Boston Strategies International (BSI) recently completed a study of renewable energy costs and value chains for a branch of the Mexican government’s Instituto Nacional de Ecología y Cambio Climático (National Institute of Ecology and Climate Change). BSI compared the costs and value added of environmentally sustainable technologies for the power generation sector (large scale solar, wind and geothermal, vs combined cycle natural gas technology) to support decision-making in environmental mitigation. The study analyzed the principal actors, elements and processes, as well as costs, value added, and barriers to entry attributable to each segment of the value chain, as inputs to energy policy formulation.
The Instituto Nacional de Ecología y Cambio Climático (INECC) produces valuable scientific and technical information on environmental issues and the training of human resources, in order to inform society, support decision making, encourage the protection of the environment, promote the sustainable use of natural resources, and support the Mexican Secretary of the Environment and Natural Resources in reading its goals. It aims to be a leader agency in applied environmental research, that develops and promotes scientific cooperation projects that contribute effectively to resolve the major environmental problems of Mexico, and support the conservation and restoration of the environment in the whole country.
Boston Strategies International is a consultancy that compresses lead time and reduces cost in gas, oil, and renewable power supply chains. Clients typically hire us to cope with legislative reform, technologically challenging projects, cost over-runs, strategic diversification, and major capital programs. We build ongoing project management competency and leadership by transferring our knowledge, analytical tools, and data to in-house staff during every engagement.
Contact us for more information on how we can help your organization.
Boston Strategies International (BSI) recently conducted a study to assess the potential uses of batteries for energy storage in Mexico. The Mexican Energy Reform has brought up the creation of an electricity market in Mexico, where private generators and large industrial consumers can buy and sell power.
BSI provided an overview of the energy marketplace in Mexico and analyzed the technical, regulatory and economic aspects affecting energy storage systems in Mexico. The study compared principal actors, elements and processes, as well as costs, value added, and barriers to entry attributable to each segment of the value chain, and provided product development, marketing, and commercialization recommendations for energy storage systems.
The study was conducted on behalf of Nippon Electric Company, Limited (NEC Corporation), Japan’s first joint venture with foreign capital, which was established in 1983 by Kunihiko Iwadare in association with the U.S. firm Western Electric Company (presently Alcatel-Lucent). The NEC Group is currently focusing on leveraging its strengths in information and communications technology (ICT) to offer Solutions for Society capable of increasing the sophistication of infrastructure systems and services indispensable to society. Through these business activities, NEC remains committed to collaborating closely with each and every one of its stakeholders to create an “information society friendly to humans and the earth” based on value that helps ensure safety, security, efficiency, and equality, enabling people to live more abundant lives.
Boston Strategies International is a consultancy that compresses the lead time and reduces cost in gas, oil, and renewable power supply chains by up to 30% through technology development, value chain engineering, strategic sourcing, and supply contract negotiation. BSI leverages its proprietary economic models and frameworks to advise oil, gas & power operators, regulators and policy-makers, lenders, equipment providers and service providers in the formulation of national and energy tax, subsidy, and investment promotion policies. Our broad experience across all aspects of industrial value chains, combined with our strength in economic analysis, provides robust and trustworthy roadmaps for growth.
Boston Strategies International’s President Mr. David Jacoby Shared BSI’s Analysis of the Solar PV Market at the SNEC Conference in Shanghai, China on April 17-21, 2017.
The SNEC Scientific Conference provided an excellent platform for the world’s PV experts and scientists to showcase and share the latest developments in solar energy technologies.
The conference programme encompassed a wide scope of PV technologies, ranging from silicon feedstock, PV materials, cells, modules, systems and quality assurance to smart grid technologies. The world’s top PV scientists along with CTOs from leading PV companies have been invited to join the International Scientific Committee as well as presenting on the cutting-edge technologies of solar energy at the conference.
Boston Strategies International’s President Mr. David Jacoby’s presentation on “Market Outlook for Solar PV” provided detailed insights about the long-term demand growth outlook for Solar PV and the world’s solar markets.
In his presentation Mr. Jacoby emphasized that cumulative global market for solar PV expected to triple by 2020 to almost 700 gigawatts, with annual demand eclipsing 100 gigawatts in 2019. According to the analysis, the bulk of the growth will occur in a small number of markets. While 8 countries might each add over 10 GW, 4 markets – China, US, Indian and Japan – are supposed to add over 20 GW, and China could exceed the 100 GW level in the High Scenario.
David also emphasised that Solar power as the lowest-cost renewable energy can provide enough clean power generation in time to meet the ambitious Paris Climate Summit targets. Utility-scale systems and rooftop systems will each have roughly half of the global market.
Rooftop systems are currently more expensive but the value of electricity delivered on consumption sites or nearby is greater.
However, as PV expansion is driven more and more by self consumption – the use of PV electricity directly at the same site where it is generated – grids may carry smaller amounts of traded electricity, raising concerns over how to recover the fixed costs of grids.
Mr. Jacoby explained how the global market for solar PV will no longer be Europe-centric and large solar markets in Asia are booming. China and Japan are leading the growth curve for the solar PV market and energy storage solutions will unleash latent growth in Latin America, Middle East and India.
He also discussed about the increasing rates of penetration for rooftop solar. According to BSI’s research, since the demand growth is coming mainly from emerging markets where utility-scale PV is currently the preferred application, this solar segment will continue its lead over the next 5 years.
He summed up by forecasting that energy storage solutions and emerging market potential promise long-term profitability for the industry.
To access David’s full SNEC 2017 presentation “Market Outlook for Solar PV” with detailed charts and analysis kindly buy it using this link.
Drought, electricity rationing, and increasing reliance on dirty thermal power are adding to the woes of the Colombian power sector.
El Niño has caused drought and high temperatures across northern and western Colombia since early 2015. Much more potent than usual, the current version is called ‘Super El Niño’ and is likely to last up to 5 years. In 2015, 9 of Colombia’s 32 departments (provinces) were in a state of emergency due to extreme drought in 2015. In recent months, El Niño dried up parts of the Magdalena River, the country’s main waterway. Electric power generation capacity, more than 70% of which comes from hydropower, has suffered. Power generating companies like ISAGEN, EMGESA, AES, and EPM have been squeezed, with little revenue to offset large fixed costs. Climate change scientists suggest that the intensity and frequency of this phenomenon will increase.
Unplanned outages of Colombian power generation plants like EPM-operated Guatape and Celsia-operated TermoFlores, sapped 10% of the country’s power supply in March alone. Additionally, about 15% of electricity is lost in transmission, leakages, and theft. Given the impact of El Niño and anticipating further reduction in hydropower generation, the government is likely to extend the electricity rationing that happened in March 2016.Colombia experiences 1.2 power outages in a typical month, and the value lost due to these power outages is estimated to be around 1.8% of sales, according to a World Bank survey. In an already constrained power system, electricity demand is growing at 13% annually, making the problem critical to the country’s future.
The government plans to add 7 GW to the national grid network by 2027. While there has been a focus on reducing reliance on hydropower since the 1990s when its contribution was over 80%, more than 20% of the upcoming capacity will come from thermal generation, which is carbon intensive.
Distributed power generation – decentralized small scale technology producing anywhere from a few kilowatts to up to 50 MW close to the end user– can help mitigate the looming power crisis. Multiple units can even cater to a “micro-grid” that is either independent of the grid or connected to it through smart net meters. Previously, distributed generators relied on synchronous generators, induction generators, and micro-turbines (which were used as power back-ups), but these are gradually being replaced by solar PV, wind, biogas, and geothermal systems. Distributed generation based on renewable technologies reduces the cost of generation, cuts transmission and distribution losses, and can make self-sufficient 5-10% of the population, which is not connected with the national grid system and receives only about 5-10 hours of power daily.
The potential for distributed power generation is considerable. Small hydropower in Colombia can potentially produce up to 150,000 GWh of power per year from multiple generation sites which are less than 20 MW each. The country has significant solar power resources, with daily average radiation of up to 6kWh/m2. According to a study by the World Bank’s Energy Sector Management Assistance Program (ESMAP), approximately 190 million m3/yr of biogas generated from coffee plantations can produce 995,000 MWh of power. And, geothermal potential has been estimated at 2,210 MW (vs. current installed capacity of only 14.4 MW).
Colombia needs to finalize and articulate its electric market legislation for the country to realize the potential of distributed generation. It was among the last of the Latin American countries to have a renewable energy law. The law passed in 2014 after two years of deliberations. Limited policy development has failed to pass a provision to allow power purchase agreements with utilities, especially the largest ones such as EPM, ISAGEN, and EMGESA. Hence there is a relatively small number of small private sector players and investors.
However, there is reason to believe that even small scale development of renewable energy is on government’s radar, given that the government woke up to clean energy development to begin with. According to the plan published by the energy and mining planning agency (Unidad de Planeación Minero Energética, or UPME), 54 MW and 50 MW of solar and geo-thermal power capacity will be installed by 2020. Tax incentives give reasons to small and medium sized enterprises to invest in small scale distributed power generation: no value added tax (16%) on capital equipment, import duty exemptions for renewable energy projects, accelerated depreciation on capital equipment (50% in the first five years).
Even though the government woke up late in addressing the regulatory omissions, it needs to take it from here in an accelerated fashion. The future of distributed power generation lies mainly with small and medium players while the large players will be struggling with optimizing the performance of grid-connected hydro and thermal projects and their transmission. Future policies must focus of power purchase agreements and feed-in-tariffs so that the distributed generation sector attracts progressively more investment capital from the private sector for faster growth.