POWER January 2013 - 38

2013 INDUSTRY FORECAST
One type of nuclear construction seems a
sure thing. In October, it emerged that necessary
safety upgrades to the EU's 132 nuclear
reactors are likely to cost €10 billion to €25
billion. The upgrades are required following
stringent " stress tests " in the wake of the Fukushima
nuclear accident.
Europe Still Waits for Cheap Gas
European industrial gas prices in the range
of €0.03 to 0.06/kWh (equivalent) and lower
wholesale power prices as a result of the recession
have cut margins for older gas plants
and led to the mothballing or closure of several
comparatively modern combined cycle
gas turbine plants. In the medium term this
situation could change if cheaper gas arrives
by pipeline from the Caucasus and central
Asia, as LNG from the U.S., or in the form of
European shale gas.
Poland still aims to be the European shale
gas leader, though its reserves estimates fell
by around 90% in the past year. The UK too
continues to look promising, though commercial
extraction is not expected to start for
another five years. France has significant reserves
but maintains its opposition to shale
gas. In September, the Netherlands delayed a
decision on shale gas until 2013 because the
necessary risk assessment was taking longer
than expected.
In September, a trio of studies by the European
Commission found that, compared to
conventional gas, extraction of shale gas generally
has a larger environmental footprint.
It also generates more greenhouse gas emissions
than domestic conventional gas, the
study said, but could be less environmentally
damaging than long-distance gas imports by
pipeline or as LNG.
Although German operators such as RWE
stress the ability of new coal-fired plants to
respond quickly to varying production from
wind and solar plants, it is, of course, gas turbines
that have traditionally been seen as the
natural partners of intermittent renewables.
Worried about Europe's falling use of gas for
generation, Shell has joined forces with Danish
offshore wind specialist Dong Energy,
GE, Alpine Energie, and First Solar to create
a lobbying group known as the Energy Partnership,
described as " the European coalition
for renewable energy and gas. "
Optimism Amid Turbulence for
European Renewables
As 2020 approaches, some observers believe
that the EU's 20% renewables target should
not be replaced, and that further decarbonization
should be driven purely by setting
limits on CO2
emissions. At the launch of the
Energy Partnership on October 31, however,
Commissioner Oettinger said he supported a
binding target for the percentage of renewable
energy by 2030.
In solar PV, Europe gained 18.5 GW of capacity
in 2011-two-thirds of the global total
of new installations, according to the EU's
Joint Research Centre. The largest gains
were in Germany and Italy.
A group of manufacturers calling themselves
EU ProSun have complained that
China is dumping cheap solar panels onto
Europe, prompting a Commission inquiry
that may lead Europe to impose import duties,
as the U.S. has done. But, again mirroring
the U.S. experience, representatives
from a counter-coalition representing the
wider European solar industry, the Alliance
for Affordable Solar Energy, say that
free trade has helped to create 300,000 European
jobs that would be put at risk by a
trade war.
At the end of September, the European
Wind Energy Association (EWEA) announced
that the EU had passed the 100GW
milestone for installed wind power
capacity, though high costs, permitting delays,
and shortage of transmission capacity
were delaying progress on large offshore
wind projects.
Danish wind turbine manufacturer Vestas
had a terrible year in 2012, losing its entire
board, with the exception of embattled CEO
Ditlev Engel. Now the Danish firm is seeking
a 20% equity investment; Mitsubishi has
been mentioned after previous rumors of a
Chinese buyer evaporated. Long the biggest
name offshore, Vestas has now lost its lead
to Siemens, which, according to Bloomberg
New Energy Finance, was set to account for
about 57% of Europe's 4.5 GW of offshore
wind capacity by year-end 2012.
Following an initiative originally kicked
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off by UK Prime Minister David Cameron,
Vestas, Siemens, and 42 other companies
have joined Norstec, an alliance to cut the
cost of offshore wind power. The British
government wants to see a cost of £100/
MWh ($161/MWh) by 2020; according to
Bloomberg New Energy Finance, the present
cost is around $226/MWh, compared
to $85 for onshore wind, $82 for coal, and
$71 for natural gas.
And there it is again-natural gas with the
price to beat. ■
- Dr. Robert Peltier, PE is editor-inchief,
David Wagman is executive
editor, Kennedy Maize is a contributing
editor, and Charles Butcher is European
reporter for POWER.
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