Why did China decide to develop its distributed solar generation so rapidly? How does Kenya develop its power system with the help of the World Bank? How did India manage to provide its most remote villages with electricity?What steps does the European Energy Exchange take in order to resume trading volumes? And, finally, how can we use blockchain technologies for energy trading?
You will learn about all this from Ukrenergo’s traditional weekly news digest. Stay tuned to find out about the most interesting events happening in the world of energy.
1. China built nearly 10 GW of solar power plants in the first quarter of 2018. In the first quarter of this year, China commissioned 9.65 GW of solar photovoltaic capacity, up 22 percent on the same period of the previous year, including 1.97 GW of utility-scale and 7.68 GW of distributed solar power capacity.
At the same time, according to experts, the China’s utility-scale segment decreased by about 64 percent in the first quarter of 2018, as compared to the same period of the previous year, while the segment of distributed solar power increased by 217 percent.
Overall results of the first quarter exceeded expectations. Thus, Asia Europe Clean Energy (Solar) Advisory Co (AECEA) previously predicted that 7.5 GW would be installed in China in the first quarter. Despite the strong growth in power generation by alternative energy sources, the curtailment of electricity generated by solar and wind power plants significantly decreased in the country. As for solar power, the share of curtailment fell to 4.3 percent, down by 5.4 percent compared with the same period of the previous year.
It is worth reminding that in 2017, China brought into operation the record high number of solar power plants with the total capacity of 53 GW. According to the AESEA forecast, during the current year, China will install less – “only” 40-45 GW. The forecasts from other organizations such as BNEF, IHS Markit and GTM Research are more optimistic – 48-60 GW, while Bernreuter Research forecasts for China up to 65 GW of new solar power plants in 2018. In any case, such forecasts are striking.
2. USD 180 million for the power sector in Kenya. The World Bank has approved a loan of USD 180 million for Kenya Electricity Generation. The loan will help strengthen the financial position of the state-owned company, which produces more than 70 percent of electricity in Kenya. A loan guarantee will help the country with long-term commercial financing to refinance KenGen’s existing commercial loans, improve its quality and contribute to the further development of renewable energy in Kenya. In its statement, the World Bank also noted that the project would eventually help reduce the cost of electricity for population.
It is worth noting that the installed production capacity in Kenya amounts to 2,370 MW, while the maximum demand is approximately 1,770 MW. The state-owned KenGen provides the installed capacity of 1,631 MW. At the same time, the demand for electricity in the country increases by about 8 percent annually. The richest economy in East Africa is accelerating electricity production and investing in its grid to keep pace with the rising demand for electricity and reduce shutdown rates. Moreover, Kenya relies heavily on renewable energy sources, such as geothermal and hydropower resources. The first step towards energy reforms has already been made as the Kenyan Minister of Energy has asked the industry regulator to reconsider electricity tariffs following repeated consumer complaints that Kenya Power, the country’s power distributor, overestimated them. This was one of the World Bank’s requirements, and this is how the African country is showing its willingness to take active steps to reform its own power sector.
3. India finally provides each village with electricity. As it is known, a few hundred million people still live without electricity in India. However, on April 29, 2018, Indian Prime Minister Narendra Modi announced that every Indian village had received access to electricity. The village of Leisang in the remote state of Manipur became the last one to have been connected to the grid. It should be noted that there are different energy supply options. India uses distribution networks supplying electricity from large “centralized” power plants as well as self-contained off grid solutions, including those based on solar energy. At the same time, there is no access to electricity for each individual household in the indicated settlements. The village is considered to be electrified if 10 percent of households and public institutions, such as schools and hospitals, are connected to the electricity supply.
Therefore, the Government led by Modi will have to make efforts to light every Indian house. And this is quite possible. Thus, in September last year, India launched “Saubhagya Yojna” program, specifying that each household in the country could be electrified by the end of 2018. The program provides citizens with solar panels, energy storage devices and LED lamps. “Electricity has come to every village, and very soon it will come to every house,” said the Prime Minister, speaking in the state of Karnataka. However, many independent observers believe the timing is too ambitious. However, we would like India to succeed in achieving its energy goals.
4. The European Energy Exchange to increase gas sales and carbon emissions quotas. The European Energy Exchange (EEX), the biggest energy bourse on the continent, said it would increase the volume of trade in energy assets, in particular gas, carbon emissions and cargo, in 2018. Let us remind you that the regulatory decision to split up German and Austrian power trading zones approved on October 18, 2017 created uncertainty among traders and led to a drop in profits. However, EEX has since been actively developing new separate financial products and diversifying its range in other countries.
“We are planning a record high year both in terms of turnover and our financial results,” EEX CEO Peter Reitz said during live broadcasting from the exchange’s headquarters in Leipzig. The EEX also developed new control contracts for Germany to compensate for previous reductions.
Moreover, the EEX is set to promote other key products such as gas trading, carbon emissions quotas and futures, while its subsidiary CLTX in Singapore started to trade freight contracts. Through the acquisition of the US peer Nodal exchange last year, the EEX added a business entity accounting for 21 percent of the country’s trading market. This step has made the European Energy Exchange present in all time zones of the world.
In addition, the EEX announced that it had deepened its partnership with US business development firm IncubEx, which will work with Nodal to launch environmental contracts in the second half of 2018, for example, considering the carbon market in California. This is why 2018 can really become a record high year for the European Energy Exchange.
5. Blockchain technologies for energy trading. British company Centrica has launched a trial of blockchain technology for electricity trading. The project will involve 200 households as well as enterprises that will use a new platform for the purchase and sale of energy. Centrica launches this project in the Cornwall area in the west of the UK to explore how blockchain technology can change the behavior of consumers buying and selling energy. The project is a part of the Local Energy Market trial and is being developed in partnership with LO3 Energy.
This blockchain site is estimated at the level of GBP 19 million and is seen as a new approach that can change the traditional power model. Mark Hanafin, Chief Executive of Centrica Business, said: “The proliferation of digital technologies is having a significant impact on the energy industry, allowing us to find new and better ways of delivering energy and services to our customers. This is an exciting opportunity for us to test blockchain technology beyond the theoretical and put it into practice, developing innovative new solutions that will empower consumers in the UK to take control of how they engage with energy.”
Let us remind you that blockchain, the chain of transaction blocks, is a distributed database that maintains a list of entries of so-called constantly increasing blocks. Its main advantage is the possibility to protect information from tampering and illegal processing. This technology has great prospects for development and further expansion in the energy sector.