This article excerpt is taken from the forthcoming issue of Renewable Energy Focus magazine (July/August issue). To register to receive a digital copy click here.
The global renewable energy sector continues to show steady activity. Some 75 projects worth a combined US$22.4bn were announced in the two months to end June. The total potential investment value is considerably lower than previous bi-monthly periods in the six-months to end-April, however.
In total, there are now 1036 active renewables projects worldwide and a further 1106 proposed for future development, according to the EIC DataStream, which tracks over 9200 of the most significant projects across the global energy industry.
In May alone 44 renewable energy projects were announced, representing a total potential investment value of US$13.8bn. Hydro and wind power were the big game players. Hydro accounts for just under half of the US$13.8bn, with 12 new projects announced, while wind power accounted for more than a third of the total value.
Hotspots
Mozambique, Georgia, Vietnam, Chile and Pakistan, with new projects worth a combined US$7.6bn, were the key hotspots for the month. The US$2.4bn Mphanda Nkuwa Hydro Power Plant on the Zambezi river in northern Mozambique was the largest project announced in May. The planned 2.5GW run-of-river plant will be built 61km downstream from the Cahora Bassa dam and will be one of Africa's largest hydro power plants.
A consortium comprising EDM, local company Insitec and the Brazilian construction firm Camargo Correa were awarded the government concession (in 2010) to build and operate the project, which is expected to become operational by 2017. It will be developed in two phases, with construction on the 1.5GW first stage planned to begin shortly.
In Georgia, meantime, construction is due to start this summer on the 720MW US$935mn Khudoni Hydroelectric Power Plant. Around two thirds of project finance required is being raised from loans. Planned for the Enguri River, 34km upstream from the Enguri Dam, the project will add to the existing Enguri cascade, comprising the 1300MW Enguri and 220MW Vardnili I plants. Khudoni will comprise an arch dam, diversion tunnel, coffer dams, water intake and penstocks, underground powerhouse, tailrace tunnels, and 500kV transmission line. The dam will have a height of 171.5m.
The other big hydro project announced in May is the US$717mn upgrade of the 82-year old Ruskin Hydroelectric Power Plant in British Columbia, Canada. The British Columbia Utilities Commission has given approval for the project as part of a wider initiative to upgrade the region's electricity system. Expected to take six years to complete, the Ruskin refurbishment will include reinforcement of the right bank, seismic upgrade of the dam and water intakes, powerhouse upgrades and relocation of the switchyard.
May winds
The biggest wind project news in May was the Pakistan government granting construction approval to China's United Energy (UE) for a US$1bn 500MW onshore wind farm. UE has secured the land for the first phase of the project, and is currently undertaking research on the investment cost and project structure. In addition to the US$1bn project cost, it is estimated UE will invest a further US$2billion to expand its wind farm infrastructure in Pakistan.
A 500MW wind project – the Mekong Delta Wind Power Centre – is also planned for Vietnam. The Vietnam Development Bank (VDB) has secured a US$1bn loan from the Export-Import Bank of US (US Eximbank) to finance the project. It will be built in Vinh Trach Dong commune, Bac Lieu Province, and will help ensure a sufficient electricity supply for the Mekong Delta. In co-operation with the Mekong Delta provinces of Bac Lieu, Tra Vinh and Soc Trang, VDB and Cong Ly Ltd Co, the project's investors, have conducted initial investigations to develop the wind farm, with a view to it being fully commissioned in the last quarter of 2015.
Significant slowdown
Activity dipped significantly in June, with just 31 renewable energy projects worth a combined potential investment of US$8.6bn. Wind led the way in terms of value, accounting for 66% of the total. Surprisingly, given its economic troubles and just one project announced, Greece topped the country table, accounting for 30% of June investment potential total.
Indeed, the US$2.6bn 81-turbine Limnos Offshore Wind Farm, to be built northeast of the island of Limnos in Greece, was the biggest project announced for the month. The 498MW project, which will use 6.15MW turbines, is Greece's first offshore wind farm. The Greek Regulatory Authority for Energy (RAE) has granted planning approval to the developer, City Electric S.A. (a wholly owned subsidiary of RF Energy S.A), and construction is expected to start soon.
In Chile, the US$933mn Loa Wind Farm gained momentum with the submission of the project's environmental impact assessment (EIA) to the relevant authorities. If approved, the 528MW project will be located in northern Chile and will comprise 264, 2MW turbines with the electricity generated supplying the northern SING grid. Construction is slated to begin in 2012 and will be carried out in two phases with completion due in 2015.
Turning to geothermal power, the most significant project this month is the 800MW Menengai Phase II project in Kenya. Comprising 120 wells, it will cost around US$800mn. Geothermal Development Company (GDC) will provide 20-40% of the project capital needed, while private investors are being invited to bid to get in on the action. They will be required to contribute at least $200mn to jointly develop 200MW of the 800MW project. GDC expects to shortlist bidders by the end of 2012, with four winners announced by July 2013. Selected bidders will then be expected to provide the funds within six months. The project is expected to be commissioned between 2017 and 2021.
Solar surge
June was a notable month for solar. In the wake of Japan's Fukushima crisis, a significant project pushing ahead is Toshiba's US$380mn Fukushima Solar Power project – it was announced on the back of the Japanese government's approval of feed-in tariffs (FITs) for solar PV earlier in the month. Toshiba's project involves several solar power plants, with a combined generating capacity of 100MW, in the Minami Soma area, Fukushima. The firm will start building the plants this year with the project due for completion in 2014.
While it is currently Japan's largest planned solar project, there are already signs other companies are likely to follow suit, with the new FIT expected to spur enormous growth in the country's clean energy sector. Japan's domestic installed solar capacity could more than double this year to 2.2–2.5GW before rising steadily to in the region of 3.4GW by 2015, according to analyst forecasts.
In Australia, AGL Energy Limited (AGL) and First Solar (Australia) Pty Ltd have been given the go ahead for two solar PV projects in New South Wales. With a combined capacity of 159 MW and set to cost around A$450mn (US$457.67mn), they are being developed under the commonwealth government's Solar Flagships Programme.
Biggest in south hemisphere
The biggest of the two projects is the A$307mn (US$313mn) 106MW Nyngan project. The other project, at Broken Hill, will be 53MW. First Solar will provide engineering, procurement and construction services for the projects, using its advanced thin-film PV modules. The Nyngan project will be the largest solar farm in the southern hemisphere and is due to be operational by 2014.
While the potential investment value of new projects is down, reassuringly, activity remains positive in the renewables sector with many projects developing to schedule. Clearly, the development of renewable energy sources continues to be high on the global agenda.
About the author: Ian Stokes is chief executive of the EIC (Energy Industries Council).