Normally in times of low oil prices, such as those which plagued the petroleum industry from late 1997 to early 1999, there is a freeze on the development of alternatives to fossil fuels.
However, the drive to achieve commercial viability of renewable energy technologies continued in Europe during this period, although the rate of development was slower than had been anticipated before the oil price slump.
An indication of just how far renewables had become accepted in Europe`s energy industry came at the annual meeting of BP Amoco PLC shareholders in London on Apr. 15, 1999. There John Browne, BP Amoco chief executive, undertook a spot of crystal ball-gazing, appropriate to his growing role as one of the petroleum industry`s chief prophets of renewables.
Browne told the shareholders that, while no amount of investment in renewable energy could hide the fact that the world would continue to need oil and gas in the foreseeable future, renewables would provide a significant proportion of the world`s energy by the middle of the 21st Century.
"That`s why we have doubled our investment in solar power over the last 2 years," said Browne, "and it is why we acquired Enron Corp.`s stake in Solartex (a solar power joint venture between Enron and the former Amoco Corp.). We are now the leading solar company in the world.
"We are determined to use that base to develop both the technology of photovoltaics and the market for solar power. But solar is a long-term business. It will take at least a decade of research and development to make it a viable commercial proposition."
In the meantime Browne said BP Amoco was committed to a set of progressive actions which included reducing emissions and producing a new choice of clean fuels. "We want to show, through practical actions, that oil and gas can be produced and used without causing harm to people or to the natural environment," he said.
And as an indication that the world was beginning to recognize the petroleum industry`s commitment to renewables, Royal Dutch/Shell Chairman Mark Moody-Stuart was named by the business and environment magazine Tomorrow as winner of its 1999 Environmental Leadership Award.
The Shell chief was deemed to have "dared to think the unthinkable" in the oil industry, by embracing the notion of a future beyond fossil fuels. Also, Moody-Stuart "displayed a willingness to respond to stakeholder concerns and to address difficult issues of corporate social responsibility. He has piloted perhaps the most remarkable and profound corporate shift of its kind."
Momentum
Yet concern about slowing momentum in the energy industry`s move towards renewables was put on the political agenda in July 1999.
The Renewable Energy Working Party of the International Energy Agency, Paris, called for the energy industry to speed the rate of adoption of renewables.
The call came at a time when the UK regulator Office of Gas & Electricity Markets (OFGEM) reduced its levy on fossil fuels to support renewable energy projects because of slow take-up of renewables schemes.
OFGEM said its fossil fuel levy for England and Wales would be cut to 0.3% from 0.7% beginning Oct. 1, 1999.
"The reduction," it said, "follows a slow-down in the expected rate of commissioning schemes approved at the last rate-settling exercise."
The IEA said that, to solve the slow implementation problem, industry and governments must work towards the reduction of technology costs, innovative financing mechanisms, stable energy policies, fair access for renewables, information and training, enhanced research and development efforts, and international cooperation.
"The current renewable energy market is small but growing," said the agency. "The increased push to develop renewables in IEA member countries is largely driven by environmental concerns, notably the fear of global climate change. In the developing world, renewable energy technologies can offer needed energy services to regions that are poorly served by conventional energy.
"Renewable energy development is at a crossroads. Notable progress in installing renewable systems has been made in recent years; however, the base is relatively small, and the industry is still young.
"Yet momentum has picked up. There is significant public support, and the technologies are becoming more reliable and cheaper. Governments are adjusting their policies to encourage greater market penetration of renewable energy and to foster industries based on renewable energy sources."
Industry acceptance
Browne`s repeated public pronouncements on renewables were evidence that the energy industry`s long-term thinkers no longer asked whether renewable energy will prove viable, but when it would make money without government concessions.
In the petroleum sector Royal Dutch/Shell and BP Amoco were building renewable energy businesses with a view to the long term, while a host of small enterprises was marching into the energy industry with small-scale power generation projects.
Despite BP Amoco`s highly public stance on renewables, perhaps the most significant milestone in the progress of renewable energy towards commercial viability was the establishment of Shell International Renewables (SIR) as a new core business for the Anglo-Dutch petroleum giant in November 1997.
Shell committed to invest more than $500 million over 5 years in renewables-small compared with Shell`s overall spending, perhaps, but much more than any other renewables company to date.
Initially, SIR was built around two renewables technologies: photovoltaics, which form the basis of solar panels, and biomass, specifically the harvesting of fast-growing trees as fuel for wood-burning power plants.
Significantly, Shell`s solar technology was being developed in-house, while its biomass schemes were a spin-off of its forestry businesses, which had been making money from pulp and wood veneer production for almost 20 years.
The formation of SIR was based on Shell`s expectation that renewables will fill 5-10% of the world`s energy needs by 2020, rising to perhaps more than 50% by midcentury.
With worldwide energy demand expected to grow at about 2%/year to more than 650 million b/d of oil equivalent by 2060, that 50% represented a massive potential to earn money.
When BP and Amoco merged, the world`s largest solar power company was created. This unit expected to achieve a turnover of more than $1 billion/year by 2010. While BP Amoco bought into technology initially developed in the academic sector, its commitment to solar power was shown by its steady investment to expand production capacity.
Legislative push
In May 1999 the European Union gave its plans for renewable energy a little more substance in a move intended to boost the energy industry`s tentative interest in renewable energy projects
The EU aimed to have renewables meet 12% of Europe`s energy needs by 2010 and envisaged an acceleration of renewable projects through 2003 by stimulating private investment in "near market technologies-solar, wind, and biomass."
The EU kicked off a campaign intended to lead to the installation of 1 million photovoltaic systems, a total of 15 million sq m of solar collectors, 10,000 Mw of wind generating capacity, 10,000 Mw-hr of combined heat and power biomass installations, 1 million homes heated by biomass, 1,000 Mw of biogas generating capacity, and 5 million metric tons of liquid biofuels generating capacity.
These projects were expected to require investment amounting to 30 billion euros ($30 billion), of which 75-80% would come from private sources.
"Much of the necessary public funding is already in the pipeline and planned, mainly at national level, but also from EU programs," the EU said.
Around the same time the EU slated debates on the creation of an internal market for electricity generated from renewable resources and on raising public awareness of the need to reduce emissions of greenhouse gases.
In mid-April the European Commission adopted a working paper providing detailed analysis and a review of options for potential EU action to create a competitive market across member countries for electricity generated from renewable energy sources.
At that time also the EU`s European Consultative Forum on the Environment and Sustainable Development called for a large-scale campaign to generate public knowledge of climate change issues and published a report which would be debated by the European Council.
Meanwhile, the IEA noted that during April 1999 worldwide wind energy capacity reached 10,000 Mw, demonstrating that "wind is the fastest growing of all renewable energy sources."
The EU`s working paper on creation of a market for "green" electric power suggested that there were two options for the creation of a Europe-wide market.
In the short term the EU anticipated that legislation, probably in the form of a directive, could be created to help establish a market; alternatively, in the medium term the EU might develop a renewable electricity business through "the operation of the EU treaty rules on the internal market and state aid rules."
Consultation
In March 1999 the UK`s Department of Trade & Industry (DTI) issued a consultation paper on the prospects for renewable energy in the 21st Century as part of its drive to reduce greenhouse gas emissions in the wake of the Kyoto climate change agreement.
The DTI set a target of satisfying 10% of UK electricity demand from renewable energy sources by 2010. This compared with an EU target to have 12% of all primary energy produced from renewable resources by 2010.
Despite the difference in approach between the UK and the EU, the responses to the DTI consultation paper were an indication of how renewables were being viewed in Europe and showed that some technologies were further down the road to acceptability and viability than others.
The DTI said that despite the growth in renewable energy capacity in recent years, the renewables sector was unlikely to be able to meet the government`s 10% target.
"The industry is perceived to be too small and fragmented," it said.
The consultation paper received 260 responses from a wide variety of organizations and individuals, including conventional energy producers, the renewables sector, the environmental lobby, local government, and the public.
"Most respondents," said the DTI, "expressed satisfaction that the government is taking renewable energy seriously and agree that renewable energy has an important role to play in meeting climate change targets.
"Most welcome or support the 10% target or believe that the target should be set at a more challenging level. There is also considerable support for a longer-term view to maintain the momentum after 2010 when additional CO2 emissions reductions can be expected.
"At the other end of the spectrum are those who feel that the government is not taking its 10% target seriously, often referring to it as an aim rather than a target. There are also those who believe the 10% target to be overambitious given current planning and financial constraints and the limited level of development achieved to date."
Solar power
In April 1999 BP Amoco started a program to install its own solar power technology in 200 of its new gasoline stations around the world over 2 years.
The company said solar panels would help to meet the electric power needs of all new BP Amoco service stations slated to be built in the UK, Australia, Germany, Switzerland, The Netherlands, Japan, Portugal, and Spain.
A typical installation would incorporate up to 400 of BP Amoco`s solar panels in the canopies above the pumps. The 200-station program was expected to cost $50 million and require 3.5 Mw of solar power generation capacity.
BP Amoco claimed the solar panels would generate more clean energy than would be consumed in meeting the stations` lighting and pump power requirements. The installations would be connected to local grids so excess electric power could be exported during the day and the shortfall imported at night.
Browne said, "Our own use of solar power is an example of BP Amoco`s commitment to tackling the issue of climate change.
"Not only will BP Amoco be one of the largest producers of solar photovoltaic cells in the world but also it will be one of the largest single users of solar power.
"By installing solar panels at such a large number of sites across the world we will also learn and add to expertise in handling issues of grid connection, contribute to the standardization of equipment, and drive down costs for all our solar customers."
The decision to install solar panels at gasoline stations followed a pilot program within BP Amoco involving 19 existing service stations in Europe, Australia, Malaysia, and the US. The pilot program was expected to be extended with the construction of new prototype sites in France and the US.
The DTI said that respondents to its consultation paper felt that photovoltaic technology offered enormous potential and that the government was wrong to view solar power as a long-term technology.
"Other countries," said the DTI, "have recognized and are developing the potential of this technology, and the UK is likely to be left behind if it does not follow suit.
"Building-integrated photovoltaics is perceived to be mature technology and to be cost-effective in a growing number of applications. Cautionary notes include the high capital costs and low efficiencies of photovoltaic systems, and a lack of sustainability associated with the use of rare metals."
Solar-panel manufacturers saw the integration of photovoltaic cells in building facades for new buildings as a major market. Yet the cheapest stone building facade cost about $450/sq m, compared with $1,300-1,600/sq m for a photovoltaic panel.
While the cost for solar panel facades was roughly the same as that for marble, the market was cautious because it remained to be proven that a solar panel facade could bring in the same rent per sq m as marble in new buildings built for office developments.
Recognizing this fact, the governments of Japan, Germany, and The Netherlands started government initiatives to support building-integrated solar projects. Meanwhile, in Germany and the US, support was being provided at municipal and state levels.
Besides providing panels for integration into buildings, Shell`s solar thrust was in undeveloped energy markets such as South Africa, India, and Sri Lanka, where small domestic solar power units were being installed as an alternative to traditional, capital-intensive rural electrification programs.
Shell claimed to be developing such schemes on a commercial basis and argued that for the hundreds of millions of people, usually poor, in areas without electricity, the small solar units cost less each month than the batteries, candles, and kerosine they rely on normally.
Likewise, BP Amoco was looking beyond the main building-integrated solar power market for innovative applications. The company secured contracts to power entire communities in the Philippines through solar power and was installing solar panels in many of its European gasoline stations as a way of slashing main electric power requirements.
BP Amoco also provided 500 solar power units for the athletes` village under development for the 2000 Olympic Games in Sydney, Australia. The village was intended to be sold for conventional housing when the games were over. Its 665 permanent houses each had a 1 kw peak solar panel installed.
One problem facing photovoltaics manufacturers was health and safety concerns over the use of cadmium in some solar cell technologies. One thin film technology with great performance potential is cadmium telluride, but this had already been banned from the Japanese market.
However, manufacturers were working on alternative materials such as copper indium gallium diselenide and were investigating the prospects for amorphous silicon technology. These processes still faced major obstacles in manufacturability, though.
Despite the problems, solar panel manufacturers were confident they were backing a winner. The sales price for current crystalline silicon-based solar panels equated to $5-7/watt for electric power, but anticipated developments in thin film technologies were expected to bring the cost down to less than $1/watt.
Wind power
While wind turbines might seem the most obvious candidate for a truly renewable resource, wind power faced the most opposition from local environmentalist groups.
"Wind turbines," said the DTI, "are perceived as industrial developments that damage the landscape and pose a major threat to the environment. Their adverse effect on tourism-present and future-is highlighted, and other problems raised include declining property values and the impact of turbine noise and rotation."
The British Wind Energy Association (BWEA) said the claims about turbine noise were exaggerated but admitted that the reliance of wind turbines on an unreliable force limited the potential of wind power. The group anticipated that wind power could supply up to 15% of the UK electric power requirement without a problem.
But Britain was looking to the example of Denmark for how to develop its wind power sector. Denmark had one inshore wind farm and was developing several more, while the UK had sanctioned its first inshore wind farm near Newcastle-upon-Tyne.
For the longer term Britain`s wind power companies were looking at the feasibility of building offshore wind power installations, which would export electric power to shore via subsea cables. One scheme was being studied for the East Anglia region, the hub of the UK offshore gas industry.
At the time of writing petroleum companies had not got actively involved in the wind power sector. However, Shell became of member of the BWEA and was studying the technology`s potential with a view to adding it to its renewables portfolio. Shell was also studying the feasibility of building a wind farm alongside one of its onshore installations in Scotland.
Meanwhile, wind turbine technology improvements were expected to reduce the per-unit cost of electricity generation. In 1999 the largest wind turbines had capacity to generate 1.5 Mw of power, but new turbines expected to be commercially available after 2000 were anticipated to be rated to 4.5 Mw. Besides capacity increases, manufacturers were also looking to reduce the "overengineering" of early turbine designs.
The wind energy sector`s 10,000 Mw capacity landmark was announced during a meeting in Madrid of the executive committee of the IEA.
An IEA official said that the world`s installed wind capacity generated electricity equivalent to more than twice the yearly consumption of Madrid, 20 billion kw-hr, and that Germany, the US, Denmark, India, and Spain accounted for 80% of worldwide wind power capacity.
"In 1998," said the IEA, "wind was the fastest-growing renewable energy source for the fourth year in a row, with 2,100 Mw of new capacity installed. Worldwide wind power equipment sales topped $2 billion.
"Worldwide wind energy growth has been driven by improved technology and supportive government policies. The EU estimates that more than 40,000 Mw will be installed in EU member countries by the year 2010, partly in offshore installations planned by Denmark and The Netherlands. The US is expected to reach 10,000 Mw of installed capacity, much of it in the Great Plains states, by the same year."
Biomass
A number of biomass technologies-the burning of naturally produced materials to generate power-were being developed.
Ironically, the most advanced of these in terms of market readiness-wood-burning-was the traditional energy source of the rural poor but was being promoted as a large-scale energy source through developments in forestry and technology.
Shell`s forestry program resulted in the development of techniques to grow eucalyptus trees at a rate of up to 10 m/year, enough to provide fuel-sustainable power projects. As with its solar installations, Shell saw biomass as a candidate for remote locations and rural electrification schemes.
While most biomass projects were expected to be built in the developing world, Shell`s first biomass operation was in Norway. Shell bought a district heating plant at Kirkenaer, 140 km northeast of Oslo, alongside which it build a plant to make wood waste blocks from waste from a nearby wood mill. Shell planned to use the blocks to fuel its own plant and also to sell them to industrial customers nearby.
In the UK, a unit of Yorkshire Water PLC built a 10 Mw power plant designed to burn wood from nearby coppiced willow and poplar plantations to meet the daily energy requirements of 34,000 people in the area.
The DTI saw benefits from biomass schemes of sustainability, potential for local jobs, and suitability for small and large scale projects but raised concerns over emissions and said that more attention needs to be given to anaerobic digestion, in which gases excreted by bacteria are used as fuel, as a potential biomass technology.
Wave power
Down the years many of Europe`s inventors turned their minds to the problem of how to extract power from the motion of waves, but it was only in 1999 that the vision became a reality.
Applied Research & Technology Ltd., Inverness, Scotland, won a 15-year power purchase contract based on the installation in Ireland of a 2 Mw wave turbine, on which was to be mounted a 1.5 Mw wind turbine.
However, an anticipated EU grant was not forthcoming, and the project was shelved. Nevertheless, the same technology was incorporated in a smaller wave power unit later installed in a cave in Scotland`s Hebrides Islands to supply power to the local community.
While wave power was thus still effectively marginal as a stand-alone power technology, it was expected to become commercial. One idea was to utilize wave energy as a means of providing power to remote offshore oil and gas platforms.
Anticipating this, London-based British-Borneo Petroleum Syndicate PLC bought a 19.73% stake in ART with a view to developing the technology for generating several Mw of power in remote offshore fields.
Other approaches
In April 1999 Shell took its pursuit of renewables down another path by joining the "California fuel cell partnership," which planned to test fuel cell-powered vehicles under real, day-to-day driving conditions.
The partnership then comprised Shell, Texaco Inc., Atlantic Richfield Co. (subsequently taken over by BP Amoco), Daimler Chrysler, Ford, and fuel cell maker Ballard Power Systems, along with the government of California.
The group aimed to place about 50 fuel cell vehicles on the road during 2000-2003. Daimler Chrysler and Ford would each initially provide five fuel cell passenger cars by 2001, while Californian bus companies aimed to provide 20 fuel cell buses. All would be powered by Ballard fuel cells.
Earlier Shell had joined with Daimler Benz, Ballard, and Ford to cooperate in research into fuel cell propulsion. Shell believed its Catalytic Partial Oxidization technology, which converts liquids fuels into hydrogen-rich gas, was a potential winner in the battle to use gasoline as a source of hydrogen to power fuel cell vehicles.
Renewables` prospects
The EU said that renewable electricity from hydroelectric, wind, solar, biomass, and photovoltaic sources had been increasing in the EU years at a rate of 15-30%/year, excluding large-scale hydroelectric schemes, since 1990.
"This trend is strongly expected to continue," said the EU. "The increased use of renewable-generated electricity will play an important part in the overall package of measures that each member state and the EU as a whole will have to take in order to meet the climate change commitments accepted by the EU at Kyoto.
"In order for renewable-generated electricity to continue to develop, financial support schemes will play a vital role in the coming years. It appears likely that such electricity will continue, at least in the medium term, to cost more to produce than `traditional` sourced electricity. All member states have such support schemes in place. However, the nature of the schemes differs considerably between countries."
The working paper was said to include analyses of the nature, advantages, and disadvantages of the differing support schemes operating in the EU; the factors that needed to exist to ensure the long-term growth of renewables generated electricity under optimum conditions; and the options available to the EU in seeking to ensure the creation of such factors.
Meanwhile, the EU said its environment and sustainable development panel concluded that the public had a vital role in reducing greenhouse gas emissions.
"Final consumption accounts for about one third of greenhouse gas emissions," said the EU, "and transport for a further one-third. An initiative is necessary to foster changed attitudes and behavior.
"In a report prepared for discussions on climate change policy at the European Council during June, the (environment and sustainable development) forum also calls for the systematic and effective involvement of stakeholders in EU policy-making, and diversification of primary energy sources."
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Solar panels line the forecourt canopy of one of about 200 BP Amoco service stations in a program to use solar energy for electrical power. Photo courtesy of BP Amoco.
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Photovoltaic panels line form part of the façade of this building of the University of Northumbria, Newcastle, UK. Photo courtesy of BP Amoco.
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A 500 kw turbo-generator being assembled ahead of installation by Wavegen on the Scottish island of Islay. Wavegen is developing the turbine technology used here for application on remote offshore installations. Photo courtesty of Wavegen.
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Wavegen`s 500 kw IMPET plant on the Scottish island of Islay is the world`s first commercial scale wave energy plant to be connected to an electric power distribution grid. Photo courtesty of Wavegen.
