Bloomberg New Energy Finance - Week In Review

This Week In Review was sent on Tuesday 16 September.

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SCOTTISH VOTE MAY BRING BIG ENERGY CHANGES NORTH AND SOUTH OF THE BORDER

Over the last week, news headlines in the UK and abroad have been dominated by the referendum on Scottish independence scheduled for this Thursday. If voters choose to leave the UK, Scotland would likely see renewable energy investment drop due to uncertainty about future support, according to Bloomberg New Energy Finance research. Some developers have already responded to the referendum uncertainty: Infinis, a renewable power company, said in August that it would wait until after 18 September to take final investment decisions on the 55MW Galawhistle and the 48MW A’Chruach onshore wind farms.

The ‘continuing UK’ – ie, England, Wales and Northern Ireland – may also experience a short-term reduction, though some projects in those countries might benefit if projects in Scotland are no longer eligible for support under the contracts for difference programme. One of the eight projects that qualified in April for early contract-for-difference support is SSE’s 664MW Beatrice offshore wind project in Scottish waters.

Generally, the continuing UK government will find it tough to convince its electorate to continue supporting new renewable energy development north of the border, though both nations are likely to want to avoid retroactive changes on existing projects.

As for the wider electricity sector, Bloomberg New Energy Finance analysis suggests that the most cost-effective approach would be to continue a single, integrated power market of England, Wales and Scotland. That said, divergent policy on nuclear and renewables payments may lead the continuing UK to argue for some separation. In fact, Scotland may be more dependent on England & Wales as a customer. Less than 5% of net annual electricity consumption in England & Wales was met by Scottish generation over 2004-12. A greater share came from continental Europe via the 3.5GW of interconnectors, with another 5GW planned for operation by 2020.

Elsewhere in global clean energy, India is due to introduce a policy aiming at 1GW of offshore wind by 2020, seeking to emulate Europe’s success with this technology. The Ministry of New and Renewable Energy will seek cabinet approval for the policy shortly, joint secretary Alok Srivastava told Bloomberg News on Friday. Seeking to emulate Europe’s success, India already has some 21GW of onshore wind farms but as yet none at sea. It is looking offshore as the best sites on land fill up and poor roads restrain the use of larger, more productive turbines.

A target of 1GW by 2020 would be a tough ask, however, according to Bloomberg New Energy Finance’s H2 2014 Offshore Wind Market Outlook. It will take some time for a proper policy to be put in place and then years to build an offshore wind industry. At most, India will have a project or two in place by 2020 but development is more likely to be restricted to some demonstration sites. In the meantime, Suzlon, India’s top wind player, is in talks with Japanese companies about forming a joint venture to make offshore wind turbines, attracted by access to cheap yen loans.

This would not be the first recent offshore wind partnership, as projects at sea become costlier and more complex. Mitsubishi Heavy Industries and Denmark’s Vestas teamed up last year, followed by Areva of France and Spain’s Gamesa in January, and General Electric’s acquisition of Alstom’s power assets in June.

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Australia is likely to see $2.9bn of clean energy investment in 2014 if its renewable energy target is not modified

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Q&A of the week

Microsoft imposes self tax for clean energy

Microsoft is helping pay for clean energy projects like wind farms by charging itself a fee for the carbon emissions associated with the activities of its approximately
130,000 employees worldwide. 

The Redmond, Washington-based maker of software like Word and the Xbox game console is searching for opportunities to purchase renewable power as it seeks to maintain a carbon-neutral status, according to Rob Bernard, chief environmental strategist for Microsoft. 

In July, Microsoft announced it agreed with EDF Renewable Energy to purchase up to about 675,000 megawatt-hours of renewable energy from the Pilot Hill Wind Project in Illinois. Bernard said it was the company’s second power purchase agreement and largest wind investment to date. It was part funded by proceeds from Microsoft’s carbon fee, he said. The 175-megawatt wind facility will begin delivering green electricity to the grid that powers Microsoft’s data centre in Chicago in 2015. 

Bernard spoke with Clean Energy & Carbon Brief about the meaning of carbon neutrality and the energy challenges all technology companies face. 

Q: Microsoft reached its carbon-neutral goal. What are you doing now to make sure you constantly maintain and meet the requirements of that goal? 

A: Some recent changes in our approach [to carbon neutrality] have purchase power agreements. [We’ve had] two major projects in the United States totalling close to 280 megawatts of wind power in two different states. For us, it is not about getting closer
or further from meeting the [carbon-neutral] goal as much as it is about modifying and
constantly adapting our approach.

Q: How much do you rely on offsets to help you meet your carbon-neutral goal? 

A: We actually divide offsets in two categories. There are offsets in terms of…

This is an excerpt from the Clean Energy & Carbon Brief published weekly. To subscribe to the Clean Energy & Carbon Brief, click here.

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