Legal & Regulatory

POWER Digest (May 2014)

Netherlands to Ban Financing of Coal Plants Abroad. The Netherlands on Mar. 24 joined an initiative of the U.S., the UK, Denmark, Finland, Iceland, Norway, and Sweden to reach a global climate change agreement in 2015, agreeing to end support for public financing of new coal-fired power plants abroad “except in rare circumstances.” The Netherlands and U.S. are already working together to promote a technology-neutral standard in the Organization for Economic Cooperation and Development Export Credit Group that limits support for high-carbon-intensity power plants by export credit agencies, said Dutch Prime Minister Mark Rutte in a statement.

IEA: High Renewables by 2050 Scenario Is Challenging. A report released in March by the International Energy Agency’s platform for enhancing international cooperation on policies and market instruments for renewable technologies—the Renewable Energy Technology Deployment (IEA-RETD)—envisions what the energy system of a high-renewable-energy world might look like in 2050. Many challenges will need to be overcome before the vision could become a reality, it concludes however. These will include making the implementation and the transition to such a “radically different energy architecture” happen; ensuring the system will operate in a stable manner without crashing and jeopardizing security of energy supply; and determining how all this can be achieved at a reasonable societal cost.

The cost hurdle could soon be overcome: Large hydropower, photovoltaics, and onshore wind in areas with high yields, and some biomass waste generation, are now competitive when compared with fossil fuel–based energies, while most remaining renewable energy technologies can be expected to see considerable cost reduction through “learning by doing” as increased capacity is deployed, the report notes. But it remains to be seen what level of centralized control will be required to provide the markets and regulators confidence that the energy system will be able to respond dynamically to balance demand and supply while maintaining supply, it concludes. “All this needs studying and testing in practice.”

Renewable Targets, Promotion of Nuclear Power Highlighted in Japan’s Draft Energy Plan. Japan’s ruling coalition comprising the ruling Liberal Democratic Party (LDP) and the New Komeito party on Apr. 4 approved a draft of what could become the country’s first Basic Energy Plan since the Fukushima disaster. The draft includes revisions, pushed for by New Komeito, that include numerical targets, not just stated commitments, for renewable energy. It reportedly now calls for renewables to constitute 20% of total power supply by 2030. Japan’s Ministry of Land, Infrastructure, and Transport on Mar. 17, meanwhile, unveiled a comprehensive environmental action program identifying steps the country should undertake by 2020 to reduce greenhouse gas emissions by 3.8% in 2020 compared with 2005 levels. The pledge is much lower than the 25% reduction in 2020 compared to a 1990 benchmark proclaimed in 2009.

Though all 48 of the country’s operating reactors are still shut down pending safety approvals, and no specific targets have been unveiled for nuclear power, the government’s draft energy plan also reportedly calls for the promotion of further research and development of high-temperature gas-cooled reactors that make them less susceptible to core meltdown than other types of reactors, and for technological development to enhance the safety of light water reactors, including countermeasures for severe accidents. Japan’s Cabinet is soon expected to approve the new energy plan.

Spain’s Renewables Subsidy Cuts Make Big Gains in Deficit Reduction. Spain reported a 33% tariff deficit drop to $5 billion in 2013 compared with $7.5 billion in 2012, a reduction that it said is due to an industry overhaul that cut renewable subsidies and introduced new taxes on electricity generation starting in July 2013. In February, the government laid out a proposal that sets new formulas for calculating an overall reduction in subsidy payments to solar, wind, and other renewables to further slash the deficit by $2.4 billion. The formulas are based on a level of “reasonable profitability” that each type of project can expect during its decades-long lifespan. Wind farms—representing 37% of the country’s installed wind power capacity—would receive no further subsidies under the proposal. Energy companies such as wind leader Iberdrola and renewables group Acciona have reportedly sold off assets and overhauled business plans in response to the proposed rules, which have yet to be signed into law.

World Bank OKs Grand Inga Funding. The World Bank on Apr. 1 approved a $73.1 million grant for the gargantuan 40-GW Grand Inga project in the Democratic Republic of Congo (DRC). The funds will be dedicated to Inga 3, the first of six stages planned for the $80 billion Grand Inga scheme, which garnered $33.4 million last year from the African Development Bank. Under a deal signed with the DRC in May 2013, South Africa will receive 2.5 GW of the 4.8 GW capacity anticipated from Inga 3.

Unit 14 Commissioned at China’s 13.9-GW Xiluodu Dam. The China Three Gorges Corp. on Mar. 30 commissioned the 14th generating unit at its 13.9-GW Xiluodu hydropower project. The project located on the Jinsha River near Chengdu in Sichuan province consists of 18 Francis turbine generators each rated at 770 MW and a 937-foot-tall dam, one of the tallest in the world. It is China’s second-largest hydropower project after the 22.5-GW Three Gorges plant. Construction began in 2003 and the project could be fully operational as soon as 2015.

France Gets a Carbon Tax. France’s carbon tax on coal, heavy fuel oil, and natural gas became effective on Apr. 1. The internal tax on consumption (taxe intérieure sur la consommation) was adopted in December 2013 to back President Francois Hollande’s announced target of reducing fossil fuel consumption by 30% by 2030, to speed the government’s planned “energy transition” to renewables while reducing the role of nuclear power, as well as to reduce the public deficit. Only 3% of France’s total power and heat was generated with coal and peat in 2011; natural gas took a larger share of 5%. The tax on gas is set at €1.41/MWh as of Apr. 1, and will double to €2.93/MWh in 2015 and €4.45/MWh in 2016. ■

—Sonal Patel is a POWER associate editor (@POWERmagazine, @sonalcpatel)

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