Energy Transition

US wind outlook lifted and what you need to know about the global energy crisis this week

There are warnings about energy shortages this year.

There are warnings about energy shortages this year. Image: REUTERS/Toby Melville TPX IMAGES OF THE DAY

Roberto Bocca
Head of Centre for Energy and Materials; Member of the Executive Committee, World Economic Forum
Kate Whiting
Senior Writer, Forum Agenda
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Energy Transition

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  • This weekly round-up brings you the latest on developments in the global energy sector.
  • Top energy stories: France and Finland warn of winter power outages; US wind outlook lifted by tax breaks for long-duration storage; More finance needed for Africa's energy transition.
  • For more on the World Economic Forum’s work in the energy space, visit the Shaping the Future of Energy, Materials and Infrastructure Platform.

1. News in brief: Energy stories from around the world

Spanish oil company Cepsa plans to invest $3.1 billion in a green hydrogen project in Andalusia, southern Spain, Chief Executive Maarten Wetselaar said on 1 December. Green hydrogen, or hydrogen produced from renewable energy, is seen as a solution to decarbonizing heavy transport. The project will consist of two electrolyzers of 1GW each in the port cities of Algeciras and Huelva.

The risk of short power outages has increased in Finland due to uncertainty in domestic production and foreign imports, the Finnish energy authority said on 1 December. National grid operator Fingrid has also warned of potential power blackouts this winter, due in part to the uncertainty surrounding the start-up date of the new Olkiluoto 3 nuclear power reactor.

Meanwhile, France may face 'some days' this winter when insufficient electricity supply could mean power cuts, the head of French energy regulator RTE said on 1 December, as the government briefed local authorities on how to manage any possible outages. "The situation entails risks, but one must not think power cuts are inevitable," Xavier Piechaczyk told France Info radio.

British Gas is launching an energy reduction plan for this winter that will pay customers for every unit of electricity they save compared to their normal usage, the company said on 1 December. The plan, called 'Peak Save', will run between December 2022 and March 2023, and could save customers £100 ($119.92) over the course of the winter, British Gas said in a statement.

It comes as Britain’s energy watchdog proposed price controls for electricity distribution network companies for the next five years that it said would drive investment in homegrown supplies and deliver cheaper power without increasing consumer bills.

Year-on-year change in energy price inflation
How energy price inflation has changed over the past year in OECD countries. Image: IEA

The Baltic Pipeline, which connects gas systems in Norway, Denmark and Poland, increasing the security of Europe's energy supply, went into full operation on 30 November, according to Danish energy company Energinet.

Oil prices settled up by over $2 per barrel on 30 November on signs of tighter supply, a weaker dollar and optimism over a Chinese demand recovery. Capping gains, the OPEC+ decision to hold its 4 December meeting virtually signals little likelihood of a policy change, a source with direct knowledge of the matter told Reuters.

The news comes as a Reuters poll of 38 economists and analysts found Brent oil prices will hold above the $100 level for the rest of 2022 as an impending EU ban on Russian oil sparks uncertainty over supply, but will tick lower next year as economic concerns prevail.

The leaders of Germany and Norway said on 30 November they would jointly ask NATO to coordinate the protection of Europe's subsea infrastructure in light of the suspected attacks on the Nord Stream gas pipeline network.

The European Union's energy chief on 30 November defended the bloc's proposal to cap gas prices and said countries will negotiate possible changes to the proposal, after a backlash from EU member states.

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The Egyptian government has finalized agreements with Emirati firm AMEA Power to build a solar park and a wind farm with a combined capacity of more than a gigawatt (GW) in a $1.1 billion deal, the cabinet said on 30 November.

The United States on 29 November announced $53 million to support the purchase of power grid equipment to Ukraine to help Kyiv fight Russian attacks targeting its energy infrastructure that left millions in the dark with no heating.

Britain will become a 50% shareholder in the Sizewell C nuclear project under a deal with its owner EDF that will enable the two groups to buy out a Chinese backer and attract new investment to the project.

2. US wind outlook lifted by tax breaks for long duration storage

New tax credits for energy storage in the US Inflation Reduction Act (IRA) will boost the business model for long-duration energy storage (LDES) that will be crucial to eliminating fossil fuel from the grid.

The IRA extends tax credits for wind and solar for the next ten years and allows developers to gain investment tax credits (ITCs) for standalone energy storage and wind plus storage projects for the first time. Previously, ITCs were only available for storage coupled with solar.

The technology-neutral storage incentives will lead to more wind projects coupled with batteries but they will also accelerate the commercialisation of LDES crucial for achieving high levels of wind penetration.

Battery storage of a few hours can help solar developers meet evening peak demand but different load profiles mean wind developers will benefit more from daily, weekly or seasonal storage dispatch.

3. More finance needed for Africa's energy transition opportunities

Africa's transition to cleaner fuels and power generation presents investors with opportunities across the value chain, but more direct financing is needed on projects, the head of a South African independent power producer said on 1 December.

Brian Dames, chief executive officer of African Rainbow Energy & Power, said the shift to cleaner energy in South Africa for example, meant a massive addition of new generation capacity with strong growth potential.

"South Africa quite simply has to add more than 50,000 megawatts (MW) of new capacity. Most of that is going to be renewables," said Dames, speaking on a panel at the Reuters NEXT conference.

Africa's most industrialised nation is going through record power outages this year as its unstable coal-fired power stations, which account for more than 70% of generation capacity of around 58,000 MW, struggle to meet demand.

4. More on energy from the World Economic Forum

India needs a lot more solar power as part of its net-zero emissions plans, but solar accounts for less than 8% of India’s electricity generation. A new report shows how Gujarat state is leading the solar boom, with nearly two-thirds of all residential rooftop solar power in India, despite covering just 6% of its land mass. Here's more on India's efforts to decarbonize, in the Economic Times.

As many as 4.5 million off-grid, renewable energy jobs could be created globally by 2030, according to the International Renewable Energy Agency. But the clean energy sector will face a dire shortage of talent in the coming years because the rapid increase in demand for workers with experience in renewables does not match supply. Here's what companies can do to bridge the skills gap.

And the largest battery storage system on the European continent has gone live in East Yorkshire. It can store enough energy to power around 300,000 homes for two hours, says Harmony Energy, the company behind the project.

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