London, United Kingdom – The world’s largest pure-play sustainability advisory firm, ERM, announces the acquisition of RCG (The Renewables Consulting Group) – a global market intelligence, management consulting, and technical advisory firm operating exclusively in the renewable energy sector.
The acquisition expands ERM’s capabilities to support clients across the entire lifecycle of large-scale renewable energy projects, from market intelligence and strategy development through to the development, construction, operations, and decommissioning of projects. It further strengthens the firm’s ability to advise clients on the purchase and sale of renewable energy assets, and adds deep sector experience in offshore wind projects.
The team of RCG grows ERM’s +5,500-strong firm by approximately 60 experts, based in Europe, the Americas and Asia-Pacific. RCG’s leadership team joins the ERM partnership.
ERM continues to expand and diversify its market presence through acquisitions. The deal marks ERM’s sixth acquisition announced in 2021, including related acquisitions in next-generation low-carbon technology advisory, and renewables consulting.
Keryn James, CEO, ERM said: “Our purpose is to shape a sustainable future with the world’s leading organizations. Navigating the new opportunities presented by renewables and low-carbon technologies is central to this ambition. With the acquisition of RCG, we are in an even stronger position to help our clients unlock the enormous potential of the clean energy revolution. We warmly welcome the talented RCG team to the ERM Group.”
Sebastian Chivers, CEO, RCG said: “From the outset, our vision for RCG has focused on building the most respected firm in renewable energy consulting, globally. Becoming part of the ERM Group will help us accelerate that vision and become a global leader for our clients in the energy transition. The backing of ERM will allow us to take the business to the next level.”
Lee Clarke, COO, RCG said: “We already have a track record of successfully collaborating closely with ERM across global markets and have shared values and ways of working. Operating together as a single team unlocks competitive advantage for clients throughout the project lifecycle.”
London, England – More than 200 GW of new offshore wind projects have been announced since the beginning of 2020 – accounting for more than 44% of all global capacity at the pre-construction or early development phase, according to the 2020 Global Offshore Wind Annual Market Report issued today from The Renewables Consulting Group (RCG).
Despite a global pandemic, 2020 was a year of substantial milestones for global offshore wind. With new projects announced from Colombia to Brazil in the Americas, Spain to Estonia in Europe and Australia to the Philippines in the APAC region, the technology has been adopted by markets at contrasting levels of socio-economic development and distinct geographies. New projects exceeding 500 MW in capacity were announced in Spain, Ireland, Norway, Taiwan, South Korea, Italy, Brazil and Vietnam through to early 2021. Technology continues to emerge as floating offshore wind continues to emerge as a utility-scale option for markets with deep-water seabed areas.
While offshore wind enjoyed a transformative year for market growth, new policies, and targets, fostering development at a government level and ongoing installation across all regions, there remain significant challenges to the industry in meeting ambitious targets and enabling the realisation of projects in the pipeline beyond 2030.
Supply chain constraints across all regions, as well as undefined development frameworks and route to market mechanisms, will limit deployment of capacity across the sector through to 2030. The rate of deployment in the near-term should not be underestimated, however the ambition of government authorities and investors may exceed sector capability in some areas.
Source: RCG’s Global Renewable Infrastructure Projects (GRIP) database*
* Note: Q1 2021 update. Recent project announcements bring the active global portfolio to 510.5 GW
Commenting on the Global Offshore Wind: Annual Market Report, RCG’s COO, Dr Lee Clarke said:
“This year’s Annual Market Report is an invaluable data source and its findings clearly demonstrate that global offshore wind continued to its impressive growth in all sectors during 2020. With a steady and predictable framework, we continue to see positive developments emanating from emerging markets, such as in the APAC and the Americas regions. The ongoing maturation of technology and declining costs for offtake have inspired governments and investors to embrace offshore wind, with many authorities touting offshore wind as a cornerstone to a green economic recovery in the wake of a global recession.” – Lee Clarke, COO
There are five key takeaways from RCG’s latest 2020 Global Offshore Wind Annual Market Report:
The total capacity financed for offshore wind in 2020 reached 8,370 megawatts (MW) across the European, Americas and Asia Pacific (excl. China)* regions, eclipsing the previous total of 6,438 MW financed in 2018. Global investment for offshore wind also set new highs last year as investment reached USD 30 billion, surpassing the previous high of USD 22 billion set in 2018.
For the first time, the APAC market portfolio has surpassed the EMEA region in project development capacity. For the first time, the UK – the market leader – will lose its No. 1 global offshore ranking by the end of the year to Vietnam and China, respectively.
Vietnam, with just 99 MW of inter-tidal capacity operational, sports a massive development pipeline of 64.9 GW. Vietnam’s early-stage development capacity is almost entirely comprised of projects proposed under the recent national power development plan (PDP8). Of the offshore wind farms proposed under the PDP 8, many have not disclosed site characteristics beyond prospective capacity. It is therefore expected that large projects located in areas of prominent resources will overlap. As result of potential overlapping boundaries, as well as other constraints such as grid availability and demand, it is unlikely all projects will advance to operation.
China, which has 8.5 GW of offshore wind operational and 30.2 GW underdevelopment – is in second place with a total portfolio of 63.6 GW. Project commissioning took place at an unprecedented rate during 2020. The offshore wind feed-in-tariff (FiT) supporting rapid development and installation timelines is due to expire in 2022, with no new subsidy mechanism announced to date. Developers, meanwhile, race to install projects by the commissioning deadline.
Floating offshore wind continues to emerge as a utility-scale option for markets with deep-water seabed areas. The floating market expanded rapidly in 2020 and early 2021, embracing more innovative technology concepts at a large scale. The first competitive tender for a commercial scale floating sites is currently underway in France, while more projects are set to be offered in competitive processes in Scotland and Norway later in 2021, with plans to lease projects in California also ongoing. Development of new projects of over 100 MW in capacity across at least eight different countries to date has shown floating technology to be a viable power generation option in a wide range of environments.
Leasing headlines for the year were dominated by the results of the Round 4 auction for new sites in England and Wales. The cost-based competitive allocation drew in bids from oil and gas majors exceeding £230 million per year in option fees. The explosion of growth in the portfolio capacity of projects in the APAC region was encouraged by the prospect of new leasing rounds and offshore wind frameworks. However, not all projects will proceed beyond an auction round and there is heavy risk associated with pre-tender project development. The success of offshore wind allocation frameworks has encouraged the formulation of new policies supporting development in markets such as Brazil, Sweden, Ireland, Australia, Spain, Romania, Greece and Vietnam.
As new project announcements in the United States stalled in 2020, the Brazilian market flourished with over 31GW of new projects announced throughout the year and into 2021. Despite a slowdown in federal permitting and new leasing in the last year of the Trump presidency, state authorities issued solicitations for offtake contracts in New Jersey and New York. The first project installed in federal waters, the 12 MW CVOW demonstrator, was commissioned by Dominion Energy in October 2020. The development and operations of the project will inform the build out of the adjacent 2.64GW CVOW offshore wind farm. Other project developers also advanced sites, with construction and operations plans submitted for three projects on the north-eastern coast of the country. There was also increased interest in pursuing offshore wind projects off the coasts of California, Louisiana and Oregon. The development and operations of the project will inform the build out of the adjacent 2.64GW CVOW offshore wind farm.
Offshore wind projects were explored in both Colombia and Chile in 2020. Local onshore renewables developer Prime Energia submitted plans for a 200 MW project near the Port of Cartagena to Colombian authorities in late December, while turbine supplier GE announced it was exploring floating opportunities off the Chilean coast in September.
The data and the analysis compiled for this report were compiled from RCG’s GRIP 2.0 online database. For more information about GRIP 2.0 and how to subscribe, visit thinkrcg.com/data-services/
RCG’s full analysis and forecasts can be viewed in its Global Offshore Wind: Annual Market Report. The 191-page summary includes details on each offshore wind market with analysis of the resources that will allow projects to reach route to market, financial close, and commissioning milestones. It contains more than 150 detailed charts, 45 tables and numerous maps. An overview of the global supply chain is also provided for various aspects of the wind farm engineering procurement construction installation (EPCI) process, as well as a breakdown on all development activity for each offshore wind market in 2020. To purchase a copy of the Annual Market Report, click HERE thinkrcg.com/data-services/
On Dec 21, the US Congress passed a massive $900 billion Coronavirus relief package bundled with a $1.4 trillion government spending bill to help with the economic fallout from the global pandemic. President Trump, after last-minute deliberations, signed the bill into law on Dec 27.
The Consolidated Appropriations Act,2021 addresses a wide array of sectors from extending unemployment insurance to small business loans, the omnibus spending bill also carves out provisions to extend deadlines for developers of terrestrial wind, solar, offshore wind, geothermal, biomass, and other renewable energy projects to qualify for federal tax credits. It is the most significant energy bill passed in the US since the Obama-era American Recovery and Reinvestment Act of 2009.
Specifically, the legislation extends deadlines for developers of terrestrial wind, solar, offshore wind, geothermal, biomass, and other renewable energy projects to qualify for federal tax credits.
Here’s how the bill impacts renewable energy:
Offshore wind. Among the biggest beneficiaries of the massive stimulus package is offshore wind.
Typically, developers have the option to elect the production tax credit (PTC) or the investment tax credit (ITC). Given the high cost of construction – relative to land-based wind farms – developers typically elect the ITC as opposed to the PTC, which pays a credit per kWh of electricity generated. The legislation extends for five years a 30% ITC for offshore wind projects that begin construction as late as 2025.
Importantly – unlike other tax credits like the PTC and ITC for solar – the ITC in offshore wind will not diminish in value over time and will remain at 30% during the eligibility period.
Given the complexity and long lead time involved in permitting, procurement and financing for offshore wind power projects, the five-year extension should enhance the financial viability of US offshore wind.
Terrestrial wind. The legislation extends PTC eligibility by one year at the current 60% level for wind projects that start construction before the end of 2021 – meaning the PTC provides for a credit of $0.015/kWh to wind project owners for energy produced during the first 10 years after a project is placed into service.
Given the complexities of the US tax law, developers must meet specific conditions to qualify – namely beginning construction before the end of 2020 and achieving commercial operation starts by 2024.
Solar: For solar projects that begin construction in 2020, 2021 or 2022, the new law says that developers of solar projects will qualify for a 26% ITC, rather than 22%.
Solar projects that begin construction in 2023 will qualify for a 22% ITC. For any solar project to qualify for more than a 10% ITC, it must be in service before 2026, as opposed than before 2024.
Aside from renewable energy technologies, the legislation carves out provisions for energy efficiency programs in data centers, schools and federal buildings. Further, the legislation sets a goal that federal lands produce 25 GW of electricity from wind, solar and geothermal sources by 2025.
To read the full text of the 5,593-page document, click here.
For a deeper understanding of how RCG and its services can assist, visit www.thinkRCG.com
Advantage-OW is RCG’s proprietary framework for assessing new technologies and innovation in offshore wind and helps clients quickly and effectively understand the risks and opportunities of a given technology. Leveraging RCG’s cross-cutting expertise in the sector, clients receive world-class, objective advice to inform decision making.
The offshore wind industry’s continued downward cost curve is one of the great success stories in worldwide renewable energy development. Its emergence as a reliable and cost-efficient energy generation technology has led to uptake in new markets as well as a change in approach from those early adopter markets to help keep a downward pressure on costs. The general trend with governments worldwide is to turn to auction mechanisms as a way to either portion up the seabed, provide access to offtake agreements or both. In light of this new world and increased competition, offshore wind developers need to find the edge to submit a winning bid and technology and innovation is coming into its own as a way of securing this edge.
Innovation strategy is an essential tool for technology development and growth.
This is a trend of recent auctions, confirmed with Crosswind’s successful award of Hollandse Kust Noord in the Netherlands, where innovation will be front and centre in the development of a commercial offshore wind farm. Cost isn’t the only area where innovation helps developers win, but other levers can be pulled depending on the criteria of different auctions. For example, innovation can help with local content requirements which are becoming increasingly common, or it can help prove to regulators a commitment to the market and a potential trajectory for the industry in its region.
Technology Readiness Levels (TRL) are recognised as a planning tool for innovation management (see RCG’s Innovate-to-Market workflow [↑] ). Technology Readiness Levels were originally developed by NASA, later used by US-DOD, US-DOE, ESA; now adopted by the European Union for technology funding. However, adaptation is needed to ensure proper decision-making processes when using any Technology Readiness Level scale. The difficulty is turning this approach into a practical tool in a competitive market.
RCG saw an opportunity to help the industry better understand and assess innovation and technology and created the Advantage-OW framework to assess the potential of a given technology:
RCG provides the client with a suite of deliverables for an in-depth understanding as well as summaries and graphics to help communicate the outcomes to their business.
The framework not only encourages offshore wind developers to start thinking about innovation more systematically at the outset of project development, but it also provides a repeatable way of assessing innovation that can be used across a portfolio of projects and helps communicate often technically complex matters, distilling them into an informative but understandable format to help make decisions. In equal measure, the framework can be leveraged by investors to scope out potential investment opportunities quickly and effectively or can be utilised by public sector bodies looking to maximise return on rate-payers’ money by investing in the most promising innovations to achieve their objectives.
The Advantage-OW framework can be applied not only by offshore wind developers in assessing technologies for projects or portfolios, but also prospective technology investors to scope out future investments, and public sector bodies requiring a robust and transparent framework to assess funding opportunities in offshore wind.
To discuss how RCG can help you to maximise the benefits from new technology and innovations in offshore wind, contact us directly.
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Having secured more than the necessary 270 electoral votes, Democratic presidential nominee Joseph R Biden was elected President of the United States on November 7, 2020 – four days after the US election.
According to the Associated Press, Biden received 290 electoral votes while Trump gained 214 electoral votes. Biden received 50.6% of the popular vote compared with 47.7% for Trump.
The protracted contest – which saw a record number of Americans cast ballots by mail or in person in a presidential election – is not yet completed as a number of states have presidential races that are too close to call. For his part, Trump has refused to concede the election and has vowed to fight the result in court.
While Democrats will hold a narrow majority in the House of Representatives, the final makeup of the Senate is not yet clear. On January 5, 2021, Georgia will hold two runoff elections. Democrats would need to win both races to effectively have control of the Senate — with Vice President Kamala D. Harris serving as the tie-breaking vote — while Republicans would retain a narrow advantage by winning at least one.
President-elect Biden will be officially sworn in as the 46th US president on January 20, 2021.
Biden’s triumph spells victory for renewable energy in the United States. Throughout the campaign, Biden emphasized the importance of using renewable technologies such as wind and solar to transition the US to a clean energy economy while reducing carbon emissions.
In a largely bipartisan acceptance speech, Biden pledged to “marshal the forces of science and the forces of hope” in the battle to “save our planet by getting climate under control”.
As Biden will not be officially sworn in until after the new year, the truest indication of how renewable energy will factor into his administration can be gleaned from the president-elect’s energy plan.
Among other measures, Biden will call for the US to achieve a 100% clean energy economy and reach net-zero emissions no later than 2050. Biden campaigned on the promise that he will sign a series of new executive orders “with unprecedented reach” that go beyond the Obama-Biden Administration.
Biden says he will urge Congress to: establish an enforcement mechanism that includes milestone targets no later than the end of his first term in 2025; make historic investment in clean energy and climate research and innovation; and incentivize the rapid deployment of clean energy innovations across the economy, especially in communities most impacted by climate change.
However, Biden’s latitude for action could be constrained as he requires Senate approval to fund renewable and alternate energy programs. If Republicans retain control of the upper chamber, they will likely restrain Biden’s ability to pursue such programs.
Regarding climate change, Biden says he will recommit the US to the Paris Agreement on climate change. The US formally exited the 189-nation accord, two-and-a-half years after President Trump announced plans to pull out of the world’s most ambitious environmental pact. Biden has said the US could rejoin the Paris accord quickly; as soon as his first day in office.
The President-elect says he will fully integrate climate change into US foreign policy and national security strategies, as well as its approach to trade. His plan calls for numerous climate resilience efforts by developing regional climate resilience plans and work with local universities and national labs, for local access to the most relevant science, data, information, tools, and training.
Doug Pfeister, RCG’s managing director, Americas said, “This is an exciting time for renewable energy in the US. We envision renewables playing a major role in a Biden-Harris administration and we stand ready to assist our clients in the transition to a low carbon economy.”
Until recently, the future of offshore wind in Australia was looking uncertain at best. The government had been stalled for over two years in issuing an exploration license for what could be Australia’s first offshore wind project.
The industry took a huge step forward when the government issued the long-awaited exploration license at the end of March. The Star of the South project, located 13 kilometers off the Gippsland coast in Victoria, received a license to undertake resource exploration on 29th March 2019. This license does not grant the developer rights to operate or develop an offshore wind project but will allow them to begin the essential investigation of sea bed conditions and wind and wave conditions that are needed before they can proceed to a detailed planning stage.
After completing its site assessment, Star of the South will need to go through an environmental review process, obtain development authorisation and then an electricity generation license. These reviews and licenses will come from the Commonwealth if the project is located beyond three nautical miles from shore, or from the State if the project is located within three nautical miles from shore. The Commonwealth regime has no specific legislation for obtaining a seabed lease for offshore wind development. However, it does have a defined process for oil and gas offshore leasing, managed by the Offshore Petroleum Joint Authorities. Given the precedent set by Star of the South, where the permitting is being led by the Department of Energy and Environment, offshore wind development responsibilities, including leasing could be given to this Department. New legislation is required to enable leasing of the seabed to exploit the wind resource.
Exhibit: Commonwealth vs. State waters jurisdictions
This is just the start of development for the Star of the South project, but this license may signify an important shift in the future of offshore wind in Australia. Without a clear framework in place for offshore wind projects to obtain an exploration permit or a lease, developers and investors have been hesitant to invest in this market. However, with the issuance of an exploration license and the promise of a “bespoke” licensing arrangement for the Star of the South project, there is now a clearer path forward for the development of offshore wind.
The Commonwealth has been slow to set renewable energy policy, however, recent positive remarks from Australian Minister for Energy, Angus Taylor MP, now indicate that the Commonwealth may see offshore wind as a significant component in Australia’s overall energy program.
Australian Minister for Energy, Angus Taylor MP
The minister said in a statement: “The offshore wind sector is growing rapidly internationally, but there are no offshore wind farms in Australia. This exploration will determine if Australia can be part of this sector in the longer term. Offshore wind farms could provide Australia with significant new investment and employment possibilities while also contributing to the stability of the grid and lowering power prices.”
Australia’s energy sector is undergoing massive transformation and disruption, so there remain significant challenges and questions regarding the role offshore wind will play in this changing industry. While important local market players such as the Australian Energy Market Operator (AEMO) and Spark Infrastructure forecast strong growth for wind and renewables through 2040, government support will still be a crucial influence the growth of the industry. Should the policy environment remain favour of renewables it is foreseeable that select sites for offshore wind development could quickly become attractive.
A number of factors make the waters off the coast of Australia appealing for offshore wind development including high domestic electricity prices, a strong wind resource, suitable nearshore bathymetry for fixed-bottom development in select locations, and primary load pockets concentrated nearshore. Publicly available data reveals that the wind resource off nearly the entire southern coast of Australia is commercially viable, with many areas above 9 m/s @ 90 m. Bathymetry data shows that fixed bottom applications in the south of Australia will generally be limited to within 10 miles of shore. The location of the wind resource also corresponds with high load centres along the coast as well as with states that have ambitious renewable energy targets. Victoria has a renewable energy generation target of 40% by 2025 and South Australia has a 50% renewable energy target by 2025.
Ultimately, Australia’s shift towards renewables will be driven by cost-effective energy. If offshore wind can remain politically favourable in the near term, due to the strong wind resource located near high load centres there is potential for it to be a noteworthy part of Australia’s energy future.