Why Mongolia is Considering a German Plan for New “Eco-Capital”

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The proposed Maidar City intended to be a home of 300,000 people.

Called Maidar, it’s intended to be home to 300,000 people and new high-tech industries, as well as being Mongolia’s new administrative nerve centre.

Designed almost entirely by German firms, and with investors reportedly champing at the bit to get involved – particularly from China – the new city will have to tackle a number of challenges including a severe scarcity of water.

But if it goes ahead, Mongolians could finally get some relief from the deadly pollution that plagues their existing capital, and the country could have its first blueprint for sustainable urban development.

The architect who landed this project of a lifetime was Stefan Schmitz, a 60-year-old partner in Cologne-based practice RSAA.

GCR caught up with him on his return from Maidar to find out how the idea for the project came about, how you build an eco-city in one of the coldest and driest countries on Earth – and why there are so many German firms involved in doing it.

Why a new capital?

Mongolia has the lowest population density in the world: 2.7 million people inhabit 1.6 million square kilometres, giving a density of 1.7 – about half that of Australia.

But four out of every 10 of those people live in the capital, Ulaanbaatar, so a city that was built to accommodate 600,000 people now contains twice that number.

This means that, paradoxically, near-empty Mongolia suffers from all the evils of urban overcrowding, including slums, housing shortages, traffic jams and deadly pollution.

In winter, when the temperature averages 40°C below freezing and there is never a cloud in the sky.

That sounds picturesque but constant high-pressure seals in pollution and, because Ulaanbaatar has no shortage of old cars, and because Mongolia relies on its abundant coal reserves for power, this creates smog so severe that is reckoned to be responsible for 10% of all deaths in the country.

Cold and high pressure locks in pollution in Mongolia’s high capital, Ulaanbaatar

Cold and high pressure locks in pollution in Mongolia’s high capital, Ulaanbaatar

One solution to the intolerable living conditions in the capital is to build a series of satellite towns designed from the ground up to avoid its problems.

Money galore

At the moment, the country’s economy is suffering as a result of rows between the government and the mining multinationals that are responsible for 30% of the country’s GDP, but the growth trend over the past 10 years has been in double digits, reaching a peak of 17.5% in 2011.

The result is that, just as the need for such a spectacular project is becoming greater, so is the money available to investors and home buyers to achieve it.

Schmitz says that the demand for homes and the desire of industries such as tourism and media to relocate means that conditions for investment are perfect.

“So it’s not a question of money, it’s a question of how to organise it,” he said.

In fact, one problem is that there is too much money coming into the scheme from one source.

“Chinese investors want to take it all,” Schmitz said. “I think the Mongolian company, Maidar City, which is in charge of the project, must consider that they need different investors. If they give it all to one then they will lose their power to manage the project.”

How it came about

When the Maidar project was conceived in 2012, it was intended to be a modest eco-town of 20,000 people built from scratch on the Mongolian steppes, about 20km south of the existing capital of Ulaanbaatar.

Schmitz told GCR that the idea for a settlement began when the Grand Maitreya Foundation decided to build a 54m-high statue of the Buddha in an area of outstanding natural beauty on the southern side of the Bogd Khan mountains, about 20km from Ulaanbaatar.

A private consortium of Mongolian companies backed by wealthy investors then decided to surround the statue with cultural and religious buildings, and a town for 20,000, built to strict ecological standards.

RSAA was asked to handle the urban design without going through the inconvenience of entering a design competition. The practice already had a profile in east Asia thanks to its winning three other eco-cities projects, including the Tianjin scheme in 2004, however Schmitz says the firm won its Maidar commission on the basis of its personal connections with the investors and the Mongolian government.

The decision to expand the town into a 110,000 hectares city was taken because the developers realized that the combination of the natural setting and the available infrastructure made it an ideal location. Schmitz says: “It was near to the highway, the airport and the railway, so the connections were perfect, so everybody wanted to have a bigger city.”

As the plans grew more ambitious, the Mongolian state stepped in and, although it didn’t provide any money, it did take over the regulation and administration of the project.

Not a drop to drink

The developers want Maidar to be an eco-city, but with Mongolian characteristics.

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“We cannot meet the real Passivhaus (ultra-low energy buildings that require little energy for space heating or cooling) as in Europe – it’s too much for Mongolia – but we can do a kind of Mongolian Passivhaus,” said Schmitz. “We have to adapt the standards to Mongolian conditions of course, which is also what the experts will handle.”

The biggest single problem is water: Mongolia is about 1.3km above sea level, it’s too cold to rain or snow for about eight months of the year and Maidar is pretty much on the northern edge of the Gobi Desert.

The design must make the most of what moisture there is. Fortunately, the Bogd Khan acts like a giant collector of the summer rains, so that water can be channeled into a reservoir.

With supplementary ground water extraction and strict water use standards in homes, RSAA calculates that there will be enough left over to irrigate part of the northern Gobi and bring it into agricultural production.

Breathing easier

Another challenge is air pollution. Cutting that means reducing private car use through planning approaches that are now familiar from other eco-cities around the world.

The city is designed to be “polycentric”, which means that its inhabitants do not have to travel far to get to get to work, do their shopping or enjoy their leisure time. Each section is a separate town with its own core, grouped around the central hub of the Buddha statue. Distances are designed to be short enough to walk or cycle.

Public transport will take care of medium-length journeys, restricting the use of cars to intercity travel using a new highway that is planned between Maidar, Ulaanbaatar and a new international airport.

It is also a short distance from Mongolia’s main railway line, which runs from Russia to China; Maidar will have its own station on that route.

The finishing touch to the transport plans will be a cable car all the way to Ulaanbaatar. This is intended to cross the Bogd Khan, passing a newly built ski resort on its way.

The constant sunshine of winter means that solar energy can be used to supply the city with hot water. But to begin with, some energy will also be supplied from fossil fuel sources.

“Coal is a big issue,” said Schmitz. “There is a lot of it in Mongolia and it’s very cheap, so to begin with we cannot compete with that. We have to have a mixed strategy.”

The plan is for a decentralised smart grid that can support the increase in renewable energy over the years. An existing wind park beside the city produces 50MW, and they want to boost that to 75MW. In the beginning power will be up to 50% renewable, and 100% within 30 years.

Friends from the Cold War

As well as RSAA, a number of other German firms are working on the city. Stuttgart-based TransSolar is the energy consultant, Berlin’s Ingenierbüro Kraft is handling the water, while eco-certification is being done by the German Sustainable Building Council (DGNB) and property consultant Drees & Sommer.

Why so many Germans? (The exception is the Finnish subsidiary of Ramboll, which is acting as traffic consultant.)

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Schmitz explains that Germany and Mongolia have a special relationship that stretches back to the Cold War, when many promising Mongolian students were educated in East Germany. “There was a lot of exchange and the Mongolians got quite a good education in the DDR (East Germany), so they can speak German and now they’re well established people in Mongolia.”

Will it really go ahead?

So far, only the lower half of the statue has been built, but work is under way on laying out the sites, and Mongolia’s parliament is about to make a decision on whether to go ahead with the scheme. Schmitz is confident that it will get the green light.

If it does, single parcels of land may be made available to investors around the world. Before they can take possession, however, they will have to sign binding agreements as to what they can and cannot do with their land.

“The reason for this is that Mongolia has no network of environmental legislation, so we have to fix the preconditions in the property contracts,” says Schmitz. For example, one stipulation could be that every building must have two water systems, one for drinking and the other for everything else.

“The key is to find a balance that allows us to both meet the ecological requirements of the city and keep investors happy,” he added.

There is still time to strike that balance. Schmitz said the real beginning of construction will be 2017, once developers have prepared the site and settled on how the project will be managed.

The first phase of residential and commercial development is scheduled to last for about 15 years, and will create homes for 90,000 people.

Before then, a number of key industries are planning to relocate, such as financial services and the media, which has already negotiated its own 100 hectare complex.

A German television documentary about Maidar can be accessed here.

Citation: Rogers, D. (2015, April 21). Why Mongolia is considering a German plan for new “eco-capital”. Retrieved April 24, 2015, from http://www.globalconstructionreview.com/trends/why-mongolia-considering-0ge8r0m4a8n-p2l0a6n-n8e0w/

Prime Minister Modi Commits to Clean Environment by Doubling India’s Coal Tax

The world’s third-biggest emitter of greenhouse gases will raise the duty on coal to 200 rupees ($3.2) a ton, Finance Minister Arun Jaitley said in his budget speech for the year starting April 1. Photographer: Kuni Takahashi/Bloomberg

The world’s third-biggest emitter of greenhouse gases will raise the duty on coal to 200 rupees ($3.2) a ton, Finance Minister Arun Jaitley said in his budget speech for the year starting April 1. Photographer: Kuni Takahashi/Bloomberg

India will double the tax on coal production and promote electric vehicles and renewable-energy projects to balance out emissions from coal-fired power plants.

The world’s third-biggest emitter of greenhouse gases will raise the duty on coal to 200 rupees ($3.2) a ton, Finance Minister Arun Jaitley said in his budget speech for the year starting April 1. The money will be used to promote clean energy, he said, indicating India’s commitment to fight global warming.

“With regard to coal, there’s a need to find a balance between taxing pollution and the price of power,” Jaitley said. “I intend to start on that journey too.”

Prime Minister Narendra Modi’s government, which swept to power in May, has set itself unprecedented targets for clean energy and has increased taxes on use of fossil fuels such as coal and petroleum amid mounting international pressure to curb emissions.

The higher tax on coal will encourage investments in washeries and upgrading plants to increase fuel efficiencies, said Kameswara Rao, who oversees energy, utilities and mining at PwC India.

Cheap Coal

Coal fires about 60 percent of India’s electricity generation capacity and is among the cheapest sources of power in the country. The higher tax will lead to an increase of as much as 0.06 rupees in coal costs for every kilowatt hour of electricity, Rao said.

“As the Paris convention approaches, these steps will show the government is serious about climate change,” said Debasish Mishra, a senior director at Deloitte Touche Tohmatsu India Pvt. in Mumbai. “We have to take care of the environment, and at the same time use fossil fuel to make sure we have energy at a reasonable cost for our growth. It’s not an either or situation.”

Countries attending the 21st international conference on climate change in Paris at the end of this year will aim to reach an agreement on greenhouse-gas reduction. While the U.S. and China, the world’s two biggest polluting nations, announced an accord in November to control their emissions, India has avoided making any specific commitments, said Bharat Bhushan Agrawal, an analyst with Bloomberg New Energy Finance in New Delhi. India wants to prioritize economic development, which will entail investments in new coal-generation capacity along with renewable energy, he said.

India plans to add 175 gigawatts of renewable-generation capacity by 2022, including 100 gigawatts from solar. That will help more than double the share of renewables in the mix of fuel it consumes from the current 6 percent, Piyush Goyal, the minister for coal, power and renewable energy, said in November.

Goyal is working to meet Modi’s promise of providing electricity to all. About one-third of India’s 1.25 billion people don’t have access to electricity, which deprives them of basic health and education facilities. Frequent blackouts cripple its industrial output and add to the cost of production.

India is gradually ending subsidies on fuels and has levied taxes on gasoline and diesel to fund new roads.

Citation: Singh, R. (2015, February 28). Modi Commits to Clean Environment by Doubling India’s Coal Tax. Retrieved March 1, 2015, from http://www.bloomberg.com/news/articles/2015-02-28/modi-commits-to-clean-environment-by-doubling-india-s-coal-tax

 

8 Solar Trends to Follow in 2015

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Every quarter, GTM Research’s solar analysts compile the most important data and findings from the past three months.  The most important charts from the Q4 2014 Solar Executive Briefing covering pricing, installations, financing, policy and business models follow.

1. The new China solar tariff decision may drive panel prices below 65 cents per watt this year.

Earlier this month, the U.S. Department of Commerce filed its preliminary review of the import tariffs on Chinese cells into the U.S. The review called for tariffs on Chinese cells to be reduced, and assuming the final decision doesn’t stray too far from the review, GTM Research expects U.S. module prices to fall to 64 cents per watt this year.

2. High-efficiency module technologies are gaining steam.

According to GTM Research’s Shyam Mehta, the shift is “driven by the increased value proposition of high efficiency relative to module costs, an end-market mix shift toward rooftop applications, and reduced all-in costs for high-efficiency products.”

3. The megawatt-scale solar operations and maintenance (O&M) market still looks like the Wild West.

Dozens of companies are fighting for market share in the operations and maintenance market, from inverter and module manufacturers to developers and EPCs (engineering, procurement and construction). Everyone wants a piece of the O&M (Operations & Maintenance) pie.

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4. Grid integration is becoming an increasing focus for inverter manufacturers.

Inverter manufacturers are beginning to design solutions to help alleviate some of the integration challenges facing utilities. The chart below highlights a few markets with high PV penetration relative to electricity generating capacity.

5. Net energy metering is becoming popular outside of the U.S.

Net energy metering has helped grow distributed generation PV markets in the United States, and other countries have started to take notice. GTM Research’s Adam James highlights a few NEM (Net Energy Metering) proposals across three continents that aren’t North America.

6. More than 4 gigawatts of utility-scale solar have been procured outside of RPS requirements in the past twelve months.

GTM Research’s Cory Honeyman attributes the success of projects outside RPS (Renewable Portfolio Standard) guidelines to utility-scale PV’s competitiveness with natural-gas alternatives.

7. Best-in-class residential solar will be installed for less than $3 per watt this year.

The largest cost difference between best-in-class installers and the rest of the market comes from labor and supply chain savings.

8. Loans are the hottest thing in U.S. residential solar.

As reported last year, the market share for residential solar leases peaked in 2014 as loans have emerged and shifted the market back toward direct ownership. Solar Analyst Nicole Litvak developed a taxonomy of companies offering residential solar loans in the U.S.

 

Citation: Munsel, M. (2015, January 22). The Most Important Trends in Solar 8 Charts. Retrieved January 25, 2015, from http://www.greentechmedia.com/articles/read/The-Most-Important-Trends-in-Solar-in-8-Charts

Africa’s Largest Solar Farm is Fully Operational

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The Jasper solar farm, located near Kimberley in South Africa, is now the continent’s largest solar power project. Construction was completed in October, and it is now fully operational. With a rated capacity of 96 megawatts, Jasper will produce about 180,000 megawatt-hours of clean energy annually for South African residents, enough to power up to 80,000 homes.

What makes this even better is that Japser won’t stay the biggest solar project for long. In the same area, in South-Africa, near the 75-megawatt Lesedi project that came online last May, a 100-megawatt concentrated solar thermal power (CSP) project called Redstone is also under construction.

Look at that scale. The Jasper Project generated about 1 million man-hours of paid work during construction, peaking at over 800 on-site construction jobs.

South Africa has a goal of having 18 gigawatts of renewable energy by 2030, so projects like this are definitely steps in the right direction. If there’s one thing that South Africa has lots of, it’s sunlight!

45% of the total project value was spent on “local content” to help increase the positive economic impact on the area.

The project was developed by a consortium consisting of Solar Reserve, the Kensani Group (an experienced empowerment investment player in South Africa), and Intikon Energy (a South African developer of renewable energy projects).

Financing came from local and international sources, including Google and the Public Investment Corporation (PIC), Intikon Energy, Kensani Capital Investments, the PEACE Humansrus Community Trust, and Solar Reserve with Rand Merchant Bank.

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Citation: Richard, M. (2014, December 17). Africa’s largest solar farm (325,480 PV modules) is now fully operational! Retrieved December 20, 2014, from http://www.solarreserve.com/what-we-do/pv-development/jasper/

5 Key Stats Reveal Latin America’s Breakthrough Year in Solar

KONICA MINOLTA DIGITAL CAMERA Did you know that Latin America is the fastest-growing regional market in the history of the solar industry? Or that the region is home to the largest merchant solar plant in the entire world? Do you know which companies and financiers are leading that growth?

Latin America has been the bright spot of 2014, breaking several global PV records and setting a few regional ones of its own. This post draws on the most comprehensive research available from GTM Research’s Latin America PV Playbook to provide you with a data-packed guide to putting Latin America’s solar growth in context.

LATIN AMERICA IS THE FASTEST-GROWING MARKET FOR SOLAR PV IN HISTORY

The Latin American solar market is growing faster than any other regional market in history. Here are a few ways to put that in perspective.

eu_vs_latam_growth_2007-2014Latin America is growing more than twice as fast as the European market did in the 2007-2011 boom. In other words, the time that most folks in the solar industry associate with rapid downstream expansion pales in comparison to the growth we are seeing in Latin America today. Keep in mind that those European markets were subsidized, and Latin America is not.

There are a number of ways to put Latin America’s growth rates in context. The chart below shows rates since the market began in that region, the first three years of growth, and the last three years to the present day.

pv_growth_by_regionLooking across all regions, and taking their growth up to today, Latin America has grown at 1.8 times the regional average — and 1.5 times faster than the second-fastest-growing market. Adjusting for the start year to look at how the market grew in its first three years, Latin America rate of growth has been twice as fast as the regional average and 2.5 times faster than the second-ranked market. Latin America has also been the fastest-growing market over the last three years, despite the massive growth in the Asia-Pacific region led by China and Japan.

But what about volume? Of course, real volume matters too. While Latin America is still small in volumetric terms, compared to Europe, Asia-Pacific, and North America, it is notable that at 988 megawatts, it has installed more volume in its first three years than any other regional market has in the past. The second-best market in this regard was Asia Pacific, which installed 613 megawatts in its first three years.

regional_pv_volumeCHILE DOMINATES THE LATIN AMERICAN SOLAR LANDSCAPE

With a record-setting 2014, Chile has surpassed both Peru and Mexico as the regional leader in PV installations. The volume of installations in Chile is eclipsing the total cumulative market for the region in previous years. In 2012, only 51 megawatts of on-grid PV capacity was on-line. In the first quarter of this year, Chile installed 150 megawatts. This is consistent with a trend seen in the top three markets Chile, Mexico, and Brazil which are responsible for 50 percent of all cumulative market growth through 2014. But even among the three, Chile currently rules supreme, installing 40 percent of the region’s volume in 2014. In 2015, Chile is expected to be Latin America’s first market to install 1 gigawatt in a single year.

CHILE IS HOME TO THE LARGEST MERCHANT SOLAR PLANT IN THE WORLD

In fact, Chile is home to two of the largest merchant solar plants. The 50-megawatt Maria Elena project from Sun Edison was the first large-scale solar plant to rely on the merchant spot market for its revenue. It held the distinction of the largest merchant solar plant in the world until a few weeks ago when SunPower’s Salvador Project, clocking in at 70 megawatts, stole the title. The region is able to sustain merchant solar plants due to a combination of high spot prices in parts of the grid and having the highest insolation rates in the entire world. That these plants were able to be developed without subsidies and be cost-competitive against every other resource on the market is a huge testament to how far solar has come in the region and where it is going.

THE OVERSEAS PRIVATE INVESTMENT CORPORATION IS THE BIGGEST SOLAR INVESTOR IN CHILE

OPIC is the region’s largest debt investor, with more than $650 million invested in five solar projects, representing 432 megawatts in Chile. The organization is beating the nearest competitor three times over the International Finance Corporation with $190 million in four projects in Chile, representing 318 megawatts. The International Finance Corporation can also lay claim to financing the 40-megawatt Aura project in Mexico, adding more to its regional portfolio. The Inter-American Development Bank, currently ranking third, has been very active and could surpass both IFC and OPIC in 2015.

SUNEDISON IS THE REGION’S TOP DEVELOPER

Last, but certainly not least, is the company that is leading the way on the massive growth in the region. Sun Edison is the top-ranked developer in Latin America, based on a combination of megawatts installed and late-stage pipeline. With 155 megawatts operational and another 163 megawatts on the way, Sun Edison is well ahead of the competition for 2014. Several companies will challenge it for the top ranking in 2015, including First Solar with its 141-megawatt plant in Chile and Enel Green Power with 169 megawatts in its late-stage pipeline not to mention some very savvy competitive positioning by Enel in markets like Peru and Panama.

Citation: James, A. (2014). 5 Key Stats Reveal Latin America’s Breakthrough Year in Solar. Green Tech Media. Retrieved December 16, 2014, from http://www.greentechmedia.com/research/report/latin-america-pv-playbookk

Big Pivot: Business Can Play a Profitable Role in Combating Climate Change, with Andrew Winston

Andrew Winston is a bestselling author and business strategist who has advised some of the world’s top companies on environmental matters. In his new book, The Big Pivot, Winston advocates for a major shift in business priorities away from short-term earnings and toward long-term sustainability. Despite outside pressure to achieve quick wins, Winston believes the business community can help tackle some of the world’s most pressing issues (such as climate change) “using the tools of capitalism, markets, and competition to do it most profitably.”

In his recent Big Think interview, Winston calls climate change “arguably… the greatest challenge we face for humanity.” Not only does it have a negative effect on our environment, climate change has been and will continue to be catastrophically expensive for both the public and private sectors. Yet, thanks to efforts to raise awareness about its many costs, Winston expresses confidence that the growing environmental movement can make a lasting impact. All they need is help from the outside.

Winston illustrates two key reasons why the business world is sometimes sluggish on environmental issues. The first is that common myths still plague sustainability, most notably the myth that “there’s this fundamental trade-off between trying to manage these big challenges in a profitable way and just managing your bottom line in a normal way.” For a long time, green products and services were known to be quite expensive. That dated reputation has persevered despite the fact that it’s no longer steeped in truth. Businesses are slowly coming to realize this:

“There’s a whole category of things that companies do that save money very quickly. All things that fall under kind of the banner of eco-efficiency or energy efficiency. I mean, in part, green is about doing more with less. That’s just good business and so that part of the agenda has become much more normal in companies and they’re finding ways to cut costs dramatically.”

More than just these quick and easy fixes, it’s never been more economical to do something like install solar panels on the company’s roof:

“The cost of that has been dropping dramatically, 70-80 percent reduction in cost of, you know, using solar power in the last five years. So the economics have shifted. This is now very good for business. Almost all of the agenda of The Big Pivot is good for business in the long term, in the medium term and very often in the short term. So there isn’t this tradeoff. This is the path to growth. This is the path to innovation.”

The second obstacle facing Winston’s big pivot is the media, specifically its unsettling reluctance to cover issues related to climate change. Winston points to the recent climate march in New York that drew 400,000 people to the Big Apple yet was barely a blip on the press’ radar:

“There’s a very strange thing that’s happened where, I don’t know, climate change is boring, it’s not sexy, it doesn’t seem exciting and so it doesn’t get the coverage it needs… And it’s a shame. I think there’s an opportunity to highlight how far we’ve come and the opportunities we have to change our lives for the better and make business a part of the solution and make it more prosperous and more profitable. And I think we’re missing out on telling that story.”

So Winston’s goals for enacting the ideas espoused in his book are to dispel the common myths about the monetary price of going green and to raise awareness through media channels. Once those benchmarks are cleared, there will be little standing in the way of a business-led environmental revolution.

Citation: Winston, A.[Big Think]. (2014, November 5th). Business Can Play a Profitable Role in Combating Climate Change[Video file]. Retrieved from https://www.youtube.com/watch?v=N3CxMZOmCgo

A Tricky Transition From Fossil Fuel: Denmark Aims for 100 Percent Renewable Energy

Denmark, with a pioneering wind-power program, is above 40 percent renewable power on its electric grid. It wants to be off fossil fuels by 2050. Credit: European Press photo Agency/E.ON/HO

Denmark, with a pioneering wind-power program, is above 40 percent renewable power on its electric grid. It wants to be off fossil fuels by 2050. Credit: European Press photo Agency/E.ON/HO

COPENHAGEN — Denmark, a tiny country on the northern fringe of Europe, is pursuing the world’s most ambitious policy against climate change. It aims to end the burning of fossil fuels in any form by 2050 — not just in electricity production, as some other countries hope to do, but in transportation as well.

Now a question is coming into focus: Can Denmark keep the lights on as it chases that lofty goal?

Lest anyone consider such a sweeping transition to be impossible in principle, the Danes beg to differ. They essentially invented the modern wind-power industry, and have pursued it more avidly than any country. They are above 40 percent renewable power on their electric grid, aiming toward 50 percent by 2020. The political consensus here to keep pushing is all but unanimous.

Their policy is similar to that of neighboring Germany, which has spent tens of billions pursuing wind and solar power, and is likely to hit 30 percent renewable power on the electric grid this year. But Denmark, at the bleeding edge of global climate policy, is in certain ways the more interesting case. The 5.6 million Danes have pushed harder than the Germans, they have gotten further — and they are reaching the point where the problems with the energy transition can no longer be papered over.

The trouble, if it can be called that, is that renewable power sources like wind and solar cost nothing to run, once installed. That is potentially a huge benefit in the long run.

But as more of these types of power sources push their way onto the electric grid, they cause power prices to crash at what used to be the most profitable times of day.

That can render conventional power plants, operating on gas or coal or uranium, uneconomical to run. Yet those plants are needed to supply backup power for times when the wind is not blowing and the sun is not shining.

With their prime assets throwing off less cash, electricity suppliers in Germany and Denmark are on edge. They have applied to shut down a slew of newly unprofitable power plants, but nervous governments are resisting, afraid of being caught short on some cold winter’s night with little wind.

The governments have offered short-term subsidies, knowing that if they force companies to operate these plants at a loss, it will be a matter of time before the companies start going bankrupt.

Throughout Europe, governments have come to the realization that electricity markets are going to have to be redesigned for the new age, but they are not pursuing this task with urgency. A bad redesign could itself throw customers into the dark, after all, as happened in California a decade ago.

Denmark is geographically lucky. It has strong electrical linkages to neighboring Sweden, with plentiful nuclear power capacity, and Norway, with power available on demand from dams. But Swedish politicians have vowed to shut down the country’s nuclear plants and go renewable, and Norway’s cheap hydroelectric power is in rising demand, with a supply line under consideration to energy-hungry Britain. So the Danish electricity industry sees trouble coming.

“We are really worried about this situation,” Anders Stouge, the deputy director general of the Danish Energy Association, said in an interview. “If we don’t do something, we will in the future face higher and higher risks of blackouts.”

The government is somewhat dismissive of that notion but well aware that it needs to find a way out of this box. Environmental groups, for their part, have tended to sneer at the problems the utilities are having, contending that it is their own fault for not getting on the renewables bandwagon years ago.

But the political risks of the situation also ought to be obvious to the greens. The minute any European country — or an ambitious American state, like California — has a blackout attributable to the push for renewables, public support for the transition could weaken drastically.

So the trick now is to get the market redesign right. A modest version of reform would essentially attach a market value, and thus a price, to standby capacity. But Rasmus Helveg Petersen, the Danish climate minister, told me he was tempted by a more ambitious approach. That would involve real-time pricing of electricity for anyone using it — if the wind is blowing vigorously or the sun is shining brightly, prices would fall off a cliff, but in times of shortage they would rise just as sharply.

As Denmark, like other countries, installs more smart meters and smart appliances able to track those prices with no human intervention, one can imagine a system in which demand would adjust smoothly to the available supply. Most people would not care if their water heater were conspiring with other water heaters to decide when to switch on and off, as long as hot water reliably came out of the tap.

Yet, even if Denmark can figure out a proper design for the electric market, it has another big task to meet its 2050 goal: squeezing the fossil fuels out of transportation. Prematurely, perhaps, the country embraced a proposed system of electric cars in which depleted batteries would be switched for fresh ones in minutes, but only a few hundred cars were sold before that overly ambitious plan flopped.

Mr. Petersen told me he still felt electrification of cars was the way to go, but the cars themselves were not really ready.

“We need longer range and lower prices before this becomes a good option,” he said. “Technology needs to save us here.”

Citation: Gillis, J. (2014, November 10). A Tricky Transition From Fossil Fuel: Denmark Aims for 100 Percent Renewable Energy. Retrieved November 11, 2014, from http://www.nytimes.com/2014/11/11/science/earth/denmark-aims-for-100-percent-renewable-energy.html?smprod=nytcore-iphone&smid=nytcore-iphone-share&_r=1