbines are 100m high and nearly 100m in diameter
  • Each turbine weighs approximately 260 tonnes
  • The 54 turbines have a combined generating capacity of 180 MW

After Shell’s decision, one of the other partners – E.ON – said that the economics of the project were “marginal at best”. The cost of the project is thought to have doubled since 2003, when it was estimated at £1bn.

The BBC has learnt that just one turbine manufacturer made a tender for the project, increasing the impression amongst some in the industry that manufacturers are able to choose their price for the projects they take on. High costs have forced the energy companies to look elsewhere for funding.

Centrica is aiming to build another three wind farms with a total capacity of around 1250 megawatts but does not want to fund the projects alone. In a bid to keep the projects on track the company is looking for investment from City institutions, including from private equity firms.

Government Policy

But this innovative tactic might not have the desired results according to Dieter Helm, Professor of Energy Policy at Oxford University. “Investors are saying that the current policy for wind energy in the UK is not fit for purpose.” “Unless the government wants to revamp and rebase its wind structure, it isn’t going to get what it wants from wind,” said Mr Helm.

This view is echoed by Charles Anglin from the British Wind Energy Association, who says that a lack of clarity has affected investment. “The fact that the government was slow to wake up to the opportunity of wind did push up uncertainty, and that has affected prices and meant that manufacturers have delayed investment,” he said.

But the government believes that the future for wind power in the UK is secure. It says that there are financial incentives in place to encourage energy companies to invest in wind farms. It also points to the fact that Britain is due to over take Denmark as the largest wind energy generator by the end of the year.

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AMSTERDAM, Netherlands – Royal Dutch Shell PLC said Tuesday it will build a facility in Hawaii to grow and test algae for its potential as a biofuel.

Shell is Europe’s largest oil company, posting $6.92 billion in net profit in the third quarter. A Shell spokeswoman in London declined to say how much money the investment represented.

“This is a 2.5 hectare (6 acre) demonstration project, and it will take up to two years to complete,” Shell spokeswoman Olga Gorodilina said of the project. Whether it proceeds further “will depend on the results,” she said.

Like corn, sugar cane, palm oil, soya and various kinds of grasses, algae has long been considered a candidate crop for furnishing vegetable oils useable as a replacement for diesel, reducing greenhouse gas emissions.

Amid current worries over global warming, scientists and entrepreneurs are seriously re-evaluating alternatives fuels.

Shell competitor Chevron Corp. and the U.S. Department of Energy’s National Renewable Energy Laboratory announced a similar project in October.

“Construction of the demonstration facility on the Kona coast of Hawaii Island will begin immediately,” Shell said in a statement.

“Algae hold great promise because they grow very rapidly, are rich in vegetable oil and can be cultivated in ponds of sea water, minimizing the use of fertile land and fresh water.”

Shell will form a majority-owned joint venture to build the project with Delaware-based HR Biopetroleum Inc., which has expertise in growing algae.

Shell said it plans to test several kinds of algae to find the optimal oil-producing strain, and it will also add carbon dioxide to the algae’s growing anks to test how much it aids growth.

If it works as hoped, future algae farms would be located near traditional fossil fuel-based power plants, and siphon off some of their carbon dioxide to help the algae grow and reduce overall emissions.

If tests are successful, the next step would be the construction of a 100 hectare (250 acre) project to test commercial viability, Gorodilina said.

A full-scale commercial production facility would occupy 20,000 hectares (50,000 acres), but she could not say when that might be built.

“Algae have great potential as a sustainable feedstock for production of diesel-type fuels with a very small CO2 footprint,” said Graeme Sweeney, a Shell executive overseeing the project, in a statement. “This demonstration will be an important test of the technology and, critically, of commercial viability.”

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