Is finance the biggest hurdle in the race to net zero?

China added an astounding 72.4GW (pdf) of new wind power in 2020, including 48GW in December alone, as developers rushed to beat an onshore wind subsidy cut-off — China will no longer approve subsidized onshore wind projects after 2020. It represents a three-fold increase from 2019 and is more than double the nation’s previous record.

However, the figure reported by China’s National Energy Administration could be skewed by 26.3GW, as it includes grid connections that were installed, but not connected, by the end of 2019, according to Feng Zhao, Head of Strategy and Market Intelligence at the Global Wind Energy Council. Regardless, the net figure of 46.1GW in 2020 would still represent a tremendous achievement for China, and nearly equals the entire global capacity installed in 2018.

China also installed 3GW of offshore wind in 2020, representing half of the new global capacity built last year. It is the third year in a row that China has led in new annual offshore wind capacity. In addition, it added 49.3GW (pdf) of solar capacity, up from 29.7GW in 2019.

Despite this increased growth in wind and solar installation, at a policy level, the emissions goals established in China’s 14th Five-Year Plan for 2021-2025 are seen by some analysts as slow-moving and leaving the door open for emissions to grow for the next 10 years.

One of the main targets in the plan — a 20% non-fossil share in total energy consumption by 2025, an increase from 15.9% in 2020 — has been classified as a “modest acceleration” by commentators. It has led to calls for China to do more to reach its climate target of peak carbon emissions before 2030.

Last month, China and the US announced that they would work together, and with other countries and regions, to tackle climate change. The two superpowers agreed to discuss further specific actions to reduce emissions and to help developing nations finance a switch to low-carbon energy.

Brazil is pushing ahead with plans to deploy offshore wind capacity. Currently, it does not have any turbines off its 8,000km Atlantic coast, but a new bill was proposed in Congress in February that, if passed, would open up the sector.

The nation has been locked in debate over how Brazilian waters should be subject to concessions or leases for offshore wind development. The new bill would ask developers to pay up to 5% of power production and other charges. An older offshore wind bill that proposes a “first come first served” system, without charging bonuses or leases, has been approved by the Senate and is being debated by the Lower House. It is expected that the two bills will be combined when the new bill reaches the Lower House.

Meanwhile, Brazil’s federal environmental authority, IBAMA, released licensing guidelines for offshore wind power projects last year. Additionally, the federal energy planning authority, EPE, published a road map for the sector that called attention to infrastructure bottlenecks.

Brazil’s potential offshore pipeline could see strong growth, thanks, in part, to a 50m-deep, 30km-wide continental shelf and wind speeds of 7m/s to 7.5m/s. Equinor and Iberdrola have already sought licenses for 4GW and 9GW respectively, while domestic firm BI Energia has submitted a request to build offshore wind farms. Total and Enauta have also expressed interest.

For the new industry to take off, however, costs will need to be reduced. Currently, planners in Brazil must follow regulations that enforce an order of contracting that combines lowest price with supply security. Given that Brazil’s 18GW onshore wind power fleet is selling power at less than BRL90/MWh (US$13/MWh), offshore wind — which has a global average price of approximately US$50/MWh — is currently far too expensive to win power deals in a government tender.

Poland has passed the Offshore Act regulating the development of offshore wind farms in the Baltic Sea. It aims for 5.9GW of capacity to be offered via contracts for difference by the end of June 2021. This is an increase from a previous draft offshore wind bill, which would have allowed for 4.6GW. The first projects could become operational by 2025.

Investors are expected to be responsible for constructing and financing the connection of offshore wind farms to the national grid. Poland’s state-owned transmission system operator, Polskie Sieci Elektroenergetyczne, will have the right of first refusal in case of a potential sale by an investor.

This marks Poland’s first phase of development. Plans for the second phase include two auctions — the first in 2025 and the second in 2027 — both for 2.5GW of capacity. This would bring Poland’s total offshore wind capacity that is operational or under development to 10.9GW by 2027. It also envisions a pipeline of up to 28GW. Poland is viewed as a potential springboard for non-Western European markets, and success here could result in developers turning their eyes toward the Black Sea.

A long-term offshore wind roadmap is being put together for Turkey by the World Bank, with the aim of holding a tender in the next two to three years. After a canceled 1.2GW offshore wind auction in mid-2018, the World Bank is now managing disbursement of EU funds to support feasibility and environmental studies ahead of a second attempt at an auction.

Sites are under assessment in the Sea of Marmara and the Black Sea. Wind speeds in the Turkish part of the Black Sea are estimated at 7m/s to 7.5m/s, in mostly deep waters. Currently, no sites are under assessment in the Aegean or Mediterranean seas, although three sites were being examined for the canceled tender attempt in 2018. The possibility of sites in the Aegean Sea could be limited by the closeness of several Greek islands to Turkish shores.

According to the World Bank, Turkey has the technical potential for 75GW of offshore wind within 200km of its coasts, comprising 63GW of floating wind and 12GW with bottom-fixed foundations.

Turkey ranks in Europe’s top 10 for installed wind capacity and is among Europe’s top 5 wind turbine equipment makers, producing both onshore and offshore equipment.

Greece’s Regulatory Authority for Energy (RAE) has announced it will hold a joint wind and solar tender on 24 May. It will be the nation’s third joint renewables tender, offering 350MW of capacity to bidders. The process will be open to solar projects with a capacity of up to 20MW and wind projects of up to 50MW.

The RAE says a ceiling price of €53.86/MWh (US$64.04/MWh) will be put in place for prospective bidders. Greece’s first joint auction for wind and solar projects was in April 2019, when it awarded 437MW of capacity. Last year’s auction awarded 503MW of capacity, including a record-breaking tariff of €49.11 per MWh (US$58/MWh) for a 200MW solar project in Ptolemaida by state-owned utility Public Power Corporation.

The upcoming auction will be the first of six that Greece plans to hold before the end of 2024, with a target of awarding 2.1GW of renewables capacity. Its tender regime has brought a steady reduction in tariffs and created a competitive environment for domestic companies.

Greece has also introduced a new digitized licensing process, helping to expedite procedures for developers to participate in national renewable energy auctions.

Belgium’s Flanders region has reduced subsidy payments for future wind projects. Wind farms of 2.5MW or larger will now fall into a lower payment band, compared with a previous cut-off of 3MW.

A reduction in the internal rate-of-return parameters for wind farms entering the support scheme has also been introduced in Flanders, as has a mandate that wind projects will only receive the appropriate payment for their nameplate capacity. The measures come as developers prepare for the phase-out of subsidies by 2024.

The changes also prevent developers from taking advantage of a perceived loophole that would allow them to de-rate installed wind farms to qualify for larger subsidy payments. Approximately 30 permitted wind projects in Flanders will be affected by the new regulations.

Hungary’s second renewables auction, held in October, was significantly oversubscribed. Of the 257 projects submitted (of which 256 were solar projects and the other a 0.5MW geothermal plant), only 36 projects were successful.

For small photovoltaic (PV) power plants between 300kW and 1MW, the lowest bid was HUF21000/MWh (US$71/MWh). For projects ranging from 1MW to 49.9MW, the lowest bid was HUF16180/MWh (US$54.9/MWh).

In total, the Hungarian Energy and Public Utility Regulatory Authority (HEA) expects to contract 390GWh. At Hungary’s first renewable energy auction, held in March 2020, it contracted 199GWh. For the second tender, there was a rise in the capacity limit — from 20MW to 50MW — for large-scale projects, which was popular among foreign investors. HEA will grant 15-year FIT payments to the 36 successful projects, to top up wholesale electricity prices.

Despite the strong growth of Hungary’s solar PV market, its renewable energy market is still hampered by a tax that supports small district heat producers. Hungary has put solar at the heart of its renewable energy policy, setting a target of 6GW of solar PV capacity by 2030, with existing capacity at just above 1GW.

Kenya is expected to add 80MW of solar power to the national grid this year — a huge increase for a nation that currently generates about 200MW of solar power. Two solar plants, both 40MW, have received approval and will be built by private investors. They are due to be operational before the end of the year.

With abundant sunshine throughout the year in most of its regions, Kenya is an ideal location for solar power, from both utility-scale and rooftop installations.

Meanwhile, the nation is planning to review its solar legal framework to improve uptake among the industrial sector. To boost uptake of household rooftop installations, Kenya is seeking to introduce regulations for standards of imported solar equipment, to safeguard consumers from substandard products. Currently, the nation imports more than 90% of its solar equipment.

Kenya is hindered by a lack of local production technology and capacity, and the Energy and Petroleum Regulatory Authority is currently considering a new regulatory framework to promote technology transfer.

France opened bidding in January for a tender for the construction, operation and maintenance of an offshore wind park in the English Channel off the coast of Normandy. It will have a capacity of between 900MW and 1,050MW, spread across a zone covering 500km.

The tender will have three stages: the selected developer, responsible for the project financing and management, will be announced in 2022; environmental studies will be conducted in the project area, in consultation with relevant stakeholders; and the wind farm will then be built at least 30km from the Normandy coast, to minimize the impact on fishing activities, maritime traffic and the marine environment.

Upon completion, it is expected to generate enough electricity to power 800,000 homes, and will be France’s eighth offshore wind farm. Last year, the Government announced plans to hold tenders for 2.4GW of offshore wind to be commissioned by 2023.