Renewable energy project monitor

David Hopwood

July/August 2011: This second monthly column, written by the ceo of the Energy Industries Council, reports on the latest new project developments in the global renewable energy marketplace.

Some 121 new renewable energy projects with a combined potential investment value of US$87 billion were announced in the two months up to the end of August, 2011.

Wind continues to be a key driving force, accounting for over a half of the projects announced in July, and just over a third of the total potential investment value of key renewable energy projects announced in August. In total, there are just over 880 active renewables projects globally and a further 943 projects proposed for future development.

In July, 72 projects were announced – with a combined value of US$41.3 billion. While the majority of these were wind farms, it was the 550MWTopazsolar PV farm that stole the limelight.

The US$3.5 billion project, to be located in San Luis Obispo County, California, now has final construction approval and work is due to start this year with completion expected by 2014. Developer First Solar received a conditional commitment from the US Department of Energy to guarantee US$4.5 billion in loans to help support the project along with a further two solar plants in the region. However, as we go to press, First Solar announced that it is to miss the DoE deadline enabling it to receive these funds. The company says it is now in “advanced talks regarding the sale and financing of the project with potential buyers utilising a different transaction structure that does not require a DoE loan guarantee.”

Topaz is the second industrial-scale solar project approved in California. The 250 MW California Valley Solar Ranch project, approved earlier this year, is the other. The two projects are estimated to be capable of producing more electricity than all the State's distributed solar projects combined.

Elsewhere, the 400MW Austerngrund offshore wind farm, to be located 50km north of Borkum in the German North Sea, has been acquired by Windreich AG.

The project, previously owned by Bard Engineering, is already progressing well down the approvals process, and construction is scheduled to commence in 2014. If it proceeds, it will produce enough electricity to supply around one million people with clean energy. Windreich is liaising with the Federal Maritime and Hydrographic Agency (BSH), the permitting authority for offshore wind projects in Germany, in the hope the wind farm can be operational by 2015. Bard will supply the turbines for the project.

July also saw what could become Greece's largest wind power plant to date edge closer to the construction phase.

Acciona Energiaki was awarded a production licence for the project, which will comprise 174, 3MW turbines. The machines will be installed in the Vermio mountains on the border of central and western Macedonia, in northern Greece. The project is still awaiting final environmental approval, due by the end of the year. If all goes to plan, commercial operation will begin in 2014. Significantly, the local population is reported to be fully behind the project, actively lobbying the central authorities to speed up the administrative process.

Meantime, Seagreen Wind Energy Ltd, a joint venture comprising Fluor and SSE Renewables, revealed more details of its plans for the Firth of Forth Zone of the UK's Round 3 offshore wind farm development programme. The Zone is located approximately 25km east of Fife in Scotland, covers an area of 2,852km2 in the outer Firth of Forth, and has a potential installed capacity of 3.5GW. This could almost double Scotland's entire existing renewables capacity.

The development is now split into 7 different projects over three phases. The Alpha and Bravo projects make up phase one, with a combined capacity of 1,075MW; phase two consists of projects Charlie, Delta and Echo totalling 1,820MW; and phase three will see a further 790MW installed across projects Foxtrot and Golf. Together the 7 projects represent an investment of US$19.4 billion.

Overall, July has been a positive month with many projects developing to schedule. Clearly, the development of renewable energy sources is high on the global agenda. Indeed, figures released by the US Energy Information Administration in July show that domestic renewable energy production is now greater than from nuclear, and is closing in on oil in the U.S.

August action

There was plenty of activity in August too, with 49 projects announced – representing an investment value of US$45.7 billion. The largest of these will be built in India – state-owned NTPC plans to invest around US$22.3 billion over a 10-year period, to construct a 9.5GW hydroelectric project on the Upper Siang River in the state of Arunachal Pradesh (in the far northeast of the country). NTPC is currently in talks with the state Government regarding the project and is preparing a detailed project report.

In the UK, a major development took place with the US$21.2 billion offshore wind farm Hornsea Zone (Phase 3) project. SMart Wind, a consortium comprising Siemens Project Ventures and Mainstream Renewable Power, has signed the first two leases for the project with the Crown Estate. The agreements set out commercial terms for use of the seabed at the Heron Wind and Njord wind farm sites within the Hornsea Zone. Each site will see 600MW installed.

Separately, Mainstream also signed a lease agreement for its planned US$2.3 billion offshore wind farm Neart na Gaoithe. The agreement with the Crown Estate secures an option for the rights to use the site, and again sets out the commercial terms for the use of the seabed. It is a significant step towards delivering the project into construction in 2014.

In the U.S. meanwhile, Neptune Wind unveiled its plans for a 500MW offshore wind farm approximately 20 miles South of Massachusetts and Rhode Island. The US$2.9 billion Normans Wind project will see the construction of 80-100 turbines in depths of 20-40 metres.

Neptune Wind intends to develop, construct and operate the wind farm itself, and has already qualified as a commercial energy leaseholder on the Outer Continental Shelf in the “area of mutual interest” between Massachusetts and Rhode Island. It anticipates getting a lease for its target area of federal waters by the end of 2012 or early 2013, although construction could be at least five years away – even if all stages of Government approvals go to plan. This project further fuels the rapidly emerging wind industry in the U.S.

Also in the U.S., BrightSource Energy has filed an Application for Certification with the California Energy Commission for the development of two, 250MW solar power plants in California's Inyo County. The US$2 billion project – known as the Hidden Hills Solar Electric Generating System – will use BrightSource's next generation plant design, which the company claims reduces land use by at least 33%, compared to traditional solar plants.

The project will use a 230 metre high receiving tower, which will allow for heliostat rows to be placed closer together – requiring less land for equivalent power generation. The proposed site is said to be well suited for a solar thermal power plant, with the predominantly flat area having access to nearby high voltage transmission lines.

In the wake of the Fukushima nuclear plant disaster, there was a greater focus on green energy sources in Japan during August too. Prime Minister Naoto Kan (before resigning) ruled that utilities pay a fixed rate to green energy producers from July 2012. Japan is to scale back its nuclear reactors in favour of solar and wind energy. The country currently generates 9% of its electricity from renewable sources. It hopes to increase this to 20% by 2020.

*Mike Major is chief executive of The EIC (Energy Industries Council).

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