Italy, one of the most promising markets for floating offshore wind We were recently asked by a client to indicate which countries we think could build commercial size floating offshore wind projects by 2030. They looked very surprised when we mentioned Italy in our very short list, together with the UK and Korea (and optimistically Taiwan). In recent years, offshore wind has been a central topic of discussion in Italy, with the arrival of a long-awaited government decree and a large number of projects under development. The industry is now more vibrant than ever. Italy is currently considered the third most promising market for floating offshore wind development in the world.[1] What does this mean for a country that at the moment has only one operational fixed bottom offshore wind farm installed, for a total of 30 MW? What is actually required to unlock this potential? Let’s start by digging into the numbers. Although the offshore wind target that the Italian government set in the latest NECP[2] was 2.1 GW by 2030, both market research and industry publications have adopted a much more bullish view. According to a number of industry studies[3], Italy has the potential to install 11 GW of offshore wind capacity by 2040 and to reach at least 20 GW of installed capacity by 2050. Achieving this growth has the potential to unlock a cumulative value of ~EUR 57 bn and to create approximately 27,000 new jobs between 2030 and 2050.

Yesterday the UK government announced the results of Allocation Round 6 (AR6) of contract for difference (CfD). The UK’s CfD scheme has long been touted as the mechanism of choice for incentivising investment in renewable energy projects – with the capital intensity of offshore wind (OW), this support mechanism is especially critical.

There has been a spate of high profile deals in the biogas sector in recent years, culminating in Shell paying an eye watering GBP 1.6 billion for 14 operational plants in Denmark. This record transaction no doubt has many biogas plant owners thoughtfully sucking  a tooth and wondering what their plant may be worth. As we will see below, the answer is frustratingly “well it probably depends”.

This month, Mingyang announced a deal with the Italian government to build a factory in Italy supplying their 19MW turbines to the wind farms developed by Italian developer Renexia. It is the latest of a series of announcements that involve the Chinese turbine manufacturer. They already supplied the first ever Chinese offshore turbines in Europe for a project developed by the same Renexia off Taranto and have now signed a preferred supply agreement with Luxcara, who has just won a 1.5 GW site in Germany this week.   While Chinese dominance in solar, battery and so many other sectors has been widely accepted, each piece of news about Chinese turbine suppliers knocking at the European door is followed by heated debates. Is the competition fair or is China subsidising its industry, as suggested in a recent investigation of the EU commission that raises fears of a new trade war? Should the European policy makers go one step further and copy the US in their protectionism? Can public auctions define rules that prevent Chinese turbines to be competitive? In the urgency that climate change commands, is the question of where the turbines come from of any relevance at all? While the cost of living is fuelling the surge of the extreme right everywhere in Europe, is it sensible to fight the cheapest option?

Making more gas from waste and importing less fossil fuel derived gas will be key if Europe is to reach net zero whilst simultaneously maintaining energy security. But parenting trillions of little bacterium is a lot harder than it looks. In this blog we look at the 3 challenges of running an anaerobic digestion plant.

In the current vitriolic election in the UK, two words, net zero, come up often. However, the route to this specific Eden is lined with lots of questions. How would the UK be if we relied on the intermittent wind plus the sun for energy? How would we keep hot on those winter evenings when the wind is not blowing? How would our industries get enough energy to run 24 hours? Does the energy mix work if we omit 100% of fossil fueled energy from our thinking?

The other day I was standing on the Tube and broke one of the cardinal rules of public transport by inadvertently making eye contact with a young woman. We exchanged very brief smiles then she stood up, touched me gently on my forearm and politely offered me her seat. This made me realize that I am now seen as an old man and should resign myself to this sort of thing happening more often. I was reflecting ruefully on this experience as I read a Bloomberg report that said the price of batteries for Battery Energy Storage Systems (BESS) has dropped by as much as 90% in the last 15 years and from USD 160 per KWhr in 2020 to less than USD 110 KWhr in 2025. And note this is full system prices not just cell packs.

A favourite Sunday afternoon activity for the Marshall family growing up was a family walk (usually accompanied by the Irish rain to be honest). From time to time, we would venture to some of the hills not far from my parents’ home where we could walk in and around these new and unusual wind parks. And from time to time there would be no turbines turning. How does that work and how is that efficient my father would ask? Now that’s a while ago and today those same hills have many more turbines, but this question is still one I hear quite frequently and in no doubt has played a role in perpetuating the popular belief that renewable energy is not reliable. I don’t think too many people outside of the energy industry have spent a long time wondering how the electricity grid functions and what goes into it (if you are used to electricity arriving at the flick of a switch, why would you?), but nonetheless this perception persists. And there is some truth to it if we are honest. The wind does not always blow as expected and although the sun rises and falls regularly, cloud cover is not something we have the same level of certainty on when predicting solar generation patterns. It’s not unexpected then that there continues to be a common mantra of ‘conventional generation for baseload’ even within the energy industry. But what happens when we test this thesis and examine the evidence? When we at Green Giraffe Advisory began to look at the framework for the South African emergency Risk Mitigation Independent Power Procurement Programme (RMIPPPP) tender a few years ago, it was immediately clear that the process had been designed with conventional generation solutions in mind – although technology neutral, it was asking for dispatchable generation to provide baseload like generation between 5h00 and 21h30 for the lowest bid price possible. However, with our client G7 Renewable Energies for the Oya Energy project, we began to examine the possibility of responding to these needs with a solution fully based around renewable energy. This wasn’t a unique idea (although the solution combining wind, solar PV, and storage at the same location is) and eventually what came out of this tender process was a list of projects reaching financial close that was dominated by renewable energy-based solutions. What can we read into this? Whilst not a silver bullet to the variability brought by renewable energy to a grid, it certainly shows the ability for a single plant with a combined interface of solar, wind and storage (the plant controller playing a vital role behind the meter for these components to then perform their collective role) to provide services to the grid operator at a price which is a competitive (or even more competitive) compared to conventional competitors. That might not work so well in every geography (it certainly helps that South Africa has great wind and solar resource) and indeed it is likely in many places that it would be more economical to manage such interface and dispatch at the level of the grid. However, that in itself gives rise to the further question as to how a national grid heavy with renewable energy might function. The duck curve is widely observed and analysed (i.e. the effect on the load throughout the day when there is a mass of solar PV generation in a system). My colleague Michael Ware has already commented here on what this may mean for idea of required baseload from conventional generation. It’s a stretch to argue that one project is a proof of concept, but we think Oya Energy provides a fantastic example of how renewable energy can help provide dispatchable and baseload type generation at a micro-level. Additionally, replicating a project such as Oya Energy in a geography where the overall grid is less developed or there is an energy intensive captive demand could still make a lot of sense. We are immensely proud of what we achieved on Oya Energy, alongside G7 Renewable Energies and Engie. Not simply because of the addition that makes to cleaner energy security in South Africa but because of the precedent that sets for the use of renewable energy to provide stable power to the grid during a long window. And to be able to blow away (pun intended) some of those persistent old perceptions about renewables at the same time does no harm either.

The electricity supply-demand equation in South Africa continues to be an unsolvable one as load-shedding continues to blight the country. South Africa benefited for many years from having a reliable and sustainable electricity supply. Although this supply was heavily polluting, the role that affordable electricity played as a catalyst for economic growth cannot be overlooked – something that was exceptionally important for South Africa during the 1990s.

As said by Warren Buffett, price is what you pay, value is what you get. You want the two to be roughly the same. The world’s renewable energy capacity grew at a record pace in 2023. For the first time ever, in 2022, investments in clean energy overtook investments in fossil fuels and they continue to outpace the latter. This has triggered an explosion of activity in buying and selling projects. More than ever, buyers and sellers are confronted by the question: at what price?   This blog aims to lay out the fundamentals of valuing renewable energy projects. For accessibility, we have tried to avoid using complex financial lingo or digging too far into the details. As financial advisors who work on many sell-side and buy-side energy transition transactions, one of our key tasks is valuing the projects, portfolios or platforms in question.

The US state of California leads the world in the transition to renewable generation but this has led to some unexpected negative consequences which may be a foretaste of problems in Europe One of my friends is a twitcher and one is a trainspotter. To explain, a twitcher is somebody who collects sightings of birds. Sometimes stormy weathers blows unfortunate birds across the Atlantic and twitchers will travel huge distances to spot a miserable foreign bird looking a bit lost in a big wet field by the sea.  A trainspotter is somebody who collects locomotive identification numbers and will also travel long distances to see an obscure locomotive in a remote railway siding though trains tend not to be blown in by storms. What’s more interesting is that despite their apparent similarities, my two friends can’t stand to be in the same room as each other. But the underlying history of their mutual antipathy is probably another blog all in itself. The inevitable segue way into renewables is the possibility of California duck curves appearing in Europe. This won’t appeal to my twitcher friend as a Californian duck curve is not a real duck  but a metaphorical term used to describe an unusual pattern in  electricity demand/price markets. To those of us in the renewable energy industry it is equally exciting.

In our latest blog, Claudia MacKenzie dives into the risk of cyberattacks on renewable energy infrastructure, notable past incidents, and what preventative measures can be taken to help deal with this growing threat. I don’t think a day goes by, at the moment, where my phone doesn’t get a news notification about another missile being sent, even more innocent lives lost, or new conflicts and tensions rising. Whilst I would like to offer this blog as a more uplifting and lighter read, I do think that it is worth shedding light on another, more silent, form of warfare that is ongoing and will increasingly impact the renewable energy industry.    I read a book last year called “This is How They Tell Me the World Ends” which, despite its cheerful title, I found very interesting. Nicole Perlroth, the author, takes a deep dive into the ongoing cyberweapons arms race, explaining the origins of this unregulated market, how countries buy and use such weapons, and why they represent a substantial threat to our near future.

2023 has been another fascinating year for the energy transition and Green Giraffe has played its part! With COP28 behind us and 2024 about to start, we wanted to reflect on the key moments from this year and also to identify what critical trends we see coming up for 2024. Top down, 2023 represents the halfway point between the 2015 COP Paris Agreement and 2030, by which point we should have halved our carbon emissions. We’ve deployed a lot more renewable energy, particularly in the last few years, but carbon emissions keep increasing. Encouragingly though, it looks like we will achieve peak oil and peak coal prior to 2030, with peak gas – the transition fossil fuel – coming in the mid-2030s. The momentum is clearly behind wind and solar as the key decarbonisation technologies and although some colleagues disagree, it’s hard to see that changing materially in the short to medium term, irrespective of policy head- or tail- winds (including a potential Trump re-election).

Despite rapidly picking up the pace on the roll-out of renewable energy, with a staggering 8-fold increase in installed capacity between 2013 and 2022, the Netherlands are lagging far behind on their neighbours and on self-imposed targets when it comes to the much-needed electricity storage. Policy has not been supportive so far, but various announced and ongoing changes may finally move the needle. It is about time that we take a closer look at what’s in store for Dutch batteries, and whether it’s enough to bring the targets back in sight!

On the surface of things, 2023 has not been the best year for offshore wind. For a sector used to good news, this year has brought a flood of the opposite: Vattenfall walked away from its 1.4 GW Norfolk Boreas project stating that market conditions had rendered it uneconomical (we wrote a blog post about this) The UK, long the leading market for offshore wind globally, launched an auction that attracted zero bids from offshore wind developers Poor financial results have required Siemens Gamesa, a leading turbine supplier, to apply for government support – it will be receiving EUR 7.5 billion in government guarantees And most recently, Ørsted took a USD 4 billion impairment charge and ceased development on two of its projects off the coast of New Jersey – Ocean Winds 1 and 2. Its share price dropped 26% following the news. This doesn’t exactly paint a picture of a thriving sector; but this picture is also incomplete. If we take a closer look, a more nuanced and positive story emerges – one that, if managed properly, will help lay the foundations for a more sustainable and resilient industry that can deliver on its ambitions. For that, we need to turn to the supply chain.

This is a blog about EV chargers in the UK. It’s also about the difficulty of sizing markets, the curious phenomena of kinked demand curves for semi-skimmed milk and how many EV chargers I think will actually be installed by 2035 (spoiler alert, it’s a lot less than you may think).

On 22 September 2023 the Baltic Power offshore windfarm successfully reached Financial Close, thereby unlocking the staggering amount of EUR 3.6 bn term loan and EUR 0.8 bn of ancillary facilities for one of the largest offshore windfarms yet to be constructed and the first of many to follow in Poland. As we have reported elsewhere, this is a big deal. Baltic Power will deliver renewable energy to the equivalent of 1.5 million Polish households, in one of the most carbon intensive energy systems in Europe. A great leap forward in the fight against climate change, one would say. However, within a week, the UK government approved the development of the Rosebank oil and gas field. The announcement was followed closely thereafter by the final investment decisions (FID) of the developer of Rosebank, earmarking a similar EUR 3.6 bn amount in USD equivalent to fund the progress of Phase 1 of their project. An estimated 300 million barrels of oil can be extracted from Phase 1. Assuming EPA’s conversion methodology, this implies a CO2 equivalent of 129 million metric tons. To put this in perspective that is about equal to the combined annual CO2 emissions of the 28 lowest-income countries in the world according to opponents of the project.

Your business case is the little word seed that could either grow into a real energy project or wither and die. Here are our 10 tips to ensure it actually germinates My unlikely inspiration for writing this blog was watching 8 Mile Road, Eminem’s bleak but ultimately uplifting film about growing up as a rapper in Detroit. Now I know that fat, bald, white, middle class and middle aged men being inspired by rap is a comedy character all by itself but the phrase “you get one shot, don’t let it blow, this opportunity comes along once in a lifetime” made me think about how many clients only get a very limited window to pitch their idea to investors and how quite a few often don’t make the most of it. Business cases are the tiny seeds that grow into real projects. Your average investor sees a lot of potential ones every month and inevitably turns most of them down. This is a blog about how 10 common tips can make sure your proposal actually gets read and germinated. 

When it comes to business, scale can be an inhibitor, but more often than not size tends to win out. Over time, it’s the largest that endure. “Big” is a simple moniker we use to acknowledge this in ode to the leading firms in a sector: Big Four (accounting), Big Pharma, Big Ag (farming), Big Car, Big Tobacco and the most dominant of all in the 21st century; Big Tech. Perhaps the most influential though is Big Oil, a group of energy supermajors that dominate the non-electricity, non-coal energy world and continue to strongly influence global affairs. Supermajors, both state and public, extract and sell the majority of the oil and gas consumed around the world. In carrying out this business they also fulfil another critical function; providing attractive returns to their shareholders which comprise governments, institutions and individuals the world over. It’s a reasonable guess to say that your corporate pension is probably partly invested in an oil or gas company. Because of this ubiquity, their financial performance has a very meaningful impact on the prosperity of nations and individuals alike.

Industrial Carbon capture and storage is a good idea in theory and the UK has the highest potential storage capacity in Europe but exactly how we will pay industry to do it and what will it cost the taxpayer per ton of Co2 captured ? Despite this week’s announcement by the PM and preceding 3 years of Government consultation papers, we still don’t really know the answer to either.

Achieving net zero generation for the UK by the end of 2050 requires a lot of new renewable capacity to be added to the grid every year for 28 years. Is this achievable and if not, why bother trying ? A reasonable rule in life is to break down a seemingly insurmountable challenge into lots of little achievable cumulative tasks. If you want to lose weight start by occasionally walking to the station rather than driving, then give up the biscuits then the beer and so on. Out of interest, I’m still at the occasional walking to the station stage. The same logic applies to decarbonising the UK energy system and the only way to do this is to keep building wind farms, solar farms and biogas plants and stop burning fossil fuels. It sounds easy and we have made a lot of progress in the last 10 years but I worry that like losing middle aged weight, the challenge may be much harder and take much longer than we realise.  

Dear Mrs Borg, I am writing to congratulate you on your recent decision to stop the development of the Norfolk Boreas projects. I would also like to thank Vattenfall and you specifically as CEO for your global leadership. I could write this letter to many of your counterparts of course, including Mr Nipper (CEO Orsted), as alongside yourself there are thankfully many players active in our critical sector that are showing strong financial discipline. And that is the crux of my message: in the face of huge social and shareholder pressure to deliver new clean power I applaud Vattenfall for having stayed true to its primary responsibility; creating long term value for your shareholders and honouring your company’s strong social responsibilities.

 Pretty much every day the UK is installing more battery capacity than any country in  the world apart from China and more fundamentally has developed more markets than anybody else for those batteries  to operate in. At the time of writing, a battery connected to the UK grid can trade in 12 different markets which vary both in value and duration and unbelievably new markets are being developed as I write. So what lessons can the rest of the world learn from us and probably more interestingly, what did the UK get wrong. 

What wind, nuclear and the cost of French electricity tell us about the wider economy for 2023? Daniel Marshall reflects on how looking at the data of the French electricity mix between December 2022 and January 2023 tells us a lot about the impact of renewables and nuclear power, and how interconnected this is to the wider economy.

Can the sewage network play a role in reducing greenhouse gas emissions?

A brief blog about the decline in spinning inertia, merchant revenue risks and the cost of capital in UK battery storage

With the ongoing energy crisis in Europe millions of households and businesses are struggling to pay their bill. At the same time, actors in the energy sector are generating large profits. What are the exact proposed interventions by the European Commission? Are the critics justified?

Marcus Dixson discusses what can be done to take Australia from climate laggard to climate leader

Claudia MacKenzie highlights the impact of the ongoing price and supply chain challenges related to raw materials for renewable energy 

Matthew Taylor highlights the key drivers for offshore wind in newer markets and some of the challenges facing the globalisation of the sector.

When it comes to recycling and moving towards a circular economy, humankind has a long road ahead. Michael Ware explores the big gaps and discusses critical steps that could bring us closer to our goal.

Matthew Taylor reflects on key market movements in offshore wind.

Wow! USD 4.37 billion bid for the New York Bight. Who saw that coming? Ever since the last BOEM offshore wind lease auction in 2018 those of us watching this space have traded opinions on the bids we would see in the Bight. It became the standard exchange over beers at every offshore wind conference since. “Will we see USD 300 million bid?”, “USD 500 million would be crazy, but we might see it”. Well, the high bid turned out to be USD 1.1 billion! We saw five bidders each commit more than USD 500 million for lease blocks. So what do we make of all this? Firstly, this is hugely positive news for the US offshore wind industry. We may once and for all stop talking about whether the industry is really going to take off. Oh, it’s off alright. The winning bidders include the who’s who of pedigreed offshore wind sponsors – including EDF, Shell, CIP, EDPR, Engie, RWE and Total. These are veterans of offshore wind who clearly see the US market as a sound investment. We also saw several newcomers bring sizeable checkbooks and mount competitive bids. This is good to see. Hopefully we will see the same depth and diversity of bidders in the upcoming auctions for North Carolina and California later this year. As we watched the live bidding unfold over three days, we couldn’t help but wonder as the bidding moved into the afternoon of the second day and bids roared past USD 500 million, if this wasn’t just crazy. Had these guys all lost their minds? By the end of the second day we still had twelve active bidders with the top lease block bid sitting at USD 900 million. No, it actually was not crazy. These were rational, sophisticated companies acting according to plan. Many of them had been strategizing, refining competitor analyses and running mock “Bight auctions” for months. The winners had carefully prepared. They were also well aware of the last auction results – not the 2018 Massachusetts auction, the 2021 UK Round 4 auction. The winning bids on a price per MW basis are generally higher than the winning bids for UK Round 4, but not wildly so. The market dynamics in the US logically drove higher bids. This brings us to the downside of these auction results. At the end of the day, the US federal treasury picked up USD 4.37 billion. Where does that come from? The very rational and sophisticated bidders of course. And why would a rational and sophisticated bidder agree to make those payments? Because they reasonably expect to make it all back selling the electricity from those wind farms. So, ultimately it will be the rate payers whose utilities buy that power who will pay the USD 4.37 billion (plus a reasonable return of course). Hmm. The New York Bight auction was a tremendous success and validation of the US offshore wind industry. Does the federal government need to make billions of dollars from these leases? No. Should rate payers pay billions of dollars more in their electricity bills to help sponsors recover the cost of these leases? No. Are billion dollar leases ultimately a good thing to support further growth of the US offshore wind industry? No. There are several approaches to protect rate payers while allowing bidders to continue behaving rationally. Massachusetts offers one example. In each future offtake RfP, the state requires bidders to bid less than the price paid in the prior RfP. This simple approach captures – for the benefit of the state’s ratepayers – what should be the natural cost decline as the offshore wind industry matures. The result will be to force future lease auction bidders to factor this dynamic into their bid models rather than assume the offtake market will bear whatever is needed to recover their lease bid cost. Onward to North Carolina!

One of the unexpected features of Zoom calls during lockdown has been the emergence of  competitive book casing; people arranging the titles in their backgrounds to make them look more intelligent than they actually are. To make myself  appear suave and urbane, I have replaced my tatty collection of Bill Bryson books with an old Roman lamp which I bought on eBay for GBP 30.  This now proudly takes centre place in the background to my calls. Although it is only an unassuming bit of red pottery, it physically connects me to a civilization that died out over 2,000 years ago. This has had me wondering what our generation will leave behind for our distant descendants and depressingly, I think the main thing that survives us will be the nuclear waste from power stations and submarines.   On paper, nuclear power is a great idea. The astonishing potential of the simple equation E = mc2 means that we can create almost limitless power out of uranium twenty-four hours a day without any emissions. There are currently 440 nuclear power stations operating in the world and 150 decommissioned ones (although a couple of these, Three Mile Island and Chernobyl were decommissioned rather more rapidly and earlier than planned). These reactors collectively have  a capacity of 400 Giga watts of electricity and in 2020, they contributed 10% of global consumption saving millions of tonnes of CO2 emissions. So far so good but the big snorty elephant in the corner of the room of course is the fact that these 440 nuclear reactors and the 150 redundant ones are all producing High Level Nuclear Waste (HLNW). The distinction between high and low level waste is how radioactive it is or to put it another way, how likely is it to kill you. I’m not a nuclear scientist but my man in the street understanding is that about 1% of the fuel used in a power station is transformed into HLNW and according to the United States Nuclear Regulatory Commission, this will remain dangerously radioactive for about 24,000  years. The World Nuclear Association (WNA) grudgingly acknowledges this and buried deep in their otherwise breezily upbeat description of their industry is the telling line “that the disposal volume of the current solid HLNW inventory is approximately 29,000m3. For context, this is a volume roughly equivalent to a three metre tall building covering an area the size of a soccer pitch”. What they omit to say that if released into the atmosphere even a tiny particle of this 29,000 m3 of waste will keep killing a lot of people for a long time. Despite attempts by WNA to minimize the scale of the problem, it is a rarely discussed but unalterable fact of the industry that here isn’t a real answer to HLNW. The only solution on the table is to bury it deep underground in what are referred euphemistically to as permanent geological repository (PGRs) and wait for a very long time for it to decay to the point where it won’t kill people anymore. However, understandably the people who live near potential sites do not fancy the prospect of having HLNW buried anywhere near them so getting planning permission for an PGR is pretty much impossible. To date there are no operating PGRs anywhere in the world, not one, zilch; although the Onkalo site in Finland has been in development for the last twenty years. The HLNW that should be being buried is sitting patiently waiting in ponds on the sites of nuclear power stations or at specialist reprocessing centers such as Sellafield. For those of you not familiar with this site, Sellafield, on the west coast of the UK, is the largest nuclear processing facility in the world employing over 10,000 people working in more than 1,000 buildings. Basically it’s a huge nuclear complex like something that normally only features in James Bond films. As well as reprocessing nuclear waste from both the UK and abroad, it also stores HLNW in big ponds and unfortunately these occasionally leak. Since 1950 there have been twenty-one recorded incidents and Greenpeace now claims that the Irish sea is the most radioactive sea in the world although others claim the Dead Sea is even worse. Neither the UK nor Israeli tourist boards think to mention this in their brochures. As well as storing HLNW at Sellafield, the UK also has a problem with its fleet of redundant nuclear submarines. The UK has not ever successfully disposed of any decommissioned nuclear submarine and there are now 20 quietly rusting away at various ports around the coast. So far the Government has spent GBP 500m guarding what are essentially large rusty metal tubes and the National Audit Office estimates we will send another GBP 7.6 billion guarding them until as they optimistically say “a practical solution can be found” which is probably never. The reason they need to be guarded is of course the fact that they contain small amounts of highly enriched uranium, which is both deadly but also a key ingredient for making crude nuclear bombs. And finally there is of course the 1986 Chernobyl accident, by far the worst nuclear disaster of our lifetime. The facts about Chernobyl are so astonishing as to be almost incomprehensible but here are a few; over 30% or two million acres of agricultural land in Russia, Ukraine and Belarus was contaminated by the disaster and taken out of production,  seven million people are now being paid state benefits because of the impact of the disaster on their livelihoods and the total cost to Belarus alone is estimated at $235 billion. That seems like a big number but has been trumped by Fukushima which some industry commentators think could cost the Japanese tax payer somewhere north of GBP 500 billion to clean up over the next forty years. The obvious common theme to Sellafield, submarines, Chernobyl and now Fukushima is that there is no long term solution for HLNW apart from burying it in non-existent holes. Despite knowing this, the nuclear industry ploughs blithely on and at the moment there are 54 nuclear plants under construction. Most of these are in India or China although the UK is cheerfully commissioning Hinckley Point. The guaranteed “strike price” being paid to the owners, EDF, will be GBP 92.50 per MWhr compared to a prevailing wholesale power price of about GBP 45 per MWhr. This difference will cost the British taxpayer an additional GBP 50 billion over thirty-five years and probably makes Hinkley Point the most expensive UK power station ever built. The Government has also recently announced a further GBP 210 million to develop a fleet of small modular reactors (SMRs). SMRs are appealing to Government Ministers because they are more voter friendly than a big reactor, little shipping container sized units that can power a medium sized town and don’t have the unfortunate historical association of their big brothers at Chernobyl, Fukushima etc. They are of course still fundamentally nuclear reactors and will produce small amounts of high level nuclear waste adding to the global stockpile but none of this features in the cheery Government announcements. This does of course beg the question of why the UK Government keeps backing the nuclear horse? I think the answer is short term pragmatism. Despite warm words at COP26, 100% decarbonisation of UK energy generation is a long term maybe thirty year plus project and there are no quick non-nuclear fixes unless we radically change consumer behavior so the demand for energy dramatically decreases. We have made great strides on the generation side of the equation with wind, solar and biogas but there is still a huge journey ahead of us and legitimate questions remain about intermittency, how to reduce our seasonal reliance on Russian gas and how to decarbonize domestic heat. It is a sobering thought that no current member of the Cabinet is likely to live long enough to see a completely carbon neutral nuclear free energy mix in the UK. If they work as promised, modular nuclear reactors are a sort of get out of jail free card to all of this, a short term technological fix to a difficult problem of energy supply versus demand and because they are new and untested, harder to empirically argue against. Politicians live in a world of electoral cycles and understandably prefer homegrown solutions that may crystallize within years not decades.    So despite knowing that there is no solution to the problem of nuclear waste and the almost inconceivable damage caused to Eastern Europe by the Chernobyl disaster, we are, to our collective shame, still ploughing on with different forms of nuclear power rather than admitting that the alternative of 100% non-nuclear decarbonization of energy will take decades to achieve.  The nuclear industry claims their plants are safer than ever but the plants still inevitably produce HLNW waste, there are no PRGs anywhere in the world and all of the high level nuclear waste ever produced in human history is still sitting in occasionally leaky storage ponds waiting for a technical solution that never comes. My 2,000 year old Roman lamp is a physical legacy of a great but long lost civilization. It probably doesn’t make me look urbane on Zoom calls but sitting in the same room with it for two minutes won’t kill me. Our own physical legacy to our descendants of nuclear waste will last much longer and be infinitely more deadly and I think they are unlikely to look back to us with quite the same fondness.

Not seeing the big emissions wood for the millions of baby trees 

The VIPs of Southeast Asia: Vietnam, Indonesia and the Philippines. What’s next for renewable power?

Clément Weber, co-chair of the WFO’s Floating Offshore Wind committee, discusses Green Giraffe’s foray into the floating offshore wind sector more than eight years ago and its stunning development since.

The EU have banned the sale of petrol or diesel powered cars from 2035. What does this mean for European consumers, the car industry, and renewable energy?

Ahead of the COP26, Michael Ware discusses the surge in gas prices and the overnight shortage of petrol in the UK.

How can the 13.3 giga tonnes of CO2 that are produced annually by the domestic and industrial heating sector be avoided? While decarbonising heat may well prove to be more difficult than decarbonising electricity, there are a few promising technologies and policies that may be up to the challenge.

Despite, or maybe because of, being at the forefront of the nuclear energy revolution, France is now struggling to adapt to the transition to a renewable future. Jérôme Guillet discusses why.

Earlier this week Shell was ordered by a Dutch court to reduce its net emissions by 45% by 2030.

“Capture prices” have become a hot topic for renewables lately. Projects are increasingly exposed to short term spot prices even if they benefit from long term price regimes like CfDs (contracts for difference) – the power is still sold in the wholesale market in any case, and subject to the discipline of balancing costs and marginal pricing. The increasing penetration of wind and solar in many markets means that the industry is forced to grapple with a growing number of periods where there is a lot of wind power or solar power at the same time, as all projects in a given area are subject to the same weather patterns. When there is a lot of wind, and correspondingly a lot of wind power generated, supply may become too plentiful, causing prices to go down. When there is no wind, prices will go up, but wind projects will not get the benefit of these as they are not producing. If the production profile is not in line with demand, the capture price received by the project can be lower than the average wholesale price for all generation. While quite location-specific, it is generally estimated that the capture price for wind is lower than the average price (and is expected to go down a bit further in coming years), whilst the capture price for solar is often higher than the average price (thanks to power demand generally being higher during the day), with trends for the future varying quite wildly depending on demand patterns and expected future penetration.

The grounding of the giant container vessel Ever Given across the Suez Canal has rightfully generated a lot of headlines, triggered both by the spectacular pictures of the skyscraper-sized vessel stuck in the sand and by the impact on global supply chains. For a lot of “just in time” businesses, the interruption of a vital route used by more than 10% of global seafaring traffic has had a direct impact on their production lines (and indeed we have learnt that one of our clients had their solar panels on that very vessel). This comes at a time when we have seen that shortages in microchips, manufactured by a tiny number of huge producers like TSMC, are causing havoc across critical industries like car manufacturing

With ESG becoming an ever hotter topic as investors want to find sustainable and green assets, and the EU is working on setting definitions and standards (see Greenwashing in finance: Europe’s push to police ESG investing) to limit greenwashing, it is worth remembering one of the best known sentences in US Supreme Court history, when Justice Potter Stewart wrote that obscenity was hard to define, but “I know it when I see it”.

Moody’s have just published their 11th report on defaults and recovery rates for project finance bank loans, covering a large fraction of all transactions done between 1984 and 2016. The report shows that the sector continues to offer good risk discipline, with a “10-year cumulative default rate of 6.4% and an average recovery rate of 79.3%.”  Moody’s further notes that “marginal default rates for project finance bank loans are similar to marginal default rates for high speculative-grade corporate issuers during the first three years following financial close. They fall over time, however, and trend toward rates consistent with the single-A rating category by year seven following financial close.”

The unexpected winter storm caused millions to be without power in Texas. Initial noise and commotion were around blaming renewables (as usual and expected). Going forward, will this be enough pressure for politicians to ensure functional infrastructure in Texas? Only they can tell. Jérôme Guillet, Managing Director of Green Giraffe, discusses the lessons learned.

Will a Biden presidency propel US commercial scale offshore wind projects? Sylvian Watts-Jones examines the last four years and looks at the road ahead.

We would like to make a stand against the lazy – and incorrect – use of the word “subsidy”, by too many in the media and even in the industry, to describe contracts for differences (CfDs).

Despite its long winters and temperatures which can go as low as -50°C, is the Nordic region (Finland, Norway and Sweden) poised to become the new hotspot for renewables investors?

Michael Ware discusses Roman rubbish disposal habits and the future of the Energy from Waste industry. A common complaint of the grumpy middle-aged European academic is the creeping Americanisation of language. An example often cited is ‘garbage’, although the pedants amongst us know that garbage was originally an English word that went to America with the pilgrims on the Mayflower and has only recently come back to its mother country via the medium of television. I was musing on this whilst watching an American program on the Discovery channel about Roman ‘garbage’ dumps and hence the inevitable segue into a blog about rubbish. As well as the etymology of the word garbage, my other take away from the program is how modern civilization still disposes of its rubbish in much the same way as our Italian forefathers did: we put in big holes in the ground and pretend it never happened.

On paper, Spain should be at the forefront of the renewable energy revolution particularly when it comes to solar power. It is a big largely empty country, has some of the highest levels of irradiation in Europe and relatively steep conventional power prices. You’d think that these three factors would mean that solar power in Spain would be taking off like a budget airline heading to Magaluf, you’d think that Spain would be leading the charge towards a future powered solely by the sun and you’d think all those hot dusty plains would be transformed into acres upon acres of solar farms. You’d think all of these things, but you’d be wrong. Although it is an over-used metaphor, the Spanish renewables industry has been on a bit of a hair-raising rollercoaster journey in the last 15 years. After a promising start when the country had one of the highest installed solar capacities in the world, the industry went down a very steep decline then a flat bit but is now seemingly going back up the scary steep section. The market is heating up dramatically and the international investor market is once again looking at the Spanish solar market with maybe too much enthusiasm? So, what has changed and why are we now back on the upslope of this peculiar rollercoaster shaped market?

Why is the Moroccan renewable energy revolution of interest to Western investors and developers? As yields on renewable energy projects fall to ever lower lows, investors are increasingly searching elsewhere for long-term, double-digit returns. Morocco may be the answer.

As governments look to accelerate the decarbonisation of the transport industry, biofuels might be the next big opportunity in global renewables. Michael Ware discusses the RTFO obligation and the growing investment in organic fuels.

In these extraordinary times, we have been thinking a lot about biomimicry, which, as you probably know, is an approach of taking innovations, patterns and solutions that already exist in nature and applying them to technology. The core idea is that Mother Nature who has spent billions of years being creative by necessity, has already solved many of the problems humanity is facing so we can helpfully learn from her successes and avoid her mistakes. A good example of this is the humble seaweed which is the collective noun for a range of species of multicellular algae. All seaweeds share a common ancestor with trees and mosses and belong to one of three groups commonly known as reds, browns and greens. For such a small and unassuming plant, seaweed could play a big part in the battle against climate change.

Green Giraffe’s Managing Director Jérôme Guillet considers the impact of negative oil prices on the renewable energy industry.

The amount of CO2 you are saving by your valiant attempts to use reusable coffee cups is probably undermined every time you hit reply all and attach a video of that parrot to your company wide email. The first commercially successful copy machine, the Xerox 914, was a red-hot new technology back in 1959 – so hot that the machine shipped with its own fire extinguisher due to its tendency to catch fire. The company labelled this accessory the “scorch eliminator”, but despite this, the copy machine went on to become one of Xerox’s most lucrative products. Things have come a long way (and are hopefully safer) since then and we eagerly await the next technological step, the promise of the paperless office. This new utopia has been just around the corner since the mid-1970s. Going by the stacks of paper covering the desks of many there is still a long way to go, however email has at least made a big difference.

Matthew Taylor outlines the hurdles to the tidal sector that have preventd it from becoming a mainstream energy source.

Yurie Kawada discusses the opportunities and challenges for the up-and-coming Japanese offshore wind sector. In an attempt to keep one of my New Year’s resolutions, I have been reading up on the history of Japan. While doing so, I was reminded of the most interesting fact that the once-invincible Mongol empire crossed the Sea of Japan twice in the 1270s and 1280s in a bid to conquer the world beyond China. Both times they were beaten due to strong winds and storms. In gratitude for this, the Japanese named the strong winds on their land the “divine wind” and huge weather events such as typhoons, tsunamis and earthquakes have always featured significantly in Japan’s history. Fast forward 750 years, and we now see that the weather is radically shaping the evolution of renewable energy in this densely populated island country. As you will recall, the Great Tsunami of 2011 hit the eastern coast of Tohoku region and subsequently destroyed the Fukushima Nuclear Power Station, an event which caused enormous damage to the country. This, understandably, led to strong opposition towards nuclear power and subsequently all the Japanese nuclear power plants were halted in 2012. This left a big gap in the country’s energy mix as nuclear power had contributed 26% of the country’s generation capacity.

Sebastian Reid proposes the coupling of renewable energy with desalination as a win-win solution for both developers and governments. Over decades of investigation, the search for extra-terrestrial life has been based on a single principle; follow the water. Up to 60% of the human body is literally water, so life without liquid water seems as yet inconceivable. Back on Earth, water is not hard to find – two-thirds of the planet covered by it. Yet London, Tokyo and Barcelona are some of the many cities expected to experience clean water shortages from 2025. Earlier this year, Indonesia announced it would move its capital from Jakarta, as the rapid depletion of the city’s groundwater resources is causing it to sink, displacing 10 million people. In 2017 and 2018 Cape Town suffered a severe shortage, with water levels dropping to 15% of dam capacity. Currently only 0.5% of the Earth’s water is fresh and accessible, and this resource, once thought plentiful, is being exhausted due to inefficient use of water resources combined with urbanisation and overconsumption. Agriculture, in particular, has been put once again under the spotlight. 70% of all water demand derives from agriculture alone; a single beef burger has a water footprint of 2,000 litres, and 50 billion beef burgers are eaten each year in the US alone. To put it into perspective, a whopping 100 trillion litres of water per year are used to meet the burger needs of just 4% of the world’s population. Surely savings must be made. Whilst management of water demand must improve, something can also be done on the supply side. Over 97% of the world’s water reserve is stored in our oceans, but in each kilogram of this water sits around 35 grams of dissolved salts which render this precious commodity unusable, a fact which leads us of course to desalination.

Michael Ware discusses the information assymetry of the peak demand Triads system in the UK. My surly next door neighbour has finally had enough of my barking dog and my two young sons kicking their footballs into his garden and is selling his house. Not particularly earth-shattering news, I know, but what is interesting is that he hasn’t advertised the asking price. If you want to make an offer, you have to call his estate agent for some sort of over-the-phone vetting process, after which they may or may not tell you quite how much he is asking for his 4 bedroom Victorian semi in a leafy street in Epsom. We know this because we tried – and they wouldn’t tell us. This secrecy creates an information asymmetry which, as classic economic theory tells us, will impede the working of the market. My neighbour knows how much he wants to sell his house for – but the buyers don’t know his price and will probably be put off as a result. His paranoid behaviour is impeding the efficiency of his transaction and will cost him money in the long run. When I tried to carefully explain this over the fence whilst retrieving my son’s football he was a tad less than impressed.

In George Orwell’s scarily prescient novel “1984”, he introduces the concept of doublethink: the ability to hold two apparently contradictory thoughts at the same time, e.g. my wife fancies the svelte, densely coiffured actor Hugh Jackman but has actually married me, a fat bald accountant. On a less personal scale, the UK Government’s approach to transport seems to be a classic example. They proudly proclaim no new cars or vans powered solely by a petrol or diesel engine will be sold in the UK from 2040 – but at the same time they spend the best part of GBP 500 M per annum on incentivising technology to produce diesel and gas from bio sources such as crops and waste. This is through the somewhat clunkily titled Road Transport Fuel Obligation scheme (RTFO).

Niek Schumacher reflects on the hype around hydrogen and how its business case could be made green. As you might remember from chemistry lessons at school, hydrogen is both the lightest element in the periodic table and constitutes 75% of the mass of the universe. And despite being such an innocuous little molecule, it is about to play a third major role in the energy revolution. The recent hype around hydrogen as the Holy Grail of the energy transition is mainly thanks to its incredible versatility; enabling it to replace fossil fuels in mobility, heating and electricity generation and serve as a low-carbon feedstock for industrial processes. Though hydrogen is currently not playing the role some might foresee it having in the future, it is important to note that the petrochemical and fertilizer industry are already consuming enormous volumes of the stuff. Unfortunately for Mother Nature, this hydrogen is produced using natural gas, a process which causes significant carbon emissions. On a global scale this so-called grey hydrogen is responsible for almost 2% of worldwide emissions, more than the carbon emissions in the UK.

Daniel Marshall looks at the growing use of electric scooters on the streets of Paris and the challenges we face integrating green transport in our cities.

Michael Ware challenges some assumptions about the role of battery storage in the future.

Michael Ware discusses Levi Strauss and the future of electric car charging.

Randy Male, director of Green Giraffe’s new office in Boston, discusses expansion plans across the Atlantic.

The renewables industry has, in part, become a victim of its own success in this regard. Globally over GBP 1 trillion has been invested in projects in the last then years.

Henri Gouzerh (head of Cape Town office) explains the rationale for opening an office in South Africa, the challenges faced over the past 12 months and the opportunities it brought Green Giraffe. At the end of 2017, Green Giraffe opened an office in Cape Town, South Africa. In this post we discuss why the time was right for the move, how we got there, and highlight some of the opportunities in the South African and the wider African markets.

Damiano Ting disusses the impact of carbon pricing on the economics and financing of renewable energy.

With the closing of the Deutsche Bucht (DeBu) financing (and sale of the project to Northland Power), a major page in Green Giraffe’s history has turned and it is worth telling the tale in full. We were first approached by Highland, the family office of Lord Irvine Laidlaw of Rothiemay, in September 2011, on the recommendation of CMS, a Hamburg law firm. At that time, Green Giraffe was a very young company, not two years old. We had just helped close our second major transaction with the financing of the Meerwind offshore wind farm in Germany, advising Blackstone (following the closing the previous year of the C-Power offshore wind farm in Belgium). At the time, offshore wind transactions were quite rare and these deals put us on the map, at least for offshore wind advisory.

In a second post on floating offshore wind, Martin Guzzetti addresses the financeability of the sector.  

Martin Guzzetti discusses the strategic rationale behind floating offshore wind, exploring the similarities and differences with fixed-bottom offshore wind projects.

Jérôme Guillet explains how Green Giraffe are on the road to carbon-positive.  

Jérôme Guillet explains why fixed energy prices are necessary for the renewable energy industry. As the renewable energy sector and its regulators grapple with the prospect of so-called “zero-subsidy” bids, as seen in the recent German offshore wind auction, here’s a suggestion to ensure that the renewable energy sector does not do anything counterproductive or even destructive in any of the upcoming tenders.

Jérôme Guillet looks at the reasons why Hinkley Point C nuclear power station is unlikely to ever get built. The Hinkley Point nuclear project in the UK is a long running saga, and it currently looks like it’s finally going to happen, after decisions by both the UK government and the board of EDF to go ahead with the project. Some early works have started (behind paywall) and full construction is now scheduled to go ahead in 2020 with operations starting in 2025. But new developments in the offshore wind markets, plus some of the complications associated with Brexit, are increasingly likely to both derail it and offer a way out.

Jérôme Guillet, Managing Director of Green Giraffe, introduces the new Green Giraffe Energy Blog.