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OGV Energy's European Energy Review – July 2020

OGV Energy's European Energy Review – July 2020


EU-wide and individual government policies supporting clean energy, as well as new alternative energy projects, including from oil and gas majors, were the highlights of this month’s energy landscape in Europe.   

In oil resource development, Equinor and Aker BP have agreed on the development concept for the licenses Krafla, Fulla, and North of Alvheim (NOA) on the Norwegian Continental Shelf. The concept consists of a processing platform operated by Aker BP and an unmanned processing platform operated by Equinor with possibilities to several satellite platforms and tiebacks to cover the various discoveries. The area consists of several oil and gas discoveries with total recoverable resources estimated at more than 500 million barrels of oil equivalents, Equinor said on 11 June.

Recovery plan for Europe includes investments in green energy 

The European Commission proposed a major recovery plan for the European Union after the coronavirus crisis. The plan will support the green transition to a climate-neutral economy via funds from Next Generation EU, a new recovery instrument.

“The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future: the European Green Deal and digitalisation will boost jobs and growth, the resilience of our societies and the health of our environment,” European Commission President Ursula von der Leyen said. 

European organisations promoting clean energy welcomed the EC’s green recovery plan.

Jorgo Chatzimarkakis, Secretary General at Hydrogen Europe, welcomed the creation of the instrument, saying:

“This is a historic opportunity to realise a systemic change towards clean technologies like hydrogen. A massive support to hydrogen and hydrogen technologies will put us firmly on track to achieving ambitious targets for 2030 and climate neutrality in 2050.” 

WindEurope CEO Giles Dickson commented: “Excellent proposals from the EU Commission on the “Recovery Strategy”. The big bazooka the EU economy requires. And the right sort of investments. It’s clearly going to be a green recovery. And a boost for the energy transition.”

Major European firms invest in renewables

Major European companies continued to announce investments, acquisitions, and strategies to boost their renewables portfolios.

Italy’s Eni created a new business structure as part of its ambition to be a leader in the energy transition. The Italian group has set up two business divisions—Natural Resources, which will develop the upstream oil & gas portfolio sustainably, and the Energy Evolution division, which will support the evolution of the company’s power generation, product transformation and marketing from fossil to bio, blue, and green.

“We want to be main actors in a Just Energy Transition, in which we believe, and is central to Eni’s transformation,” CEO Claudio Descalzi said.

France’s supermajor Total will become the fourth-largest supplier of gas and power in Spain after buying Energías de Portugal’s portfolio of 2.5 million B2C customers and two gas-fired combined cycle power plants, which represent an electricity generation capacity of nearly 850 MW.

In the past month, Total also signed an agreement with SSE Renewables to acquire a 51-per cent stake in the Seagreen 1 offshore wind farm project in the Scottish North Sea. The 1,140 MW project has reached simultaneously a final investment decision and financial close. 

“This move represents a major change of scale for Total’s offshore wind activity in line with our strategy of profitable growth in renewables and low carbon electricity,” Total’s chairman and CEO Patrick Pouyanné said. 

Spain’s Iberdrola said in early June it would invest up to 4 billion Euro in renewable energy in France over the next four years. Iberdrola plans to invest in wind farms and solar plants and expressed interest in future tenders to build new offshore wind farms.

Another Spanish energy company, Repsol, said it would invest in two industrial decarbonisation projects in Spain. Repsol will invest in a project to build the world’s largest plants to manufacture net-zero emissions fuels, using CO2 and green hydrogen generated with renewable energy. The other project is for a plant to generate gas from urban waste. The generated gas will be used to replace part of the traditional fuels that the Basque refinery, one of Spain’s largest, currently uses in its production process. 

In France, EDF Renewables, Canada’s Enbridge, and wpd began construction of the Fécamp Offshore Wind Farm with capacity of 500 MW. Project commissioning is scheduled in 2023. Once completed, the wind farm will be able to provide enough annual electricity to meet the power needs for 770,000 people.

Scotland and Germany boost offshore wind plans

Further north in Europe, Crown Estate Scotland announced on 10 June the launch of the first round of offshore wind leasing in Scottish waters for a decade. Total investment in the ScotWind Leasing round could potentially surpass £8 billion and help power the transition to a net-zero future.

“Today is a huge step forward in kick-starting Scotland’s green recovery, meeting net-zero targets and bringing multi-billion pound investments to benefit communities across the nation,” said John Robertson, Crown Estate Scotland’s Head of Energy & Infrastructure.

Scotland’s Energy Minister, Paul Wheelhouse MSP, said: “We want to harness this huge resource for our energy system, unlocking significant investment in the supply chain to create more green jobs across the sector and, importantly, to do so in a way that gives due regard to our marine environment and other marine activities.”

Germany increased its offshore wind targets to

20 GW capacity by 2030, from a previous target of 15 GW, and pledged 40 GW in offshore wind power by 2040.

According to estimates from Rystad Energy, offshore wind investment in Europe will surpass upstream oil and gas investment in 2022, as offshore oil and gas CAPEX is set to drop in the wake of the pandemic, while offshore wind is expected to grow strongly.

Annual CAPEX in Europe’s offshore wind is expected to jump from US$11.1 billion in 2019 to more than US$22 billion in 2022. At the same time, offshore oil and gas investment in Europe is seen dropping from more than US$25 billion in 2019 to less than US$17 billion in 2022, Rystad Energy reckons.

“Offshore wind development in Europe is expected to flourish in the coming years as countries strive to reach their ambitious 2030-targets – and large investments will be required,” Alexander Flotre, Rystad Energy’s project manager for offshore wind, said.

UK approves development of its largest solar park

In solar energy, the UK Secretary of State for Business, Energy and Industrial Strategy, Alok Sharma, approved at the end of May the application for the proposed Cleve Hill Solar Park Project near Faversham in Kent, which will be Britain’s largest solar park.

The Cleve Hill Solar Park – a joint venture project between Hive Energy Ltd and Wirsol Energy Ltd – will generate up to 350 MW of clean renewable electricity to power over 91,000 homes, reducing the UKs dependence on fossil fuels and lowering CO2 emissions by 68,000 tonnes a year. The project will not require any Government subsidies and aims to be one of the lowest-cost generators of electricity in the UK, Hive Energy said.

“Solar has a significant role to play in boosting the economy in the wake of the coronavirus crisis. With the right policies we can expect to see an 8GW pipeline of solar projects unlocked and rapidly deployed, swiftly creating a wealth of skilled jobs and setting us on the path towards a green recovery,” said Chris Hewett, Chief Executive of the Solar Trade Association.  

Two weeks later, the association called on the UK government to commit to a target of 40 GW of solar power capacity by 2030. 

“A 40 gigawatt target aligns with the recommendations of Britain’s top climate advisors, and the industry is ready to scale up operations to deliver this, with the support of a robust policy framework,” Hewett said. 

The UK and Welsh Governments approved in June the business case for the Pembroke Dock Marine Swansea Bay City Deal project. The project for low-carbon marine energy is expected to create more than 1,800 jobs over the next 15 years and to generate £73.5 million a year to the Swansea Bay City Region’s economy.

Over the past month, companies have advanced sustainable energy projects in Sweden and Denmark, too.

In Sweden, Aker Solutions started operating its mobile test facility for carbon capture at Preem’s refinery in Lysekil. The project is a collaboration between Sweden’s largest fuel company Preem, Aker Solutions, Chalmers University of Technology, Equinor, and Norwegian research institute SINTEF. The test unit is part of the 'Preem CCS' pilot project which will analyse the value chain from CO2 capture to storage.

A consortium of Danish energy firms and pension funds said it was ready to finance an artificial energy island in the Danish North Sea that will generate power from offshore wind. The proposed island, VindØ, could become in the future a 10-GW wind energy island, PensionDanmark, PFA, and SEAS-NVE said.

The companies are ready to make an initial investment of up to 400 million Danish kroner, or around £48 million, in the project’s development.   

Read the latest issue of the OGV Energy magazine HERE.

Published: 10-07-2020

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