Harnessing the Solar Surge: The Potential of BESS

Harnessing the Solar Surge: The Potential of BESS Get in touch Harnessing the Solar Surge: The Potential of BESS – A Case Study in Spain Monday, January 20, 2025 By Laura Susta & María Santana As Europe transitions toward a renewable-powered future, the challenge of managing intermittent energy sources is becoming increasingly critical. This year, the captured rate of solar PV has declined across the continent, dropping to 67% in Spain and 69% in Greece. For investors, ensuring expected returns on investment has become increasingly tough, whether through PPAs or by staying merchant. Therefore, reaching the ambitious targets for renewable energy deployment of the coming years is expected to be challenging.  In this context, Battery Storage Systems are emerging as a transformative solution, not only for balancing the grid but also for stabilizing the electricity prices. According to the National Energy and Climate Plan, Spain aims to achieve 22.5 GW of installed storage capacity by 2030, with at least 25% of this capacity expected to come from BESS. Some industry projections are even more aggressive, forecasting up to 20 GW of BESS deployment by 2030.  To understand the potential of this technology to mitigate the solar price cannibalization, we have built a model to compare hourly prices in scenarios with and without substantial BESS deployment in Spain by 2030.   The study is based on historical data and the expected load, PV and wind capacity according to the national targets and market consensus. The methodology used is a mix of statistical techniques based on machine learning, which allows achieving an accuracy of 85% in price prediction.   The findings are represented in the graph above, showing the difference in the two 2030 average hourly price curves, considering a RES deployment according to the national targets and market forecasts. With a BESS installed capacity of 20 GW, the production is almost constant throughout the day, as the peak during the solar hours is absorbed by the storage and then reinjected into the system during the night hours, while with 0 GW of BESS the production is definitely discontinuous.   This strongly impacts the prices, as without BESS they show a standard deviation of 55% compared to the daily average, while with the modelled BESS installation the fluctuations are reduced to 36%. The peaks remain during sunrise and sunset hours due to the higher load, but their amplitude is reduced from 100€ to 50€.   This is due to BESS’s ability to absorb excess energy when prices are low and release stored energy during periods of higher demand, creating a more stable and predictable electricity market. This brings benefits for all stakeholders: for consumers, it leads to more predictable pricing and potentially lower overall costs, for grid operators, it enhances system reliability and minimizes the need for expensive peaker plants, for producers, it improves captured prices, thereby incentivizing investments in renewable energy and fostering a virtuous cycle of growth in renewable capacity.  Surely, BESS are not the only solution available, and they must be complemented with alternatives such as demand side flexibility, which helps stabilize prices through a load shift. This has already been implemented for example by Google, to adjust the consumption of their data centres in different regions. However, demand response solutions have more significant impact on the single company but take more time to reflect on the whole system.  In conclusion, as Spain approaches 2030, BESS are expected to become the key enabler of the energy transition—a trend mirrored across European energy markets, thanks to the combination of ambitious government targets, declining capital costs, and favourable trading conditions.   However, timing and strategy are crucial to avoid the pitfalls of over-saturation and revenue erosion: there is the risk that, through too aggressive targets and supporting systems, BESS could undergo a fast cannibalization effect.   With strategic planning and early adoption, investors can leverage BESS to accelerate the transition to a renewable-powered future, securing economic and environmental benefits for generations to come.  At Our New Energy we give strategic and quantitative support to enable actors to exploit the potentials of the different technologies and maximise the benefits for all. To assist developers in making an informed evaluation, we have also developed a proprietary model to estimate the future expected merchant revenues of a BESS, and compare them with other alternatives such as incentive schemes or PPAs, to maximize the revenues while minimizing the risks.   Recent Post Harnessing the Solar Surge: The Potential of BESS Harnessing the Solar Surge: The Potential of BESS Get in touch Harnessing the Solar Surge: The Potential of BESS –… Learn More Kamilia Michaela Jakobsen20 de January de 2025 What is the mechanism about and how are the stakeholders organized? Energy Release: What is the mechanism about and how are the stakeholders organized? Get in touch Energy Release: What is… Learn More Kamilia Michaela Jakobsen13 de January de 2025 Offshore Wind Energy: A saturated market results in no bids in Danish auction Offshore Wind Energy: A saturated market results in no bids in Danish auction Get in touch Offshore Wind Energy: A… Learn More Kamilia Michaela Jakobsen12 de December de 2024 Cargar más

What is the mechanism about and how are the stakeholders organized?

Energy Release: What is the mechanism about and how are the stakeholders organized? Get in touch Energy Release: What is the mechanism about and how are the stakeholders organized? Monday, January 13, 2025 By Sofia Ubaldini Energy Release 2.0 is a mechanism introduced by the Italian state allowing energy-intensive companies to access electricity at capped prices, provided that, in order to return such cheap energy volumes, they invest in the creation of new renewable energy generation capacity. This investment can be carried out directly by the corporate or delegated to a third-party developer. Also, energy-intensive companies can participate in the mechanism either individually or through a demand aggregator, where the latter takes over the obligation to build new RES capacity or – more often – find a third-party developer to fulfill such obligation towards GSE.  The entities that have so far emerged in the aggregator’s role are mainly industry associations, energy service providers (including some ESCos) and several utilities.   From an economic perspective, aggregators are generally generously remunerated for their service by the industrial consumers for taking over all the obligations (and related risks) towards GSE and the relationship between the corporate and the aggregator often relies on a profit-sharing model. With a consumption strike price set at 65 €/MWh for years 2025, 2026 and 2027, the expected savings for the corporates generated by participating in the initiative lie in the range between 40-50 €/MWh (considering today’s electricity futures). Current aggregators profit sharing offers towards energy consumers span to as much as 50% of such expected profit, which has triggered a rather disorganized frenzy, even from operators not strictly qualified, to get their hands on these supposedly easy profits.    Challenges behind the mechanism: guarantees, volumes, time  Yet, the implementation of Energy Release presents a range of challenges for all the stakeholders involved.  One of the primary issues is the extremely tight timeframe for execution. The challenge becomes even more pressing due to the overlap with the end-of-year holiday season and significantly limits the ability of aggregators and producers to negotiate the contract for delegating the asset development. This may result in a situation where aggregators and consumers will bid on the 14th of February without having a signed agreement with the generators to back their restitution obligations.  Another major challenge arises from the guarantees involved. Firstly, GSE requests a first demand bank guarantee from corporates/aggregators to ensure the future construction of the renewable project. This requirement can be particularly challenging for some players, unless they are well-established utilities. The upside of this constraint is that it excludes less solid players from the system. However, even renown operators who have to create a new business vehicle for the purpose of becoming aggregators might face difficulties in quickly obtaining such bank collaterals.   Secondly, aggregators usually require RES developers to provide a guarantee backing the responsibilities towards GSE related to the asset construction. This guarantee is typically aligned with the independent guarantee asked by the GSE (“garanzia autonoma”), but in some cases can range to the full value of the penalty imposed by the GSE in case of withdrawal from the restitution contract (“contratto di restituzione”) between the producer and GSE. In the first scenario, the aggregator assumes the risk of having to pay the penalty if the producer withdraws from the agreement. However, although they accept to remain liable for the entire amount of the penalty, very few producers would accept to provide a guarantee that matches the total penalty value. Indeed, even if the guarantee would be in place limited to the period between 14th February and the asset COD, such collateral would be both very difficult to receive from the bank and very inefficient from a cost perspective.  Managing volume uncertainty between anticipation contracts and restitution contracts is another key challenge. Such difficulty is double folded as there is uncertainty in both the volumes that will be accepted under Energy Release and the actual volumes that the corporates will consume. The first risk is typically borne by the producer as almost all the delegation contracts include a condition precedent which ensures that the contract is only valid if the aggregator successfully secures volumes with the GSE, yet usually with a minimum volume being guaranteed to the producer. On the contrary, the second risk is often borne by the aggregator who takes on the responsibility of guaranteeing in the delegation contract that the quantity of energy returned cannot be lower than a minimum threshold agreed between the corporate and the aggregator.  Finally, fiscal issues pose significant challenges for aggregators. The energy “borrowed” through Energy Release could be required to be booked as a liability on the corporate/aggregator’s balance sheet until the obligations towards GSE are fully taken over by the producer. While this remains one of the open points currently being investigated by the market, it could give large utilities a strong competitive advantage compared to other aggregators and corporates. To address this challenge, some players are willing to offer a dynamic price premium based on the asset COD: the earlier the operation date, the higher the premium on top of the 65€/MWh. This approach underscores their prioritization of quickly closing the liability line introduced by Energy Release in their balance sheet.    Bankability of Energy Release mechanism and relationship with PPAs  A final challenge of Energy Release is ensuring the bankability of projects where only 50% of the energy could be contractually secured at a fixed price, through energy release. Indeed, banks still have mixed feelings on what financing terms to agree on for such moderate Hedge Ratios. In this context, the Power Purchase Agreements (PPA) market is offering a viable solution to circumvent the problem.  The restitution requirement under Energy Release operates at portfolio level rather with the only condition that each asset participates in the restitution with at least 5% of its energy production. This structure allows for a strategic distribution of the restitution obligations. For instance, most of the energy to be returned, (i.e. up

Offshore Wind Energy: A saturated market results in no bids in Danish auction

Offshore Wind Energy: A saturated market results in no bids in Danish auction Get in touch Offshore Wind Energy: A saturated market results in no bids in Danish auction Tuesday, December 10, 2024 – Staffetta Quotidiana  By G.P. and S.P.   Translated to English using an AI translation software. Read the original article here The first round of the Danish auction without incentives, aiming to allocate three areas in the North Sea for the construction of offshore wind farms with a total capacity of at least 3 GW, received no bids. The deadline for submissions expired last week. The second round of the auction, which will allocate an additional three coastal areas in Denmark with a capacity of 3 GW, has a deadline of April 1, 2025. The procedure for both rounds was launched in April 2024. The Danish Ministry of Climate and Energy has asked the Danish Energy Agency to investigate why no bids were submitted. The areas are allocated without state subsidies, and developers must pay a lease to the state for 30 years. Additionally, the state will own 20% of each project. According to the industry association Green Power Denmark, the lack of interest is due to rising costs for wind turbines, materials, and interest rates. Denmark does not offer incentives, and investors face uncertainties regarding the prices at which the electricity production can be sold. Specifically, there is uncertainty about the use of electricity in hydrogen production. Mikkel Kring, a partner at the consultancy Our New Energy (ONE), explains that the lack of interest is closely tied to characteristics of the Danish PPA market, currently being oversupplied combined with having limited demand growth, ultimately discouraging signing of long-term power purchase agreements (PPAs). Without PPAs or state incentives, investors are unwilling to risk building new facilities. «We have advised several potential bidders over the past 18 months,» says Kring. «Our analysis shows that the Danish PPA market is and will continue to be oversupplied, which explains the limited interest.» On the supply side, there are already many projects seeking PPA contracts, creating an oversupply. At the same time, several major Danish companies have already signed long-term agreements, leading to market saturation. On the demand side, the electrification of Danish consumption is lagging, and the expected increase in energy demand from P2X projects, such as hydrogen production, is delayed by economic challenges and unclear political support. Furthermore, Denmark has few energy-intensive industries. These factors create a gap between the prices buyers are willing to commit to in long-term agreements and the prices demanded by investors. Currently, PPA price bids are often below the costs of new facilities. «The gap between LCOE (levelized cost of energy) and market prices means that PPA prices are in some cases lower than the actual construction costs,» explains Kring. He adds that ONE has developed a proprietary PPA pricing tool  to price PPAs, that shows prices are below the LCOE for offshore wind in Denmark, mainly attributed to rising interest rates and high capital expenditures. The Danish energy system would struggle to absorb the production from the three new offshore wind farms, which could add approximately 12 TWh to the grid. To absorb all this production, additional demand is needed from industrial electrification, P2X projects, and hydrogen exports to Germany. In 2023, Denmark produced 58% of its electricity from wind and 10% from solar, according to AIE. That same year, the country was a net importer of 10% of its demand. Recent Post Offshore Wind Energy: A saturated market results in no bids in Danish auction Offshore Wind Energy: A saturated market results in no bids in Danish auction Get in touch Offshore Wind Energy: A… Learn More Kamilia Michaela Jakobsen12 de December de 2024 Unpacking Article 5-bis of DL Agriculture: Implications for Italy’s Biomethane Sector Unpacking Article 5-bis of DL Agricoltura: Implications for Italy’s Biomethane Sector Get in touch Unpacking Article 5-bis of DL Agricoltura:… Learn More Kamilia Michaela Jakobsen16 de September de 2024 Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established? Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established? Get in touch Last week (04/06), PwC published a survey… Learn More Miguel Marroquin10 de June de 2024 Cargar más

Unpacking Article 5-bis of DL Agriculture: Implications for Italy’s Biomethane Sector

Unpacking Article 5-bis of DL Agricoltura: Implications for Italy’s Biomethane Sector Get in touch Unpacking Article 5-bis of DL Agricoltura: Implications for Italy’s Biomethane Sector Written by Sofia Ubaldini Italy’s recent release of Agriculture Law Decree, through its article 5-bis can introduce significant changes to the country’s biomethane sector. Together with our local team, leading the BPA transaction space in the market, we have explored the implications of these new regulations on various stakeholders of the biomethane supply chain as well as on the overall market dynamics. Speeding up the decarbonization of difficult sector as the main reason behind the decree The objective of Article 5-bis is to promote the production of biomethane from agricultural biomass and to increase its use in hard-to-decarbonize sectors. This is facilitated through direct sale and purchase agreements between biomethane producers and industrial consumers within these sectors. Uncertainties on the definition of “production chains which are difficult to decarbonize” Article 5-bis aims to promote the use of biomethane in «production chains which are difficult to decarbonize.» However, the term is not clearly defined, and there is no explicit reference with hard-to-abate sectors or EU ETS members. As a result, the specific industries that fall under this category remain unclear. Such definition is essential as the decree provides that the direct purchase agreements recognize a biomethane GOs price of 0 €/GO, carrying significant economic implications. Industrial buyers within these production chains could claim zero GHG emissions without incurring additional costs compared to the purchase of methane. This is especially advantageous for EU ETS members, who would avoid paying both the biomethane GO and the cost of the EUA, gaining a substantial economic advantage over non-ETS players seeking to decarbonize. How this advantage will be split commercially between the producer and the ETS member will have to be agreed in the direct biomethane purchase agreement. Direct Contracts, will utilities be cut off? A significant change introduced by the decree is the requirement for direct contracts between biomethane producers and industrial buyers, a set-up that seems to exclude utilities from their traditional intermediary role. This could reshape the biomethane supply sector, diminishing utilities’ position in the value chain and limiting their role to transport and unbalance management activities. Nevertheless, utilities have always played a central part in the gas supply chain and the mentioned requirement is expected to be questioned by their representatives. Self-consumption configuration is currently an advantage for producers, but the situation can change The interpretation of self-consumption rules in Article 5-bis has sparked discussions about its consistency with the current Biomethane Decree’s operative rules. As a matter of fact, under the self-consumption configuration subsidy formula, the tariff received from GSE serves as a price floor rather than a fixed price for producers. Thus, GSE might decide to modify the operative rules in the coming future to prevent this potential distortion in the self-consumption framework. In synthesis a decree with a large potential impact on the entire supply chain but perceived as hard to be practically implemented Article 5-bis marks a significant shift in Italy’s approach to biomethane production and consumption. However, its practical implementation remains unclear, leaving market participants facing numerous uncertainties, contradictions, and concerns about its feasibility. The sector is looking forward to the release of the updated operational guidelines, expected withing next couple of months, as biomethane transactions, currently slowed, depend on this clarity to move ahead. Recent Post Unpacking Article 5-bis of DL Agriculture: Implications for Italy’s Biomethane Sector Unpacking Article 5-bis of DL Agriculture: Implications for Italy’s Biomethane Sector Get in touch Unpacking Article 5-bis of DL Agriculture:… Learn More Kamilia Michaela Jakobsen16 de September de 2024 Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established? Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established? Get in touch Last week (04/06), PwC published a survey… Learn More Miguel Marroquin10 de June de 2024 The energy transition puzzle has not a single solution The energy transition puzzle has not a single solution Get in touch ONE’s Partner Jakob Bendixen on the Danish GreenLab,… Learn More Jakob Bendixen1 de April de 2024 Cargar más

Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established?

Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established? Get in touch Last week (04/06), PwC published a survey of 36 active players in the Power-to-X market, highlighting the critical role of financing. While 50% of respondents expect to reach FID within two years, industry experts deem this timeline unrealistic under current conditions with lacking infrastructure, uncertain regulatory frameworks, and complex value chain management. Potential demand and potential supply for of greener alternatives like green hydrogen, ammonia, and methanol are strong, with both sides eager to transition from conventional fuels. Denmark, with its favorable geography and expertise in renewable energy, is well-positioned for this transition. However, the shift requires a complex transformation of the energy sector, necessitating a robust regulatory framework and transparent business practices to attract investors and unlock Power-to-X’s potential. The business case development is further complicated by the complex nature of the energy market where the fundamentals shift according to the energy transition highly impacting the feasibility of Power-to-X. Investors require solid business plans with “Proof-of-Concept,” long-term agreements such as PPAs, and trusted management to ensure stable operations. Power-to-X’s success hinges on the supply of renewable power, determining the hydrogen’s “greenness”, production profile, and cost of operation.Denmark’s energy mix supports high capture rates especially with PV, as seen with European Energy’s plant in Kassø, though operational hours are a trade-off. Additionally, electrolysers require a substantial water supply, restricting potential plant locations. Fact Box: Water Requirement: A plant producing 1000 Tonnes per Annum (TPA) of hydrogen requires 9 L of ultra-pure water per kg of hydrogen, and 1.5 L of groundwater per 1 L of ultra-pure water, amounting to 13,500 m3 of groundwater annually, equal to the average groundwater consumption in 300 private persons. Conclusion: Water is not an issue  Transport Challenges: Considering a 10 MW Power-to-X plant with a mix of solar and wind ensuring 5000 full-load hours (57%), and a 67% efficient electrolyzer, it would produce approximately 1000 TPA of hydrogen. Transporting this hydrogen in 500 kg tube-trailers would require 2000 trucks annually. Conclusion: Transport is an issue (Hydrogen pipeline etc. is key) Hydrogen, the smallest molecule, needs significant compression or space for transport. Without a pipeline to Germany, large-scale hydrogen transport from Denmark is infeasible. Without clear plans and timelines to establish the needed infrastructure, the risk of transportation risk is a crucial decisive factor. Electrolyzer technology for large-scale operations is still emerging, indicated by low TLR (Technological Readiness Level), increasing OEM risk. Different technologies have varying operational patterns, influencing their role in ancillary services, a potential revenue stream. The fundamentals of for Power-to-X in Denmark are visible but not well-established. Acknowledging the uncertainties prevalent reveals a sector with high potential and high risk. Technology is nothing without capital and capital is nothing without technology.Ensuring long-term financing entails a need for long-term certainty for investors, significantly enhancing the need for concluding long-term agreements with suppliers and off-takers. Investor Perspective Investors view Power-to-X investments with caution due to inherent uncertainties. Early developments need strong leadership and reputable partners to attract investment and enhance local impact. Leveraging the local economy is crucial; utilizing residual heat from hydrogen production for district heating or fostering new investments can strengthen the business case and reputation.Identifying additional value components that can be exploited enables revenue stacking through ancillary services, district heating, flexible optimization against the spot market and PPA which is fundamental in establishing sound business cases. The “First-mover” advantage is not evident in gaining finance, as investors prefer a proven track record. Current OEM supplies offer a two-year efficiency guarantee, presenting a significant risk for the business case with potential vulnerabilities in long-term agreements. Projects are expected to operate for 10-15+ years, making PPAs crucial for cost mitigation and alignment with EU RFNBO production requirements. HPAs (Hydrogen Purchase Agreements) are needed to ensure stable offtake with foreseeable revenue streams and strong partnerships to build a solid business case. The development of Power-to-X is complex. Project developers need financing to deploy their projects, and financiers need deployed projects to assess risks and attractiveness. Both sides share excitement and vision but are interlocked in their positions. Bridging the Gap Our New Energy seeks to be the missing link between project developers and investors, aligning expectations and realizations to ensure feasible and healthy business case development. ONE can assist in navigating through regulatory framework, identifying components for revenue stacking, applications for public tenders, and feasibility studies.With our extensive knowledge and proven track record in transactions through PPAs, we offer insights and expertise from business case development to transaction completion. Feel free to reach out for more information and support in your Power-to-X ventures. Recent Post Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established? Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established Get in touch Last week (04/06), PwC published a survey… Learn More Miguel Marroquin10 de June de 2024 The energy transition puzzle has not a single solution The energy transition puzzle has not a single solution Get in touch ONE’s Partner Jakob Bendixen on the Danish GreenLab,… Learn More Jakob Bendixen1 de April de 2024 The Silverlining: BESS and the Future of Renewables in Spain PPAs: why Italy only witnessed a few corporate cases Get in touch The Silverlining: BESS and the Future of Renewables… Learn More Miguel Marroquin14 de March de 2024 Cargar más

OBTON x Boston Scientific

Obton x Boston Scientific Get in touch Obton x Boston Scientific 2024 Our New Energy acted as the exclusive advisor in the 24,7 MW (combined 3 PV parks signed in late 2023 and early 2024) power purchase agreement between Obton and Boston Scientific that will deliver energy for 15 years. Recent Post What is the mechanism about and how are the stakeholders organized? Energy Release: What is the mechanism about and how are the stakeholders organized? Get in touch Energy Release: What is… Learn More Kamilia Michaela Jakobsen13 de January de 2025 Offshore Wind Energy: A saturated market results in no bids in Danish auction Offshore Wind Energy: A saturated market results in no bids in Danish auction Get in touch Offshore Wind Energy: A… Learn More Kamilia Michaela Jakobsen12 de December de 2024 Unpacking Article 5-bis of DL Agriculture: Implications for Italy’s Biomethane Sector Unpacking Article 5-bis of DL Agricoltura: Implications for Italy’s Biomethane Sector Get in touch Unpacking Article 5-bis of DL Agricoltura:… Learn More Kamilia Michaela Jakobsen16 de September de 2024 Cargar más

CIP x Google

CIP x Google Get in touch CIP x Google 2024 Our New Energy acted as the exclusive advisor in the 250 MW power purchase agreement between CIP and Google that will deliver energy from the Zeevonk project for 15 years. Recent Post What is the mechanism about and how are the stakeholders organized? Energy Release: What is the mechanism about and how are the stakeholders organized? Get in touch Energy Release: What is… Learn More Kamilia Michaela Jakobsen13 de January de 2025 Offshore Wind Energy: A saturated market results in no bids in Danish auction Offshore Wind Energy: A saturated market results in no bids in Danish auction Get in touch Offshore Wind Energy: A… Learn More Kamilia Michaela Jakobsen12 de December de 2024 Unpacking Article 5-bis of DL Agriculture: Implications for Italy’s Biomethane Sector Unpacking Article 5-bis of DL Agricoltura: Implications for Italy’s Biomethane Sector Get in touch Unpacking Article 5-bis of DL Agricoltura:… Learn More Kamilia Michaela Jakobsen16 de September de 2024 Cargar más

Svea Solar x Ljusgårda

Svea Solar x Ljusgårda Get in touch Svea Solar x Ljusgårda 2024 Our New Energy acted as the exclusive advisor in the 8 MW power purchase agreement between Svea Solar and Ljusgårda that will deliver energy for 10 years. Recent Post What is the mechanism about and how are the stakeholders organized? Energy Release: What is the mechanism about and how are the stakeholders organized? Get in touch Energy Release: What is… Learn More Kamilia Michaela Jakobsen13 de January de 2025 Offshore Wind Energy: A saturated market results in no bids in Danish auction Offshore Wind Energy: A saturated market results in no bids in Danish auction Get in touch Offshore Wind Energy: A… Learn More Kamilia Michaela Jakobsen12 de December de 2024 Unpacking Article 5-bis of DL Agriculture: Implications for Italy’s Biomethane Sector Unpacking Article 5-bis of DL Agricoltura: Implications for Italy’s Biomethane Sector Get in touch Unpacking Article 5-bis of DL Agricoltura:… Learn More Kamilia Michaela Jakobsen16 de September de 2024 Cargar más

The energy transition puzzle has not a single solution

The energy transition puzzle has not a single solution Get in touch ONE’s Partner Jakob Bendixen on the Danish GreenLab, that recently signed a 10 yr PPA for direct RES consumption and hydrogen production in an industrial park Just because oil has been a single answer to the energy problem for so long, it doesn’t mean we must find a single substitute to it. We have to bear this in mind approaching pioneer projects like the Danish industrial park, GreenLab, integrating renewables, green hydrogen, e-fuel production in an industrial park with its own infrastructure. In the view of ONE’s Partner Jakob Bendixen, who helped structuring a recently announced 10-year PPA on 84 MW of wind and solar directly connected to the industries of the site, including an upcoming Power- to-X plant, complexity is of course the nr. 1 feeling. But also, Jakob adds, a strong sense is emerging that work on non-mature technologies like hydrogen and synthetic fuels is now maturing much further than it appeared possible just few years ago. “Of course costs are still an issue but when it comes to decarbonization, you don’t have to compare green hydrogen to grey hydrogen but to other green fuels, like biodiesel. If you have decided to go green, don’t compare green to black, but instead compare the different green solutions. If you manage to keep the total energy costs low, by using PPAs, direct lines, adding revenues from ancillary services, recovering waste products, etc., like in this case, then the total “cost of green” is actually quite reasonable”, he says. “There must be no single solution for the oil problem, it’s better to have many to avoid dependencies”. GreenLab is a green and circular industrial park in northern Jutland, with an ambition to host industries that produce both energy products like sustainable liquid and gaseous fuels, but also non-energy products like construction boards and marine proteins. They also work with utilising energy in all its forms – by making one industry’s waste another industry’s resource. The corporate power purchase agreement just signed with Eurowind Energy is the first of its kind in Denmark, involving 54 MW of wind and 30,8 MW of solar feeding directly into GreenLab’s internal energy infrastructure. The RES capacity will power businesses inside the industrial park, including the 6MW Power-to-X production, which is already being tested inside the park. GreenLab is designated as an official regulatory energy test zone in Denmark. This enables the green companies within the industrial park to share each other’s surplus energy, which so far have encountered barriers under the current electricity regulations. By balancing energy production with industrial consumption, new industrial parks, like GreenLab, can be established without negatively affecting the existing collective energy network. This contributes to reduced grid fees, and thereby lower energy costs, which is especially critical for technologies like green hydrogen. Ideally, GreenLab’s test zone will be a proof of concept which can be replicated to other industry parks globally. The cost of making hydrogen depends for 2/3 on the cost of electricity and for 1/3 on everything else. With reduced grid fees, a reduction of up to 40% on the cost of power can be achieved, cutting down the overall costs dramatically. There obviously is still a large difference between building a complex business case for PtX integrated with PV and wind, and for the simple stand-alone RES generation project. “With ready to build PV or wind projects, the risk for the developer is low. But with integrated PtX projects you cannot have all the numbers in advance and some faith is needed that the whole thing will work. But we are learning at every step and I feel we moved a lot further than we were only a few years ago. Going forward we expect to see capture rates increase on stand-alone RES projects, and therefore more companies will be interested in projects with some level of integrated PtX solutions”, Jakob concludes. Recent Post Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established? Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established? Get in touch Last week (04/06), PwC published a survey… Learn More Miguel Marroquin10 de June de 2024 The energy transition puzzle has not a single solution The energy transition puzzle has not a single solution Get in touch ONE’s Partner Jakob Bendixen on the Danish GreenLab,… Learn More Jakob Bendixen1 de April de 2024 The Silverlining: BESS and the Future of Renewables in Spain PPAs: why Italy only witnessed a few corporate cases Get in touch The Silverlining: BESS and the Future of Renewables… Learn More Miguel Marroquin14 de March de 2024 Cargar más

The Silverlining: BESS and the Future of Renewables in Spain

PPAs: why Italy only witnessed a few corporate cases Get in touch The Silverlining: BESS and the Future of Renewables in Spain In the ever-evolving landscape of Spain’s energy market, a recent development has caught the eye of industry experts and stakeholders alike. The captured prices for photovoltaic energy have experienced a significant downturn, a scenario attributed to an abundance of sunlight and unusually mild temperatures across the Iberian Peninsula. This trend aligns with our projections at Our New Energy, yet it raises pertinent questions about the future of the renewable sector, as astutely noted by Rubén Esteller (link). This downturn in prices arrives at a particularly precarious moment. Spain is at a crossroads, with over 40GW of renewable projects in limbo, awaiting final authorizations amidst bureaucratic delays (link). These projects, unable to secure final permits can/should not sign PPAs and find themselves on the brink of economic and executional collapse. Low electricity prices seem beneficial for taxpayers; the paradox: Excessively low prices deter investment in the energy transition and decarbonization efforts, posing a significant challenge to a sustainable energy transition. Amidst this backdrop of challenges, a hidden opportunity emerges for Battery Energy Storage Systems (BESS). Spain and Portugal, trailing behind their European counterparts in BESS regulation, now have a chance to leap forward. Countries like Germany, Netherlands, Poland or Italy have already implemented mechanisms to encourage investment in energy storage, recognizing its critical role in managing the intermittency of renewable resources. Current price scenario, with low prices projected to remain low, prompts a crucial question: How will the renewable industry adapt? The answer lies in support mechanisms, specifically, the introduction of auctions or capacity markets (link) (old story: taxpayers pay). This market is poised to offer a lifeline to technologies under strain also for BESS. BESS stands to benefit from the current market dynamics, capitalizing on the opportunity to store energy during low-price periods and release it when prices peak. This arbitrage revenue could redefine the investment landscape for storage in Spain, turning a significant solar challenge into a catalyst for batteries. As we navigate these turbulent waters, the reactions of the renewable industry, the trajectory of power prices, and the actions of policymakers will shape the future of Spain’s energy market. The unfolding scenario presents a compelling narrative of resilience, innovation, and the relentless pursuit of sustainability. What do you think? How will renewable industry respond? What trends will we see in power prices? And how will policymakers adapt to these new dynamics? Recent Post Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established? Financing Opportunities for Power-to-X in Denmark: Are the Fundamentals Established? Get in touch Last week (04/06), PwC published a survey… Learn More Miguel Marroquin10 de June de 2024 The energy transition puzzle has not a single solution The energy transition puzzle has not a single solution Get in touch ONE’s Partner Jakob Bendixen on the Danish GreenLab,… Learn More Jakob Bendixen1 de April de 2024 The Silverlining: BESS and the Future of Renewables in Spain PPAs: why Italy only witnessed a few corporate cases Get in touch The Silverlining: BESS and the Future of Renewables… Learn More Miguel Marroquin14 de March de 2024 Cargar más