Renewable Energy Helps Utilities Survive Virus Slump

offshore wind farm
A support vessel is seen next to a wind turbine at the Walney Extension offshore wind farm operated by Orsted off the coast of Blackpool, Britain September 5, 2018. REUTERS/Phil Noble

European utilities with bulging renewable energy portfolios are showing that the way out of the coronavirus slump is coloured green.

Energy companies from Orsted A/S to Iberdrola SA reported robust first-quarter earnings in a period that has been bedevilled by a slump in energy demand and a collapse in gas prices. Owning large wind and solar portfolios has so far protected those companies from the worst effects of the crisis.

Utilities are the third best performing sector on the Stoxx 600 this year, down 11% instead of the 17% slump the broader market has suffered.

“There is complete consensus that the road to economic recovery must be green,” Ignacio Galan, Iberdrola’s chairman, said after announcing the results on Wednesday.

Here follows a round-up of the key energy earnings:

Orsted

The world’s biggest developer of offshore wind farms gave a sign that green power generators will emerge from the crisis relatively unscathed. The Danish firm maintained its earnings guidance for the year in its first-quarter update to the market.

Conservative hedging and 90% of generation from renewables should largely shield Orsted’s profit from the sharp decline in power prices and demand, according to Bloomberg Intelligence.

However, what lies ahead may be harder to navigate. Offshore wind projects in the U.S. are facing regulatory delays, pushing back the moment hundreds of megawatts were due to come online, potentially by years.

Iberdrola

The Spanish energy giant shrugged off any concerns that the coronavirus is hurting its business despite a collapse in demand in one of the European nations hit hardest by the pandemic. It maintained its growth and dividend target for the year. It pointed to 8.5 gigawatts of new capacity under construction as well as plans to hire 5,000 people as all reasons to be optimistic for the future.

Vattenfall

The state-owned Swedish utility showed how to profit from a collapse in prices by making 1.77 billion kronor ($180 million) from buying and selling energy. Traders managed to navigate volatile markets driven by the growing impact of the pandemic and a glut of natural gas that sent European benchmark prices down by almost half this year. Profit for Vattenfall’s growing wind business was up 44%.

Naturgy

The utility said Wednesday that it plans to revise all its natural gas procurement contracts in 2020. Gas prices slid to record lows in Europe and Asia, and many buyers are looking for deferrals of shipments. The rout is pushing gas buyers to seek better deals from suppliers in a market that’s seen to remain in a glut until at least the middle of the decade.

–With assistance from William Mathis and Lars Paulsson.

Ports of Auckland Challenged on Shore Power Plan

The Carnival Spirit is based year-round in Australia (photo: Clyde Dickens)

Ports of Auckland (POAL) has announced that it has decided to adopt the recommendation of a recent study to plan for shore power, which it said will have an estimated cost of some $18.3 million and the potential to reduce greenhouse gas emissions by 31 percent.

Commenting on POAL’s decision, however, CLIA Australasia’s managing director Joel Katz stated that a key strategy of the major cruise lines in meeting the IMO requirements is the adoption of exhaust gas cleaning system technology to achieve emission reductions. But, with the advancements in cleaner fuels and emissions abatement systems, he said, the usefulness of shore power will likely decline over time, and it should not be assumed that the next generation of cruise ships will be designed and built as shore power enabled, he said.

Katz added that it was worth noting that the Ports of Auckland said it will carry out further work on shore power, including a detailed cost estimate, a cost-benefit analysis and an investigation of funding options so there is still a lot discussion to be had with industry.

According to the POAL, cruise ships were selected for the study as the cruise industry has been proactive at addressing environmental issues over the past decade and these vessels are more frequently fitted with the onboard infrastructure required. This, combined with high individual electricity demand while at berth (compared to other vessel types), is expected to increase utilization and deliver the highest emission reduction return.

The study looked at the feasibility of a wide range of emission reduction technologies, including shore power (grid supplied, local generation including renewables, hybrid); fuel switching (methanol, LNG, low sulfur diesel); land/barge based exhaust capture systems; and ship based scrubbers.

Viable solutions were assessed against a range of social and environmental attributes in addition to the whole of life cost. This holistic approach was adopted to provide a balanced assessment of the alternatives, with consideration of the stakeholder values.

The report recommended two options: To implement shore power at one cruise berth in the next five years; and/or fuel switching to 0.1% sulfur fuel.

The report or the recommendation did not address the issue, however, that very few of the ships currently sailing year-round or seasonally from Australia are equipped to plug in.

The Carnival Spirit and Legend, for example, are not shore power enabled, according to Carnival Australia.