The heat pump market is recovering. This is the conclusion reached in a new study by the European Heat Pump Association (EHPA) on the 2014 heat pump market, which analysed statistics from heat pump markets in 21 European countries.

The study also shows how EU policies affect the use of heat pumps and how the technology contributes to energy efficiency.

In 2013, heat pump sales increased by 3%. This slight increase was the first in three years. Over the past year, 771,245 heat pumps were sold in Europe, and it looks like this trend will continue in 2014. Thomas Nowak, the Secretary-General of EHPA, explains that this is good news not only for the heat pump industry but also for Europe’s climate targets: «It has been said that the future Energy Union should be about sustainability, competitiveness and security of supply. Heat pumps can help to achieve these three objectives – they are efficient, use renewable energy and reduce GHG emission.»

In another study, EHPA had already reported that the use of heat pumps would not only make a considerable contribution towards achieving the efficiency targets for 2030, but that installing 54 million additional heat pumps would eliminate the need for gas imports from Russia. So far, there are only approximately 6 million heat pumps installed in European buildings, but EHPA is confident that the goal of a total of 60 million heat pumps by 2030 is realistic. In order to achieve this, the European heat pump market would have to grow by 17% annually. These conditions could be created by government investment and by reducing the competitive advantages of several other, less environmentally friendly technologies. In addition, Europe’s largest heat pump market France, which has an annual growth rate of 30%, demonstrates that the 17% target is not too high. According to the study, installing 60 million pumps would result in a total of 60 MTOE (Million Tonnes of Oil Equivalent, equal to 697.8 TWh) of renewable energy becoming available, and energy consumption would be reduced by 37 MTOE (430.3 TWh). In addition, more than 300,000 new jobs would be created.

The study, which is titled ‘European Heat Pump Market and Statistics Report 2014’ can be ordered here.

Tanja Peschel

The Dutch equipment manufacturer Eurotron opens the world first Competence Center for back contact module technology in Bleskensgraaf, the Netherlands. The Eurotron Competence Center is capable for lab-, test- and pre-production of all sorts of back contact solar PV modules.
Although the exact amount of Eurotron’s investment is not disclosed, a view in the Competence Center presupposes that a significant investment has been done.

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Modern nomads and nature lovers will fall in love with the Wide Path Camper for its eco-friendly concept and small size, but those in worse shape than Tour de France cyclists may experience trouble trying to get this baby up a hill. This creates a limited range of destinations to choose from, but if you’re fine with camping in the plains, the Wide Path Camper could be a smart investment. Also, if paired with an electric bike, the mobile home-away-from-home could prove to be much more versatile than initially intended.

Related: MINI Unveils Three of the World’s Tiniest Luxury Campers

The idea may not be groundbreaking, but its size and mobility look compelling. It can actually fit two people and has over 300 L of storage space for necessary luggage. Its sitting area can be easily transformed into a bed, and there is the option of adding solar cells to recharge the built-in-battery for charging phones and other small devices.

+ Wide Path Camper

Via Treehugger

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The future is tough to predict.

The International Energy Agency recently came out with its World Energy Outlook 2014, a comprehensive analysis of global energy demand and the underlying supply mix through 2040. Along with BP’s annual forecast, it is one of the most authoritative documents of its kind.

But even the IEA can miss a trend. In the 2014 report, the IEA predicts that the share of renewables will grow from 21% in 2012 to 33% by 33%.  Renewables, including hydropower, nearly triple by 2040 and surpass both natural gas and coal as the top source of electricity by 2035. By 2050, solar alone could become the largest source of power by 2050.

In the executive summary of the World Energy Outlook 2004, the words “solar” and “PV” do not appear. The share of “other” renewables, i.e. everything by hydropower, will triple, but only from 2% to 6% by 2030. Hydropower is around 16% of world power today so the base figure fits but the prediction was low.

The same holds for efficiency. “Efficiency” appears only twice in the 2004 summary. The report revolves around supply and the picture is grim for emerging markets.

“Huge amounts of new energy infrastructure will need to be financed. And many of the world’s poorest people will still be deprived of modern energy services. These challenges call for urgent and decisive action by governments around the world,” the 2004 report states. “Little progress will be made in reducing the total number of people who lack access to electricity.”

In the 2014 report, efficiency plays a more prominent role. The slowdown in the growth of demand for energy to 1.1% per year is attributed primarily to efficiency.  Efficiency is also identified as a lynchpin in bringing power to emerging markets. It will still be a challenge to extend power to rural areas of Africa and Asia, but hope grows.

“Without the cumulative impact of energy efficiency measures over the projection horizon, oil demand in 2040 would be 23 mb/d (or 22%) higher, gas demand 940 bcm (or 17%) and coal demand 920 Mtce (or 15%) higher. Beyond cutting energy use, energy efficiency lowers energy bills, improves trade balances and cuts CO2 emissions. Improved energy efficiency compared with today reduces oil and gas import bills for the five largest energy-importing regions by almost $1 trillion in 2040,” the report states. “Technological progress and improved energy efficiency… allow a higher level of demand for energy services to be satisfied per unit of energy.”

Oil? In 2004, oil demand was expected to hit 121 million barrels a day. In the 2014 report, demand will only rise to 104 million barrels a day.

Biofuels? Not in the executive summary of 2004. 2014? “Biofuels use more than triples, rising from 1.3 million barrels of oil equivalent per day (mboe/d) in 2012 to 4.6 mboe/d in 2040, by which time it represents 8% of road-transport fuel demand,” the report states. “Advanced biofuels, which help address sustainability concerns about conventional biofuels, gain market share after 2020, making up almost 20% of biofuels supply in 2040.”

That prediction is below the sort of predictions from biofuel advocates like Vinod Khosla, but it’s certainly higher than in the past.

Again, this isn’t to say the IEA needs to rethink its methodologies. It’s an authoritative source. The lesson here really is our greatest source of energy is human ingenuity. Over the past decade we’ve seen a revolution in energy and it has come out because of new materials (i.e. semiconductors) new business models and new ways of thinking about systems.

And some other notes from the 2014 report

• Subsidies for fossil fuels are four times greater those given to renewables. Fossil fuel subsidies come to approximately $550 billion a year. Subsidies to renewables come to around $121 billion. Renewable subsidies will rise to $230 billion by 2030 but then drop to $205 billion by 2040.

• Global investment in power infrastructure will total $21 trillion by 2040. A significant portion will go toward upgrading transmission and distribution networks. It’s needed. The average age of transformers in the U.S. is 42 years. The average lifetime expectancy of a transformer is 40 years.

• Nuclear shifts to non—OECD nations. In 2013, there were 434 nuclear reactors worldwide, supplying 11% of the world’s power, far down from the 18% market share in 1996. Nuclear’s market share will grow to 12% by 2040, but the big change is the locations of the reactors. The bulk of the 380GW coming on line will be in China and other non-OECD nations while the majority of the 148GW retirements will come in North America, Europe and Japan. Still, nuclear remains one of the “limited options” for controlling emissions.

• Watch Sub-Saharan Africa. The region has tremendous potential for solar, geothermal, wind and natural resource extraction. In the last five years, 30% of new oil and discoveries were made there. It will also be a hotbed of grid experimentation. 950 million people will get access for the first time to regular sources of power by 2040 and 70% of those new customers in rural areas will get power through microgrids and off grid systems.

According to the latest Energy Infrastructure Update report from the Federal Energy Regulatory Commission‘s (FERC) Office of Energy Projects, wind power provided over two-thirds (68.41 %) of new U.S. electrical generating capacity in October 2014. Specifically, five wind farms in Colorado, Kansas, Michigan, Nebraska, and Texas came on line last month, accounting for 574 MW of new capacity.

In addition, seven «units» of biomass (102 MW) and five units of solar (31 MW) came into service accounting for 12.16 % and 3.69 % of new capacity respectively. The balance came from three units of natural gas (132 MW — 15.73 %). Moreover, for the eighth time in the past ten months, renewable energy sources (i.e., biomass, geothermal, hydropower, solar, wind) accounted for the majority of new U.S. electrical generation brought into service. Natural gas took the lead in the other two months (April and August).

Of the 9,903 MW of new generating capacity from all sources installed since January 1, 2014, 34 units of wind accounted for 2,189 MW (22.10 %), followed by 208 units of solar — 1,801 MW (18.19 %), 45 units of biomass — 241 MW (2.43 %), 7 units of hydropower — 141 MW (1.42 %), and 5 units of geothermal — 32 MW (0.32 %). In total, renewables have provided 44.47 % of new U.S. electrical generating capacity thus far in 2014.

The balance came from 45 units of natural gas — 5,373 MW (54.26 %), 1 unit of nuclear — 71 MW (0.72 %), 15 units of oil — 47 MW (0.47 %), and 6 units of «other» — 7 MW (0.07 %). There has been no new coal capacity added thus far in 2014. Thus, new capacity from renewable sources in 2014 is more than 37 times that from oil, coal, and nuclear combined.

Renewable energy sources now account for 16.39 % of total installed operating generating capacity in the U.S.: water — 8.44%, wind — 5.39%, biomass — 1.38%, solar — 0.85%, and geothermal steam — 0.33%. Renewable energy capacity is greater than that of nuclear (9.23 %) and oil (3.97 %) combined.

Katharina Garus / Ken Bossong

Historically, a major drawback to the use and cost-effectiveness of alternative energy systems has been that they are too variable — if the wind doesn’t blow or the sun doesn’t shine, a completely different energy system has to be available to pick up the slack. This lack of dependability is costly and inefficient.

But in an analysis just published in The Electricity Journal, scientists say that much of this problem could be addressed with enhanced energy storage technology or by developing «hybrid» systems in which, on a broader geographic scale, one form of renewable energy is ramping up even while the other is declining.

«Wind energy is already pretty cost-competitive and solar energy is quickly getting there,» said Anna Kelly, a graduate student in the School of Public Policy at Oregon State University, and an energy policy analyst. «The key to greater use of these and other technologies is to match them in smart-grid, connected systems.

«This is already being done successfully in a number of countries and the approach could be expanded.»

For instance, the wind often blows more strongly at night in some regions, Kelly said, and solar technology can only produce energy during the day. By making more sophisticated use of that basic concept in a connected grid, and pairing it with more advanced forms of energy storage, the door could be opened for a much wider use of renewable energy systems, scientists say.

«This is more than just an idea, it’s a working reality in energy facilities around the world, in places like Spain, Morocco and China, as well as the U.S.,» Kelly said. «Geothermal is being paired with solar; wind and solar with lithium-ion batteries; and wind and biodiesel with batteries. By helping to address the price issue, renewable energy is being produced in hybrid systems by real, private companies that are making real money.»

Advanced energy storage could be another huge key to making renewable energy more functional, and one example is just being developed in several cooperating states in the West. Electricity is being produced by efficient wind farms in Wyoming; transmitted to Utah where it’s being stored via compressed air in certain rock formations; and ultimately used to help power Los Angeles.

This $8 billion system could be an indicator of things to come, since compressed air can rapidly respond to energy needs and be readily scaled up to be cost-competitive at a significant commercial level.

«There are still a number of obstacles to overcome,» said Joshua Merritt, a co-author on the report and also a graduate student in mechanical engineering and public policy at OSU. «Our transmission grids need major improvements so we can more easily produce energy and then send it to where it’s needed. There are some regulatory hurdles to overcome. And the public has to more readily accept energy systems like wind, wave or solar in practice, not just in theory.»

The «not in my back yard» opposition to renewable energy systems is still a reality, the researchers said, and there are still some environmental concerns about virtually any form of energy, whether it’s birds killed by wind turbine rotors, fish losses in hydroelectric dams or chemical contaminants from use of solar energy.

The near future may offer more options, the researchers said. Advanced battery storage technologies are becoming more feasible. Wave or tidal energy may become a real contributor, and some of those forces are more predictable and stable by definition. And the birth of small, modular nuclear reactors — which can be built at lower cost and produce no greenhouse gas emissions — could play a significant role in helping to balance energy outflows from renewable sources.

The long-term goal, the report concluded, is to identify technologies that can work in a hybrid system that offers consistency, dependability and doesn’t rely on fossil fuels. With careful matching of systems, improved transmission abilities and some new technological advances, that goal may be closer than realized, they said.

«With development, the cost of these hybrid systems will decrease and become increasingly competitive, hopefully playing a larger role in power generation in the future,» the researchers wrote in their conclusion.

The decisions made along the path of solar project finance and development have major implications for the growth — or stagnation — of the commercial and industrial solar market.  How does a developer choose the right financier for their project, or an investor decide to interact during contract negotiations? Together, what impacts do these decisions have on the value chain?

To answer these questions, we look to game theory, specifically the Prisoner’s Dilemma, to analyze and predict how decisions made in these transactions affect the interactions in the solar industry, specifically in the 200-kW to 5-MW space.

Game Theory and The Prisoner’s Dilemma

In case it has been a while since your last Econ 101 class, here is a basic example of game theory.

The police catch two partners in crime, Matt and Colin, after they have been selling counterfeit solar modules.  Upon return to the police headquarters, the police separate the two and question them independently. The police don’t have enough evidence to charge the criminals, but a confession would be sufficient to put them away. Per the example the criminals can either confess (thereby incriminating their partner), or they can remain silent. The full breakdown of possible decisions and outcomes is below:

The decision structure incentivizes both Matt and Colin to confess as this improves their position in two of the four possible outcomes: 1) if they both end up confessing or 2) in the event that the other remains silent. However, the optimal group outcome only occurs if both remain silent. As the two partners individually ponder how to proceed, the dilemma becomes clear — how can one trust the other to not confess? If one can’t trust the other, isn’t it just better to confess?

Now, think about that in the context of solar project finance and development.

The Number of Games Played Matters

Solar industry stakeholders do not make strategic decisions in a vacuum. However, industry players do vary in the way they view time horizons — and how their decisions impact future transactions. 

If a developer or investor views a deal as a one-time transaction, they are more likely to defect in search of economic gain. Players that anticipate future transactions with the same parties are more likely to opt for cooperation to protect future possible gains. In short, the number of games played matters, and directly correlates to the amount of trust between two parties. If Matt and Colin have worked together many times, they can trust the other to remain silent and will be back on the streets selling counterfeit modules in no time. However, if this is their first collective trip to the rodeo, the trust is not there and jail time is likely in store.

To put it simply, in the world of solar project finance, relationships matter. If two players treat the deal at hand as the beginning of a long-term partnership rather than a one-off transaction, they greatly increase their likelihood of achieving both short-term and long-term success. Defecting to increase returns in a one-off transaction may have a higher short-term payoff, but does not carry the same return in the long run.  The more interactions that a developer and investor have with each other, the greater their chances are for cooperation — and success.

Defection Has Its [Temporary] Gains, But Hurts CI Solar

Cooperation provides the best group-level outcome, but defection enables the greatest outcome for an individual player. Defection manifests itself in the solar industry in a number of ways. During financial negotiations, both investors and developers have the ability to protract discussions or be punitive in the name of an additional penny or two per Watt. In the greater project marketplace, industry players have the incentive to misrepresent projects or their financing capabilities in order to increase financial gain — the notorious “free look.”

Defection is risky because it quickly erodes trust and the potential for any long-term gains. The opposing counterparty may also defect in retaliation and wipe out any advantage the decision maker gained by defecting in the first place. Further, and possibly more importantly, it can corrode one’s reputation in a relatively small industry. If a player considers defection, there must be a very good economic case supporting this decision because the long-term results may not contain an attractive payout.  

Unfortunately, defection is all too common with middle market solar projects, and thus, many projects never make it to the finish line.  The most typical explanation for defection persisting in an environment of repeated games is that one party is “hyperinflationary.” That is, that their personal cost of money or return expectation is so high — or their value of future business so low — that rationally they assign no value to future years.  If Colin has no realistic prospect of living more than five years, he will defect every time. Similarly, if a solar industry player can’t make payroll without that extra cent on a project, or has no future projects in the pipeline, they’ll grind all counterparties to maximize the money they can get this time, with no thought to speedily getting to the next transaction.