At the Renewable Energy Finance Forum—Wall Street 2009, Don Paul, current executive director of the Univ. of Southern California's Energy Institute and former chief technical officer of US oil major Chevron, recently cited five reasons why he believes Big Oil will be a major player in the renewable energy business: (1) an increase in alternative fuels would allow firms to divert natural gas from existing petroleum refining operations to market, (2) existing production sites can be converted to solar and wind power projects, (3) power infrastructure can be integrated with NG as a backup for other feedstocks, (4) geothermal power is a natural fit with the oil and gas industry, and (5) opportunities for biofuels integration already exist. However, a recent report by the US National Research Council titled "Electricity from Renewable Resources: Status, Prospects, and Impediments" noted that renewables are currently not used on a large scale because of lower cost-competitiveness of these technologies when compared to conventional sources of electricity, a lack of sustained policies, and infrastructure problems associated with moving renewable electricity to distant areas of demand. One way of making the cost of renewables more competitive with conventional energy sources is through a set cost for carbon emissions.

Recognizing the need to both mitigate GHG emissions and provide greater complementary sources of energy, several governments around the world are taking steps to boost the amount of power being produced from renewable sources by offering incentives to companies investing in renewables. Policy initiatives from governments, including feed-in tariffs, renewable portfolio standards, greenhouse gas controls, and a production tax credit, would greatly benefit the future growth of renewable energy use globally. Already there are initiatives in place in the EU, where renewable energy sources are to account for 20% of all power generated in 2020, up from 13.9% in 1997. China is looking to invest 3 trillion CNY ($440B) in solar, wind, and other renewable energy resources by 2020. In the US, beginning in 2012, $15B/y will be invested in renewable energy research, with funding provided by the auctioning of carbon emissions permits.

According to the American Petroleum Institute (API), the US oil and gas industry has already invested $6.7B in renewable energies like biofuels, solar panels, and wind turbines. Oil companies outside the US are also actively pursuing alternative power sources as a means to mitigate CO₂ emissions caused by the use of conventional electricity. Some of the applications target refinery operations, for example:

• BP has partnered with Chevron to build and operate a 22.5-MW wind farm at the jointly-owned Nerefco refinery near Rotterdam, the Netherlands. The project costs $23MM and generates enough electricity to supply 20K homes in the Netherlands while reducing CO₂ emissions by 20K mt CO₂/y.
• Indian Oil Corp. has commenced operations at its first wind power venture at Kandla in Gujarat, India. Electricity generated at the 21-MW wind farm is being used to power IOC's fuel storage and oil pipeline operations in Gujarat.
• Valero started up a 10-MW wind farm just outside of its McKee refinery in the Texas Panhandle in the US on March 31, 2009. The farm currently contains six turbines, but Valero hopes to expand this to 33 turbines by 2010 and raise the power-generating capacity of the farm to 50 MW.
• MOL is currently working on a project at the Duna Refinery in Hungary to use solar energy for lighting electricity and hot water generation. MOL has performed the technical assessment and selected buildings for the project. The refiner is looking to place the solar cells above buildings that consume large amounts of hot water and above some parking places to generate 23 kW of electricity to cover some public lighting consumption at the refinery.
• Shell Oil's Martinez, CA refinery in the US has installed a solar-powered circulator called the SolarBee, which aerates the waste treatment pond at a remote location. The new circulator, which replaces a diesel-power brush aeration system, is said to save $10K/y in energy costs over the alternative of hard-wired aerators and, most importantly, has consistently met the odor cap.

Only during the last few years have refiners begun looking into replacing conventional electricity with renewable sources, largely because of the poor economics of existing technologies and a lack of incentive and motivation to reduce carbon footprint on the refiners' part. However, the operating environment has changed as environmental governing bodies in developed nations are calling industries to reduce GHG. Non-complying companies will be subject to fines.

There are many hurdles for the refining industry to adopt alternative power onsite. The most important obstacle is technological know-how, which is outside the scope of refiner expertise. To circumvent this challenge and speed up the learning curve, refiners can either form partnerships with renewable energy companies or purchase the technology outright from outside vendors. The second impacting consideration is the cost-benefit factor, as carbon allowance is now part of the operating costs. Going forward, allocation of investment budgets could be difficult at times of weak refining margins due to fuel demand destruction in developed nations. Introduction of new energy sources means the rework of refinery energy balances in addition to finding space for new equipment. As demonstrated by the examples above, renewable energy can be used in various processing units and utility systems. Furthermore, a piecemeal or fragmented approach when introducing renewable energy is deemed wasteful of investments. Therefore, a comprehensive evaluation of both the availability of state-of-the-art technologies and refinery internal configurations and suitability must be undertaken based on short and long-term bases, particularly the need to estimate the benefits of CO₂ reduction in the future.

This Report focuses on the latest renewable energy developments that use wind, solar, biomass, geothermal, and tidal wave energy to generate electricity for refinery applications. The technologies must be economically viable and significantly reduce CO₂ emissions, compared with conventional electric supply on a life-cycle basis. The study also examines geographical locations, regulatory requirements, and tax policies in its case studies so as to present the economic advantages of traditional renewable sources as well as other innovations (e.g., a gas turbine driven by petroleum coke/biomass-generated hydrogen) being developed around the world. This Report will present a checklist and a road map on how to implement renewable sources in refineries in different regions of the world over the next 30 years.

>Next: Carbon Capture