Clean power sources abound some places
Portugal's wind energy ready to compete
Renewable sources are the cutting-edge, coming on line, but they do not, can not, leave classic economics behind. The most important thing is still location 3x. This 2009 article is from The Financial Times, Feb 27, by Peter Wise.
by Peter Wise, FT’s Portugal correspondentIn a remote region of Portugal imbued with the spirit of an ancient past, the turbines looming out of the mist on the summits of the Alto Minho serras address the future. When 120 turbines became fully operational in January, the impoverished rural region, depopulated by successive waves of emigration, found itself the site of the largest onshore wind farm in Europe.
Residents of the isolated granite villages are already enjoying the fruits of the clean energy revolution. Land rent from wind farm operators has doubled the annual budgets of local parish councils, who have used the money to restore churches, build football grounds, and install new water and sanitation systems.
Portugal, one of Western Europe’s poorest countries, is blessed with an abundance of clean energy resources. Prevailing westerly winds and a broad sweep of accessible hill ranges in the north and centre create ideal conditions for wind farms. The south enjoys up to 300 sunny days a year, making it a natural choice for solar energy plants. A long Atlantic coastline, where swells and storms are not as strong as in northern Europe, provides enormous potential for wave energy. Rivers entering the country from Spain are an important source of hydropower.
Manuel Pinho, the economy minister, says by 2020 the country will produce more than 60% of its electricity and 31% of its energy (including electricity, heating, and transport fuels) from renewable sources. This compares with a European Union electricity target of 20% of energy. US president Barack Obama calls for America producing 12% of its power from clean energy sources at about the time Portugal reaches the 50% mark, says Pinho. By next year, he says, Portugal will already emit less CO2 per capita than any other EU country.
“This is not wishful thinking,” Pinho insists, “the projects are in the pipeline.” The equivalent energy target for Britain is to move from 1.3% to 15%.
Portugal’s push to harness the full potential of its renewable resources is inspired partly the country’s lack of oil, gas, and other energy supplies. All have to be imported, placing a heavy burden on a relatively small economy. In 2008, the energy deficit was the equivalent of 5% of gross domestic product. Falling oil prices could close half of that gap this year, but fluctuations like this serve only to emphasize the extent to which Portugal is subject to international forces beyond its control.
The country’s solar electricity plant covers a vast area; its output of electricity is relatively small: an estimated maximum of 93 million kWh a year, enough to supply 30,000 Portuguese homes and to avoid annual emissions of more than 83,000 tonnes of CO2 from coal-fired power stations.
The nation’s three ocean wave converters now in operation have a combined capacity of only 2.25MW. The government is so far targeting a more modest 250MW of installed wave capacity by 2020. But the real prize in the wave energy race is industrial production. If companies based in Portugal can produce wave energy that is commercially viable in both quantity and price, the country would be well-placed to become a world leader in the technology.
The business model favored in Portugal is based on what are known as feed-in tariffs. These involve an undertaking to buy electricity from clean energy producers at above market rates for a fixed period. Unlike other incentives systems, such as the green energy certificates used in Britain or US tax credits, feed-in tariffs provide long-term financial stability that enables producers to raise project finance.
Feed-in tariffs drop in line with the diminishing costs of clean energy production as technology evolves and producers gain economies of scale. Wind capacity has developed much faster in Portugal than anyone forecast. Having grown from 537MW to 2,740MW over the past five years, capacity is projected to double again over the next three, and to reach 8,500MW by 2020.
Wind turbines will then supply 30% of the country’s electricity needs, double their share in 2007. As a result of that rapid growth, the feed-in tariffs now being offered have fallen to €0.07 per kWh, roughly the equivalent of average prices on the wholesale electricity market. This means Portugal has reached a stage where wind power is almost as cheap as the electricity generated by fossil fuel plants. If the costs of paying for permits to produce carbon dioxide are taken into account, it is probably already cheaper.
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