REW_20110901_Sep_2011

SEPTEMBEROCTOBER 2011 VOLUME 14 NUMBER 5

FACING THE SUNHow tracking technology

boosts energy yields

BRAZILS SUCCESS STORYNew government policy driving

growth into the next decade

Contents | Zoom in | Zoom out Search Issue | Next PageFor navigation instructions please click here

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RENEWABLE GROWTH

GLOBAL STATUS REPORT

Previous Page | Contents | Zoom in | Zoom out | Front Cover | Search Issue | Next PageRENEWABLE

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RENEWABLE ENERGY WORLD SEPTEMBEROCTOBER 2011 1

SEPTEMBER-OCTOBER 2011 VOLUME 14 NUMBER 5 CONTENTS

59 20

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REGULARSFrom the Editor ............................................................. 4

News/Analysis ............................................................... 8A roundup of news from around the world

Company results ....................................................... 86

Diary ................................................................................. 91

Advertisers Index ..................................................... 92

THE LAST WORDWater and renewable energy ........................... 89New trends are emerging to address water availability issues in renewable energy project development. While recent technological and policy developments in the US and collaborations with arid nations will offer many benefits, each project will have different goals and present different challenges.By Jerome Muys and Van Hilderbrand

FEATURESThe Big Question ......................................... 20Each edition, REW asks leading players in the industry to give their verdict on a key issue of the moment. In the Big Question feature for this edition, we asked readers to give us their predictions for how the UKs recently announced Renewable Heat Incentive (RHI) will play out. Will this new policy successfully engage industry and consumers to develop a major new commercial sector and provide a key route to achieving the policy goals of new renewable energy and lower carbon emissions? Will it succeed in influencing other European nations and those further afield to implement similar initiatives or, as happened with solar PV, will the success of this new programme lead to a subsequent revision, and if so what will the outcomes be for manufacturers, consumers and the commercial and industrial sectors?

Renewables 2011 Global Status Report ..... 24A positive constant amid the economic turbulence of the last year has been the global performance of renewable energy. Renewable sources have grown to supply an estimated 20% of global final energy consumption in 2010. We explore the state of the global renewable energy sector.By Janet L. Sawin and Eric Martinot

A view from the top .................................... 32Many heads of government around the world, wondering how they can play their part in the worlds shift to renewable energy, could be forgiven for looking enviously at Brazil, where energy from renewable sources already stood at almost 45% in 2010 and is forecast to rise to over 46% in 2020. With almost half of its energy supply generated by renewable sources, we explore what makes Brazil increasingly look like a positive example to the rest of the world.By Robin Yapp

SEPTEMBEROCTOBER 2011 VOLUME 14 NUMBER 5

FACING THE SUNHow tracking technology

boosts energy yields

BRAZILS SUCCESS STORYNew government policy driving

growth into the next decade

RENEWABLE GROWTH

GLOBAL STATUS REPORT


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2 RENEWABLE ENERGY WORLD SEPTEMBEROCTOBER 2011

CONTENTS

Facing the sun............................................. 39The use of tracking technology allowing solar modules to follow the course of the sun (and so optimise the incident angle of sunlight on their surface) can increase electricity production by around a third, and some claim by as much as 45% in some regions, compared with modules at a fixed angle. We look at the types of solar tracking technology currently available and the key players in this important market.By David Appleyard

Transforming profits ................................... 47Wind farms must be designed to maximise generation available for sale while minimising operating costs. The weak link in most wind farm designs is often not the turbine but the transformer. Properly optimised low-core-loss transformers can boost efficiency and profits.By Robert Berman

Down to earth energy ................................. 53Ground Source Heat Pumps (GSHPs), and their application in geothermal heat extraction, have matured as a technology in re-cent years. GSHP is one of the most advanced technologies avail-able for heating, hot water and cooling. Following on from the last issue, which described some of the latest developments in deep geothermal extraction in Europe and beyond, we look at this rising technology on domestic, commercial and industrial levels. By Chris Webb

The perils of protectionism ........................ 59A mixture of high oil prices and new environmental legislation points to renewable energy enjoying a period of unparalleled worldwide growth over the next 10 years. But, while it is often well meant, we examine how various forms of protectionism in fact threaten to halt the industry and prevent it from realising its potential.By Richard Baillie

A good time to be green ............................. 67Never in history have renewables entrepreneurs seen such good times. But who are they? Where do they come from? And why are they arriving in a flood at renewable energys front gate? We profile the creative thinkers and risk takers responsible for the rise of clean energy ventures over the last decade. By Elisa Wood

Solar thermal barriers and trends .............. 73The latest figures to emerge reveal that the international solar thermal industry is still very fragmented. A new analysis of the global solar market reveals a mixed bag of development, with some countries surging while others are relatively stagnant in the face of uncertain support. By Brbel Epp

Maintaining offshore growth ...................... 75While wind turbines attract most of the attention when it comes to the offshore wind business, operation and maintenance account for almost as high a percentage of the final cost of electricity. We explore some of the techniques and technologies being developed to lower costs in this vital sector.By Alasdair Cameron

Ripe for renewables ................................... 82At the current rate of development Malaysias disappearing fossil fuel resources are projected to be viable only for the next 30 years. However, the countrys potential for renewable energy generation is substantial. We take a look at the policy, markets, issues and key players in this rapidly expanding market. By Tildy Bayar

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Group Publisher Ralph Boon

Chief Editor David Appleyard

Acting Assistant Editor Tildy Bayar

Consulting Editor Jackie Jones

Production Editor Piers Evans

Design/Production Shyam Gosai

Production Manager Kimberlee Smith

Production Controller Rebecca Crews

Sales Managers Peter Andersen, Natasha Cole, Dan Harper, Kate Hart, Ekow Monney, Sandra Spencer

Digital Sales Manager Leo Wolfert

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Returning from a domestic errand, I was heartened to stumble across a commercial photovoltaic installation under construction on a sizable patch of what had previously been arable land. This 4.5 MW plant is to feed power to the grid and will no doubt operate successfully for 20 or more years, enjoying decades of the sunshine that once ripened the wheat of previous generations. It will also perhaps be one of the last to benefit from the governments generous PV feed-in tariff, now withdrawn for installations above 50 kW. Whether this means an end to commercial-scale PV development in the UK remains to be seen, but there can be little doubt that confidence in the sector has been affected. And with solar having little more than a tenuous grip on the UK energy marketplace, hopes that PV will make a big impact in the short term have clearly been dented. In the UK and in many other similarly affected countries, whether this will in fact emerge as a knockout blow in the longer term depends more than ever on industry passing on falling costs to consumers and pushing the long-term cost-of-ownership envelope to below that of conventional energy. Its a tall order even for a relatively mature technology like PV. Without support, that challenge becomes harder still.While the aftershocks of this decision are still being very much felt, the UK is pioneering a new form of feed-in tariff with its Renewable Heat Incentive. This commendable initiative represents an exciting development that could ultimately spearhead a new wave of renewable heating policy directives. With support for these important forms of renewable energy, a new route to a low carbon infrastructure has opened up. And, after all, some 40% of Europes energy consumption is spent on space and water heating. But perhaps there are also dangers lurking if, say, the policy becomes too successful for its own good and, like the PV sector, is again throttled back just as momentum gathers. We hear more of this debate, and see a few future scenarios for this novel programme, in our latest Big Question feature, starting on page 20.Placing this debate in context and providing a comprehensive overview of the renewables sector we present our regular snapshot of the REN-21 Global Status Report and its analysis of the global market for each key renewable energy technology. In a more detailed look at some of the major renewable technologies, we have the second article of our two-part geothermal series with an insight into heat pumps, while on page 39, our Key Players feature reviews the movers and shakers in the solar tracking sector which, alongside its efficiency advantages, is attracting ever more interest as CPV technologies become fully commercial. As always, we also feature policy and market coverage and in this edition, alongside our regular company results pages, we report on the sometimes far from benign influence of market protectionist policies. And we can perhaps hope to pick up some tips as we hear words of wisdom from those entrepreneurs who have made a roaring success of the renewables industry. It may well be that the modest 4.5 MW PV installation under construction in rural Lincolnshire turns out to be the last of its breed, but it is nonetheless extremely hard to believe that it will be the last of its kind.

PS: For even more in-depth coverage of the key renewable energy markets dont forget to look out for our two new supplements, as we also present the latest editions of Large Scale Solar and Wind Technology.

David Appleyard Chief Editor

FROM THE EDITOR

Member, BPA Worldwide


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WORLDS LARGEST OFFSHORE WIND ENERGY EVENT

ADVERTISING FEATURE: EWEA OFFSHORE 2011

COMES TO THE NETHERLANDS


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ADVERTISING FEATURE: EWEA OFFSHORE 2011

Late this November, the city of Amsterdam known for its waterways will host EWEAs OFFSHORE 2011 event, presenting the latest news and views on water-based wind energy technology. The conference will cover all relevant aspects from the financial to the political and scientific, and will be complemented by an exhibition featuring hundreds of companies involved in the offshore wind industry.

Chairing the conference is Ian Marchant, chief executive officer of Scottish and Southern Energy (SSE). He says, Electricity from offshore wind farms can and should play a key part in meeting Europes energy needs over the next decade. There are many challenges such as safety, technology and cost. EWEA OFFSHORE 2011 provides an excellent forum in which to consider these challenges and help ensure they are met so that offshore wind farms become a sustainable energy source in every sense.

In the next few decades offshore wind energy is expected to assume a dominant role in Europes energy portfolio. As of 30 June there are 1247 offshore wind turbines fully grid-connected, with a

total capacity of 3294 MW generated by 49 wind farms spread between nine European countries. EWEA estimates that by 2030 there will be 150 GW of offshore wind power providing 14% of the EUs electricity demand.

By 2025, offshore capacity is expected to exceed the 2010 capacity of onshore wind, and is projected to exceed onshore capacity beyond 2030.

To ensure that the sector realises its potential, governments and the EU must implement a progressive and stable policy framework which includes a binding 2030 renewable energy target, implementation of a single electricity market and actions to ensure the construction of an offshore grid. In addition, EWEA has long called for governments to facilitate R&D investment to enable the technology to achieve the same cost reductions as onshore wind.

The EWEA OFFSHORE 2011 event will run from 29 November to 1 December. Attendees will hear experts discuss logistics, grids and infrastructure, business and policy practices, the latest technological innovation, the importance of bringing down the cost of offshore generation, forecasting, the next generation of wind farms and demonstration sites. EWEA will also launch its new offshore report at the event.

7500 participants including the leading companies in offshore wind and offshore-related industries are expected at the worlds largest offshore wind energy event, which will feature 24 conference sessions and an exhibition

venue of 8,000m2 three times larger than OFFSHORE 2009 in Stockholm. Nearly every company with an interest in the offshore sector will be there over 300 in total, from 25 different countries.

On the conference side of the event, sessions are organised around themes to cover all of the issues affecting the industry:

resource assessment, grids, hardware, logistics, lessons learned and financing. Side events will focus on investment opportunities in large offshore wind markets.

The opening session will include leading political and industry figures who will discuss whether the European offshore wind industry will replicate the success of onshore wind technology in terms of market deployment, cost-competitiveness and technology maturity. Through keynote speeches and a moderated debate, speakers will consider the industrys prospects for growth and discuss which facilitators are needed from governments, the EU, the industry itself and the financial sector.

The programme will also feature a technology panel, which will continue discussion of the questions raised in the opening session. Respected technical experts will consider the role of different technologies in the success of offshore wind power. The conversation will focus on a major issue for the offshore industry: the use of direct drive technology vs gearboxes, and the bearing this choice has upon turbine weight, cost and maintenance.

For unbiased information and to get a full picture of the advances in virtually all aspects of offshore wind energy technology and market dynamics, this conference is an absolute must. The programme committee has done its utmost to organise coherent, well-structured sessions and to select presentations showcasing cutting edge know-how. said Jos Beurskens, ECN Wind Energy, lead session chair of Next generation of demonstration sites.

For those new to the wind industry who would like an overview of the sector prior to the conference, EWEA -- building on its Wind Energy The Facts publication, widely considered to be the most authoritative reference to date -- will offer an introduction to wind energy on 28 November, with a particular focus on the offshore sector.

And lets not forget the many social events and opportunities to network, including a conference reception at the Amsterdam Stock Exchange building an apt location for the exchange of business know-how and contact details and the conference gala dinner. This years venue for the dinner, the national maritime museum (Het Scheepvaartmuseum), is one of Amsterdams biggest 17th century buildings, a storehouse for the Dutch war fleet dating from 1656.

For further information, please visit: www.ewea.org/offshore2011

With a programme of 24 conference sessions covering all aspects of the offshore wind industry, EWEA OFFSHORE 2011 is not to be missed!


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NEWS ANALYSIS

SOLID OFFSHORE GROWTH

WIND ENERGY MARKETS

Scenarios for onshore and offshore wind power deployment in the EU have been published by trade group the European Wind Energy Association (EWEA) ahead of next years European Commission Energy Roadmap 2050.

Wind energy will more than triple its power output by 2020 with 194 billion invested in European onshore and offshore wind farms in this decade, said Justin Wilkes, policy director of EWEA. This success is mainly driven by a strong EU regulatory framework to 2020, which we need also after 2020.

Electricity production from wind power is expected to increase from 182 TWh or 5.5% of total EU demand in 2010, to 581 TWh or 15.7% of total demand in 2020.

By 2020, said EWEA, electricity production from wind will be equivalent to the total electricity consumption of all households in France, Germany, Poland, Spain and the UK combined.

By 2030, 1154 TWh (28% of total demand) is projected to be produced by wind, more than the EUs predicted 241 million private households are expected to consume in 2030, according to EWEA forecasts, an increase of a factor of five on todays figures.

SOLID OFFSHORE GROWTHEWEA has also published its offshore wind energy statistics for the first half of 2011, showing a comfortable 4.5% increase in installations of offshore capacity compared with the first half of 2010.

The sector is coming out of the financial crisis but is still facing a potential worsening of the general economic crisis. The number of banks providing capital for offshore wind farm investments is steadily growing, although there is a continued need for attracting an increasing number of large institutional investors to offshore wind farms presently the largest construction projects going on in Europe, said Christian Kjaer, chief executive officer of EWEA.

Several wind farms in Germany and the UK will reach financial close in 2011, and EWEA says financial

institutions will provide a record amount of financing to the sector at over 3 billion. Between three and five transactions are expected to close during the course of the year. Equity financing, including divestment of stakes in existing projects in order to initiate new ones, highlights new approaches to financing among developers and power companies following the financial crisis, the group adds.

In the first six months of 2011, 101 new offshore wind turbines totalling 348.1 MW were connected to the power grids of the UK, Germany and Norway. Offshore wind farms worth some 8.5 billion are currently under construction in European waters. Once completed, they will represent a total installed capacity of 2844 MW. In Europe, as of June 2011, there were 1247 offshore wind turbines fully grid connected with a total capacity of 3294 MW in 49 wind farms spread over nine countries.

During the first half of 2011, average wind turbine capacity increased to 3.4 MW, as opposed to 2.9 MW last year a growth achieved with seven fewer turbines than in the same period last year. This is a result of the move towards deploying larger machines offshore. This trend is expected to continue considering the new wind turbine announcements that have been made in recent months, said EWEA.

Three manufacturers had offshore wind turbines grid-connected during the first quarter of 2011. Siemens dominated the rankings with an 84% market share, followed by BARD with 16%. The SWAY 15 kW floating turbine was

installed in Bergen to serve as a prototype aiming ultimately at the development of the 10 MW SWAY floating wind turbine. In addition, REpower turbines were erected, but not fully grid-connected during the first six months of the year.

Financing activity in the offshore wind farm sector is picking up following the major transactions signed in late 2010, including the debt financings on a non-recourse basis for C Power (Belgium, 325 MW) and Borkum West 2 (Germany, 200 MW), and the sale of a minority stake in the 375 MW Walney site in the UK. While no debt transactions have been closed in the first half of 2011, several projects formally approached the banking market during that period and should close in the very near future, EWEA says. The projects expected to be financed in 2011 include several wind farms in Germany such as Globaltech 1 (400 MW), Meerwind (288 MW) and Baltic 1, and in the UK such as Lincs (270 MW), and Masdars 20% stake in the London Array (126 MW). After the early transactions which took place mainly in the Benelux countries, the debt market is now moving to the countries most active in offshore wind development.

POSITIVE TRENDSEWEA noted several positive trends with respect to these transactions and the overall market:

The number of banks willing to take offshore wind risk is steadily growing more than 20 institutions have now obtained firm credit committee approval;

The recently unveiled KfW programme for offshore wind, which will provide up to 5 billion to 10 projects in Germany, is a major step towards ensuring the development of non-recourse financing in that country. Two transactions expected to close shortly (Globaltech 1 and Meerwind) have tapped into the programme and will demonstrate its capacity to provide both volume and cheaper funding to the sector;

Danish export credit agency EKF and the European Investment Bank (EIB) continue to support transactions; the arrival of new banks and of KfW is slowly allowing EKF and the EIB to reduce their volume of new commitments, but their participation in new financing is still seen as positive by investors and commercial lenders alike; and

The UKs Green Investment Bank, announced in May, should provide additional financing capacity to the industry once it is up and running.

Non-recourse lending is also now becoming a large contributor, and could provide a significant portion of funding for nearly 50% of the capacity under construction by the end of the year, EWEA says.

While no two projects are alike, EWEA argues that the key lesson this year is that projects which want to find debt finance can do so if they do their homework, fulfilling the increasingly consistent requirements of the banks.

Tildy Bayar

By 2020, electricity production from wind energy will be 581 TWh or 15.7% of total demand in the European Union, EWEA believes. By 2030, 1154 TWh or 28% of total demand is projectedEWEA


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NEWS ANALYSIS

News that power and technology group ABB has won an order worth around US$1 billion to supply a High Voltage DC (HVDC) power link connecting offshore North Sea wind farms to Germanys mainland grid is clear evidence that the technology has now emerged as a strong component in the development of both on- and offshore wind power.

HVDC significantly reduces transmission losses and is widely considered to be the only viable solution for economical, low-loss transmission of power via cable longer than around 80 km, as with longer AC cables a significant proportion of the electrical energy transmitted is lost due to reactive power requirements.

This latest contract, which ABB says is the largest power transmission order in its history, will deploy what it says is the worlds largest offshore HVDC system, at more than 900 MW and 320 kV. The contract is on behalf of the Dutch-German transmission system operator TenneT.

ABB emphasises the key advantage of the technology, saying that electrical losses will amount to less than 1% per converter station from the 400 MW Gode Wind II, and other wind farms, to an offshore HVDC converter station, which will be used to transmit DC electricity to the onshore HVDC station at Drpen on the German coast via 135 km of underwater and underground cables. The Drpen station will feed power to the grid.

Scheduled to be operational in 2015, under the terms of the contract ABB will design, engineer, supply and install the offshore platform, the offshore and onshore converter stations and both the land and sea cable systems.

Offshore wind power is emerging as a major source of large-scale renewable energy in Europe to help meet emission targets and lower environmental impact, said Peter Leupp, head of ABBs Power Systems division, adding that the company has invested significantly in these technologies.

The company further claims that its HVDC Light technology offers

environmental benefits, such as neutral electromagnetic fields and compact converter stations.

This is the third recent offshore wind connection order for ABB in Germany, following the 800 MW Dolwin 1 link awarded last year and previously the BorWin 1 project.

In February ABB also won a US$180 million order from utilities Statnett of Norway and Energinet.dk of Denmark to supply an HVDC Light solution to support the interconnection of the Norwegian and Danish power grids. The 500 kV underwater link is a new record in transmission voltage using this technology, the company claims, and will boost transmission capacity between the mainly hydroelectric-based Norwegian system and the wind and thermal

power-based Danish system. It will enable both networks to add more renewable energy to their energy mix, and to use electricity more efficiently, ABB says.

It will design, supply and commission two 700 MW converter stations located at either end of the 240 km-long interconnector, and will be situated at the same site as the existing converter stations for Skagerrak 13 previously supplied by the company, in Kristiansand, Norway and Tjele, Denmark. The bipolar link, scheduled for commissioning in 2014, will be operated with the Skagerrak 3 transmission system.

Commenting on the technology, Leupp said: It will also reduce the impact of power system disturbances and contribute to the

stability and reliability of the grids. The higher voltage level will also help minimise transmission losses.

Leupp continued on the technology, adding: It will also reduce the impact of power system disturbances and contribute to the stability and reliability of the grids. The higher voltage level will also help minimise transmission losses.

Other recent orders for large-scale ABB HVDC systems include a $700 million order for a 325 kV HVDC Light power transmission link connecting three offshore wind farms in the North Sea to the German power grid.

While ABB is one of the leading proponents of HVDC technology, it is far from the only game in town with other energy engineering majors having developed their own solutions.

Germanys Siemens, for example, has also revealed a series of recent contracts based on its HVDC systems in support renewable energy installations.

HVDC STEALING A MARCH

GRID TECHNOLOGY

High Voltage Direct Current has emerged as a strong component in the development of offshore wind powerABB

ABB says that electrical losses will amount to less than 1% per converter station from the 400 MW Gode Wind II and others


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NEWS ANALYSIS

For instance in August, and working in consortium with the Italian cable manufacturer Prysmian, Siemens Energy said it was erecting HelWin 2, the HVDC link between the North Sea offshore windfarm Amrumbank West and the onshore grid. Again the customer is TenneT TSO GmbH and the order is worth approximately 600 million to the consortium.

Prysmian will provide complete supply, installation and commissioning of the submarine and land cable connections as part of a larger contract, while Siemens will deliver the Voltage Sourced Converter (VSC) system, rated at 690 MW. The turnkey connection will link the offshore wind park Amrumbank West, located about 55 km offshore in the North Sea, to the mainland.

The link is scheduled to be operational by 2015, grid-connecting the 300-400 MW Amrumbank West wind farm project, which is to be located about 35 km north of Helgoland, and 37 km west of the North Frisian island of Amrum.

Power will be transmitted at 320 kV via a submarine high-voltage cable from the feed-in point on the platform to the grid connection point in Bttel, northwest of the city of Hamburg, over 130 km away.

Together with the Meerwind and North Sea East offshore wind farms, Amrumbank West is part of the North Sea cluster HelWin. Central to the HelWin 2 link is the offshore converter platform HelWin beta, on which the Siemens HVDC Plus system is installed. Siemens is responsible for the turnkey supply of the fully equipped floating and self-erecting platform.

TenneTs German group Transpower, which it acquired in 2009, has now ordered its third offshore grid connection from the Siemens Energy and Prysmian Powerlink group. The HVDC connection BorWin2 has a design capacity of 800 MW will connect the wind farms Global Tech 1 and Veja Mate to the onshore transmission grid.

Together with the additional services separate from the contract with Siemens/Prysmian, Transpowers investment for BorWin2 will be worth around 800 million.

Completion of the grid connection, stretching some 200 km to a substation in Diele, close to Papenburg, is planned for spring 2013. The substation for the

first HVDC offshore connection, the 400 million, 400 MW project BorWin1 which was completed in 2009, is also located in Diele.

In a related development, Siemens Energy recently extended its transformer production location in Guangzhou, China by setting up a new facility for the production of 800 kV converter transformers intended to serve the future needs of the Chinese market and the wider Asia-Pacific region.

In addition to HVDC transformers, power transformers with ratings up to 1400 MVA will also be produced at the new facility. With our new facility were not only extending our global network of HVDC transformer factories and expanding our product portfolio in Asia. Through the local production of HVDC transformers were also enhancing our competitiveness in the field of HVDC transmission in China, said Jrgen Vinkenflgel, chief executive officer of the Transformers Business Unit of Siemens Energy.

And backing this up, Siemens says it is to supply key components for two HVDC transmission projects Nuozhadu-Guangdong and Xiluodu-Guangdong in southern China. The purchaser is China Southern Power Grid Co.

Nuozhadu-Guangdong will have a transmission capacity of 5 GW at a voltage of 800 kV, while Xiluodu-Guangdong is to have an overall capacity of 6.4 GW at 500 kV, Siemens says. The total order value for the company is approximately 250 million and commissioning of the systems is scheduled for 2013.

Large-capacity hydroelectric plants such as Nuozhadu and the 12.6 GW Xiluodo in southwest China will use the low-loss transmission provided by the new links to bring energy to the megacities Guangzhou, Jiangmen, Dongguan and Shenzhen.

For the Nuozhadu-Guangdong 800 kV HVDC bipole system, Siemens, together with its Chinese partners, will supply the converter valves both for the sending station in Puer in the province of Yunnan and for the receiving station in Jiangmen, Guangdong Province, a distance of 1451 km.

The Xiluodu-Guangdong project is a double 500 kV bipole system

with a transmission capacity of twin 3200 MW systems. For this project Siemens, again together with Chinese partners, will supply the converter valves for the sending station in Zhaotong, near the Xiluodu hydro power plant in the Yunnan/Sichuan region, and for the receiving station in Conghua of Guangdong province, a distance of 1286 km.

In late December 2009, Siemens and China Southern Power Grid put into operation the first pole of an HVDC system with a transmission capacity 5 GW and covering a distance of over 1400 kilometers. And, in April, together with the operating company BritNed Development Ltd., Siemens commissioned the 260 km BritNed HVDC transmission link between the UK and the Netherlands. BritNed itself a joint venture of National Grid and TenneT operates the link which has a transmission capacity of 1000 MW at 400 kV.

As with the ABB development in Norway/Denmark, late last year

Siemens also secured a contract for its HVDC systems which exploits another key advantage of the technology in that it allows asynchronous grids to effectively phase frequencies.

The company is building converter stations in Pssi, Estonia, and Anttila, Finland, for a new transmission link between the two nations. EstLink 2 will have a transmission capacity of 650 MW at 450 kV and will comprise 14 km of overhead, a 145 km submarine cable across the Gulf of Finland, and a 12 km buried cable. The development will increase the capacity for transmission between the Baltic and Nordic countries from 350 MW to 1000 MW, making the power supply more reliable for the Fingrid utility based in Helsinki and the Estonian power network operator Elering, based in Tallinn.

Partially funded by the EU, the contract is worth some 320 million, with Siemens share about 100 million of that. The converter stations are planned to go into operation early in 2014.

Taking the grid integration idea just one step further comes the Tres Amigas SuperStation project in New Mexico, US. Once completed

this transmission hub will ultimately interconnect Americas three primary electricity grids, the Eastern (Southwest Power Pool), Western (Western Electricity Coordinating Council) and Texas (Electric Reliability Council of Texas) networks.

In April Alstom Grid announced a contract worth approximately 150 million by Tres Amigas LLC for HVDC converters and automation technology as well as high availability system maintenance services for the first stage of the project.

Under the contract, Alstom Grid will supply a 750 MW, 345 kV converter scheme utilising its Voltage Source Converter (VSC) technology.

With a clutch of the major players offering commercial HVDC systems it is perhaps of little surprise that a new report from Pike Reaserch concludes: The demand for these products is rapidly moving beyond the traditional role slotted for high-voltage submarine cables, connecting islands to nearby national grids. The usage of high-voltage submarine cables for grid interconnections and connecting offshore wind farms to nearby landmasses is on the rise.

However, the report, HVDC and HVAC Submarine Power Cables: Supply Constraints, Demand Drivers, Technology Issues, Prominent Projects, Key Industry Players, and Global Market Forecasts also issues a warning. It suggests that with only a handful of manufacturers capable of producing and installing such systems, and indications of a limited supply chain for cables, capacity constraints could become an issue, particularly in light of the increased demand that offshore renewable energy production and grid interconnection will place on the market.

The report concludes: The constraints on the supply chain dont stop with the manufacturers. The site engineering companies and cable-laying ships required are highly specialised and also in limited supply. As countries all over the world experience an increased need for advanced grid connections and renewable power, cable manufacturers will need to significantly increase their production capabilities to keep up with the steady demand growth in the years ahead.

David Appleyard

The demand for HVDC products is rapidlymoving beyond the traditional roleslotted for high-voltage submarine cables


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NEWS ANALYSIS

US PLAN FOR FUEL, NOT FOOD

BIOFUELS MARKETS: US

A recent feature story in UK newspaper The Guardian reported that the financial crisis in the US and the

countrys pressing need to cut its federal budget by US$1.3 trillion had combined to spur lawmakers to reevaluate three decades of corn ethanol subsidies.

A significant factor in this equation was the global food crisis, which has illuminated the consequences of biofuel production rising food prices as farmland is converted to produce biofuels and created a public backlash against biofuels.

The Senate had already voted overwhelmingly in June to end the tax credits and trade protection that benefit the ethanol industry. In its story The Guardian reported that Congress was also expected to end $6 billion in subsidies to the ethanol industry as part of its recent debt ceiling negotiations.

Federal pro-ethanol policies, including subsidies, helped to grow US ethanol production to 13.3 billion US gallons (50 billion litres) in 2010, up from 1.6 billion gallons (6 billion litres) 10 years before. These subsidies had flowed to oil companies whose products are partly constituted from ethanol. The industry had planned to redirect parts of the funds toward petrol station refits, enabling the stations to use more ethanol, under a Senate deal made last July. But the drastic budget cuts required by the debt deal resulted in a Senate vote blocking federal money from paying for special ethanol-blending pumps.

The Omaha, Nebraska-based World-Herald newspaper also reported on the ethanol industrys preparation for life after federal subsidies. The paper wrote that there seemed to be no political will to extend the $6 billion per year in subsidies. Although there had been one proposal to extend existing tax credits that support cellulosic (non-corn based) ethanol, Congress had left Washington for its summer recess without acting

on it, which means its not going to happen, according to several US senators and ethanol industry representatives.

The ethanol industry, speculated the World-Herald, would now be forced to think of new ways to market their fuel, as it would no longer be cheaper than regular petrol (which was its major selling point for US consumers), and to seek other means of acquiring government support that would be more politically palatable in other words, that would no longer resemble subsidies.

Many ethanol plants located close to corn supplies, such as those in the corn-belt states of Iowa and Nebraska, were forecast to remain economically viable and, argues the World-Herald, would be able to continue production in a post-subsidy environment. Iowa is projected to use 58% of its corn crop for ethanol in 2011, and some Iowa farmers may sell up to 70% of their crops for ethanol production. However, more marginal plants in states without abundant corn supplies could be driven out of business, according to Monte Shaw, executive director of the Iowa Renewable Fuels Association.

In all of these events public opinion cannot be underestimated. Environmental groups and food-focused charities have mounted powerful campaigns to raise awareness of the contributions to the current world food crisis of biofuel production processes and, especially, land use, and these campaigns have made significant headway in terms of turning public opinion against corn-based fuels. The results of this turn may perhaps be seen most clearly in the Senate vote to cut subsidies, which garnered broad bipartisan support. It was noteworthy that 33 Republican Senators (with 40 Democrats) voted for the cuts.

HOWEVER...In mid-August the US Department of Agriculture announced that the Obama administration will

implement a $510 million initiative to boost the production of next-generation biofuels. The plan, jointly sponsored by the Departments of Energy and Agriculture and the Navy, will support a public-private partnership in which companies will be invited to bid on new biofuel projects and the government will match their investment.

The new projects will involve biofuel production from wood chips and the inedible parts of plants, rather than from corn. The Obama administration is presenting the plan as a new route to US energy independence which avoids the food-or-fuel controversy associated with corn-based ethanol, and as the basis for a new industry based in rural areas of the country which will form part of the governments job-creation programme. In addition to building new biofuel plants, the initiative will fund the retrofitting of existing corn-based plants.

The new proposals will support development of a new, rural-focused industry that will replace imported crude oil with secure, renewable fuels made here in the US, said energy secretary Steven Chu.

The participation of the Navy is due to the initiatives focus on the production of advanced drop-in aviation and marine biofuels chemical copies of their fossil

fuel counterparts which will power military and commercial transportation. Because these biofuels possess the same characteristics as petroleum-based fuels, asserts the Renewable Energy Institute, it is not necessary to modify pipelines, other fuel or transportation infrastructure, or engines in order to use it.

In order to accelerate the production of bio-based jet and diesel fuel for military and commercial purposes, secretary of agriculture Tom Vilsack, Chu and secretary of the Navy Ray Mabus have developed a plan to jointly construct or retrofit several drop-in biofuel plants and refineries. For the military, over-dependence on imported oil can mean real vulnerabilities, said Vilsack. The Navys preoccupation with security dovetails with national attitudes about dependence on foreign oil and the pressing need for job creation at home.

It would seem, then, that rumours of the demise of the US biofuels industry have been greatly exaggerated. An end to subsidies may perhaps signal an end but, depending on how the governments new initiative plays out, the industry may also turn out to be reborn.

Tildy Bayar

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NEWS ANALYSIS

Telecom giant Alcatel-Lucent, headquartered in France, has announced that it is teaming up with Chinas State Grid Information & Telecommunication Company Ltd (SGIT) to help utilities manage peak electricity demand, identify opportunities for power savings and cut down on energy usage. The two companies plan to do this by increasing the intelligence in utilities power distribution systems, or smart grids, which allow the continuous measurement, monitoring, control and adjustment of power distribution.

Alcatel-Lucent and SGIT, a subsidiary of State Grid Corporation of China, will address some of the challenges related to smart grids, accessing data used to track energy usage from a plethora of devices including smart meters, analysing that data and delivering information to the utility. This information can then be used by utility companies to monitor and control demand and manage delivery.

These solutions will also provide the customers of utility companies with access to more reliable power distribution systems as well as information on their own power usage, allowing them to make educated decisions about their power consumption, for example changing their normal usage patterns to take advantage of lower pricing structures at off-peak times.

Meanwhile, the Gridwise Alliance, a US coalition advocating the transformation of the electricity system, has released The US Smart Grid Revolution: Smart Grid Workforce Trends 2011, a new report that examines how the continued development and deployment of smart grids impacts on the electric energy industry workforce. The report, prepared by global consulting, testing and certification firm KEMA, stresses the important role education initiatives play in maximising improvements for all those connected to the electric system.

GRIDS GET A BIT SMARTER

SMART GRID REVOLUTION

Smart grids allow for more efficient monitoring, control and adjustment of power distribution.MAPAWATT


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NEWS ANALYSIS

In its key findings, KEMA discovered that continuous investment in the smart grid sector has expanded opportunities across the entire electric energy industry. This is crucial as job creation and the development of an industry native to the US are national priorities. The report also concludes that the smart grid continues to be a primary example of a technological area that is ripe with opportunity and ready for continued innovation and creativity. In order to maximise its potential for economic growth, the report says, the US must retrain current employees in the new, higher-level skills required to modernise the transmission and distribution grid.

The report emphasised that a successful organisational transition to the smart grid and smart grid job creation and growth must include retraining programmes, engineering and technical curricula, efforts to familiarise workers with smart grid technology and systems, and educating current students who will be the smart grid workforce of tomorrow.

In the utilities sector, the shifting requirements of existing jobs makes retraining the workforce a signficant priority, particularly for those utilities that are in the process of deploying smart grid solutions. While new jobs are being created, this retraining effort to enable current employees within the utility smart grid workforce to adapt and take on new roles is particularly active.

This report takes the industrys first comprehensive look at not only how the expansion of the smart grid will strengthen the American economy but also the critical steps America must take to ensure its workforce is prepared to maximise this new technology, said GridWise Alliance Board liaison for the Education and Workforce Group, Randy Berry. All levels of the electrical energy industry chain can learn from this report on how best to reform

their efforts and equip their employees with new skills needed to achieve success with the transformed grid, he added.

As an example, Vivint, one of the largest US home automation companies, recently opened the first US smart grid training centre of its kind, designed to prepare technicians for full-scale deployment, including the installation of home area network (HAN) and load control devices, electric vehicle (EV) chargers and much more.

The 10,000 square foot (3048 m2) facility, located in Austin, Texas, also houses two fully equipped model smart homes outfitted with Vivints energy technologies. The companys Vivint Smart Grid Solutions arm provides smart

meter installation services for electric, gas and water automated meter reading and advanced meter infrastructure projects.

The future of the smart grid continues to be very strong, says the KEMA report, noting that investment continues to flow into businesses active in the smart grid sector, driving innovation, job creation and significant change.

Indeed, according to Microsofts 2011 Industry Survey, utilities are already moving from the planning to the deployment stage of smart grids, and budgets to support these efforts are consequently on the rise.

Tildy Bayar

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NEWS ANALYSIS

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GROWING MARKET DEMAND

2011 PV FORECAST

Despite a very weak start to the year, IMS Research has recently increased its photovoltaics (PV) forecast for the full year by more than 1 GW and predicts that more than 22 GW of new PV capacity will be added in 2011. The research firm cited growing demand in all major markets, notably in Asia and the Americas, as well as a pick-up in the sluggish German market, and projects that installations in the second half will be nearly double that seen in the first six months.

A STRONG SECOND HALFIMS Researchs latest Global PV Demand report, which analyses installations rather than registrations or connections in more than 60 downstream markets,

predicts that despite weak first and second quarters, demand will grow rapidly in the second half of 2011 due to rapidly falling module prices, incoming incentives in new markets and planned end of year cuts in existing markets.

Senior research director for PV Ash Sharma commented, Although installations grew just 13% in Q2 from Q1 the results of our latest report show that there will be a huge surge in installations in the second half of the year. Several mid-sized markets like the USA are growing massively whilst markets like Germany and Italy are starting to pick up too.

EUROPE FLAT IN 2011According to the new report, several European markets,

including Germany, are predicted to see a major slowdown or even a fall in 2011. (For more on recent developments in Germany, see page 17 of our Large Scale Solar supplement.) However, Europe overall will be only 1% down this year due to geographic diversification, with high demand coming from a number of new countries such as Slovakia and the UK. The report revealed that 11 countries in Europe will install at least 100 MW this year, with 20 countries globally installing this amount or more up from just 13 the previous year. This increasing diversity in the market is helping to support demand and provide stability to a market that was once dependent for growth on just one or two countries.

CHINA IS KEYOne significant factor in IMS Researchs increased forecast is the recently introduced national feed-in tariff (FiT) in China, which was revealed by the National Development and Reform Commission (NDRC) in August. This FiT pays a premium for installations completed this year, but continues past the end of the year and is in addition to the countrys Golden Sun scheme. We earlier predicted the introduction of a PV FiT in China once prices had fallen to an acceptable level and were forecasting installations of 1.3 GW this year and more than 2 GW in 2012, commented Sharma. In the longer term, IMS projects that China will become a key player for PV and not just for production,


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NEWS ANALYSIS

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with the country becoming one of the top three markets in 2015.

TOP 10 MARKETS IN 2011IMS Research has also updated and released its top 10 markets for 2011, and reveals that although Europe still dominates the global PV market, only four of the 10 most important markets in 2011 will be European, with Asian markets ranking prominently. At the same time, its important to remember that Europe will still account for close to 70% of global installations this year and in fact the next five largest markets are all European, added Sharma.

THE RANKINGSThe 10 most important PV markets in 2011, according to IMS Research, will be:

1. Germany2. Italy3. USA4. China5. Japan6. France7. Australia8. India9. Spain10. Canada

With some notable changes in position, this result contrasts in several ways with IMSs list of the 10 most important PV markets of last year:

1. Germany2. Italy3. Czech Republic4. USA5. France6. Japan7. Spain8. Belgium9. China10. Australia

While Germany and Italy hold their places this year at first and second respectively, the US despite a slow start to the year moves into third position, up from number four last year. (To find out whos building what in the US, see US Solar Utility Rankings on page 7 of our Large Scale Solar supplement.)

France loses a point, moving down to number six from fifth place last year. And Japan, where the government is aggressively expanding its solar targets in the wake of the Fukushima disaster, moves up from sixth to fifth.

Spain falls two slots, down from number seven in 2010 to number nine this year. This is largely as a result of the countrys reduced FiT, which came into effect in the second quarter of this year. Under the cuts, remuneration declined by 8% to 28.88 cents for smaller rooftop installations, by 27% to 20.37 cents for larger rooftop systems and by 46.5% to 13.46 cents for ground-mounted.

Australia moves up from last years number 10 to number seven this year, a significant jump. There is currently strong policy commitment to solar energy from the Australian government, most notably with its Solar Cities programme. Demand is also increasing in rural areas where connection to the grid may not be feasible.

India, which had failed to feature in the rankings last year, enters this year at a respectable number eight. The countrys thriving renewable energy sector and strong growth in PV manufacturing are supported by incentive packages, soft loans and the innovative Jawaharlal Nehru Solar Mission, which has set a target to acheieve 20 GW of grid-connected solar power installed and on-line by 2020.

However, Belgium, number eight in 2010, falls off the chart entirely this year.

Canada where the solar PV market in Ontario alone is forecast by ClearSky Advisors of Toronto to grow a whopping 270% by the end of this year, becoming the largest regional market in North America enters the rankings at number 10.

The biggest leap forward for 2011, of course, is Chinas jump from number nine last year to number four this year.

INCREASING OPTIMISMIMS is now also more optimistic about the mid-term future for the PV industry and has also raised its projections for 2012. Despite many still predicting doom and gloom, our latest research presents a very different picture. The decision by the Chinese government to introduce a national FiT to boost flagging demand, as well as a diversifying global market and the introduction of new incentive schemes globally presents a much more optimistic, but still very challenging future for the industry, concluded Sharma.

Tildy Bayar


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RITTER SOLAR

APTOPIX

The Renewable Heat Incentive (RHI) is the first scheme of its type and all eyes will be on the UK to determine its success and whether it can be replicated by other countries.

It is vital that the tariff bands are set correctly to prevent the market from being distorted and to create a level of stability which will ensure economic success. Currently, the government has sought to set tariff levels to achieve a 12% annual rate of return for installing renewable heat technology. However, it is unable to predict all changes to the industry and the impact the

RHI will have. Therefore it is vital that the tariff bands are regularly reviewed to ensure the market is not over incentivised and to take into account changing technology costs.

Dramatic changes in the incentives would, however, result in unease within the industry, especially with regards to investment opportunities in the technology. Since the budget for the scheme is set by the Treasury each year, its important that larger installations dont take too big a piece of the pie, so to speak. The larger the system,

the greater the heat generated and amount paid (albeit at a lower tariff rate), so to ensure that smaller-scale domestic installations gain access, any subsequent tariff cuts are most likely to be imposed on the larger scale non-residential installations in other words, the commercial and industrial sectors. There is, of course, a fine balance to be achieved, since these sectors will deliver the largest proportion of overall renewable heat generation. Naturally, any reduction in tariff bands could adversely affect demand for renewable heat

technology across the board for manufacturers, consumers and the commercial and industrial sectors.

DAVID THORNE, CEO, GEMSERV


THE BIG QUESTION

THE BIG QUESTION

RHI: Success, failure or something in between?

TISUN

WESSEX GROUP

Each issue, Renewable Energy World asks leading players in the industry to give their verdict on a key issue of the moment.

In this edition's Big Question feature, we asked readers to give us their predictions for how the UK's recently announced Renewable Heat Incentive will play out. Will this new policy successfully engage industry and consumers? What will the outcomes be for manufacturers, consumers and industrial sectors?


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The first thing to say is that the RHI is a very welcome initiative by the government which could be a game changer in terms of the UK's uptake of renewable technologies, in particular solar thermal and heat pumps.

However, there is good and bad news. Any government incentive will drive the market as we have already seen with the feed-in tariff for solar PV. If, on the back of the RHI, take-up is greater than anticipated it is not impossible that the government could again begin to rein demand back in.

It has been made clear by government that the 860 million (US$1.3 billion) set aside for the RHI is set in stone and will not be increased. However, it has also been made clear that this money is ring-fenced and will not be reduced.

My concern now is that the government may be forced to eke out the cash to make it last for the full three years, which could lead to a stop-start, stop-start approach, which we are already seeing with the gap between the end of the RHI Premium Payment and the full start of the programme in 2012.

Longer term, the government has taken a very risk-averse approach to implementation due to fears of abuse of the system. However, this has led to the development of a highly complicated system which is a potential red-tape headache for commercial applicants with the potential to put off domestic households altogether.

This is particularly ironic given that the government has said it wants to cut red tape for small businesses.

NEIL SCHOFIELD, HEAD OF EXTERNAL AND GOV'T AFFAIRS, WORCESTER-BOSCH

On the whole, both the European Solar Thermal Industry Federation (ESTIF) and the solar heating industry were enthusiastic when the RHI consultation was launched in 2009. For years ESTIF has been promoting renewable heat as a sector with huge potential but requiring specific policies. Industry had already pointed out the benefits of financial incentives based on a systems performance/output rather than on mere square metres. On both counts the outline of the RHI was promising.

At the time, we did not contradict some of the preliminary studies commissioned in preparation for the RHI, such as the NERA/AEA (2009) and the NERA (2010) reports on initial and levelised costs that were

biased, with a negative effect on solar thermal. Besides warmly welcoming the initiative, ESTIF concentrated its efforts on the recognition of the Solar Keymark alongside national marks and on the importance of a proper and accurate measurement methodology based on European standards.

Following the initial consultation phase, there was a long period of uncertainty due to both the political changes and the 2011 financial situation. Once the financial decisions were made and it became obvious that the RHI would be maintained in some form, a first period of consultation resulted in the launch of the RHI for the non-domestic sector. In this scheme, solar thermal does not get fair treatment and the negative effects of the originally

flawed cost analysis to be found in the background studies result in a tariff for solar thermal which does not offer a satisfying return on investment.

The announcement on the crucial domestic sector was postponed and Renewable Heat Premium Payments have just been introduced as an intermediate solution. Today we do not know what will be the tariff for domestic solar thermal, but considering the premium payments and the non-domestic scheme there are no grounds for optimism. Despite the fact that the UK is home to some pioneers of the solar thermal industry, it fails to acknowledge

the full potential of solar thermal.The RHI is an excellent

example of a very ambitious and well-conceived policy that results in conflicting effects in

the market due to problems in its implementation.

The concept of a tariff for renewable heat is making progress in Europe (Spain, Italy) and the UK will serve to test large-scale implementation of such innovative schemes, testing issues such as monthly payments, metering and so on. However, the great uncertainties surrounding the domestic RHI are discouraging for both consumers and industry, leading to a stagnating market in 2011.

XAVIER NOYON, SECRETARY GENERAL, EUROPEAN SOLAR THERMAL INDUSTRY FEDERATION

In this scheme solar thermal does not geta fair treatment and the tariff does not offera satisfying return on investment

THE BIG QUESTION


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THE BIG QUESTION


The UK government is to be applauded for being the first to implement an incentive of this nature. However, there is a lesson for other countries wishing to implement similar schemes, in that any scheme needs to be executed within the time frames announced. The UK government has repeatedly delayed the implementation of the scheme resulting in possible purchasers holding off from investing in a solar system. This has achieved the opposite of what the RHI was intended to do, which was to stimulate the market for renewable heating. Investor confidence has not been increased by the lack of information over the past two years, and as yet the government has not announced the all important details of domestic RHI payments.

Now that the RHI has been confirmed for implementation for commercial installations at the end of September, we believe that the uptake of solar thermal will see increases similar to the effect that the feed-in tariff had on solar PV.

While the payment of 8.5 p/kWh is far below the 43 p/kWh that solar PV is awarded, the lower capital cost of solar thermal will generally achieve payback in under 10 years, according to our modelling. If there are further increases in the cost of fuel like the recent 18% increase in the UK, the case for solar thermal is clearly strengthened.

In summary, although the governments vacillation has damaged the solar thermal industry, the RHI will still result in increased uptake.

ROBIN WELLING, MANAGING DIRECTOR, TISUN GMBH

DECC decided to split the policy in two phases, so that issues they could not resolve in time for 2011 dont hold back the RHI as a whole. Although there are plenty of quibbles to make on phase one, the main concerns are not over what has been missed out which, we hope, will be included in Phase 2 from 2012.

As with the FiT, the big question is whether there is enough money to back the scheme. The RHIs budget to 20142015 has been divided into four annual budgets. There is no flexibility between years, so any overspend in one year will have to be made up elsewhere and any underspend goes straight back to the Treasury. This makes the task of getting the RHI up and running even harder. The longer a project

takes to complete, the harder it will be to live with the risk of tariff changes a particularly unfortunate outcome as these will generally be claiming the lower rates.

Treatment of CHP is another issue. At the time of writing, we are still waiting for the governments proposals on the future of the CHP uplift within the Renewables Obligation. If the uplift is removed, those projects will be dependent on the RHI. As were talking about a relatively small number of large projects, this would compound the difficulty of staying in budget.

The RHI is a major achievement, and certainly has the potential to deliver. But there is still a great deal that could go wrong, and government must be very careful to finish the job in Phase 2 and implement it as promised by autumn 2012.

Although its first phase may not have extended as far as many would have liked, the fact that the government has stuck to the principle of accelerating the widespread domestic take-up of renewable heating technologies should be applauded.

This incentive is a much-needed fillip for an industry which until now has been inundated with lots of sticks in the form of standards and regulations but very few carrots.

In the domestic heating sector there is no doubt that its introduction is good news for all concerned. Payments will be made to the home owner in addition to any savings resulting from the installation. By embracing the opportunities that the RHI brings, it is possible to set homes apart by offering a real marketing advantage

both in the private market and for social housing (where fuel poverty is high on the agenda).

The inclusion of air-to-water heat pumps in the long awaited details of the one-off Renewable Heat Premium Payment is a welcome demonstration that the government has confidence in this technology. Given this, the next logical step is to include them as part of the wider RHI.

We see the continued development and widespread adoption of air-to-water heat pumps as an investment in the UKs future. However, at the moment only a small minority of homes will benefit from explicit incentives. The decision to restrict some RHI payments to the fewer than three million UK homes in off-gas areas means that more than 19 million homes will not currently benefit.

PAUL THOMPSON, HEAD OF POLICY, REA PETER VERKEMPYNCK, MANAGING DIRECTOR, DAIKIN UK


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THE BIG QUESTION

Heating our leaky old housing stock is a significant cost for most people in the UK, and with oil and gas prices rising is only likely to get greater. This means more people in fuel poverty. Its also a significant cause of carbon emissions. So it makes sense to incentivise people to both to reduce their needs and switch to renewable heat.

There is much to welcome in the domestic element of the Renewable Heat Incentive. Im pleased that basic energy efficiency measures must be in place to qualify, and it's great to hear that there's going to be research into how people use renewable heat, and how well it works in practice. I also welcome its integration with the Green Deal. But (there had to be one) policy seems to be being made on the hoof:

The six-month window for applying for the renewable heat premium payments (RHPP) is during the winter, when you dont really want to be doing major renovations on your heating system. Then there are five warm months before the launch of the RHI proper will that be sufficient time to obtain any meaningful data

and feed it into the design of the RHI?

And how high will take-up be? The government still hasn't announced what rates will be available for the domestic incentives, and what the eligibility criteria are. Without this information, such investment is still prohibitively expensive for most people.

Many installers have dismissed the renewable heat payments as too small to make a difference. A change in the price of oil is much more likely to get their phones ringing.

I realise that this is a difficult 'chicken-and-egg' situation. Without the findings of their research, the eventual Renewable Heat Incentive probably won't be as effective in incentivising uptake of solar thermal, biomass boilers and heat pumps. But unless people know the long-term financial implications of investment, I dont think these rel

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