4th Week of November 2019

Starving the fossil beast; kicking the supports from the gas ‘bridge’

Last week, the European Investment Bank indicated it would stop funding fossil fuel projects at the end of 2021, a move that could pull the rug out of billions of dollars worth of gas projects.  EIB Vice President Andrew McDowell told reporters on a call “This is an important first step – this is not the last step,” and added that it is the Bank’s intention to “set the standard” for multilateral banks aligned with the Paris agreement to limit greenhouse gases. 

If the EIB has its way, more gas plants will be sunsetting

Under the new approach, developers applying for financial support must show that, for each kilowatthour they produce, associated emissions are held under 250 grams of CO2 – a death knell for a traditional gas-fired generator. 

Financing of gas projects will be conditioned on the addition of new technologies such as carbon capture, CHP, or injection of clean hydrogen into the methane stream that feeds the facilities.

Reuters points out that this has indirect implications for over $200 billion in proposed LNG projects looking for finance over the next five years (with the potential perverse outcome that a number of coal and oil plants that would have ceded ground to new gas plants will remain operating, at least for some time to come).

This announcement from the EIB lines up with other players in the finance and insurance industry that are starting to ‘get it.’  For example, in July, global insurance giant Chubb indicated it was done with underwriting new coal-fired generators or companies with over 30% of their revenues emanating from coal mining or energy generation based on coal, with the new policy to be enacted in 2022.

Two of the larger beasts in the U.S. finally succumb to their economic wounds

Last week a couple of America’s larger coal generators shut their doors.  The 2.25 GW Navajo Generating Station in Arizona closed, after an unsuccessful effort over the past two years to find a buyer, and a final failed effort to force a local water agency to buy its output.  The plant was an enormous emitter of carbon dioxide – at about 20 million metric tons annually – but it was also a critical mainstay of the local economy, with approximately 90% of its employees belonging to the Navajo Nation.

A clearer outlook, but a cloudy future for local jobs

In addition, the 2.7 GW Bruce Mansfield plant –the largest unit in Pennsylvania – saw its last load of coal drop through the chute, shutting down nearly two years ahead of its expected schedule.  

More closures are expected in the years to come, as natural gas prices remain punishingly low, and the growth of renewables continues, despite the declining federal tax incentives. No real surprises here.

More bad news for coal on two fronts, as H2 steps up

News out of Europe that German manufacturing behemoth Thyssenkrupp successfully ran a trial demonstrating that it could run a steel blast furnace on hydrogen.  Until recently, there have been serious doubts as to whether decarbonization technologies could address the energy-intensive manufacturing sector.  Thyssenkrupp is eyeing a future where zero-emission steel is a real possibility. 

This pilot proves that there is hope there – IF we can get the cost of green hydrogen to the point where it is economic to use it as a fuel.  That will probably come down to a reduction in the cost of the electrolyzers that use renewable energy to separate water into H2 and O.  

There are some positive indicators on that front.  Last week Siemens announced it has been approved to construct a 2.2 MW electrolysis plant in Germany – to be completed by 2020 – that will create hydrogen from windpower.

Europe getting into the green hydrogen game

Meanwhile, just one country away, the largest green hydrogen facility (using local wind enegy) to date is operating at a steel mill in Austria, with the similar goal of showing that H2 can be used to power heavy industries.  This 6 MW hydrogen production plant is supported by the European Union and involves multiple partners (including Siemens). 

There are other larger projects in the works. A 10 MW electrolysis plant is being built in Germany’s Rhineland at Shell’s refinery, with an in-service date of 2020.  There is also a 30 MW pilot – part of a much larger planned 700 MW undertaking – expected in Northwest Germany by 2025.  Hydrogen from this plant is slated for use in aviation at nearby Hamburg Airport.

Nikola might have outdone Tesla last week, if they are for real

Yeah, Elon and his team put a steel ball into, but-not-quite-through a window last week during the unveil of Tesla’s “CyberTruck.” But if Nikola Motor Co’s announcement concerning its new battery tech is real, it will have the more profound long-term impact.  The company announced that it will unveil a new battery during NikolaWorld 2020 (book your tickets now) with a record energy density of 500 watt-hours/kg at the production cell level, and acceptable cycling performance.  If technically feasible and commercially viable (Nikola represents it to be cheaper than current lithium-ion technologies and easy to recycle) these batteries could double EV ranges to as much as 600 miles with a similarly sized battery.  Nikola also represents that it will share the intellectual property with other OEMs, including competitors. 

Betting their reputation on a new chemistry

In response to questions, Executive Assistant to the CEO, Matthew Peterson provided information indicating that the new battery material includes lithium but that the majority of the nickel, cobalt, aluminum, and magnesium have been removed.  The resulting battery would cost less than half of today’s comparable lithium-ion tech.  So, if this announcement is backed by fact, the implications are potentially huge. Meanwhile industry observers are – to put it mildly – highly skeptical, as this would represent a huge breakthrough, and it’s not as if thousands of materials scientists around the world aren’t working on these types of breakthroughs. The general sense is that it’s extremely difficult.

In the meantime, Nikola completed its first zero-emission delivery of Anheuser Busch beer in St. Louis last week, with its hydrogen-electric vehicle doing the work formerly reserved for Clydesdales.  In 2018, the brewer ordered up to 800 Nikola hydrogen-electric semis.     

Floating turbines will shortly enter the waters, and they will be big

Eoliennes Flottantes du Golfe du Lion (EFGL – the French way of saying Gulf of Lion Floating Wind) announced last week that it has selected three 10 MW Vestas V164 floating turbines for its project in the French Mediterranean.  The turbines will be installed on semi-submersible floating platforms 10 miles off the coast.

Getting them to float was step A; Step B was to make them huge

The National Renewable Energy Laboratory recently estimated California’s offshore wind potential in excess of 110 GW.  Given the West Coast’s lack of continental shelf, all of this would involve floating technologies.  Recently, two major players in the Norwegian oil and gas industry have joined up with a group of renewable energy companies to advocate for California offshore wind development.  With recent announcements such as that from Vestas, the potential for industry development off the West Coast seems to be increasing with each passing day.  

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