RENEWABLES’ ROLE IN SOLVING THE ENERGY ‘TRILEMMA’?

While oil and gas investment appear robust, most observers believe fossil fuel consumption will peak towards enddecade as the world grapples with the energy “trilemma” – balancing security of supply, affordable energy costs and cutting emissions. Investment in renewables, energy efficiency and low emission projects is central to the final part of that equation.

Clean energy investment is trending up — but not fast enough. The International Renewable Energy Agency, or IRENA, said there was investment of US$1.3 trillion last year in energy transition technologies, up by half since 2019. Renewable energy accounted for US$0.5 trillion of that, although IRENA said that is only 40 percent of the annual investment needed to counter global warming. “Annual additions of renewable power capacity must grow by three times the current level by 2030 if we want to stay on a pathway limiting global warming to 1.5°C,” said Irena Director-General Francesco La Camera.

Renewable capacity rose by just under 10 percent in 2022 to 3,372 GW by year-end, IRENA said, of which hydropower has the largest share. But in capacity additions, solar and wind power dominate, accounting for 90 percent of additions in 2022 – of which 191 GW was solar and 75 GW wind.

Additions are concentrated in a few areas, with Asia accounting for nearly half of the 295 GW added in 2022, and China alone 141 GW. Europe’s capacity was up by 57.3 GW and the U.S.’ by 29.1 GW. South American capacity was up by 18.2 GW and the Middle East by 3.2 GW. The glaring omission is sub-Saharan Africa, where per capita renewable investment is 1 percent of other regions.

Offshore wind is set for particularly rapid growth. Analyst McKinsey sees

EMEA capacity rising from 25 GW in 2020 to 100-120 GW in 2030 and up to 320 GW by 2050, while Asia-Pacific capacity could rise from 11 GW in 2020 to as much as 120 GW in 2030 and up to 820 GW by 2050. The U.S. is starting at a low level, but President Biden in 2021 called for 30 GW to be installed by 2030, later adding the ambition of 15 GW of floating wind power by 2035.

Floating wind power is a potential game-changer. It enables wind farms to be located in much deeper waters than turbines with bottomfixed foundations, and McKinsey said the technology increases the area suitable for wind power fivefold. Other technological developments include the pairing of wind power with hydrogen production, and a rise in turbine size from 8 MW in 2020 to 13-15 MW by 2024. At the same time, costs are falling, McKinsey said, from €150/ MWh in 2015 to a third of that in 2024.

Nuclear energy has also received a boost from COP26, with innovation taking the form of modular nuclear reactors of 250-500 MW each. Energy Industries Council Director of Market Intelligence, Neil Golding said: “Potentially even before the end of this decade we could see the first small modular reactors in Europe in place,” with the U.S., and Canada in particular, also looking at ramping up this sector.

But increasing non-fossil fuel capacity, while vital, faces considerable challenges. Golding said the issue is going to be “can the supply chain deliver on all these projects that are coming through?” He said there are supply constraints and pinch points, with [wind power] turbine manufacturing being one of them. “We have the ambition; now how do we get there — how do we scale up?” from Qatar rise by two-thirds from its current 77 million tons per annum (mtpa) to 110 mtpa by 2025 in a first phase — the US$28.75 billion North Field East (NFEast) project, which includes four mega-trains of 8 mtpa each alongside carbon capture to reduce emissions. State-owned Qatargas has a 75 percent stake in NFEast and will partner with Shell, ExxonMobil, TotalEnergies and Eni in this stage.

Qatari LNG output will then increase to 126 mtpa by 2027 on completion of the second, North Field South (NFS) LNG project, which centers on two mega trains. Although this is still pre-Final Investment Decision (FID), the decision is expected in the first half of the year. Qatargas will hold 75 percent in NFS, with partners TotalEnergies, Shell and ConocoPhillips.

Alongside Qatar’s North Field Expansion in the first half, ADNOC’s Fujairah LNG in the UAE could reach FID in the second half of 2023, WoodMac said. This would add 9.6 mtpa of output to the country’s existing 6 mtpa plant at Das Island, with production set to start in 2027.

Global LNG output is set for a wave of FIDs in 2023-24, said WoodMac, after around 28 mtpa of liquefaction projects reached that stage last year. Some 200 mtpa of capacity is seeking FID, which with capacity costing around US$10 billion per 10 mtpa of output suggests investment of US$200 billion.

U.S. Ready for Project Boom

The U.S. also has several mega LNG projects that have just reached or are nearing FID as they have gained offtake commitments sufficient to raise debt.

Key U.S. developments are Sempra’s 13 mtpa Port Arthur LNG facility in Texas, which Sempra said on March 6 had reached FID for its first US$13 billion phase. This will involve two 6.5mtpa LNG trains and two LNG storage tanks, plus related facilities. The trains are due on stream in 2027-8. Some 10.5 mtpa of the total 13 mtpa already has offtake commitments. Sempra said it is also “actively marketing and developing” a second phase of the same size. Another U.S. LNG mega project to reach FID in March was the second phase of Venture Global’s Plaquemines $21bn LNG export project in Louisiana, which will produce 20 mtpa once on stream.

The U.S. is also forging ahead with a mega project in the oil sector, not without controversy. President Biden in March approved ConocoPhillips’ $8bn Willow development on Alaska’s North Slope, which will produce 576 million barrels of oil over 30 years. Environmentalists have dubbed the project “a carbon bomb.”

Other key oil investments include TotalEnergies’ $10bn Lake Albert project in Uganda, which reached FID last February and involves development of the Tilenga and Kingfisher upstream projects in Uganda and the 1,400 kilometer

Qatar’s US$28.75 billion North Field East (NFEast) project includes four mega-trains of 8 mtpa each alongside carbon capture to reduce emissions.

Credit: TotalEnergies

East African Crude Oil Pipeline in Uganda and Tanzania. Output of up to 230,000 barrels per day is due in 2025. TotalEnergies and Uganda have also signed an MOU to develop 1GW of renewable energy.

In the UK, the US$9bn Equinoroperated Rosebank project in the West of Shetland area — the largest undeveloped field in the North Sea — is set to reach FID in 2023. It is

Future Global Energy Dominated by Four Trends

due to produce first oil in Q426, with subsea installation starting in 2024, well drilling in 2025 and the floating production and storage and offloading vessel arriving in Q226. It will produce up to 69,000 barrels per day at peak, with gas exported via a new pipeline link.

Neil Campbell is a specialist energy and renewables journalist and editor.