Author: George Mangion - Senior Partner at PKF Malta
Published on Sunday Independent: 16th July 2023

PKF took the plunge this year and hosted an international conference focusing on renewables held at the Hilton in collaboration with The Times of Malta.

More conferences are in the pipeline. Sixteen local and foreign speakers discussed how Malta can take hold of its destiny to become an exporter of green hydrogen. To Castille and the business community, this looks like a pipe dream for which soon there will be influencers to rock business leaders to start putting money where their mouth is.

Malta's decarbonisation journey simply cannot accelerate, if we don't have a well-researched road map, the right technology, low-cost capital and political expertise to deliver the solutions we need.

In offshore wind, it is encouraging to observe how right now northern countries are standing at the epicentre of an enormous seismic shift for a global energy system. A decade from now, the industry will have grown into a well-oiled machine, with industrial processes ticking along at a great scale. Right now, however, pioneers are only just beginning this journey, and being active in this moment, feels both thrilling and terrifying for Europe's decarbonisation task.

As a nascent industry, it must innovate, think on its feet, embrace constant change and absorb the impact of huge challenges. Back home, it is surprising how local banks showed tepid interest to support PKF's renewables event, even though in Europe, banks such as HSBC form part of a successful Power to X hydrogen production consortium in Germany.

Speaking at the PKF event, Minister Miriam Dalli blamed local banks which sit on idle capital (upwards of €24bn). In her opinion, they need to start the ball investing jointly with multinational companies to secure energy sustainability. As they say, these are like horses brought to the water but reluctant to drink. Post-Covid and due to the Russian invasion of Ukraine, Castille is currently pumping €400m annually to subsidise energy and cost of cereals. Many experts agree that it is a complex and expensive task for Castille to propose a future energy system that can support a cost-competitive green transition, reduce dependence on LNG imports, slowly eliminate importation of Ice cars and ensure a resilient and reliable energy supply. Yet, as regards offshore renewables, Malta stands at an advantage as it is surrounded by water (part of EEZ) while blessed with over 300 days of sunshine.

The finance minister was clear in his message to the Chamber of Commerce delegates at the last AGM. Sporting a grin on his face, he encouraged members to take the bull by the horns and start building a technical operation consisting of mega rows of floating PV panels and floating sea wind turbines. The area potentially allocated for renewables is in shallow waters close to Hurd's bank - it is almost three times the island's acreage. PKF has been making the rounds with international operators to discuss forming such a consortium.

This consortium will consist of both local partners and existing producers in Europe. If it plays its cards well, Malta could generate 25GW of green power by 2050 provided it starts in earnest. A potential for exporting green power to the European grid can be facilitated either by use of a second inter-connector or a subsea hydrogen ready gas pipe.

Obviously, at its peak, this export potential will in money terms lift GDP and may exceed other economic stalwarts such as gaming, tourism and financial services sectors combined.

Talking to a number of international leaders, one can mention giants such as Orsted, Vestas and EVP Renewables. Starting with Ørsted, they plan to install 50GW renewable energy capacity by 2030 - the vast majority of which will be wind energy. Some of this energy will be fed directly into the grid, while some will be used to produce renewable hydrogen and e-fuels. Being part of such a fundamental change this net-zero revolution brings significant responsibility to business leaders to protect the environment.

The drive to decarbonise Malta's society starts by cutting CO2 from the air produced by over 400,000 Ice cars apart from heavy duty construction engines, dense pollution from aviation and trailers that deliver cargo overland from the Freeport. It's time for Europe to unite in order to bring wind energy to hard-to-electrify sectors.

To take the challenge posed by extraction of green hydrogen enablers must start from ambition to reach a tangible reality. Binding targets for decarbonisation in industry and transport are needed to trigger investments into Power-to-X and deliver a globally competitive, demand-led hydrogen economy. Here, one needs to mention how the demand side has led to the introduction of green ships, while Ørsted, for example, is building production capacity for green marine fuels. Operators are encouraged by the promulgation of the Renewable Energy Directive III, Fuel EU maritime and ReFuel EU aviation. Another major player is Danish Vestas. They are planning to scale-up every corner of its business. It's reflected in the design of its technology, the manufacturing footprint, its holistic approach to service, digitalisation and project development.

There is essentially one question that keep operators up at night; how are they to scale-up the offshore industry in time to meet EU net-zero targets? What will hold everyone back, however, is the delay arising from bureaucracy, marine navigation permits, apart from state approvals to link to grid networks. Is there the necessary infrastructure, ports, such as to secure enough vessels to install mammoth wind infrastructures. These projects can take as long as a decade to establish, and right now, the slow rate of progress is deeply concerning for the industry. Not to underestimate, players also have a huge journey ahead to train enough skilled engineers to support a decarbonisation journey in Europe.

The European Union recently set a goal to double the proportion of renewables in its energy mix, to 42.5%, hoping it becomes easier to get permits. The war in Europe has shown how fragile energy security can be. We need to build up sustainable supply chains capable of delivering unprecedented green energy growth in wind, bio thermal and solar power.

Quoting Prime Minister Robert Abela last week he stated that an international call for offshore wind turbines and solar panels is being issued. This is the start of a long process which after the summer recess Parliament needs to identify the exclusive economic zones outside territorial waters on which Malta would have jurisdiction. The wheel grinds slowly, but it grinds.

Author: George Mangion - Senior Partner at PKF Malta
Published on Sunday Independent: 16th July 2023
Get in touch: info@pkfmalta.com