Hydropower, once shunned because of environmental concerns, is making a comeback

http://online.wsj.com/article/SB10001424052748703960004575427092861731122.html

Water Surge:
Hydropower, once shunned because of environmental concerns, is making
a comeback

* SEPTEMBER 13, 2010

By STEPHANIE SIMON

LEADVILLE, Colo.�The giant pipes wheeze and rumble, the whoosh of
water coursing through them as noisy as a freeway. The Mount Elbert
hydropower plant high in the Rocky Mountains isn't much to look at�or
listen to. But to true believers, it's a road map to a greener future.

View Full Image
HYDRO
Larissa Bender, Bureau of Reclamation

Hydropower, shunned just a few years ago as an environmental scourge,
is experiencing a remarkable resurgence in the U.S. Dams are still
viewed warily; in fact, Congress is considering dismantling four
hydroelectric dams blamed for depleting salmon in the Klamath River
basin in southern Oregon and northern California.

But engineers and entrepreneurs are pressing an alternative view of
hydropower that doesn't involve new dams. They argue that plenty of
efficient, economical energy can be wrung from other water resources,
including ocean waves, free-flowing rivers, irrigation ditches�even
the effluent discharged from wastewater treatment facilities.

There's a surge of interest, too, in adding small power plants to dams
built years ago for flood control or navigation�as well as in turning
reservoirs into battery packs of sorts, releasing energy when the grid
needs it most.

Globally, hydropower provides 16% of electricity, slightly more than
nuclear power and closing in on natural gas, according to the London-
based International Hydropower Association.

In the U.S., by contrast, hydropower now provides about 7% of
electricity generation. All other renewable sources combined account
for about 3%.

Even without building large dams, expanding efforts to draw power from
water could add 40,000 megawatts to the grid by 2025, says the
Electric Power Research Institute, a nonprofit research firm in Palo
Alto, Calif. That's the equivalent of putting at least two dozen new
nuclear power plants online.
Pouring It On

Such estimates are stirring action. The U.S. Department of Energy
spent nothing on hydropower research as recently as 2007 but allocated
$50 million this year. The Federal Energy Regulatory Commission issued
50 preliminary permits for small hydro projects last year, up from 15
in 2007. At least two dozen states have mandated that utilities draw
more power from renewable sources�and many include small hydropower as
an option, along with wind and solar. Colorado Gov. Bill Ritter
recently announced an agreement between his state and the federal
government that will streamline the permitting process for developing
small hydropower projects in Colorado.

The Department of Energy estimates a new hydro project in 2016 would
generate power at a cost of $120 per megawatt-hour. By contrast, the
cost per megawatt-hour would be $150 at a wind farm going online that
year and nearly $400 at a photovoltaic solar array. (Those figures
don't take into account various tax incentives meant to offset the
cost of renewable energy, especially wind and solar.)

Hydro also has technical advantages over other renewables. Daily water
flow in many areas is far more predictable than wind or sunshine. It's
relatively easy to store the energy pent up in water so it can be
released when the grid needs it most. And certain types of hydro
plants can rev up from low power to full capacity within seconds.

"There remains tremendous untapped potential in North America," says
Don Erpenbeck, a vice president at MWH, a global hydropower
construction and engineering firm in Broomfield, Colo. "After decades
of delay, we are starting to realize that potential."

But Mr. Erpenbeck adds that years-long waits for federal permits and
high capital costs make hydropower a tough sell to some utilities and
investors. Maximizing water energy in the U.S., he says, "is going to
take some guts."

Countries such as Brazil and China remain committed to large
hydroelectric dams and are forging ahead with big projects. Yet they
are also looking at smaller solutions favored by environmentalists.
The International Hydropower Association estimates that North America
has developed nearly 70% of its available hydropower resources and
Europe 75%. But the group sees huge potential in South America, Asia
and especially Africa, where just 7% of resources have been developed.

Dam Smart

In the U.S., one strategy gaining popularity is to add power plants to
some of the 80,000 existing dams that don't have hydroelectric
capacity. Technological advances like turbines that are gentler on
fish and oxygen-injection systems that help balance aquatic ecosystems
have won favor even among some environmental groups.

In one such project, American Municipal Power Inc. is spending $2
billion to add power plants to three dams on the Ohio River and invest
in additional hydropower elsewhere.

The utility's CEO, Marc Gerken, says the new hydropower will cost more
initially than coal or natural gas. But after the construction costs
are paid off in 30 years, the utility will enjoy cheap power for
several decades because the fuel�the rushing river�is essentially free
and the plant is designed to run without much maintenance for 60 or 70
years. AMP, based in Columbus, Ohio, is a nonprofit corporation owned
and operated by municipal utilities in the six states the company
serves.

Other technologies are more speculative. A much-ballyhooed experiment
that involved suspending a turbine from a barge in the Mississippi
River didn't prove to be worth expanding. The turbine is generating
power, but Hydro Green Energy LLC, the Houston-based start-up that
developed the device, says it has moved on to more promising ventures.
"It's still a power-producing, money-making device," but the economics
don't support expansion, says Vice President Mark Stover.

Several companies are experimenting with "low-head" turbines that can
pull energy from relatively small volumes of water dropping as little
as five feet over natural or man-made falls. One such project,
launched by Natel Energy Inc. of Alameda, Calif., uses low-head
technology to extract energy from an Arizona irrigation canal.

Federal scientists say some of these approaches look promising but
need more study. "With these new technologies, nobody knows what their
environmental impacts might be," says Doug Hall, who manages the water-
energy program at the Department of Energy's Idaho National Laboratory.
Pump Action

A less-experimental technology, dating back more than a century, is
also gaining currency as a means to store energy and back up the grid:
pumped storage, the system used by the Mount Elbert hydro plant
outside Denver.

The plant, sitting on the jewel-like Twin Lakes and managed by the
Bureau of Reclamation, plays a key role in keeping lights on and air
conditioners humming across the West.

At night, when demand on the power grid is low, the Mount Elbert plant
sucks water from the lakes, sometimes using wind power to pump that
water up into a reservoir above the plant. The reservoir acts as a
liquid battery�a huge pool of potential energy.

As the day warms up and the grid shows signs of strain, workers begin
to release the water down a 470-foot drop, through devices that turn
the pent-up energy into usable electricity. The water eventually pours
back into the lakes, where it can be recycled into power again the
next evening.

Pumped storage is quite popular abroad; China has 2,200 projects under
construction, and India and Ukraine aren't far behind. An analysis by
MWH shows that countries as varied as Romania, Thailand, Switzerland,
South Africa and Italy are also moving heavily into pumped-storage
construction. The U.S. has lagged, but federal authorities saw a surge
in permit applications in 2008 and again so far this year.

"No new dams are being built," says Dave Sabo, a senior adviser with
the Bureau of Reclamation. But just about every other approach to
hydropower, he says, is being studied and tested intensively. Says Mr.
Sabo, "All this stuff is in play right now�pretty heavily."

Ms. Simon is a staff reporter in The Wall Street Journal's Dallas
bureau. She can be reached at stephanie.simon@wsj.com.
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Dams, climate and rivers: New issue of WRR

NEW ISSUE OF WORLD RIVERS REVIEW ONLINE

Catastrophic flooding in Pakistan, dam breaks around the world, and drought-caused blackouts in Africa provide ample warning of how global warming is changing our watery world.

The September 2010 issue of World Rivers Review looks at how climate change is affecting rivers and water resources, and examines the risks associated with building dams at a time of great hydrological uncertainty. Get the full story on what these challenges mean for dam safety, river-based communities, energy production, and the environment - and the solutions that can help us survive.

• Read the new World Rivers Review: http://www.internationalrivers.org/node/5788

Mapping Africa's Hydrodependency

This special issue features a graphic look at the problem of hydrodependency in Africa (http://www.internationalrivers.org/en/node/5808) in a time of growing drought; an interview with Dr. Margaret Palmer, an expert on climate change and rivers; and an essay by global water expert Sandra Postel, who explains how we can better adapt to a "new normal" for managing water on our climate-challenged planet.

The issue also has an update on dam- failures caused by extreme rains (http://www.internationalrivers.org/en/node/5796). It's sadly a growing phenomenon:  see below for news about a new dam disaster in Ghana, where at least 17 people have died from a dam-related flood (see below). 

Best,

Lori Pottinger

----------------------------------------

http://www.google.com/hostednews/afp/article/ALeqM5jbl9wEBVOyR5QTaG66pe6UI5HYxQ

Dam spill floods kill 17 in Ghana

(AFP) – 9 hours ago

ACCRA — At least 17 people have drowned in northern Ghana in recent weeks after nearby Burkina Faso opened spillway gates to dams following heavy rains, the country's relief agency said on Friday.

"As at yesterday, the death toll in the three northern regions stood at 17 and a number of farmlands have been destroyed," National Disaster Management Organisation (NADMO) spokesman Nicholas Mensah told AFP.

He said while the area was already flooded due to torrential rains that have pounded the area recently, the situation was worsened when Burkina Faso released water from its overflowing dams. Burkina Faso authorities opened the floodgates on August 10.

"We have had lots of rains up north. Burkina Faso has also experienced the same pattern of rain and they are spilling water from their dams," he said.

"That has exacerbated the problem we have already been having with rainfall," he added.

Burkina Faso had alerted Ghana of its plans and the agency told people in the most vulnerable areas to move," said Mensah.

Torrential rains have killed more than 30 people in southern Ghana, including in the seasside capital Accra, in what experts described as the worst floods in a decade.

Copyright © 2010 AFP. 

Sahara Solar Energy Could Power Europe Inc.

http://www.businessweek.com/magazine/content/10_38/b4195012469892.htm

Sahara Solar Energy Could Power Europe Inc.
A consortium wants to invest $560 billion in Sahara solar panels

By Carol Matlack
BW Magazine

September 13, 2010

The Sahara gets twice as much sunshine annually as most of Europe. The
European Union wants to get 20 percent of its electricity from
renewable sources within a decade. So why not build solar power plants
across North Africa and ship the electricity north via power lines
under the Mediterranean?

Over the past year, more than 30 European blue chips have joined the
Desertec Industrial Initiative (DII), a consortium that seeks a $560
billion investment in North African solar and wind installations over
the next 40 years. The DII is completing a feasibility study and hopes
to be building its first power plant by 2013. A separate group of
companies called Transgreen, formed in July, is working on plans for
the thousands of miles of high-voltage lines needed. The challenge is
immense: Winning agreement from very different countries on two
continents to carry out one of the biggest infrastructure projects in
history.

Many backers are eager for a share of rich construction contracts.
They include engineering outfits such as Germany's Siemens (SI) and
Swiss-Swedish group ABB (ABB) and solar companies Abengoa Solar of
Spain and First Solar (FSLR) of Arizona. Giant Italian utility Enel
wants to rely less on Russian gas, and German insurer Munich Re sees
the project as a hedge against damage from global warming. "We are
creating a large network of allies with complementary interests," says
the DII's boss, a former Dutch utility executive named Paul van Son.

There's little doubt that Sahara sun can power Europe. Cables already
carry electricity under the Mediterranean�though the power flows from
Spain to Morocco. And after years of false starts, scores of large-
scale solar power plants are being built or in advanced planning
stages, from the American Southwest to the Mideast. "There is now a
good track record," says Bernd Utz, head of Siemens' renewable energy
division.

With the technology the consortium plans to use, solar-powered
electricity costs at least four times as much per kilowatt-hour as
power from coal- and gas-fired plants, according to Bloomberg New
Energy Finance, an analysis group. Governments have used subsidies to
support alternate energy companies until their costs are more in line
with oil and gas. The U.S. in July awarded a $1.45 billion loan
guarantee to lower financing costs for the planned Solana power plant
in Arizona, at 280 megawatts one of the world's largest.

The Sahara project envisions generating capacity equal to almost 400
Solanas. Where would the financing come from? The DII and Transgreen
member companies so far have put up less than $10 million for
feasibility studies. They want Europe's governments to require
utilities to pay more for Sahara-generated energy, a preferential
arrangement that European countries use to spur solar and wind energy
development at home.

Trouble is, Germany and Spain are reducing these rates, which the
utilities often pass on to customers. The depth of political support
in North Africa is another issue. Morocco, Tunisia, and Egypt back the
project. Algeria wants to develop solar plants on its own. Some
European critics, meanwhile, see a case of overreach. "European
countries can develop faster and cheaper than Desertec a renewable
energy supply from indigenous sources," says Hermann Scheer, a member
of the German Bundestag who heads Eurosolar, a Bonn-based solar
research and advocacy group.

Even Europe's sunniest regions, though, don't get enough sun to
generate power as efficiently as in North Africa, says Abengoa Solar
Chief Executive Officer Santiago Seage. The Sahara's ample space is
crucial since plans call for fields of mirrors, totaling hundreds of
square miles, at more than 20 locations. The mirrors would concentrate
the sun's rays to create heat and drive turbines� a technology known
as concentrating solar power (CSP) that allows heat to be extracted
and stored gradually so electricity is generated continuously. Plans
also call for solar photovoltaic and wind turbine generators, whose
energy costs less to produce than CSP yet don't offer storage
capacity. "For utilities, CSP is a much more robust product," Seage
says.

As the consortium feels its way forward, some European countries could
strike bilateral deals with North African suppliers. Morocco, for
example, has announced plans to build solar plants for its own use.
Since Morocco's government can't afford the subsidies that would make
solar power feasible inside its own borders, it might team up with
Spain or France to help with financing in exchange for a share of
output, suggests Logan Goldie-Scot, a London-based analyst with
Bloomberg New Energy Finance. "The [Desertec] project will happen," he
says, yet "it's likely to be a series of small projects."

The bottom line: Europe is pursuing a plan to tap the solar energy of
the Sahara. Financing is a hurdle, as is securing cooperation from
many players.

Matlack is a Paris correspondent for Bloomberg Businessweek.
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Diverse water sources seen key to food security/IWMI

http://www.iwmi.cgiar.org/Topics/Water_Storage/

Diverse water sources seen key to food security

 Sep 7 2010

LONDON (Reuters) - Increasingly erratic rainfall patterns related to climate change pose a major threat to food security and economic growth, water experts said on Monday, arguing for greater investment in water storage.

In a report by the International Water Management Institute (IWMI), experts said Africa and Asia were likely to be hardest hit by unpredictable rainfall, and urged policymakers and farmers to try to find ways of diversifying sources of water.

The IWMI research estimates that up to 499 million people in Africa and India could benefit from improved agricultural water management.

"Just as modern consumers diversify their financial holdings to reduce risk, smallholder farmers need a wide array of 'water accounts' to provide a buffer against climate change impacts," Matthew McCartney, a hydrologist at IWMI, said in a statement.

"That way, if one water source goes dry, they'll have others to fall back on."

The U.N. panel of climate experts has projected more extreme weather such as droughts, floods and heatwaves this century, caused by global warming.

The report said that, despite a great expansion in irrigation in recent decades in Asia, around 66 percent of agriculture there is still dependent on rainfall.

In sub-Saharan Africa, the proportion is even greater at 94 percent, it said. These are the regions where water storage infrastructure is least developed.

The report cautioned against over-reliance on single solutions such as big dams, and said an integrated approach combining large- and small-scale storage was a better strategy.

It suggested the use of water from natural wetlands, water stored in the soil, groundwater and water collected in ponds, tanks and reservoirs.

"For millions of people dependent on rain-fed agriculture, reliable access to water can make all the difference between chronic hunger and steady progress toward food security," McCartney added.

"Even small amounts of stored water, by enabling crops and livestock to survive dry periods, can produce large gains in agricultural productivity and in the wellbeing of rural people."

The IWMI is funded by the Consultative Group on International Agricultural Research (CGIAR), a partnership of governments, donors and international organizations.

It noted that, in response to increased demand for food and power supplies, many developing country governments with fast-growing economies have recently invested in large dams.

The benefits of these projects in terms of storing water for crop irrigation were clear, it said, "but so are the adverse social and environmental impacts."

As examples of the value of small-scale storage options, the study cited field studies that have proven the effectiveness of using small planting basins to "harvest" water.

In Zimbabwe, such basins have been shown to boost maize yields, whether rainfall is abundant or scarce. In Niger, they have led to three- or four-fold increases in millet yields.

Mekong commission accused of ignoring own findings on dam impacts [Thanh Nien News 9.3.10 ]

Mekong commission accused of ignoring own findings on dam impacts

Thanh Nien News, 9/3/2010

Promoting decision-making not tantamount to project approval, counters commission

The Mekong River Commission seems to be acting beyond or even against its brief by encouraging decision-making on a major dam on the lower reaches of the river, critics say.

This, they argue, is tantamount to supporting the commencement of Lower Mekong Mainstream dams, ignoring the MRC’s own findings about the severe risks posed by such constructions.

The MRC, which comprises Thailand, Cambodia, Laos, and Vietnam, has also bypassed its role as an advisor to regional governments on sustainable use of the precious water source that the livelihoods of millions of households depend on, the critics add.

The Mekong River originates in the Tibetan plateau and flows 4,800 kilometers (2,980 miles) through Myanmar, Thailand, Laos, and Cambodia before emptying into the East Sea off Vietnam.

China’s dam construction upstream the Mekong River (known there as Lancang) has already altered the river flow and impacted downstream communities where no dams have been built yet, according to international non-governmental organizations (NGOs).

Meanwhile, downstream nations have their own plans to build dams to meet their energy needs, and concerned activists have been calling to defer 12 of them.

“Any dam built (on downstream sections) would cause irreversible changes to the river. By blocking vital fish migration routes and sediment flows, the dams will significantly alter the river’s rich biodiversity,” said Ame Trandem, the Mekong Campaigner for International Rivers, a US-based NGO which seeks to protect rivers and defend the rights of communities that depend on them.

“This will result in fishery losses, impacting the livelihoods and food security of millions,” Trandem said.

Shifting sands

At a meeting held late July in Laos on the Mekong Basin Development Plan, which provides various development option scenarios, the MRC appeared to favor the scenario to build six mainstream dams above Vientiane, Laos over the next five years.

“The [scenario] adds only six mainstream dams above Vientiane... This will not change the water quantity in mainstream or tributaries and thus the planned consumptive water use can proceed,” the MRC said in its draft Basin Development Strategy report.

“The countries consider that there may be possibilities to consider [this scenario]... provided that guidelines will be developed that bring localized impacts upstream and downstream of dams specifically into dam project feasibility and assessment procedures, and that strategic studies commence relating to fish passage technology for Mekong conditions and to the future of the Giant Catfish in both natural situations and breeding centers.”

This has drawn the ire of critics like the International Rivers Network.

“This recommendation clearly contradicts the findings of the [MRC’s] Strategic Environment Assessment, which points to the serious risks these dams pose to the Mekong and its people and the need to defer any decision over the dams for at least another ten years,” said Trandem of International Rivers.

The MRC-authored Strategic Environment Assessment’s June 2010 Avoidance, Enhancement and Mitigation Assessment report stated that “The decision to go ahead with the mainstream dams should be taken with the knowledge that the loss in biodiversity of the Mekong will be a permanent and irreplaceable global loss and that no adequate compensation can be provided.”

The absence of any “real discussion” about the Strategic Environment Assessment at the July meeting in Laos was also noted by critics.

“This was particularly worrisome given the MRC’s role to serve as an advisory body to the Lower Mekong countries,” Trandem said.

In response, the MRC asserted it had good reason for the approach it has taken.

“It is important to note that the Strategic Environment Assessment [SEA] process is not yet complete. The ‘impact assessment’ stage of the SEA and the ‘avoidance, mitigation and enhancement’ stage had been the subject of earlier multi-stakeholder workshops in the previous months,” said Jeremy Bird, Chief Executive Officer of the MRC.

The final SEA report will be published by the end of September, Bird added.

Double role

However, Trandem said that by pushing for the start of the regional decision-making procedures on the Xayaburi dam project at the July meeting, the MRC appeared to shed an objective approach.

The 1,260 MW Xayaburi project is located in northern Laos and is currently the most advanced mainstream project planned on the lower reaches of the Mekong.

According to the MRC’s 2010 SEA Impact Assessment, the Xayaburi project will inundate 10 villages and displace 2,151 people. It is also likely to impact millions more in the basin.

Bird denied any notions of the MRC adopting double standards.

“Promoting the [regional decision-making procedures on the Xayaburi dam project] is not equivalent to promoting the project itself – it is part of a wider and complex process involving national and regional considerations,” Bird said.

In July, the Thai developer and the Electricity Generation Authority of Thailand (EGAT) reached a tariff agreement on the Xayaburi project. The agreement was endorsed by the Laotian government.

“The tariff agreement is not a project approval either on the part of the Lao or Thai government, but does demonstrate a certain level of priority in the national planning processes being given to this project,” Bird said.

“It is clear therefore that the necessary documentation has been prepared to support a prior consultation process and hence we feel that it would be better to initiate that process soon so that the recommendations emerging from it can be fully taken into account and clarity on the views of the MRC’s four member countries can be obtained.”

But Trandem countered this by saying the decision on whether or not to approve the Xayaburi dam project should only occur when the Mekong countries are able to make informed decisions.

“The MRC’s decision [on] whether or not to initiate the regional decision making procedures should not be driven by the dam developers, but rather be based on having fully assessed and considered the regional implications,” Trandem said.

Bird admitted that the MRC, which is based in Laos, had not received any notification for the Xayaburi dam project from the Laotian authorities. The MRC will inform its member states upon receiving relevant information from Laos, he added.

Le Duc Trung, office manager of MRC Vietnam, also confirmed that the commission had not received any official information from the Laotian authorities with regard to the Xayaburi project.

The four member states would convene to discuss the impact of the dam on the Mekong River after being fully informed of project details, Trung said.

But he declined to comment on whether or not the Xayaburi project should commence.

“Unlike other NGOs, I am not in a position to oppose the construction of all dams.”

‘Seriously underestimated’

Experts have repeatedly warned that any Lower Mekong mainstream dam will carry important risks to food security, given its impact on fisheries and agriculture.

It is estimated that the Lower Mekong produces 2.5 to 3 million tons of fish annually. An important part of this production - between 600,000 to 1.4 million tons – would be at risk if Lower Mekong mainstream dams were constructed, they added.

“All impacts are incremental,” said Marc Goichot, Sustainable Infrastructure Senior Advisor to the World Wildlife Fund’s Greater Mekong Program.

“They will add to the impact of large reservoir dams in the Chinese part of the basin. You cannot look at impact of one hydropower project alone,” Goichot said.

“The risk to the Mekong Delta is seriously underestimated in the current draft of the [MRC’s] Basin Development Plan Assessment of the Basin-wide Development Scenarios. Impacts to the delta are a concern to millions of Vietnamese, and could significantly affect the agricultural productivity of the delta.”

Both Goichot and Trandem concurred that reformed energy planning and a comprehensive energy options assessment is needed in the Mekong region.

“By employing modern and more sustainable energy options, alternatives to the Xayaburi and other destructive projects can be identified and the Mekong can be preserved to allow for the security and continuity of future generations,” Trandem said.

Reported by An Dien

http://www.thanhniennews.com/2010/Pages/20100904154506.aspx

Copyright Thanh Nien News

New pipeline of IFI dam projects

(Apologies for cross-postings...)

Attached please find a list of key new proposed World Bank, IFC, AsDB, IDB and AfDB water and power projects from June to August 2010. It includes new and rehabilitated projects in India, Turkey, and Nepal.

This list does not include most oil, gas, mining or water supply and sanitation projects. It focuses on the power sector and irrigation projects -- particularly projects involving dams or alternatives to dams –- although some exceptions are included.

Pipeline projects are also listed on International Rivers' website on the specific MDB pages under "Follow the Money":
http://www.internationalrivers.org/en/follow-money

Please let me know if you have any feedback on this document or suggestions for improving its usefulness.

Best regards,

Katy Yan
International Rivers



--
Katy Yan
International Rivers
Office: 510.848.1155 x317
Mobile: 650.283.5758
www.internationalrivers.org

Follow us on Twitter! www.twitter.com/IntlRivers

**Good planets are hard to find -- please consider the environment before printing this email.**

Portugal's big renewable energy push/Worldwatch

http://www.environmental-expert.com/resultEachPressRelease.aspx?cid=28754&codi=192123

Trade winds, sound policies push Portugal to the renewable energy forefront
Source: Worldwatch Institute
Sep. 1, 2010

Typically, the Scandinavian countries and Germany have set the example in
the European renewables field. Yet lately, a Southern country - Portugal -
has attracted attention after delivering its National Renewable Energy
Action Plan to the European Commission this June.

Portugal has made dramatic changes in its energy policy over the last five
years under the government of Prime Minister Jos� S�crates. The country's
installed renewable energy capacity more than tripled between 2004 and
2009, from 1,220 megawatts (MW) to 4,307 MW, and renewables now represent
roughly 36 percent of electricity consumed. Portugal currently ranks
fourth in Europe in energy production from renewables.

Of course, Portugal benefits from favorable conditions for renewables: a
strong wind resource, great hydropower, good tidal waves potential, and a
high sunshine rate. After the country removed several dams in recent
years, S�crates' government has focused instead on wind power development,
under most conditions the cheapest renewable energy source after
hydropower. With more than 600-percent growth in wind energy production
between 2004 and 2009, Portugal now ranks sixth in Europe in total
installed capacity and third in capacity per capita, behind only Denmark
and Spain. Some even expect Portugal to overtake its neighbor Spain in
per-capita wind energy production as early as this year.

Additionally, Portugal is starting to exploit its solar potential. A
photovoltaic (PV) power station located in Moura, operative since 2008 and
expected to be fully completed by the end of 2010, will count among the
world's largest solar farms. But despite a great progression of installed
PV capacity in Portugal (from 1 MW in 2000 to 75 MW in 2009), solar power
still lags far behind wind's installed capacity of 3,353 MW. Portugal also
deploys other renewable energies, albeit at a much smaller scale. Biomass
and biogas represented 3.2 percent of total consumed electricity in 2009,
and the world's first shoreline wave power plant has been operating since
2005 on the island of Pico in the Azores, with 400 kilowatt-hours (kWh) of
capacity.

How did Portugal assume such impressive leadership in the clean energy
transition? The key, as usual, lies in ambitious supportive policies.
Prior to 2000, Portugal's transmission lines were owned by private power
companies that had no interest in investing in renewables, as the
deployment of these technologies would require radical changes in the grid
infrastructure and therefore raise costs. To address this barrier, the
government bought the lines and began adapting the grid to renewables
requirements, including more flexibility and a better grid connection in
remote areas to allow the production and distribution of electricity from
small generators, such as domestic solar panels.

A combination of incentives was implemented to attract investors. Feed-in
tariffs (FIT) - which guarantee producers of renewable energy a specified
price for every megawatt-hour of power fed into the grid - were first
introduced in Portugal in 1988 and have increasingly evolved into a highly
sophisticated system with individual prices for each renewable energy
source. The latest tariff stipulations, issued in 2005 and 2007, take into
account environmental considerations, the level of technology development,
and the inflation rate. The government also integrated new technologies
such as Concentrating Solar Power (CSP) and tidal power into the system.

Today, all renewable energy sources in Portugal wil benefit from the
feed-in tariff for 15 years, and small hydropower prices are guaranteed
for 20 years. The tariffs vary from around 7.5 Euro cents (around 9.5 U.S.
cents) per kWh for wind and hydro to more than 30 Euro cents (38 U.S.
cents) per kWh for photovoltaic energy. Renewable heating and cooling is
also supported under conditions by financial and fiscal incentives,
largely for the benefit of small and medium-sized enterprises.

The European Commission plays a decisive role in setting targets for each
Member State via its 2009 Renewable Energy Directive. Portugal is expected
to reach a 31-percent share of renewable energy in its gross final energy
consumption by 2020. Also, the European Emission Trading Scheme (ETS)
encourages participating countries to cut their emissions of greenhouse
gases and therefore move from fossil fuels to renewables, by requiring
energy producers and energy-intensive companies to meet strict carbon
dioxide emissions targets and to purchase additional permits for
overshooting them.

According to the International Energy Agency (IEA), Portugal became a net
power exporter last year, delivering a small amount of electricity to
Spain. Inspired by these good results, Portugal set more ambitious
targets in its National Energy Strategy (ENE 2020), adopted by the
Council of Ministers on April 15. The country now aims to reach a
45-percent renewables share in its electricity production by the end of
the year, and a 60-percent share by 2020.

The main focus of Portugal's renewable policy will remain on wind power, a
dynamic industry that represents a source of revenue and creates green
jobs. The electricity operator Energias de Portugal even invests in wind
farms located in the U.S. Midwest.

Prime Minister Jose Socrates' government wants to improve the reliability
and efficiency of Portugal's renewables supply. Renewable energy
production is often challenged by natural flows-including the common
criticism that the sun does not always shine and the wind does not always
blow, even in Portugal. By the end of the year, the government will set up
a system to monitor on-going energy demand and potential supply from
various available renewable sources.

What is driving Portugal to undertake such changes? One factor, of course,
is the fact that the country does not possess any noteworthy fossil fuel
resources, as illustrated by 2007 IEA data. Yet in 2005, the bulk of
Portugal's gross electricity was generated by three fossil sources: coal
(32.7%), natural gas (29.2%), and oil (18.9%). The country is therefore
heavily dependent on imports that place a high toll on the national budget
- amounting to 86 percent of spending in 2006, according to the European
Renewable Energy Council (EREC). In its ENE 2020 strategy, Portugal aims
to reduce fossil fuel imports 70 percent by 2020 and cut its energy import
balance 25 percent, saving some US$2.55 billion.

In order to address initial local conflicts due to the financial costs of
intense development of wind power plants, a unique mechanism has been set
up. Under the current feed-in tariff legislation, municipalities that host
wind farms benefit from additional financial support in the form of a
2.5-percent share of the monthly remuneration paid to local wind project
operators.

Overall, the IEA's Shinji Fujino tells the New York Times, 'So far, the
[renewable energy] program has placed no stress on the national budget.'
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