Progressive Investor Sample Article
Currency Wars; EV Charging Infrastructure Taking Off; Connecting Clean Energy to the Grid; Green Portfolio Update
Issue 90: April 2012
Connecting Clean Energy to the Grid
Rona Fried, Ph.D., Contributing Editor
With offshore wind taking off in a big, big way in Europe, many people wonder how they might invest in that. Wind turbine manufacturers are suffering in similar ways to the solar industry and aren't a good bet right now.
But when you think about the critical infrastructure - much of which is holding both land-based and offshore wind back right now - you think of the shortage of transmission lines to connect all that wind to the grid. The same is true for all those big solar plants coming online in the western U.S. Investments in transmission infrastructure now must go hand in hand with those in clean energy itself.
And that points to ABB Ltd. (ABB).
Based in Zurich, Switzerland, ABB Ltd. resulted from the 1988 merger of a Swedish corporation (ASEA) and a Swiss company (Brown, Boveri & Cie). The company has long been a leader in manufacturing and connecting the vital components of efficient transmission systems, such as electric transformers, switchgears, circuit breakers and cables. ABB also helps industrial and utility customers use less energy through automated distribution systems.
ABB pioneered the development of power semiconductors that control the flow of electricity and convert it into forms required for different applications. It's responsible for innovations that vastly reduce energy losses through transmission lines - down to just 1% in some cases - and energy-saving variable speed drives, and frequency converters used by electric trains.
Its transformers can also improve the performance of wind turbines by as much as 70%. ABB provides power infrastructure from "where the wind comes into the turbine until the time it touches the grid," says Dennis McKinley, head of ABB North American Windpower.
The company has a strong internal sustainability focus, reducing its energy use and materials, streamlining transporting goods, phasing out hazardous materials, and designing eco-efficient and recyclable products. The company has ranked number one on the Dow Jones corporate sustainability index for several years. Design engineers use life cycle analysis for product design and ABB employs some 400 sustainability officers across the 100 countries where it operates. ABB also works with suppliers on these issues. In 2012, it plans to conduct over 100 sustainability audits and provide face-to-face training with 250 suppliers.
ABB says nearly 60% of revenues are related to energy efficiency products and services that help customers save energy and reduce greenhouse gas emissions.
Connecting Offshore Wind to the Mainland
Offshore wind will provide 13.1% of Europe's electricity, powering 130 million homes, if all the projects currently planned go through. About 141 gigawatts (GW) in 17 EU countries are either built, under construction, consented, or planned in Europe. That's 35 times the capacity of the 4 GW installed today.
Last year, ABB won its largest transmission contract to date - a $1 billion order to connect offshore wind farms in Germany's North Sea to the mainland grid. The order is for a 900 MW high-efficiency, high-voltage direct current (HVDC) system, the world's largest offshore system. When it's operational in 2015, the system will supply over 1.5 million households with wind-generated electricity.
The HVDC lines, which limit electrical losses to less than 1% per converter station, will transport power generated at Gode Wind II and other wind farms to an offshore HVDC converter station. From there, the electricity will be transferred via 135 kilometers of underwater and underground cables to an onshore HVDC station on the German coast, and from there will travel to the mainland grid.
HDVC allows power to be transmitted at high voltage in direct current (DC), rather than alternating current (AC), which almost eliminates electricity losses over long distances. ABB is one of the world's most experienced underground and submarine cable manufacturers, with many record achievements to its credit, such as the 580 km long 700 MW, 450 kV cable link between Norway and the Netherlands. The technology allows for very long submarine cables of up to 2000 MW at 500 kV DC (bipole). The company's capabilities range from planning to installation.
ABB previously used the technology to connect the BorWin1 wind farm and has a contract to connect the 800MW Dolwin1 wind farm, both in the North Sea.
As a founding member of the Desertec Industrial Initiative, (see "Remarkable Desertec Project Gains Traction" in the February 2012 issue), ABB's HVDC cables are being proposed to carry the electricity that will connect the Sahara with Europe, the Mid-East and northern Africa. Extremely long distance transmission cables will travel under Saharan sand and under the Mediterranean to eventually supply 15% of Europe's electricity, and a substantial part of the demand in Northern Africa and the Middle East.
Connecting the Smart Grid
ABB is one of the world leaders developing smart grid technologies. Its solutions enable more distributed generation, more power generated from renewable sources and a two-way grid that can receive as well as deliver reliable power.
One of its R&D projects is a large scale smart grid in Stockholm in partnership with the utility Fortum. The project is a test case for incorporating excess power from rooftop solar and other local renewable energy sources into the grid, and enabling electric vehicles to both draw electricity from the grid and feed it back in. It's also looking at energy storage options for a more flexible grid, all of this intended to lower energy consumption and emissions.
Diversifying in Cleantech
It's no surprise then that ABB is buying up companies to expand its footprint in energy efficiency, smart grid and electric vehicle charging.
Among its cleantech acquisitions is Baldor Electric, which it bought for $4.2 billion. One of our long-time favorite companies, Baldor leads in efficient motors and has a long history as one of the most socially responsible employers.
In the past year or so, ABB acquired several smart grid software companies including Ventryx, Trilliant and Obvient Strategies, and entered electric vehicle charging by buying Epyon B.V. and taking a stake in ECOtality.
ABB is revving up an electric car charging network, saying it could be a $1 billion business by 2017.
ABB is also investing in ocean power with a stake in Aquamarine Power which makes the Oyster, an innovative near-shore wave energy device we discussed in "Ocean Power, the Next Frontier" in the December 2011 issue.
To top it off, ABB also has ownership stakes in two concentrating solar companies: a 35% stake in Novatec Solar and a lead investor in GreenVolts, which plans to market large-scale systems to utilities, businesses and agriculture. "Our extensive footprint, which covers all key solar markets in the world, will help us make this technology globally accessible," says Peter Leupp, head of ABB's Power Systems.
Rona Fried, Ph.D. is CEO of SustainableBusiness.com, which published Progressive Investor for eight years before merging with The Green Investor in November 2010.