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Western Balkan countries have ambitious plans to increase their electricity generation over the next years. But what will happen if they all become a regional energy hub? Will there be a demand for all the available electricity?
by Pippa Gallop, cross-posted from the Bankwatch blog
Hardly a week goes by without the media in the Western Balkans reporting on some progress with a coal or hydropower plant projects or reporting grand statements from politicians about their countries becoming regional energy hubs. In some cases this seems deeply improbable at first glance, with countries like Albania and Montenegro historically being electricity importers, but for others like Bosnia and Herzegovina and Serbia – already net exporters most years – it seems reasonably plausible.
But what will happen if everyone becomes a regional energy hub? Where will all the electricity go? Is there likely to be a market for it at all?
For a few years, the answer seemed to lay in Italy, which looked like it would have difficulty in reaching its obligatory 2020 renewable energy target. It planned in its National Renewable Energy Action Plan to import significant amounts of renewable electricity from the Balkans. Yet in recent years Italy has pulled ahead (pdf), managing to meet the electricity component of its target already. It also has a large generation capacity surplus with much of its fleet lying idle. This led Germany’s E.On to leave Italy earlier this year and sell its thermal power assets. Presumably it also contributed to ENEL’s welcome decision announced earlier this week, to stop constructing new coal plants. This does not necessarily mean that Italy will not import electricity, but that any imports must be cheap enough to compete with domestic production or other imports.
Since we had already been concerned that some of the planned Balkan electricity generation projects may be uneconomic, (see for example unit 7 at the Tuzla lignite-fired plant (BiH) and the Boskov Most hydropower plant, we decided to investigate with the University of Groningen and the Advisory House consultancy what will happen if the promised electricity generation capacity really materialises. We know what to expect on the environmental side from coal and poorly-sited hydropower plants. But what about the economic side? Could coal and gas plants in the Balkans end up lying idle like their counterparts in Italy?
The first surprise was how difficult it was to find updated and realistic information on planned generation capacity investments. Some of the countries do not have any recent official energy strategy at all while others have but they do not contain sufficient information and/or are internally contradictory.
Not unexpectedly, we found a large gap between government wish-lists of electricity projects and reality.
If no new capacity is built except that which is already under construction or near construction, and nothing is closed except that which is already announced, then the region will need to import electricity starting somewhere between 2018-2023, depending on demand levels.
At the other end of the spectrum, if the countries realise all their planned capacity extensions and demand growth is low, the region will have a 56% electricity surplus in 2024.
In particular Bosnia and Herzegovina could turn into the largest exporter of electricity (up to 20 000 GWh), followed by Serbia (18 000 GWh). The other countries have a much lower potential contribution to the regional surplus, but measured in terms of their domestic demand, their export potential is substantial.
Such significant electricity capacity expansions designed to meet export demand create the danger of becoming dependent upon the export market. The export analysis shows that there will not only be competition within the Western Balkans but also from other nearby competitors such Bulgaria, Romania and the rest of the EU. Given an expected excess supply in Europe, increased competition may put pressure on export prices and increase the risk of incurring stranded assets – power plants that will become simply uneconomic to even operate. For this reason, the study suggests closely examining investments that are directed to serve export markets and to also consider the trade-off of producing or buying electricity. Taking measures to reduce electricity losses is also crucial.Better planning is crucial
No-one knows exactly what the future holds, but several things emerge for me from this study.
First, planning in the energy sector needs to be seriously improved in the region. Strategies need to be better justified, clearer and more coherent. They should avoid including old projects which have already practically failed and take serious note of public comments.
Second, less is more. Why have huge lists of projects that are proving difficult to implement, when with more rational planning and analysis, a much smaller amount of investments would suffice? Energy efficiency should come first, and governments should not be afraid to cancel projects which have been hanging around for decades but never proved worth building.
Third, cross-border co-operation in the region has great potential to save money and natural resources. Making increased use of regional co-operation to meet peak demand would increase stability and lower the overall amount of electricity needed. Peak demand in the Western Balkans for 2024 without cooperation is estimated at approximately 17630 MW in 2024 in the high growth scenario while with cooperation it is only around 15000 MW. So far most of the countries are thinking in very national terms and failing to take advantages of regional synergies.More
By the numbers: where will energy come from in the western Balkans?
Blog post | March 19, 2015
Electricity export ambitions may prove risky for Western Balkans, shows new study
Press release | March 19, 2015
In 2012, Toyota Motor introduced its new development framework, the Toyota New Global Architecture. (Earlier post.) Designed to balance product advances with cost reductions, TNGA supports the grouping of the development of new vehicles to promote strategic sharing of parts and powertrain components. One goal is the reduction of resources required for development by 20% or more.
Toyota recently provided an update and an outlook on its progress with TNGA, focusing on new vehicle development (powertrain components and vehicle platforms) as well as production systems.
Sudden and drastic changes in the business environment mean that conventional ways of thinking and doing business can no longer help us grow sustainably. We are at a crossroads where we must now build a new business model. I want 2015 to be a year in which we take steady and bold steps toward sustainable growth. We can do this by launching new models that incorporate TNGA, and making good use of this intentional pause to strengthen our competitiveness. Based on the new management structure we announced this month, it is important that we improve our true competitiveness, including strengthening our human resources. We aim to be a company that grows sustainably―a tree with a strong trunk.—Toyota President Akio Toyoda
New platform under TNGA. Click to enlarge.
Development. Powertrain component development needs to be coordinated with that of vehicle platforms, which form the basic structure of all vehicles. To enhance driving performance and fuel efficiency while also giving vehicles more attractive styling and improved handling, Toyota is focusing on joint development of powertrains and platforms together to create a lower center of gravity, on making components lighter and more compact, and on applying unified design through modularization.
By improving thermal efficiency in engines and energy-relay efficiency in transmissions, Toyota has increased the overall fuel efficiency of its powertrains by approximately 25% and overall power output by more than 15%.
By rethinking drive unit layout and making electric motors, inverters and batteries smaller, Toyota expects to improve the overall fuel efficiency of its hybrid vehicle systems by more than 15%.
Toyota will begin introducing its new powertrain units this year, and will continue to develop innovative new hybrid systems, transmissions and engines.
Toyota has developed new vehicle platforms through improvements to its vehicle underbodies and suspensions. Additionally, repositioning and lowering the center of gravity of powertrain components has contributed to achieving attractive, low-stance designs, responsive handling, a high-quality drive feel, and collision performance that offers safety.
By rethinking body structure, Toyota plans to first increase overall body rigidity by as much as 30-65%, and then further improve rigidity by joining body components using laser screw welding technology.
Toyota will begin rolling out its new platforms with the launch of a midsize front-wheel-drive vehicle this year, followed by specific new platforms for front-wheel-drive compact and large vehicles, as well as for rear-wheel-drive vehicles. Toyota expects approximately half of its vehicles sold worldwide in 2020 to feature the new platforms.
Production systems. Deciding to take a pause to strengthen its competitiveness, Toyota froze new production plant projects and has been working to achieve full use of existing plants and facilities, and to reduce the amount of capital investment required at plants when new vehicle models are launched. Toyota is also working to make plants more competitive by greatly reducing required levels of initial investment and further strengthening environmental performance and safety.
Since 2013, Toyota has been increasing the versatility of its production lines, linking production of same-model vehicles across multiple plants and steadily increasing operational availability to make thorough use of even the smallest capacity surpluses at each plant.
Toyota has increased its total global load factor (line utilization rate) to more than 90% from approximately 70% in 2009.
This year, Toyota is aiming to reduce the amount of capital investment required to prepare a production line for a new model by approximately 50% compared to 2008 levels. This work also covers the production of new engines, transmissions and related components.
Although rolling out new TNGA platforms and powertrain components will temporarily require increased production line investment, investment requirements are still expected to result in lower investment levels than those required in 2008.
TNGA’s strategic sharing of parts and components allows multiple platforms and powertrain components to be added to a line for mixed production, enabling Toyota to respond flexibly to changes in demand and achieve reductions in overall production line investment.Toyota gains ISO 50001 certification for energy management Toyota became the first automaker in Japan to acquire the international energy management system certification ISO 50001, which requires the introduction of comprehensive companywide measures to use energy more efficiently. As a part of its efforts to achieve zero emissions across the entire company, even at plants and production technology R&D facilities, Toyota has supplemented its existing energy management measures by introducing and employing systems based on ISO 50001. ISO 50001 provides a framework for organizations to integrate energy management into overall efforts to improve quality and environmental management. Like the ISO 14001 energy management standard, the ISO 50001 standard was adopted with the aim of continuously improving energy performance through the creation and operation of energy management systems centered on the PDCA (Plan-Do-Check-Act) cycle.
Toyota is combining the results of its work to increase plant competitiveness with the mindset and technologies accumulated by making ever-better cars in the field of production engineering.
Toyota is now approaching the point at which it can expect to reduce initial plant investment by approximately 40% compared to 2008 levels.
The main contributors include measures to achieve “simple and slim” production lines, such as downsizing painting-booth facilities and switching to compact equipment that can be installed on top of plant floors. By contrast, current plants often require large equipment that needs to be suspended from ceilings or fixed into the plant floor. This reduction in required investment frees up resources.
By improving plant energy management, Toyota expects to reduce plant CO2 output by up to 55%.
Production engineering initiatives, with new technologies already finding their way onto a number of mass-production vehicle models, include revolutionizing forming technologies to allow the production of highly stylish components and developing more-advanced welding technologies for greater body rigidity.
A total £45m fund to encourage the introduction of greener taxis and a decision to extend the Plug-in Van incentive scheme, as well as support for gas refuelling points for HGVs, were among a flurry of announcements made before the dissolution of Parliament for the General Election. The announcements are made as news comes in of booming global EV sales.