Lithium News

New auctions for wind and solar projects exceeding 1 MW in size will be part of a new incentive scheme for renewable energy for the period 2018-2020, which is now under review by local authorities. In the first auction, planned for November, around 500 MW of wind and solar projects over 1 MW are expected to be assigned. The incentive scheme will also support solar and renewables up to 1 MW through specific tenders.

Italy’s Ministry of Development (MISE) has submitted to the country’s State-Regions Conference and the Italian Regulatory Authority for Energy, Networks and Environment (ARERA) a draft decree for the introduction of a new incentive scheme (Decreto Fer), which includes, among other things, a mixed wind-solar auction mechanism for projects over 1 MW, as well as a tender mechanism for renewable energy installations up to 1 MW.

Auctions for utility-scale solar and wind

According to the draft decree, to which pv magazine gained access, the first auction for large-scale solar and wind is expected to be held this coming November, and will assign around 500 MW of capacity.

Three similar auctions are set to be held in 2019, in March (500 MW), July (700 MW) and November (700 MW); while another three auctions are planned for 2020, in March (700 MW), July (800 MW) and November (800 MW).

Overall, through the mixed auctions for wind and solar over 1 MW, around 4.8 GW are expected to be allocated in Italy in the period 2018-2020, while other power projects over 1 MW, relying on different renewable energy technologies, are expected to see a total share of just 245 MW, which will be assigned in separate auctions.

Furthermore, MISE is planning to tender 490 MW for existing renewable energy power plants that will be partially or entirely retrofitted, provided these plants have surpassed at least two thirds of their life-cycle, and are not currently receiving incentives.

As for the development of PV projects, the decree establishes that these have to be completed within 24 months after the date of the auction’s conclusion, and that the maximum price will be €70/MWh.

Projects planned for landfills, quarries and depleted mines, or landfill areas and contaminated sites will be prioritized, MISE said in the decree.

Projects under the auction scheme will not be permitted in areas, which are already saturated with non-programmable renewable energies, and that the incentives awarded in the auctions will be suspended in the hours in which the zonal prices will reach zero for a period of six consecutive hours, or in the case of negative prices on the wholesale market.

Renewable energy projects located abroad will also be allowed to participate in the auction, provided that they export the generated power to Italy

Tender scheme for solar and renewables up to 1 MW

The decree also includes a mechanism to support power projects not exceeding 1 MW in size. Overall, MISE plans to allocate 590 MW of installed power for PV and wind over the period 2018-2020 via seven different tenders.

Two different maximum prices for PV technology were set: €110/MWh for projects ranging in size from 20 kW to 100 kW; and €90 for projects between 100 kW and 1 MW.

Approval of the EU

Once the decree is approved by the relevant Italian authorities, it will be submitted to the European Commission for final approval.

It is very unlikely, however, that such a scheme will be rejected by the Brussels’ authorities, since it includes the most important recommendations made by the EU for member states regarding the development of renewable energies, such as, among others, the adoption of technology-neutral auctions to support large-scale renewables, and allowing projects located in neighbor countries to participate.

The Italian government has stressed that the decree has taken into consideration the Clean Energy Package 2020-2030, which the EU is currently defining, and Italy’s new energy strategy for the period 2020-2030 (Strategia Energetica Nazionale – SEN), through which the Italian government expects the share of renewables to increase from around 17.5% currently – the 2020 EU target of 17% was already achieved by the country – to 27% in 2030.

As per the new energy strategy, solar is set to play a key role, and account for around 50% of newly installed capacity.

MISE expects power production from PV to increase from 23 TWh currently, to 72 TWh by 2030. According to Italian renewable energy expert, Gianni Silvestrini, in order to achieve the 72 TWh target, new solar installations must exceed 3 GW per year, while total new PV capacity installations are estimated to be over 30 GW for the 2020-2030 period.

Revival of large-scale solar in Italy

If implemented, the new scheme will enable large-scale solar – a segment that saw huge development between 2009 and 2013, when the Conto Energia scheme was still in place; and almost zero growth over the past four years following its removal – to regain momentum.

In the meantime, several projects for unsubsidized solar parks have been developed over the past year, as the Italian market appears to offer good opportunities in the private PPA market.

The combined effect of auctions and the PPA market, in the end, may push Italy back into the club of Europe’s largest PV markets over the coming years, particularly when one considers that it was able to deploy between 300 and 400 MW annually over the past four years (mostly rooftop installations), despite the fact no direct incentives were available.

Chinese solar power plant operator, China Smarter Energy Group Holdings Limited (CSE) has agreed to acquire special purpose vehicle, Ningxia Guxin Electricity Investment Company Limited, which owns a 300 MW solar power project in Ningdong, in China’s Ningxia Hui Autonomous Region, from Chinese investment firm, Shanghai Guxin Asset Management Co., Ltd and China-based lithium battery manufacturer, Shandong Runfeng Group Co. Ltd.

CSE acquired the project for around CNY 849 million (approximately $134 million), while the project is currently valued at about CNY 2,700 million (9 CNY per W), the company said in its statement. It added that it will finance the operation through its own funds, and debt or equity financing.

“The Consideration for the Acquisition was determined after arm’s length negotiations between the Purchaser and Vendors principally taking into account, among other things, the development and maintenance costs, the availability of sunlight in the area of the Target Project, the rate of feed-in tariff and references to historical market comparable transactions,” CSE said.

A similarly large transaction was closed last November, when the Chinese group acquired a 100 MW solar power project in Jinchuan District, Jinchang City, Gansu Province.

In its latest financial results, published at the end of the same month, CSE said its operational solar power plant portfolio in China had reached 180 MW. All of its solar facilities are located in four provinces – Gansu, Anhui, Jiangxi and Shandong – and one municipality, Shanghai.

CSE, which was previously known Rising Development Holdings Limited, is headquartered in Wan Chai, Hong Kong. The company is also trading in fur garments and other products, while also investing in unlisted equities.

Automobile manufacturers will face challenges surfacing from supply shortages of natural resources for battery production as they move to electrify their fleet in line with government mandate to reduce carbon dioxide emissions, according to a recent report produced by independent research organization A.T. Kearney Energy Transition Institute.

In the Indian context Abhishek Poddar, Partner, Energy & Process Industries, AT Kearney India said, “It is critical that India takes into account the practical aspects related to EV rollout, as it defines its long-term strategy for the sector. The problem is further complicated by the fact that we have limited availability of the natural resources required for LIB battery manufacturing.”

Taking cognisance of these issues, the Government of India, in the latest automotive policy has focused on overall pollution reduction through multiple technologies and regulations by implementing stiff targets, and by not demanding 100% switch to EV by 2030.

“Electric car batteries rely on a host of rare materials —from lithium and nickel to cobalt. Battery makers around the world are struggling to secure supplies of these key ingredients as demand outstrips supply. This undoubtedly places pressure on carmakers, so the hunt for alternative technologies is on,” explained Romain Debarre, managing director, A.T. Kearney Energy Transition Institute.

Cobalt, the report held, is in particularly short supply globally and reserves could be depleted completely by the time 300 million EVs are produced —a modest proportion compared to the 1.2 billion cars on roads today. In addition, global lithium production has risen 7% a year since 2018, but to keep up with demand, miners need to accelerate production to more than 9% a year. Rising demand and tight supplies have also led to price increases.

“The challenging natural resource shortage is further exacerbated by a lack of viable and cost-effective reuse and recycling options for electric car batteries,” Romain added. “By 2025, the economics of recycling is likely to improve as used batteries become more commonplace and second-hand batteries take root.”

The report held that stakeholders need to look at the holistic life-cycle management of electric vehicles to ensure the desired reduction of CO2 footprint is indeed achieved. This will require nations to consider which energy sources are used to charge electric car batteries.

It’ll take more than just driving an electric vehicle to save the environment. You’ll have to charge it at the right time, too.

Put simply, if the world’s drivers plug in an increasingly large EV fleet right after work, it could undo many of the environmental benefits expected from fewer cars running on gasoline and diesel. Cutting pollution could come down to an act as unexceptional as waiting until bedtime to charge the minivan.

Down one path lies a future world with cleaner skies, cheaper energy and more reliable electricity systems. The other has more fossil fuel-burning generators, higher power prices and additional strain on the grids keeping lights on everywhere from hospitals to schools.

“The key question isn’t how much demand electric vehicles add to the grid, it’s when does it add it,” said Daniel Brenden, a senior power and renewables analyst at BMI Research in London. “EVs are either going to be huge problem or a huge tool.”

Sales of electric passenger vehicles surpassed 1 million for the first time in 2017. Forecasts for future growth vary wildly: Exxon Mobil Corp. expects the global fleet to swell to 100 million vehicles by 2040, while Bloomberg New Energy Finance sees it reaching 540 million units by then, with more than half of all cars sold being powered by electricity.

Even at the high end of estimates, global electricity production would need to increase by just 5 percent to meet the new vehicle demand, said Colin McKerracher, an analyst with Bloomberg New Energy Finance. The new generation may not even require new power plants if grid operators, regulators and drivers can get on the same page as far as timing goes, McKerracher said.

That’s because of the unique structure of the power market, in which demand ebbs and flows minute-by-minute during the day as people flick their lights and appliances on and off. Consumption typically peaks in the evening and morning, and is at its lowest in the middle of the night.

If drivers plug in their cars when they get home from work and add to that evening peak, even the modest amounts of new generation needed will likely require building more capacity, and that likely will have to be in the form of fossil fuel-fired plants, Brenden said. And because the owners of those plants will have to pay down debt while only operating a short time of the day, their rates will have to be higher.

“You’re not contributing to decarbonization as much as you’d like, and you’re paying to keep that backup generation ready, so you’re adding to your electric bill,” Brenden said.

There’s another option, though, McKerracher said. If drivers can charge their vehicles during off-peak times, they may be able to do so without requiring new generation at all. Off-peak hours also coincide with the time when some renewable power sources are at their strongest — at night when the wind blows hardest and during the day when the sun shines brightest.

“You don’t need a whole lot of new generating capacity to electrify a lot of the fleet, provided they’re charged in an efficient way,” McKerracher said.

Drivers could even use their electric cars to become miniature power traders if they install two-way chargers, filling up their batteries when power rates are the cheapest and selling back to the grid if they’re plugged in during peak hours, said Mark Hutchinson, head of power and renewables consulting in Asia Pacific at Wood Mackenzie Ltd.

Brenden said he could envision a company such as Uber Technologies Inc. employing thousands of autonomous EVs using artificial intelligence to decide the most profitable times to give rides, charge their batteries and resell electricity.

Such a future will require investments by companies and regulatory decisions that support more sophisticated charging infrastructure. It will also need liberal power markets with dynamic pricing to encourage off-peak charging.

The response from utilities has been mixed. China, home to the largest EV market, hasn’t created any policies incentivizing optimal plug-in times, Brenden said.

On the other hand, Nissan Motor Co. already uses its electric cars to buffer wind power in Denmark, and Southern California Edison proposes offering customers “super” off-peak daytime rates to encourage plugging in during mid-day, when so much cheap solar energy floods the California grid that the state system operator sometimes has to shut down solar plants.

“The best time to charge is going to be in the middle of the day when all of that solar is on the grid,” Caroline Choi, senior vice president of regulatory affairs for the company, said February 2 at the Bloomberg New Energy Finance The Future of Mobility Summit in Palo Alto, California.