How to resolve the bottlenecks that slow down the green transition

How to resolve the bottlenecks that slow down the green transition

  • The permitting process is a key cause of delays for renewable energy projects.
  • Addressing permitting challenges in the European Union can help it achieve targets to replace lost energy it received before the Ukraine-Russia crisis.
  • In Denmark, anchoring the permitting process with a central agency has helped with streamlining.
  • Frameworks, such as Environmental and Social Impact Assessments (ESIAs) can speed up renewable project delivery, as seen in India.

The current energy crisis and 2050 net-zero targets point in the same direction: the need for an energy system that is decarbonized, low-cost and resilient. The world has a viable pathway, which will require unprecedented transformation, a massive scale-up of clean power generation, related infrastructure and the necessary minerals and materials.

Globally, renewable energy projects are suffering long lead and permitting times, among other challenges such as supply-chain bottlenecks, a growing skills gap, lack of collaboration with local communities, geopolitics, and trade-offs between infrastructure build-out and biodiversity loss.

Members of the World Economic Forum’s Clean Power and Electrification’s permitting and regulatory processes working group address the bottlenecks and offer case studies for real-life solutions to mitigate them.

Climate goals and the permitting challenge

Manita Kaur Dosanjh, Wadia Fruergaard and Rina Bohle Zeller, Vestas Wind Systems A/S

The globally agreed goal of keeping temperature increases to well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius” is in critical condition. To keep it on track, efforts around decarbonization must accelerate significantly.

The target was defined by the Paris Agreement, which implies that all nations must halve global greenhouse gas emissions by 2030. For that to happen in the next seven years, swathes of high-emission technologies must be replaced with zero- or low-carbon alternatives. It also means swiftly replacing fossil-fuel-powered energy with renewable energy.

Scaling up renewables is crucial and beyond boosting yearly capacity additions, we also need a build-out of transmission lines grids, storage solutions and technologies that enable system flexibility. Most market outlooks see an imminent uptick in demand for renewables. Delivering to this demand, however, calls for an industry with the footprint, infrastructure and investment ready and waiting to deliver. Although the solutions needed to drive decarbonization exist today, their ability to build scale, at speed, is being thwarted.

It can take up to 10 years to build a wind energy project, especially offshore. For transmission lines, the timeline is even longer.

Permitting bottlenecks are deflating momentum throughout the journey of the energy transition, posing the risk of high complexity, complicating the outlook for developers and investors and potentially disincentivizing investment in offshore wind projects. The permitting process takes so long because it is, in essence, a manual machine, often under-resourced, dogged by jumbled decision-making across a multitude of input providers and too often starved of digital support. The result is that in Europe, for example, there is four times more wind capacity caught in permitting delays than under construction.

Delayed projects wreak havoc on an industry’s ability to build at scale, which needs certainty to attract investment. Without certainty – a line of sight on project pipeline, predictability in construction planning and production needs – the renewables industry simply cannot invest the resources needed into building at scale. A new approach to permitting would help provide such certainty, by bringing projects to market at the right time and with the right speed.

Lessons on more efficient processes can be learned from countries such as Denmark, Finland, Ireland and Sweden. To reduce risks, uncertainty and maintain wind as an attractive prospect for development, governments have introduced a “One-Stop-Shop” system. This model anchors the permitting process within a dedicated agency.

In Denmark, the Danish Energy Agency (DEA) is a central node in the system’s administrative process, driving coordination across all stakeholders and holding the mandate to issue permits to the project developer. The DEA then remains the single point of contact for a developer as the project progresses. The result is a more streamlined process that satisfies the terms of the Danish consenting process while remaining attractive to investors.

Streamlining permitting: the Europe example

Enrique De Las Morenas Moneo, Enel Green Power

The EU issued in May 2022 its RePowerEU plan amidst the Ukraine-Russia crisis, which triggered the need to replace 100 to 200 TWh of energy produced in the EU with Russian gas. This plan to rapidly reduce dependency on Russia focuses on the greater deployment of renewables, which implies annual average installations of close to 84 GW, more than twice today’s installation run rate of circa 40 GW per annum.

In a recently published report, the International Energy Agency acknowledges that its primary forecasts fall short of EU targets due to three major challenges, of which two are permitting issues for renewable projects. Addressing these challenges could allow the EU to achieve its targets but past efforts, such as the Renewables Energy Directive I and II, have yet to prove enough.

The RePowerEU plan also included a wide-reaching permitting review (the so-called RED IV) that could deliver simplified permitting through (i) a new standard definition of permitting, (ii) the pre-identification of appropriate land and go-to areas for projects and (iii) the introduction of deadlines, an overriding public interest test and silent consent (in lieu of responses from the relevant administrative bodies).

However, implementing these measures depends on a swift transposition into member states’ regulatory frameworks, which may take time. For this reason, in November, the European Council proposed a new temporary emergency regulation to accelerate the deployment of renewable energy sources in the form of a Council Regulation that circumvents the need for transposition.

The World Economic Forum’s Platform for Shaping the Future of Energy, Materials and Infrastructure works across six industries: electricity, oil and gas, mining and metals, chemicals and advanced materials, engineering and construction, and advanced energy solutions. It enables government and business to work together to accelerate the transformation of energy, materials and infrastructure systems.

Contact us for more information on how to get involved.

The Council Regulation will now apply to all administrative procedures, grid connection permits and environmental impact assessments. Under the proposal, renewable energy plants would be presumed to be of overriding public interest, applied to ongoing permitting procedures.

Specific considerations are made for re-powering processes and solar installations that use already industrialized areas. As these plants disrupt significantly less environment and grid, they may set a new perspective and be considered low-hanging fruit for a quick approval.

The EU’s move will transform renewables permitting by affording it more urgency with regulatory changes aligned for timely delivery. At the same time, it converts permitting to be comprehended as a single process rather than the sum of disparate processes.

Member states must now apply these foundations while other countries facing similar permitting difficulties, outside the challenges posed by the Ukraine crisis, should reference these efforts.

Streamlining to scale clean power and electrification: the India example

Vaishali Nigam Sinha, ReNew Power

Complex projects, such as round-the-clock energy projects, can yield time-consuming administrative processes, which is why concrete frameworks are needed to ease the permitting process in India.

The typical Environmental and Social Impact Assessment (ESIA) framework is an example of a favourable process. Solar PV and wind power projects are classified as “white” category projects, which means they escape the legal mandate for environmental clearance from the Ministry of Environment, Forest and Climate Change.

Renewable project developers, such as ReNew, conduct a voluntary ESIA against the Equator Principles or IFC (International Finance Corporation) Environment and Social Standards 2012. However, ESIA studies need ground-level surveys and baseline monitoring.

Collaboration with local communities further strengthens the acceptance of infrastructure projects.

—Vaishali Nigam Sinha, ReNew Power

An easier way to get through the project lifecycle and speed up the bidding and installation process would be to establish an environmental baseline for potential renewable energy areas/zones before inviting bids and making such data available. Fast-tracking could also take place by easing the land acquisition and procurement process, as landowners’ rights entitle them to stop the entire process, creating huge risks.

The National Single Window System (NSWS) is a positive step that took place recently. NSWS is a digital platform and advisory tool to identify approvals (not limited to energy) based on user input. Since its inception in September last year, the platform has facilitated more than 44,000 approvals of various projects across sectors, garnering traction among the investor community.

Collaboration with local communities further strengthens the acceptance of infrastructure projects. One of ReNew’s prominent initiatives is Project Surya, which empowers women for climate entrepreneurship and skilling – the objective is to train salt pan workers to be solar technicians.

Over 17,000 salt farmers, primarily women, work in the salt pans of the Little Rann of Kutch, Gujarat, India, in challenging working conditions where they live six to seven months in makeshift shacks next to salt pans, without contracts and with very poor pay. These conditions lead to a cycle of debt and poverty.

Project Surya, launched on 29 June 2022, trains salt pan women through a 90-day course covering the basics of electricity and solar energy, solar PV components and panel installations etc. ReNew partners with the Self Employed Women’s Association (SEWA) and the United Nations Environment Programme (UNEP) India with plans to train and skill 1,000 women over the next three years. The trained salt pan workers may earn up to $240 per month if gainfully employed post-training.

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