Energy Subsidies

Act Local, Solve Global: The $5.3 Trillion Energy Subsidy Problem

US$5.3 trillion; 6½ percent of global GDP—that is our latest reckoning of the cost of energy subsidies in 2015. These estimates are shocking. The figure likely exceeds government health spending across the world, estimated by the World Health Organization at 6 percent of global GDP, but for the different year of 2013. They correspond to one of the largest negative externality ever estimated. They have global relevance. And that’s not all: earlier work by the IMF also shows that these subsidies have adverse effects on economic efficiency, growth, and inequality.

What are energy subsidie

We define energy subsidies as the difference between what consumers pay for energy and its “true costs,” plus a country’s normal value added or sales  tax rate. These “true costs” of energy consumption include its supply costs and the damage that energy consumption inflicts on people and the environment. These damages, in turn, come from carbon emissions and hence global warming; the health effects of air pollution; and the effects on traffic congestion, traffic accidents, and road damage. Most of these externalities are borne by local populations, with the global warming component of energy subsidies  only a fourth of the total.

Energy subsidies are both large and widespread. They are pervasive across advanced and developing countries. Emerging Asia accounts for about half of the total, while advanced economies account for about a quarter (Chart 2). The largest subsidies, in absolute terms, are in China (US$2.3 trillion), the United States (US$699 billion), Russia (US$335 billion), India (US$277 billion), and Japan (US$157 billion). For the European Union, subsidies are also substantial (US$330 billion).

The fiscal implications are mammoth: at US$5.3 trillion, energy subsidies exceed the estimated public health spending for the entire globe. It also exceeds the world’s total public investment spending. The resources freed from subsidy reform could be used to meet critical public spending needs or reduce taxes that are choking economic growth.

By acting local, and in their own best interest, policy authorities can contribute significantly to the solution of a global challenge. The path forward is thus clear: act local, solve global.


china solar

China Adds Solar Power the Size of France in First Quarter

China’s solar installations in the first quarter were almost equal to France’s entire supply of power from the sun.
China connected 5.04 gigawatts of solar capacity to grids in the three months ended March 31, the National Energy Administration said in a statement on Monday. The Asian nation now has a total 33 gigawatts of solar-power supply.
“Construction of most additions in the first quarter began last year after securing local approvals,” said Nick Duan, a Beijing-based analyst from Bloomberg New Energy Finance. In China, developers must start construction within a year after approvals are given and validated.
China is seeking to approve and install as much as 17.8 gigawatts of solar power this year, or nearly 2 1/2 times the capacity added by the U.S. in 2014. The push is part of the Asian nation’s plans to cap carbon emissions in the next decade and a half.
Utility-scale photovoltaic power plants accounted for 4.38 gigawatts of the new capacity in the first quarter, with distributed projects comprising the remainder, the NEA said. Distributed generation refers to electricity produced at or near where it’s used. In the case of solar, distributed projects typically include rooftops or ground-mounted panels near facilities such as sporting arenas or municipal buildings.The northwestern region of Xinjiang led the effort, with 1.1 gigawatts of photovoltaic power plants installed in the first three months. Xinjiang was followed by Inner Mongolia, Zhejiang, Gansu and Jiangsu.

The NEA on Monday also called for a nationwide quality check for solar power projects as installations burgeoned. Local governments are required to report inspection results by the end of July.


Solar Eclipse

Eclipse – What happens when the sun takes a few hours off?

The solar eclipse on the 20th of March 2015 saw the electricity generated by solar panels drop by up to 75%. It was the first time in Europe that an eclipse was expected to have an impact on the electricity grids.

SynaptiQ, 3E’s solar PV monitoring and reporting tool, picked up the consequences of this stunning phenomenon quite easily. As you can see on the graph, the eclipse started around 09:30 on Friday and lasted for a bit more than two hours. At that time of day, in our example, about 49000kW of power would be generated from solar. It fell to 10911kW.

Europe’s total solar power output could have dropped by as much as 34GW if it was a clear day. That’s the equivalent of the output of around 80 gas-fired power stations gradually fading out of the European system as the eclipse happens, then fading back in again.

Half of the total impact was expected in Germany (39GW). Other major users of solar power including Italy (19.7GW) and Spain (6.7GW) were expected to face challenges too.

According to Reuters, “The initial 15 gigawatt drop in Germany was less than operators had feared. They were able to draw on alternative power sources including coal, gas, biogas, nuclear and hydroelectric energy pumped from storage and were helped by demand reductions from industry including four aluminium plants.”

According to PV Magazine, “In Italy, which has the world’s highest level of PV penetration, grid operator Terna had already decided to take no chances with the eclipse, turning off all of its large-scale (>100 kilowatts) PV plants for the day in order to protect any fluctuations on its grid.”

The eclipse over Europe’s solar panels provides a sneak peek at a fascinating challenge facing tomorrow’s electric grid.





Global investment in green energy rises 17% to $270 billion

Driven by solar and wind, global investment in green energy last year reversed a two-year dip, seemingly ignoring the challenge posed by sharply lower oil prices, according to the United Nations Environment Programme.

The world saw a record 103 GW of renewable energy capacity added last year – the equivalent of all 158 nuclear power plant reactors in the United States – and a 17% increase in global investment in green power generation to $270 billion, according to a new report released on Tuesday by the United Nations Environment Programme.

Prepared by the Frankfurt School-UNEP Collaborating Centre and Bloomberg New Energy Finance, the annual Global Trends in Renewable Energy Investment report found that more than $2 trillion was invested in renewables worldwide  between 2004 to 2014.

According to the study, solar, wind, biomass and waste-to-power, geothermal, small hydro and marine power contributed an estimated 9.1% of world electricity generation in 2014, up from 8.5% in 2013.

“Had the same amount of electricity been produced using the fossil-dominated mix generating the other 90.9% of world power, some 1.3 gigatonnes of CO2 — roughly twice the emissions of the world’s airline industry — would have been produced,” the Frankfurt School-UNEP Collaborating Centre said in a statement.

The Chinese made by far the biggest renewable energy investments last year — a record $83.3 billion, up 39% from 2013, followed by the U.S. with $36.3 billion, an increase of 7% on the year but well below its all-time high reached in 2011. In third was Japan with $35.7 billion, 10% higher than in 2013 and its biggest total ever.

The study showed that solar and wind accounted for 92% of all investment: Solar jumped 25% to $149.6 billion, the second-highest figure ever, while wind investments rose 11% to a record $99.5 billion.

Driven by solar and wind, global investment in green energy last year reversed a two-year dip, seemingly ignoring the challenge posed by sharply lower oil prices, the report found.

Major expansions of solar installations in China and Japan and record investments in offshore wind projects in Europe helped propel global investments to $270 billion, a 17% surge from the 2013 figure of $232 billion.

The overall boost market the first annual increase in dollars invested in and committed to renewables (excluding large hydro-electric projects) in three years. The $270 billion total is just 3% below the all-time record of $279 billion set in 2011.

The report attributes the falls in investment 2012, which reached $256 billion, and 2013 ($232 billion) in part to lower prices for renewable energy technologies due to economies of scale.



Emissions Solar

Why the global economy is growing, but CO2 emissions aren’t

Sometimes wonky, technical details really matter.

Such is the case on Friday, with an announcement from the International Energy Agency showing that there was a “decoupling” of economic growth and carbon dioxide emissions in 2014. In other words: the world economy grew, but CO2 emissions didn’t. This was “the first time in 40 years in which there was a halt or reduction in emissions of the greenhouse gas that was not tied to an economic downturn,” said the agency.

For anybody who cares about the planet, that’s very good news. After all, the previously tight link between economic growth and the use of more energy — leading to more emissions — has seemed an almost invariant fact of the modern industrial world. Indeed, observations like these have driven some on the environmental left to posit that economic growth itself is incompatible with environmental protections.

So what changed?

The IEA reports that there were several factors involved — China shifting more to renewables, even as OECD countries also advanced renewable energy and combined that with more energy efficiency.

Certainly, that’s been the story in the U.S. electricity industry of late. “For the first time demand is untethered to GDP,” said Alex Laskey, the president of Opower, which works with utility companies to help them connect with customers. “And that’s because of efficiency, self generation, and so on….we can make do with less.”

You can see as much in a figure from the U.S. Energy Information Administration’s 2014 Annual Energy Outlook, showing declining U.S. energy use on a both per capita basis and in relation to GDP.

Home energy efficiency — our far more efficient fridges, stoves, and much else — is just one of many key factors behind the trend, though.

Another factor, noted Robert Stavins, a leading environmental economist at the Harvard Kennedy School, is that in the U.S. transportation sector, cars are also more efficient (thanks to CAFE standards) even as a number of countries (or U.S. states, in the case of California) are pricing carbon and thus using economic forces to make it more costly to release into the atmosphere.

And there’s yet another key factor, according to Stavins — the natural gas boom in the United States brought on by fracking. “This has, in turn, led to significant increases in dispatch of gas-fired electricity generation, relative to dispatch of coal-fired generation, as well as increased investment in new gas-fired electric generation capacity, and cessation of investment in new coal generation in the United States,” he said.

According to the IEA, in the last 40 years, “there have been only three times in which emissions have stood still or fallen compared to the previous year, and all were associated with global economic weakness.” But the global economy was in good shape last year — and grew 3 percent.

This is how progress in saving our planet is measured — as two lines on a graph that no longer follow one another.


solarcity google

Google invests $300m in SolarCity’s $750m residential PV fund

The tech giant announces sizeable increase in solar energy commitment, dwarfing previous $280 million investment in SolarCity.

Google has today shattered its previous renewable energy investment record by announcing it has poured $300 million into SolarCity’s $750 million fund for residential solar PV projects.

The announcement dwarfs Google’s $280 million investment in SolarCity in 2011, and serves as a bold statement of intent for the tech giant – and a ringing endorsement of solar power’s growing prominence in the U.S. energy landscape.

“Corporations are starting to realize the importance of using clean energy,” said SolarCity chief executive Lyndon Rive. “Historically the companies that have financed solar deployment have been the big financial institutions and we’ve seen the movement in the sector of tech companies getting into the space and helping to transform a dirty infrastructure to a clean infrastructure.”

Google’s involvement in SolarCity’s residential fund will enable the solar leasing leader to bolster its presence in 15 U.S. states, enabling an estimated 25,000 additional U.S. homeowners to benefit from no-upfront-cost solar power and lower energy bills from their installed system. Typically, SolarCity’s scheme offsets installation costs to the tune of around $20,000-$30,000 – a sum that is out of reach for the majority of U.S. residences.

“We’re happy to support SolarCity’s mission to help families reduce their carbon footprint and energy costs,” said Google’s renewable energy principal, Siddharth Mundra. “It’s good for the environment, good for families and also makes good business sense.”

As Google has entered into the agreement as a “tax equity” investor, the company is able to claim federal tax credits worth 30% of the solar project’s cost, making the scheme extremely attractive to a company that has already spent $1.5 billion on renewable energy projects worldwide.

Google’s support for SolarCity follows shortly after Apple announced that it is to invest some $848 million on a large-scale, First Solar-developed 130 MW solar farm to power its California stores and national corporate offices.

The investment from Google will bolster SolarCity’s presence in a number of key markets. The company ended 2014 with 190,000 customers on its books and 1 GW of solar PV deployed.


Crowdfunding campaign for Solar Bond closed successfully

AMSTERDAM – Solar Assets Belgium 1 (SAB), a subsidiary of the Dutch investment firm Sunrock Investments, has successfully closed a solar bond issuing. In less than two and a half months’ time the aimed amount of €250.000 has been raised from little over 60 investors through crowdfunding platform

Bondholders of the solar project will receive a fixed annual coupon of 6% and are therewith participating in a well performing operational solar project. Based on the roof of a large fruit producer in Flanders, 30 km west of Maastricht, the project is built using high quality materials. An extensive Information Memorandum had been made available to provide potential investors with essential project information.

Sunrock Investments is aiming to further increase its solar portfolio through issuing more bonds in the near future and enable private investors to contribute to an environmentally sustainable world.

Solar Trend Report: Turnover Dutch solar to EUR 2.4 billion

The turnover of the Dutch solar industry has increased from 1,825 million in 2013 to 2,424 million in 2014, according to research in the framework of the Solar Trend Report 2015 .

For the first time in the history of the National Solar Trend Report ​​an extensive investigation has been undertaken into the sales, profits and employment in the solar industry. The results of the study are not only impressive, but show that all previous estimates were significantly too low. The conversion of suppliers and installers have increased in 2014 compared to 2013 , respectively 52% and 60%. The number of full-time equivalents (FTEs ) has risen by 75% in 2014 compared to 2013 .

It also appears that more than one Gigawatt of solar panels has been imported in 2014 ( in the Netherlands) intended for Dutch companies.This can be concluded from data provided by the Dutch Customs Authority. It is still unclear how many Megawatts of this is actually installed, but several signs point towards more than 500 Megawatts of installed capacity. Market analyst Peter Segaar (Polder PV) counts in the report with three scenarios: 350, 650 and 850 Megawatts peak newly installed capacity in 2014.


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BigSolar Introduces Solar Lease to The Netherlands

BigSolar is one of the first companies in the Netherlands to introduce Solar Lease for residential housing. In collaboration with AKEF (Amsterdams Klimaat & Energiefonds) and Sunrock Investments, BigSolar will be installing solar panels in the municipality of Amsterdam.

The main purpose of the municipality is to increase the number of households with solar panels to 45.000 by 2020 (currently 2.200). The current market is fragmented and characterized by many small solar suppliers which do not offer lease possibilities. BigSolar is therefore one of the first companies to introduce this leasing model in the Netherlands. The combination of LED lighting and their SPV approach, in which a large number of small installations will be bundled, will give BigSolar the possibility to provide homeowners with a substantial saving of around 20% on their electricity bill without making any investment.

The proposition of BigSolar is developed by Sunrock Investments which is one of its major shareholders. The combination of expertise in the fields of solar, lease and marketing have created a solid partnership between BigSolar and Sunrock Investments.



Renewable Energy Competitive with Fossil Fuels

The International Renewable Energy Agency (IRENA) says the cost of generating power from some renewable energy sources has reached parity or is cheaper than cost of fossil fuels.

The Renewable Power Generation Costs in 2014 report states biomass, hydro, geothermal and onshore wind are all competitive with or cheaper than coal, oil and gas-fired power stations – and that’s even without subsidies.

Individual wind projects are consistently generating electricity for USD 0.05 per kilowatt-hour without financial support, compared to  USD 0.045 to 0.14/kWh for fossil-fuel power plants.

Solar PV is rapidly closing the gap; with solar panel costs falling 75 per cent since the end of 2009 and utility-scale solar PV electricity generation costs plummeting 50 per cent since 2010.

IRENA notes a recent utility scale PV tender in Dubai was costed at just just 0.06USD/kWh.

Residential solar power systems are now as much as 70% cheaper than in 2008.

Between 2010 and 2014, the average LCOE (levelized cost of electricity) of residential systems in Australia declined by 52% and residential electricity price parity has been reached in parts of the nation. The report states the LCOE of solar PV in Australia is highly competitive due to the country’s excellent solar resources.

“Now is the time for a step-change in deployment for renewables,” said Adnan Z. Amin, Director-General of IRENA. “It has never been cheaper to avoid dangerous climate change, create jobs, reduce fuel import bills and future-proof our energy system with renewables. This requires public acknowledgement of the low price of renewables, an end to subsidies for fossil fuels, and regulations and infrastructure to support the global energy transition.”

The report says there are no technical barriers to the increased integration of variable renewable resources.

” At low levels of penetration, the grid integration costs will be negative or modest, but can rise as penetration increases. Even so, when the local and global environmental costs of fossil fuels are taken into account, grid integration costs look considerably less daunting, even with variable renewable sources providing 40% of the power supply. In other words, with a level playing field and all externalities considered, renewables remain fundamentally competitive.”

In terms of small scale off-grid and remote power, renewables now offer the best economic solution compared to diesel-fired generation – and this is  despite the reduction in oil prices at the end of last year and the beginning of 2015.

The International Renewable Energy Agency (IRENA) is the global hub for renewable energy cooperation and information exchange. It consists of 138 members (137 States and the European Union), including Australia.