Sunday, 10 December 2017

Why wind power costs are crashing and soon could plunge well below wholesale electricity prices

Wind power costs are plunging and it might not take too long before they get down to £40 per MWh, well below recent UK wholesale power prices which have been at £45 per MWh in recent times.

Offshore wind power costs have seen the sharpest decline, although falling prices for onshore wind should also be evident in the UK if only the UK Government were offering long term power purchase agreements (PPAs) for them as well as offshore windfarms. Anti-renewable commentators are still quoting costs for onshore wind power (£70-£80 per MWh) that are grossly out of date, relying on nothing more than than the fact that the Government have not offered any PPAs for them recently.

Recent offshore wind farm auctions in the UK, Germany, Denmark and The Netherlands have seen prices plunge to below £60 per MWh and predictions are being made that prices will carry on falling.  But why is this happening? This is a question that befuddles some anti-renewable energy think tanks and spokesperson who seem to think that some of the world's leading corporations are spoofing us all. But there's no spoof - it's happening.

But how can this be, given that until recently offshore windfarms have sometimes been costing £100 per MWh or more?

There are six reasons for this that I can see.

First, advancements in computer modelling techniques have led to better designs of wind turbine blades that can capture more energy whilst weighing much less than previously. This has allowed wind turbines to be built that are much bigger and thus whose blades can take in a much larger swept area without substantially increasing the cost of the materials involved.

Second, digital control over wind turbines also increases the amount of energy converted into electricity.

Together this means that, for example, a turbine can be built that produces twice as much as designs of machines previously installed whilst only modestly increasing the weight of materials involved. This on its own cuts the total costs by almost a half.

Third, the benefits of installing a much smaller number of turbines can be utilised because, for example,  there needs to be only half as much expense per output needed to install a machine that produces 2x MWh a year as opposed to installing 2 machines which each generate x MWh a year.

Fourth, fabrication and construction techniques for building the windfarms have been dramatically improved. For example, whereas it would previously have taken several weeks to install and commission a wind turbine in the sea (once the monopile or jacket has been emplaced), now it can be done in a single day. This saves very large sums of money in terms of hiring vessels alone.

Fifth, considerable reduction in 'supply chain' costs have been achieved. For example. wind turbine manufacturing companies in the past have out-sourced manufacturing of gearboxes, but now they are done 'in house'. The large production lines and very large sizes of offshore windfarms has made this more practical.

Sixth, the fact that some big multinational corporations are now seeing renewable energy as the central, rather than peripheral, aspect of their power generation business has meant that they will use their cheapest in-house financing means to support them. When it comes to the cost of servicing debts, guarantees made by the biggest companies will slash financial costs.

The most recent UK auctions saw PPAs issued at £57.50 per MWh for the Hornsea 2 and Moray Firth windfarms. But it has been suggested from inside the industry that the costs of such developments have already fallen to around £50 per MWh and that a further reduction of around 20 per cent is already on the cards.

Much concern has been expressed over the fact that it was said in the recent Budget statement that there would be no new money for renewable energy until 2025. Whilst this is very bad news for developing technologies such as tidal stream, this will not matter at all if wind power can be delivered for no more than the wholesale power price.

Of course this shouldn't be a signal for people to say the Government doesn't need to do anything to promote wind power anymore. That is because without long term guarantees of minimum levels of income industry will not build the projects. They are capital intensive meaning that investors need to know that they will get their money back, and for that they need income stability. In addition the UK is now running short of new windfarm sites simply because The Crown Estates have not issued any new licenses since 2009. Now The Crown Estates are poised to start as new round of licensing.

A further problem is a political one in that the Government has on its books a large capacity of almost undeliverable nuclear power projects on its hands which makes it look like (on paper) that the Government is meeting is non-fossil fuel construction targets, but in fact is not. Even if Hinkley C is built for example, it will soak up very large sums of money for a very long period of time that could be much more usefully deployed to support developing renewable energy technologies that do ha ve a chance of seeing their costs reduced.



https://www.bloomberg.com/news/articles/2017-09-11/u-k-offshore-wind-costs-fall-to-record-in-latest-auction
http://ieefa.org/ieefa-europe-offshore-wind-costs-maintain-falling-trend/

Wednesday, 6 December 2017

The Leave Campaign's monster lie about £350 million a week wasn't their biggest

The Leave campaign's claim that after Brexit the UK could simply divert the money we pay to the EU into the NHS was certainly a whopper, but in terms of the implications for the UK it wasn't even the biggest. Not close. 

The biggest lie was the implication that the UK could, whilst leaving, have a sensible discussion with the EU about trade and come to a trade agreement that suited us just fine.

As the Leave Campaign said: 'we will have a new UK-EU trading relationship. There is a European free trade zone from Iceland to the Russian border and we will be part of it. The heart of what we all want is the continuation of tariff-free trade with minimal bureaucracy.'

This would happen because, in effect, the EU had no other option, as they continued.....

'The government will explore how the other EU countries and the Commission want to proceed. We will be helped enormously by the fact that the EU Commission, Berlin, and Paris now have an official roadmap for another Intergovernmental Conference and another Treaty centralising many more powers including over taxes with the EU. They think they need this to save the euro. It provides a clear opportunity for a new deal based on us letting them plough ahead while we take back control.' 

But despite the fact that this just isn’t happening the Brexiter leaders simply shrug their shoulders and say the consequences of us leaving the EU without any deal just won’t be so bad.

Instead, it seems, the UK will reduce  its environmental and social standards to undercut the EU and we’ll have a jolly old trade war with them. Quite apart from the inanity of imagining that reducing our social and environmental standards could be regarded as anything but a national disaster this outcome would render the Leave campaign’s whole premise – that a smooth passage to a free trade agreement was in the offing – to be a monstrous lie. Indeed it is an even bigger one than the £350 million a week claim’.

The fatal flaw in the Leave Narrative is that the UK was leaving the EU for essentially identity reasons – to preserve self determination (‘take back control’) whilst expecting that the EU would behave according to economic rationality. You know, of wanting to smooth the flow of manufactured cars etc to and from the UK etc.

But of course the EU has reacted in much the same way as us, that is politically, to defend their identity. Defending Irish (border-free) interests is now at the top of their agenda. The apparent current expectation by Brexiters, that the (nationalist) Irish polity, united as it is behind the goal of not letting the border return, will simply roll over after their leader tells them that the UK Government cannot deliver this, is ridiculous. The Irish went through three long civil wars in the 20th century over the border – a few patronising put downs by English politicians are not going to make the Irish give way!  Anything but! And, of course, Ireland has a veto over what is now looking like a wistful EU free trade agreement with the UK, even if the other 26 states weren’t prepared to back the Irish position, which they do of course.

Politics is full of unintended consequences, and an unintended consequence of the apparent refusal of the DUP to do what the Irish Govt wants (to guarantee that a hard(er) border will not return) is most likely to result in the UK remaining effectively in the EU.

Once Mrs May's effective acceptance of Northern Ireland being given a special status to remain in the Single Market and Customs Union is ruled out, there is  only one plausible way that a trade war and a semi-cold war between the UK and the EU will be avoided. That is for the UK to adopt not only the EU Customs Union but also the Single Market. That would give the same conditions for Northern Ireland and the rest of the UK, would remove the need for border changes, and would avoid the (DUP-hated) border in the Irish Sea that would result from the Special Status proposal for Northern Ireland agreed (for a brief couple of hours) between May and the EU negotiators.

Now if the UK remained in both the Single Market and the Customs Union, then we would actually be much closer to full membership of the EU than Norway! Norway is not a member of the customs union and can make trade agreements with other countries. But the UK would, as Labour’s Barry Gardner described it, become a ‘vassal state’ of the EU. We would have our trade and regulatory policy decided by the EU but have no direct say in making these policies.


This would be an absurd situation, a strange parody of the Leave slogan ‘take back control’. Full membership of the EU would surely be much preferable to being a vassal state!

See the Vote Leave statement from which the above quotes are taken.

http://www.voteleavetakecontrol.org/briefing_newdeal.html

See also Barry Gardner's dismissal of the 'remain in customs union and single market'  scenario (ironic now that Labour seems to be pointing in that direction)

See the EU's attitude to threats from the UK that we might start a trade war:

https://www.theguardian.com/politics/2017/dec/01/brussels-punishment-clause-uk-trade-deal-regulatory-standards-brexit

Saturday, 14 October 2017

How the centralised generators are trying to strangle the decentralised energy revolution in the UK


Just as the UK Government has stopped onshore renewables (mainly wind power and solar pv) from getting all-important long term power purchase agreements (PPAs) through the feed in tariff system (the big one being now reserved for Hinkley C), so government agencies are moving to make sure that the rules of the electricity market favour centralised generators over decentralised ones. The Government says that no subsidies will be available for onshore wind and solar pv. Yet it is busy doling out subsidies and altering rules to favour big power stations over decentralised renewables.

In setting the regulations, the Government and the agencies, including OFGEM and the National Grid (NG) clearly seem to favour big power plant over other decentralised options for balancing electricity supply and demand including battery storage and demand side response (DSR). Really these technologies should now be routinely combined with renewable energy schemes to create 'virtual power plant' to deliver energy services for consumers. Yet despite the celebrated Clayhill 'subsidy-free' solar pv-battery project, progress is very slow. The revolution is being held back by the dead hand of the centralised power regime.

The Government's preferred solution of course is lots more large gas fired power plant - and nuclear power plants of course. Yet these technologies are falling behind the newer decentralised ones whose costs and information based technologies are becoming more and more economic. But instead of helping decentralised energy, the Government is pushing more and more subsidies towards the old, centralised, solutions.

This action to roll back the revolution is taking place in the 'boileroom' of the electricity system, with its  the arcane and often impenetrable rules and language of the electricity market, well away from the understanding of the wider public. However various trade and academic reports are flagging how the centralised generators are trying to hold back the decentralised energy revolution by whatever means are possible.

How is this happening? Essentially there are two strands. First there is the way that the so-called 'capacity market' is oriented to favour the interests of centralised power plant, and second is the way that the regulatory incentives are being geared to penalise smaller and more innovative players and to favour the big ones.

Capacity Market (CM)

Matthew Lockwood, in a recent working paper, tells the story of how the CM has largely been shaped to be a riverstream of income for the existing gas and coal and nuclear power plant. First came the decision to reward all existing generators for providing capacity, providing a subsidy for plants that have been built a long time ago. A much cheaper option would have been to operate a 'strategic reserve' that would fund a dedicated set of assets to be brought in to balance supply and demand. But that. of course, would not help the centralised power plant. Of course the mere term 'capacity' is biased against the decentralised solutions which include DSR and battery storage.

Then has come a series of decisions that have given centralised power plant an inbuilt advantage over decentralised options for balancing demand with supply. Cornwall Energy as well as Matthew Lockwood has written about some of these decisions and how they adversely affect the decentralised players.

First, DSR and battery storage are given much inferior terms compared to the big power stations in the CM. Their contribution is deliberately de-rated, subject to expensive monitoring and accorded much shorter contracts compared to the big power plant operators.

Second, OFGEM has issued rules which slash payments earned by distributed generators, that is small generators, through the TRIAD system. This is a mechanism whereby the system rewards companies which can reduce peak power requirements.

Third, the rules seem to favour the big operators even when it comes to providing storage solutions in what is called 'frequency response' services. This is a mechanism that incentivises those who can produce instant remedies to keep national electricity frequencies with a prescribed margin. Yet the decisions of the National Grid in awarding the contracts seem to favour the big boys.

Clearly the dinosaurs are thrashing about to great effect in an effort to delay the decentralised revolution. They will not win the war, but at the moment they are managing to delay the onward march of decentralised energy.

Without doubt they are winning the propaganda war. Any incentives given to renewables are deemed subsidies, whilst the reality is that these subsidies have been eliminated whilst the effective bank of subsidies given to big power station operators is growing rapidly.


For further info, read:

https://theenergyst.com/ofgem-outlines-deep-cuts-to-small-generators-triad-payments/

http://projects.exeter.ac.uk/igov/wp-content/uploads/2017/10/WP-1702-Capacity-Market.pdf

https://www.cornwall-insight.com/newsroom/all-news/latest-frequency-tender-results-exacerbate-battery-challenges

https://www.carbonbrief.org/in-depth-how-smart-flexible-grid-could-save-uk-40-billion

Tuesday, 10 October 2017

Three cheers for Sturgeon as she announces pro-renewables Scottish energy company

In what must come as a welcome boost to the flagging hopes of renewable energy workers and supporters Nicola Sturgeon has announced the Government's intention to establish a publicly owned energy company that will be fuelled specifically from renewable energy.
See


Credit, of course, should also go to the Scottish Greens upon whose votes the SNP depend for a majority and who have been very influential in pushing forward the green energy agenda.

Of course a lot of detail remains to be worked out, but if what's in the can matches the label then this should be a big opportunity for an industry that has been laid low by Westminster's refusal to fund any further land based wind or solar projects.

The Scottish Government's emphasis is on keeping costs down, but that is not a problem for onshore renewable energy whose costs have been declining rapidly in recent times. What they lack at the moment is long term guarantees about income to be earned for energy generation. Nicola Sturgeon's proposal seems likely to plug this gap.

The Scottish Government (SG) could carry out its mission by various means, provided it achieves the central necessity of issuing long term agreements on levels of payment per unit generated from renewable energy projects. It would also be popular if priority could be given to schemes that are community based, that is owned whole or in part by ordinary people. This is what myself and others were arguing in The Scotsman this morning:
See.....
and......

Long term power purchase arrangements are needed if renewable energy projects are to get cheap financing deals with banks and investors. Among the options there are two routes to progress in how the Scottish company could buy energy and give long term guaranteed incomes flows to solar, wind, and micro-hydro projects. One is that the company could conduct auctions for the right to be given long term power purchase agreements (PPAs), with companies competing to offer the lowest price per MWh to supply a given tranche of contracts. A second, perhaps more suitable for community renewable schemes, is to, in effect, offer them a standard rate for their power, perhaps linked to the wholesale power price (as argued in the letter to The Scotsman).

Recently a report published by Scottish Renewables suggested that 1 GW of wind power was available for no more than £49 per MWh. Yet renewable energy costs (including the costs of solar pv as well as wind) have continued to fall. See https://www.scottishrenewables.com/news/most-competitive-onshore-wind-projects-baringa/

Solar pv costs have been plunging, and if the Scottish Government can offer long term PPAs (for 15 or preferably even 20 years) then they may be able to entice cutting edge solar pv (and battery?) projects up North as has been developed in the Clayhill project in the South of England. 

In recent times the wholesale electricity price has been £45 per MWh. Yet with production of the cheaper gas supplies from the British and Norweigian parts of the North Sea under decline and with our other major supplier (The Netherlands) now restricting future exploitation of gas fields the Scottish Government looks like it will be a winner if it signs up wind and solar projects. They may be competing with electricity from gas power plant fuelled by increasingly expensive supplies from Qatar or other places.

Scotland's proposal for a state owned energy company stands in stark contrast to the nationalisation proposed by Labour which is tinged with support for nuclear power. If Labour's planned nuclear expansion goes ahead it will result in heavy state losses, whilst Scotland's renewable expansion will result in cost savings. 

Sunday, 1 October 2017

How the Scottish Government could implement a 'subsidy free' scheme for community renewables


The Scottish Government (SG) should open discussions to establish a mechanism to enable ‘subsidy free’ community renewable  schemes. It is great news to see a decline in costs of offshore wind schemes, but as good as they are, they are not involving ordinary people. Community renewable schemes, using a definition given to me by Jon Halle of sharenergy are:

'Community renewable schemes are majority-owned and run by members of the public, including both people local to the scheme and supporters from further afield. They are open and democratically controlled, ensuring wide popular ownership of the energy system and maximising the sharing of both benefits and responsibility.'

This could apply to wind power, solar pv or micro-hydro. A 'subsidy free' scheme should be done on a pilot scheme basis to begin with.

Because of the decline in wind and solar power costs it seems likely that some renewable energy  projects in Scotland could be established assuming current levels of power prices that generators can receive on wholesale power markets. The projects would  certainly count as ‘subsidy free’. But they need long term assurances about income streams, something that the Scottish Government could provide at minimal risk to the public purse.

 A scheme could be established by the SG to set up a back-up loan facility to give ‘top-up’ payments for community renewable generators. This could  ensure that the generators received at least the income that they would do if wholesale power prices were at the current level of, say, £45 per MWh. Any loans paid would be paid back when power prices rose above the £45 per MWh level. This arrangement could be guaranteed for 20 years and could be enshrined in agreements issued by the SG to specific schemes. This would give schemes long term financial confidence that could allow them to raise money from banks and investors.
A pilot basis would consist of the scheme being restricted, for an initial proving phase, of no more than 100 MW of capacity.

A recent auction for community wind power projects in Germany saw the projects winning long term power purchase agreements for under £40 per MWh, and this is in a country with much lower windspeeds than are available in Scotland. See https://www.bloomberg.com/news/articles/2017-08-15/german-onshore-wind-power-costs-plummet-in-second-auction
The Clayhill solar pv scheme  has recently opened on a ‘subsidy free’ basis, and this is helped by being able to earn payments for electricity system services by co-locating the solar farm with batteries. See https://www.solarpowerportal.co.uk/blogs/inside_clay_hill_the_uks_first_subsidy_free_solar_farm

ARUP has published an analysis of market possibilities for ‘subsidy-free’ wind power suggested that schemes costing less than £50-£55 per MWh (in 2012 prices) would count as ‘subsidy free’. file:///C:/Users/Toke/Downloads/Enabling%20Investment%20in%20Established%20Low%20Carbon%20Electricity%20Generation%20(2).pdf

While the Westminster Government is reluctant to offer sufficiently good financial conditions to promote the development of much onshore wind, and solar pv, Scotland is in a good position to continue take a lead in promoting community renewable. Although £45 per MWh is not a large amount of money, it does at least ensure that the scheme is ‘subsidy-free’ and means that the Scottish Government, which does not have the power to levy charges on electricity bills (unlike Westminster), will not suffer large financial losses.

There are some harbingers that suggest that average wholesale electricity prices will rise in future years. These prices are dominated by natural gas prices. The UK is able to access a declining proportion of its gas from cheap British sources. The balance cones increasingly from Dutch and Norwegian fields, yet both sets of supplies appear to have peaked already and there is every indication that they may decline. This will leave the UK increasingly dependent on supplies of LNG from Qatar and other sources which are much more expensive than those from the North Sea or The Netherlands.

Brief financial risk analysis

Let us assume that the scheme was limited to 100 MW in order to demonstrate test the concept, and that this 100 MW consisted of wind power projects.  Even if the long term income available from power markets  was £10 per MWh less than the level of £45 per MWh that the SG would guarantee paid to  wind power generators (eg £35 per MWh compared to £45 per MWh) then the annual ‘loss’ payable by the Government would be less than £3 million (under this pilot scheme). Recently the wholesale power price has been around the £45 per MWh level. Of course if the average income stream is higher than a ‘strike price’ of eg £45 per MWh then there would be a surplus of income.


Tuesday, 26 September 2017

Trust the Greens, not Labour, with renewable energy

John McDonell's speech to the Labour Conference came out with a lot of green sounding rhetoric on renewable energy but the commitments are vague and potentially fatally undermined by what could well end up as a commitment to centralised re-nationalisation of parts of the energy system.
Now I'm all in favour of the community owning our energy system provided it is local people - city councils, cooperatives, local not for profit companies, but not centralised monopoly nationalised industries. These aren't things that are controlled by the public or the Government, on the contrary they control the Government. This can be seen most graphically in the case of EDF, about which I talked in an earlier blog post:

http://realfeed-intariffs.blogspot.co.uk/2015/08/why-edf-is-good-example-of-why-we-dont.html

Really, one should not trust Labour's commitments, as vague as they are, as far as you can understand them, which isn't very far. I read John McDonnell's speech and the only renewable energy source mentioned was a tidal lagoon plant in Swansea. What about wind power or solar power? No mention - but, wait for it, whilst Jeremy Corbyn was busy saying he would cancel Hinkley C (really?), his junior energy spokesperson was busy telling people they would support a different nuclear project at Moorside.

Rebecca Long-Bailey interpreted the manifesto commitments on energy as consisting of ensuing 'that 60% of our energy comes from low carbon or renewable sources by 2030. To support projects like Swansea tidal lagoon and Moorside nuclear plant.' See http://press.labour.org.uk/

Oh I see, so renewable and low carbon involves nuclear power and a tidal lagoon scheme. Very clear.
Would Moorside be a better project than HinkleyC? No, it wouldn't. All proposals for new nuclear power faces the same crippling costs to reach modern safety standards. A terrible problem with a Labour Government is that its commitment to centralised public ownership could mean, in practice, a blank cheque to be given to nuclear developers who will gobble up lots of money that could otherwise be spent on solar and wind power. We would be left with never-ending nuclear building sites and little renewable energy.

The problem with Labour,  is that they can never stray far from their dinosaur pretensions kept alive (in their minds) by the GMB and others. That's what you'll get with their centralised visions of state ownership.

By contrast the green movement stands for decentralised, people's control of energy which will be thoroughly renewable, not nuclear. You can trust the greens to support that consistently, but not Labour.


Friday, 25 August 2017

Four plausible reasons why driverless cars might not be very green

Now, I'm not taking up an ideological position on this, and it may indeed prove to be the case that driverless cars end up reducing pollution by large amounts. But I feel that it is also plausible that we are going to end up being driven by a lot hype into a rather ungreen future or, more mundanely, into accepting a piece of 'modernisation' that makes little difference to pollution outcomes.

Now of course electric vehicles are to me something that represents a great gain, especially as electricity systems move more and more to be based on low carbon energy sources given the increase in renewable energy use. Of course also we need also to plan our environment so that other modes, especially walking, cycling and also buses and trains are given greater priority. We know (or at least I am sure) that these things will reduce pollution and improve quality of life.

But driverless cars and the sort of systems that they will involve are very unknown quantities. In many ways by comparison substituting electric for petroleum based vehicles is a fairly modest change in systems, give or take some changes in fuelling structure (which could have great benefits for balancing renewable electricity with demand). But driverless cars represent a completely new system. This brings me to four potential problems.

First, we do not know how how driverless cars will alter demand for road travel. What is there about a driverless system that would encourage people to travel less by car? Not much as far as I can see. Indeed, 'packages' sold to consumers might offer lower prices for using particular company offerings of ride contracts for driverless cars if they sign up to travel at least x000 miles a year which might actually encourage people to travel more. Alternatively why won't people simply buy their own driverless cars and carry on travelling as usual? After all a lot of people gain their identities form their cars! It will be necessary to offer them an incentive, that is to make things cheaper, and this may mean they will travel more.

Not having a driver of course cuts costs to (driverless) car/taxi companies, but that still doesn't eliminate the costs of buying, servicing and maintaining the cars in the first place. Getting a driverless uber is still going to be very pricey compared to the fuel cost (or marginal cost) of taking that trip in your own car.

Now I'm guessing here. I could be wrong, and miss out something important. I don't know. But what is the point is that the people who are being (no doubt with good intentions) optimistic about the green-ness of driverless cars do not know much more than I do about how this entirely new system is going to work out and interact with consumer demand for travelling by motorised vehicle, driverless or otherwise.

A second factor is that we should be very wary of the modernisation-bandwagon effect. We are witnessing a process whereby this paradigm shift to driverless cars is being dressed up as an inevitable part of modernisation, and its benefits seem to be in a process of being elided with electrification, which, as I have said, is not the same thing necessarily at all. The danger here is that planning systems are given over to this new, 'inevitable march of modernisation' and other important considerations cast aside. This has happened before with urban planning, with everything from road design to high rise flats, to bad effect.

A third factor is that claims made about driverless cars is that they will be used more efficiently than individually owned electric cars. These gains may actually prove to be pretty marginal gains or even non-existent. A problem with new technological systems is that before the practical engineering and socio-technical ramifications become clear the technologies are presented in a utopian fashion (remind you of anything?). Even now we can see some slightly heroic assumptions being made about how cars are going to be made use of all of the time. This on its own may have the perverse consequence of incentivising the companies who own them to encourage people to travel more than they do now. I hear that driverless cars will be much more efficient at braking and using gears etc. Maybe, but I suspect that conventional electric driven cars are being and will be adapted to incorporate at least some of these gains.

A fourth factor is. well, the unknown unknowns. Former US Defense Secretary Donald Rumsfeld famously made the point that there are three types of risk: the risks which can be calculated; the risks that cannot be calculated, and the risks which we don't know about at all (unknown unknowns). In fact he was popularising a economist called Frank Knight who wrote about this in the 1920s as he was discussing the difference between risk and uncertainty. We know about the risks of electric cars and where the uncertainties lie. Or at least we have a much better idea than with driverless cars. But we don't know the unknowns that will almost certainly jump out to bite us in the case of driverless cars. Whether these are minor irritating gremlins, or big monster ones, we don't yet know.

 But the point is that there are all sorts of unknowns which really seriously undermine the now widely (and unreasonably) accepted claim that driverless cars necessarily represent a major green leap forward.



Thursday, 17 August 2017

UK offshore wind prices predicted to fall to 25 per cent less than Hinkley C - but it could still be done much cheaper!


Offshore wind prices are plunging fast. A leading wind expert says that the next round of UK contracts awarded (next January) for offshore wind projects will undercut the price given to Hinkley C by around 25 per cent. Not only this but the contract length will be only 15 years for the offshore wind projects compared to the 35 years for Hinkley C.  In Germany, meanwhile, the latest round of contracts for onshore wind are being issued at under £40 per MWh, a great deal less than anything a British gas fired power station could set up for. The last Danish offshore wind project at Kriegers Flak was awarded a contract last December for under £44 per MWh (no more than £55 per MWh after taking into account grid connection costs).

Gordon Edge, who served for over a decade as RenewableUK Policy Officer but who now runs an independent consultancy, is predicting that the 'strike price' awarded to offshore wind projects will fall to around £70 per MWh. Not only this, but Edge believes that over 3GW of offshore wind contracts could be issued to fit in with the Government's 'budget' for spending on power from new offshore wind projects. These prices are, however, calculated in 2012 prices as is done with the Hinkley C contract which is worth £92.50 in 2012 prices.

This could mean that in this second round of 'CfD' (contract for differences) allocation (the first was in early 2015) all of the 3GW+ of offshore wind contracts could be in place by 2022/3. This would generate over 4 per cent of UK electricity supply, possibly as much as close to 5 per cent.

Offshore wind contract prices have been plunging at a rapid rate in recent years, as can be seen from the second page graph on the KPMG report at https://home.kpmg.com/content/dam/kpmg/uk/pdf/2016/11/second-cfd-allocation-round.pdf

In general we are seeing a step change in declines in cost of wind power as 'capacity factors' (the average amount of time that a given generation capacity is operating) are rapidly heading upwards. Larger wind turbines with much increased 'swept areas' at greater heights are being deployed which can capture much more energy for a given wind speed per capacity installed. In the case of offshore wind costs are also declining because larger turbines reduce the large costs of installing each turbine, along with other factors such as greater experience in electrical connections and in financing offshore wind which reduces 'risk' and therefore cost.

Bernard Chabot, a wind economist predicts that this process will continue with wind power capacity factors climbing to 60 per cent.

Yet, the UK Government's own method of procuring offshore wind has become the least competitive and most expensive procedure in Europe. Gordon Edge's analysis reveals that in effect there are only three competitors in the race to pick up contracts under the current CfD round.

Competition is limited to a few companies that were granted leases some years ago, with no new leases being issued for several years now. And even in these three cases the companies have been saddled with sorting out planning and site investigation details - details which in other European procurement regimes are dealt with by Government agencies.

This 'laissez faire' process (ironically then micro-managed by Whitehall after contracts are issued) has also led to confrontations with RSPB over some Scottish offshore windfarm projects. On top of this the UK Government is setting onerous rules about how and when the projects that gain contracts should be deployed. All of this is in flagrant contrast to the freedom given to EDF to install Hinkley C. As I commented in my last blog post the Government needs to start the process of identifying new offshore wind sites. I commented in my last blog post that an urgent priority for the Government is that they should:

'Identify new sites for offshore wind deployment as well as quickly bringing forward the issue of power purchase agreements to existing projects with planning consent. The Government should take note of how, in Denmark, the uncertainties and thus the costs of offshore wind have been reduced by the Government taking on the task of researching and consulting on specific sites rather than leaving this to the developers. This only adds to costs which may be part of the reason why UK offshore wind costs are higher than costs in the case of Denmark, The Netherlands and Germany.'


Onshore wind prices, if only the Government awarded any contracts, would be likely even lower than the predicted offshore wind prices. Indeed wind power prices are now challenging prices for contracts for gas fired power plant if only they were awarded on the same basis. But the Government is giving backdoor preference to gas fired power plant over wind through the 'capacity mechanism'.

You can read Gordon Edge's analysis at https://www.linkedin.com/pulse/cfd-ar2-prediction-gordon-edge

Incidentally you can see my talk to the 'No to nuclear power, yes to renewables' conference held by CND in June at https://www.youtube.com/watch?v=1hMCbf_c4DY


Other References:

KPMG
















Monday, 14 August 2017

Six ways in which the energy costs review could reduce consumer costs and deliver green energy

The Government's review of energy costs is obviously a set-up designed to argue against a major emphasis on funding currently commercialised renewables and energy efficiency technologies, so here I critique this viewpoint and suggest some ideas for what a genuinely far-sighted clean energy effort to reduce costs might involve. Ideas which, I suspect, will be comprehensively ignored by the review.

The Government has given its review of energy costs to Dieter Helm whose opinions are hostile to promoting 'current' generation renewables and who is anyway excluded from considering the Hinkley C contract or other issues such as the smart meter roll-out which are pushing up electricity prices.

Last year Dieter Helm argued that:

'new and emerging technologies, rather than international agreements, and the promotion of current generation renewables, will probably bring fossil fuel dominance to a gradual close.  To facilitate decarbonisation, energy policy should be directed at enhancing R&D and next generation renewables, instead of supporting existing ones'. (Helm: The Future of fossil fuels: is it the end http://www.dieterhelm.co.uk/energy/energy/the-future-of-fossil-fuels-is-it-the-end/)

Helm has apparently been oblivious to the fact that the enormous decline in costs that has happened in the case of solar pv and wind power has been driven not by original research (as important as that is) but by the feed-in tariff and other support schemes that have created mass markets in renewable energy technologies. Investment in renewable energy technologies now surpasses combined investment in fossil fuel and nuclear power throughout the world today. (eg see https://www.carbonbrief.org/renewables-growth-breaks-records-again-despite-fall-investment). Even in the UK renewable energy has expanded as a source of electricity from round 3 per cent in 2002 to over 25 per cent in 2015. It is remarkable that some economists can be apparently so oblivious to the fact that technology costs decline as markets for them are expanded.

Helm avoids this fact in favour of his own longstanding antipathy to renewables and he openly favours giving priority to new gas production saying: 'Now the oil and gas is worth more today than tomorrow, and hence it makes sense to maximise production now'

Essentially Dieter Helm seems to want commercial renewables incentives to be curtailed and, in effect, incentives should be largely oriented towards encouraging more natural gas generation. A few crumbs will be doled out to industry to research into 'advanced' renewables. The Paris Agreement is dismissed.

I suspect that, in the energy costs review, there will be little meaningful analysis of the medium to longer term prospect for natural gas prices, which tend towards increasing prices as Norwegian, British and Dutch production declines. This means the UK prices will rise as these countries supplies become further squeezed and prices tend towards the marginal suppliers such as expensive liquified natural gas from Qatar and other places. (see for eg https://www.platts.com/latest-news/natural-gas/london/analysis-doubts-stack-over-norways-gas-export-26390853).

Neither will there be much appreciation of the fact that the costs of renewables such as offshore wind and solar pv have plunged in recent years or that onshore wind has been deployed over the last couple of years through the Renewables Obligation for prices well below the Hinkley C contract (£70-£75 per MWh for onshore wind compared to £100 per MWh for Hinkley C in 2017 prices).

In addition the energy costs review seems likely to be a 'prices' review and not a costs review at all. If it was a genuine costs review it would look at how to reduce consumer bills, not prices, which means looking at how to improve the energy efficiency of the UK's energy system. Hence energy efficiency schemes will no doubt be seen as an addition to costs when in fact they have brought bills down by large amounts, as the Committee on Climate Change has discussed.

So below are six ways that the Government could reduce costs to the consumer, none of which are likely to be recommended by the Helm review.

1. Encourage the French Government to reconsider the Hinkley C project, eg suggest to them that it is not worthwhile putting more French taxpayers money into the project. If Hinkley C is not completed, then this will save UK energy consumers enormous sums of money since they are committed to paying (in 2017 prices) £100 per MWh for 35 years

2. Instead issue power purchase agreements to onshore wind, offshore wind and solar pv for projects in the £60-£80 range, using 15-20 year contracts by the end of which costs of renewables will have fallen further.

3. Abolish stamp duty for houses which incorporate energy efficiency, solar power and storage technologies which involve buildings which can generate more energy than they consume as studied by Swansea University’s Specific Innovation and Knowledge Centre (https://www.solarpowerportal.co.uk/news/solar_and_storage_could_save_homes_600_each_year_new_report_finds?utm_source=rss-feeds&utm_medium=rss&utm_campaign=general)

4. Take the disastrously implemented 'smart energy meter' rollout out of the hands of the electricity suppliers and put it into the hands of the Distribution Network Operators who are now becoming Distribution System Operators.They should use the smart meters as they should be used to ensure that implementation of 'time of use' charging for electricity to match variable renewables with the demand for energy

5. Abolish price competition in the domestic retail sector and replace it with competition between suppliers to supply energy efficiency (eg selling more efficient fridges, washing machines, incentivising different forms of insulation). This will encourage the suppliers to offer services that can reduce bills rather than playing games with contracts for energy prices. Common prices would be set by OFGEM using a tried and tested formula used in the distribution sector. 

6. Identify new sites for offshore wind deployment as well as quickly bringing forward the issue of power purchase agreements to existing projects with planning consent. The Government should take note of how, in Denmark, the uncertainties and thus the costs of offshore wind have been reduced by the Government taking on the task of researching and consulting on specific sites rather than leaving this to the developers. This only adds to costs which may be part of the reason why UK offshore wind costs are higher than costs in the case of Denmark, The Netherlands and Germany. 

You can see my talk on how a renewable energy strategy comes out way ahead of of a nuclear one; to the 'No to nuclear power, yes to renewables' conference held by CND in June at https://www.youtube.com/watch?v=1hMCbf_c4DY


https://www.thetimes.co.uk/edition/business/energy-review-to-ignore-price-caps-profits-and-smart-meters-z2q6pdbd2



https://www.solarpowerportal.co.uk/news/solar_and_storage_could_save_homes_600_each_year_new_report_finds?utm_source=rss-feeds&utm_medium=rss&utm_campaign=general

Thursday, 27 July 2017

How, on current trends, peak demand for electricity is likely to fall in spite of rapid adoption of electric cars

Just as in 2005 the UK was rushed into an ill-judged nuclear programme by scare-stories of imminent power blackouts, we are now being herded into a panic mode by lop-sided projections of future energy demand out of fear of electric vehicles.

EVs are the future of motorised road transportation of course, and I'm sure it will happen quite quickly. But if you work out the figures based on past trends you find out that after re-working the National Grid's recent projections peak demand is actually likely to FALL, not increase.

There is always a supply-side bias in energy projections, and the numbers that are pouring out of the newspapers are the latest manifestation of this phenomenon.

One factor which almost everybody seems to have missed is that electricity demand has fallen since 2005 by around 12 per cent (in 2006 the Government talked about dramatic increases in demand). If you carry this forward to the future then this rate of decline would be more than the increase associated with the expansion in the number of EVs that was assumed by the National Grid in their most recent report. Given the fact that they identified opportunities for load shifting, in particular through 'time of use' charging that would reduce peak demand by up to 4.5 GW, that adds up altogether to a substantial FALL in the amount of peak generating capacity required in 2030.

In fact EVs supplied with electricity by sources such as wind, solar or marine energy are extremely efficient. First, the EVs themselves are, in terms of energy used to move a given distance much more energy efficient than conventional motor vehicles - and this difference is likely to increase as EVs mature as a technology. They have about a threefold advantage in energy efficiency. If the electricity is generated by these renewable energy sources then very little will be wasted (mainly grid losses) before the power is used in the vehicle. In fact the extra electricity needed to power the NG's projected expansion in EVs will be easily covered by the expansion in renewable energy if we assume recent trends continue.

Using the National Grid's assumption that around 9 million road vehicles constituting around one quarter of Britain's road transport fleet will be EVs by 2030 then some 108 TWh of petrol/diesel consumption will be replaced by around 40 TWh of electricity. Since 2012 renewable energy production has increased by over 40 TWh between 2012 and 2016.

There have been some ridiculously exaggerated numbers printed in one leading newspaper (I won't dignify them by mentioning their name) about the numbers of wind turbines needed to cover the extra production for EVs. In fact there are now around 7600 wind turbines in the UK. Given increasing sizes of offshore wind turbines (soon to be 10 MW each) and also increasing levels of efficiency for the newest models (with capacity factors approaching 50 per cent) then no more than 1000 new wind turbines would be needed to generate the demand for all of the EVs in operation by 2030. 

Now, for various reasons, including cutting carbon emissions and reducing our dependency on imported natural gas, we ought to be doing a lot more than that. Which, I suppose, if I were more cynical might lead me to forget about about countering the exaggerated stuff about the need for new power plant since this boosts the need for renewable energy. But getting further towards the objective of providing close to 100 per cent of our energy from renewables, as well as promoting energy efficiency, are good things in themselves and enough of an incentive to do a lot more than what we are doing now.



Some notes:

Nissan leaf 30 KWh per 100 miles

Average miles per gallon uk
38 mpg or 2.6 gallons per 100 miles


10 KWh per litre of petrol or 46 KWh per gallon or 2.6xs 46 KWh per 100 miles =120 KWh per 100 miles

Electricity from RE is at least 3xs as efficient as a petrol driven motor. Or 120 divided by 3.3 = 3.6xs as efficient.

37 mtoe used in road transport in 2016

11.63 MWh in1 tonne of oil. 11.63 TWh in 1 million tonnes of oil or 430 TWh from 37 mtoe divided by 3.6 comes to about 120 TWh.
A quarter of this is 40 TWh if approaching 50 cf is reached no more than 10 GW of capacity is needed. Already got 7.600 machines.



National grid report https://www.theguardian.com/business/2017/jul/13/electric-car-boom-power-demand-national-grid-hinkley-point-c 9 million electric cars and vehicles in 2030 = 8GW of extra peak.

UK electricity demand has fallen from a peak of 406 TWh in 2005 to 357 TWh in 2016.
Renewable Energy Production has increased from 41 to 83 TWh from 2012 to 2016.

Monday, 24 July 2017

How Brexiteers are undermining their claimed objective of a free trade deal with the EU

British politicians are engaging in what can only be seen as a self-defeating series of postures on Brexit that undermine their self-declared aim of securing a free trade agreement with the EU.

As I commented last November,( http://realfeed-intariffs.blogspot.co.uk/2016/11/why-leaving-eu-is-bit-like-building.html ),
the best that the UK can hope for in the medium term is a Norweigian or Swiss type deal that leaves us in the Single Market with at best a face-saving deal to obscure the continuation of current rules on freedom of movement.

The Government knows that the much-touted 'free trade deal' will take several years to negotiate and that if the UK left the EU without them any government in power would become extremely unpopular because of the border and business chaos that would happen in March 2019. A sense of self-preservation has forced the Government to agree to the notion of a 'transitional' or 'implementation' phase that will last at least two years (more I'm sure). 'Hard Brexit' or the notion 'no deal is better than a bad deal' was never anything more, for the Government, than a phrase used as a party management device.

This  'implementation phase' will involve a Norweigian or Swiss type deal -and that includes free movement of people from the EU to take up jobs in the UK. British politicians debate the extent to which we can choose labour market rules. But it is all farcical. It is not up to them to choose. They can either take the EU's terms - which cannot, for obvious reasons be better than Norway or Switzerland's deal - or suffer the famed 'hard Brexit'. Hence their wish to avoid political disaster by bowing to the inevitable and agreeing to a 'implementation' phase. A comment from the EU on how the UK's wishes to 'cherry pick' the Single Market are unrealistic can be seen at http://www.epc.eu/pub_details.php?cat_id=4&pub_id=7865

The Brexiteers in the Government thus have faced a dilemma - resign or accept the notion of a 'transitional' phase.
But the Brexiteers, if they seriously want a good trade deal with the EU, are their own worst enemy. This is because the last thing the UK needs in negotiating a free trade agreement is a time limit for the talks. This is a set of bargaining that only the UK really wants. The EU would be perfectly satisfied with the status quo - that is the UK continuing to belong to the Single Market. It's only the UK who want what is, in trading terms an inferior  arrangement of a free trade deal which would leave a lot of areas, including access to services, uncovered (see https://www.niesr.ac.uk/blog/services-trade-and-free-movement). The UK only want it because of the illusion that getting rid of free movement of people into the UK will do it any good.

The point is that the EU aren't going to be in a hurry to agree to the inferior position of a 'free trade' deal. So if Britain wants one quick then it will have to accept whatever terms the EU want to offer - it will not have the time to argue about it!

That is the craziness of the Tory Brexiteer vision. Either they destroy their party electorally as they take the blame for a disastrous 'hard Brexit' or they destroy the UK negotiating position for a free trade agreement. Liam Fox may be the first minister in British history to be busy negotiating for international agreements that give the UK a worse economic deal than they have already!

Tuesday, 27 June 2017

Could latest delays in Hinkley C presage bankruptcy of EDF and more British bailouts?

The latest announcement from EDF that Hinkley C will be further delayed and that EDF will be hit with even more cost overruns risks making true the prediction of EDF former Finance Officer that the project will bankrupt the company. This may well lead to increasing pressures on the UK Government to put billions of UK taxpayers money into the project.

Hinkley C, which former EDF boss Vincent de Rivaz said (in 2007) would be generating by the end of  this year (2017) will now, according to EDF, not be generating electricity until 2027. Ten years on and the project is still ten years away! But meanwhile the company has spent massive sums getting not very far towards building the plant. It is now in danger of wasting even the money the French state has pumped into EDF to save the company and build the project in Somerset.
Sixteen months ago EDF Finance Director Thomas Piquemal resigned, after EDF decided to make a 'final investment decision' over Hinkley C, fearing it could put the whole company at risk.

EDF is already facing financial disaster because of the costs of failing reactor designs at Flamanville in France, Okiluoto in Finland and the costs of renovating ageing reactors in France - not to mention falling incomes from its own power plant. If EDF closes plant then it will have to pay steep decommissioning costs. Last year the French Government agreed to put in an extra 3 billion euros to shore up the Hinkley C project. This is part of an equity share offer, a thinly disguised Government subsidy given that 85 per cent of shares are owned by EDF. EDF shares fell further as a result and are now at around half the value that they were in 2012.

Indeed, there has been a lot of comment on these issues in recent months, but what has been rather less discussed are the knock-on implications for British taxpayers if EDF did indeed go bankrupt. UK politicians have been smugly asserting that it doesn't matter how much loss EDF chalks up in funding Hinkley C since EDF is contractually obliged only to receive income from electricity generation. But this is yet another one of the paper pieces of self-delusion that has always accompanied nuclear investments.

But in the event that EDF was declared bankrupt by the French Government the contract that the UK Government signed with EDF would be worthless. The French Government would then turn to the UK and say that if the power plant, no doubt by then half built, was to be completed, then further funds would have to be supplied by the British Government. Indeed, this sort of scenario has happened before when Sizewell B was being constructed. The CEGB, who was building it, ceased to exist when it was privatised in 1990, and the half-built plant had to be supplied with further funds paid for British electricity consumers to ensure that the plant was constructed.

We would, in the case of the 'half'' completion of EDF, be met with the usual chorus of voices about how it was now 'economic' to complete the plant. No doubt it would be stated that half the price of Hinkley C would be competitive with offshore wind (whose costs have fallen rapidly in recent years) and would thus now be 'economic'. The British Treasury or electricity consumer will then be saddled with a bill to pay for the further cost overruns.

Perhaps we are already being softened up for this. The recently issued National Audit Office report indicated how expensive and uncompetitive Hinkley C is, but contained the quite ludicrous assertion that if only Hinkley C was half paid for by the Government then it would cost half as much. Of course this applies to anything: windfarms, solar farms, my next pair of shoes etc etc etc

But perhaps this is an echo of policy before privatisation of electricity when nuclear power appeared to cost very little simply because the Government, through the aegis of the nationalised industry, paid for all of the construction costs, not to mention taking responsibility for 'back-end' decommissioning costs. Then nobody noticed that they, the taxpayer and electricity consumer, were really picking up the bill. The nuclear industry longs to return to these bad old days.

References:

https://www.ft.com/content/c1290164-5eab-3d06-b629-e79a8b1e35a3?mhq5j=e3

http://www.powerengineeringint.com/articles/2017/06/vincent-de-rivaz-to-depart-edf-energy.html

http://www.theecologist.org/essays/2988748/edf_facing_bankruptcy_as_decommissioning_time_for_frances_ageing_nuclear_fleet_nears.html

https://www.ft.com/content/d2cc9f70-5333-11e6-9664-e0bdc13c3bef?mhq5j=e3
http://inflation.stephenmorley.org/

https://www.ft.com/content/04d4d886-e6c2-11e5-bc31-138df2ae9ee6?mhq5j=e3

https://www.ft.com/content/cabdca0a-e47c-11e5-bc31-138df2ae9ee6?mhq5j=e3


Sunday, 18 June 2017

This Parliament is almost a perfect storm that favours Labour

As political scenarios go, the new Parliamentary position is just about as good as it gets for an Opposition. The Government is facing an almost impossible task (securing 'good' Brexit terms), is much too weak to push through much the Opposition doesn't really want, and has seriously lost its political momentum. Crucially, the historical precedents are heavily stacked against the Government surviving anything like its full Parliamentary term.

Let's put it this way. The current Tory Parliamentary position of being just a few seats short of a majority of 322 (that is with Sinn Fein votes subtracted, and they will never turn up) is almost identical to that of the Callaghan Government in March 1979. And that was the moment when they lost their famous vote of confidence! The Labour Government had become a minority one in 1977, having lost its majority of 3 (won in October 1974) in by-elections.

You will search in vain for a Government in the last century that has lasted for much more than 2 years without a single party majority. The 'best' example was the the 1929-1931 Labour Government that was sustained by the Liberals. But then that only seemed to last as long as it did because the then PM, Ramsay Macdonald was offering a real prospect of electoral reform to the Liberals. But the Government collapsed in 1931 in the midst of a national crisis. Remind of you of anything (that's coming)?

The Liberals survived longer after an inconclusive 1910 General election, but only because they had Irish Nationalist support to put through Home Rule legislation (which was ultimately short-circuited by the First World War). The few baubles of things like aviation taxes, infrastructure projects and an indemnity law for soldiers that the current Government can offer to the DUP do not constitute anything that compares anywhere near to that prize. Indeed, this time the complications of Northern Irish Government point in a negative direction!  Once the political tit-bits are passed, the key incentive to support the Government disappears.

Although it is true that on technical grounds the Government can limp on so long as the all the DUP MPs back it in confidence votes until such time as the Government loses several by-elections (4 years?), the arithmetic looks too thin to imagine that Conservative backbenchers can withstand this sort of pummelling for quite that long. The DUP, who don't as a rule, much favour the Tories fiscal priorities anyway, are hardly likely to want to sacrifice themselves for the little that they will be able gain after the first couple of years at most. Because, short of a definite upswing in the UK economy, once the Government have put whatever mainly financial incentives in place for Norther Ireland, and Labour have indicated that they will not disturb them, the DUP will have no incentive to carry on supporting what may become a rather unpopular government.

Perhaps if the DUP agrees a pact to last a defined period, say 18 months as was the Lib-Lab pact of 1977-1978, we shall know when the next General Election will be (ie more or less directly after the end of the pact). A pact of more than 2 years covering 'supply and confidence' , even if it is signed on paper, may lack credibility and deliverability. I am writing this before we know how long the pact with the DUP will last, but I must say the announcement that there will be no Queen's speech after the imminent one until 2019 might be regarded as a giveaway. Another General Election in 2 years? That is, if they last that long......

Meanwhile the Labour Party can ambush the Government at times of their own choosing. They can draw in even DUP MPs to support them on many issues, and leave the Government with the ownership of  an exit deal with the EU involving the UK paying a compensation bill of tens of billions of pounds. No doubt it will be a deal that satisfies nobody very much. Personally, I'd like a referendum on whether it is worth leaving the EU to have to pay that particular bill.
If a political party had to choose a time when it had to be in opposition, this is the perfect time for Labour!

Thursday, 15 June 2017

France to tilt EU energy market towards nuclear power

The French Government's announcement that it will legislate for a carbon floor price of 30 euros per MWh marks a dramatic turn in EU energy markets which will now be shifted to favour nuclear power above renewables. This is because just over half of nuclear power generated in the EU come from reactors in France, whereas less than 10 per cent of EU renewable energy production comes from France. The fact that nuclear power is being given special privileges undermines the policy credibility of the Green Energy Minister Nichals Hulot who has just been appointed by President Macron.

Given that three-quarters of electricity in France comes from nuclear power, and very little from fossil fuels, this measure is a thinly disguised extra incentive for nuclear power, an incentive that the large bulk of renewable generation in the EU will not be able to receive. Only the UK has a carbon floor price, which is around 17 per cent lower than the proposed French one.

A case in point is Germany, which generates a third of the wind power in the EU. German electricity wholesale power prices are relatively low - much lower than in the case of the UK for example, and there are fears that some windfarms will no longer be economic after their feed-in tariff contracts end after 2020. But they would be likely to stay online if they had access to the carbon floor price being set in France. There is no carbon floor price in Germany.

Macron seems, in energy at least, to be continuing 'business as usual' in letting EDF run the French state. The French Government has effectively ploughed several billions into bankrupt nuclear generators AREVA and also injected money to EDF through a 'share flotation' (EDF is 85 per cent owned by the French Government) that seems associated with building Hinkley C power station.
In addition there have been fears that the need to refurbish ageing French reactors means that they might be closed down but for extra money being paid by French electricity consumers to keep them running. The carbon floor price may go at least some way towards keeping them open.

Nicholas Hulot has been associated with a move to shift French electricity generation away from nuclear and towards renewable energy. From where I am sitting it looks like the nuclear establishment at EDF is still very much in control and Hulot will achieve very little in switching France from nuclear to renewables.


See for example:

https://www.theguardian.com/environment/2016/may/17/france-sets-carbon-price-floor?CMP=share_btn_tw

https://www.ft.com/content/9a6752cc-3bc4-11e7-ac89-b01cc67cfeec

http://www.world-nuclear.org/information-library/country-profiles/others/european-union.aspx

Monday, 12 June 2017

Why Greens should stop beating themselves up over the lacklustre general election performance

I suppose it's inevitable that any party will engage in some soul searching and point-settling when it loses votes, but we should consider that in the context of a generally greater focus on the two party contest that it is unlikely that ANY Green Party strategy would have avoided a substantial fall in votes.

The focus on the most Presidential campaign that has been framed in Britain for decades (May versus Corbyn), the relative resurgence of Labour and also the special appeal that Labour made to the youth vote all meant that Green candidates were going to be squeezed. Of course the main exception to this was Caroline Lucas herself, and that is because in her constituency she is not only a formidable reputation but also the most credible embodiment of the forces that propel what we could describe as radical Labour today.
I'm sure now that Green Party meetings will be full of debates about 'progressive alliance' and such forth. But I'm also sure that the Green Party's vote losses in the 2017 election were more caused by the single factor of Labour being perceived as matching Greens on the subject of abolishing tuition fees for students than the strategy of 'Progressive Alliance'.

But what to do?

Really Greens ought to put their efforts into building up their local base, fighting for local social and environmental causes. Indeed, at a national level, we should earnestly fight for and certainly hope for that we get a Labour Government as soon as possible, while at the same time pointing out the shortcomings of Labour's programmes. I know in energy, for example, there is much confusion about objectives (see my earlier post). We need, for example, to have a clear, separate ambitious target for renewable energy. We need bottom up campaigns for ownership of the grid, not some top-down version that benefits only the energy establishment. We need much more radical and locally centred initiatives for energy saving and also a commitment to develop a more flexible, smart, energy system that fits in with the future, not the past.

I'm not suggesting Green candidates should automatically stand aside for Labour - heaven forbid! - but the cruel fact of the political logic at the moment is that until we get a Labour Government there is going to be a strong force behind Labour squeezing Greens in many of those constituencies that Greens hope to win.

Of course, when we do have a Labour Government, things will change in the Greens favour. I am certain about that! Maybe Greens should be a bit more patient and put their energy into positive action rather than slagging each other off.

Now that Trump has pulled USA out of Paris can China take a lead in fighting climate change?

Now that Donald Trump has pulled the USA out of the Paris Agreement more attention has been focused on China's role in reducing carbon emissions (the title of a book of mine that has just been published). And it seems there is a good chance that China will be able to reduce its energy-related carbon emissions by as much as two-thirds by 2050.

Given China's apparently accelerating growth in output of carbon emissions, this does seem a strange conclusion to make. But only if we ignore recent trends and, perhaps most importantly the economic, industrial and political dynamics at play.
Recent carbon trends suggest that China is stabilising its carbon emissions earlier than projected by the Chinese Government. Independent evaluation of the carbon output in 2014, 2015 and 2016 indicate that during these years carbon dioxide emissions were stable and not increasing. There are three factors behind this turnaround.

First, economic growth is slowing. There are good reasons to suspect that this is part of a longer term trend, and growth is likely to fall further. Developing economies can see rapid increases in carbon emissions as they develop infrastructure eg roads, railways, bridges, buildings, that forms the basis of the economy. However as time goes on there is less return from these developments and they slow down. Second, again, as people accumulate facilities that we almost take for granted in the West, such as fridges or TVs, production of this equipment rapidly increases. Certainly there are still products where ownership is still much less than is the case in the West - motor vehicles is the most important item here for energy consumption, but still it is becoming the case that for many products the early growth has subsided down to production of replacements.

In addition to this the advantages of low labour costs, low land costs and cheaply available capital are declining for China leading towards a similar loss of advantage in exports of manufacturing products than has already occurred in the case of Japan and South Korea. There we are seeing lower rates of economic growth and also a shift towards a more service based economy. Indeed the main issue is not whether this shift is occurring, but whether it can be completed without the sort of economic collapse that occurred in Japan at the end of the 1980s and which produced a zero growth economy throughout the 1990s.
Indeed many people are worried that China has simply built up too much debt and that many 'zombie' companies are being kept alive with endlessly recycled loans. China may avoid an economic crash ( I hope so because its effects on the world economy could be terrible), but a further slowdown in economic growth seems inevitable. All of this will, of course reduce energy consumption.

China's per capita carbon footprint is just above the average level for the EU; higher than the UK, less than Germany. However, given that China's urban density is higher and its average building space per person a lot lower than the EU implies that China already has the capacity for a lot of energy efficiency improvements. The Government is improving its efforts on this front. Building energy efficinecy standards have been improved, although enforcement still lags behind. Local government needs to be made more accountable in order to improve environmental standards and protection in general. . So there is good reason to believe that China can greatly reduce, never mind stabilise, its energy consumption.

Then there is the second factor, the build-up of non-fossil energy sources. China has been rapidly expanding renewable energy in recent years such that in 2015, for example, half of the world's capacity of wind turbines and a third of the capacity of solar pv panels were installed in China. Hydro and nuclear power has also been expanding. Hydro power leads generation among non-fossil fuels so far followed by wind, then nuclear and solar. China now has the biggest market for, and is the biggest producer of, electric cars.

The third factor reducing carbon emissions in China is the increased pressure on the Chinese Government to achieve environmental objectives. The build-up in non-fossil fuels is driven partly by climate change considerations, but most of all by tremendous pressures to reduce the appalling levels of air pollution in the cities. A lot of this is caused by the burning of coal in the power stations. Because of a lower than expected increase in electricity consumption and also the increase in non-fossil fuel power plant, coal fired power plant in China have been operating at low capacity factors (meaning that they have been only been generating for about half the time in 2015 and 2016).

There are problems with incorporating variable renewables into the grid, and much more renewable energy has been 'load-shedded' (wasted) compared to western countries with much higher proportions of variable renewable energy on the grid. The system still involves coal fired power plant being given priority over wind and solar in dispatch. Although there has recently been a drive to build nuclear power stations there are also strong pressures to increase safety standards - something which is likely to increase costs as in the west and slow growth in nucrear power. Various plans for nuclear power plant in the inland areas have been cancelled due to opposition. Large hydro schemes have been criticised for displacing large numbers of people and their expansion is likely to slow in coming years. However the fall in costs of wind and solar is likely to counterbalance these trends leading to large expansion of these sources.

Certainly studies done by the China Centre for Renewable Energy indicate that renewable energy on its own could generate the bulk of China's energy by 2050 -assuming of course that energy consumption can be stabilised, something that seems likely as China's economic growth rates fall and also China's population growth rate falls off. Large reductions in carbon emissions from China seem probable by 2050.

In conclusion, much needs to be done to improve China's policies and strategies, but there is more hope at present that China will lead the way towards carbon reductions than the USA. Given the authoritarian nature of China's Government this can only be regarded as a great embarrassment for democrats around the world.

You can read much more about this discussion buy buying a copy of the book 'China's Role in Reducing Carbon Emissions' published by Routledge. An electronic version can be purchased for £25. See https://www.routledge.com/Chinas-Role-in-Reducing-Carbon-Emissions-The-Stabilisation-of-Energy/Toke/p/book/9781138244412


Thursday, 1 June 2017

Labour pledges massive target for renewable energy

It still may require a slight touch on Douglas Adams' improbability drive to imagine that a Labour Government could emerge from this general election, but let us assume that it happens and we can talk about what this might mean for green energy prospects. Basing my analysis solely on what Labour's manifesto says, perhaps two words sum it all up: benign confusion. But within that, there's no way around it. Labour are pledging to achieve a massive target for renewable energy.

The manifesto says, in a sort of summary 'We will transform our energy systems, investing in new, state of the art low carbon gas and renewable electricity production'. That's not too bad, and there is even the implication that 'low carbon gas' could be biogas from grass, suggested by Ecotricity, Jo Abess and Keith Barnham (now what a coalition that is!). Fracking gas is to be banned. Jolly good, Makes a change from the Conservatives who to want to make compulsory for local authorities to accept planning applications for exploratory drilling.

Perhaps the biggest piece of confusion generated by the manifesto is the statement that a Labour Government would 'ensure that 60 per cent of the UK's energy comes from zero-carbon or renewable sources by 2030', not least because, as all energy nerds of whatever prejudice will tell you, there is no such thing as a zero carbon energy source. Now, yes you can have rules about  zero carbon homes (about which Labour will 'consult') since low energy usage can be balanced by energy production from, say, solar panels, but zero carbon energy source itself? No, not really - low carbon is the term to use, please.

Some have suggested that the '60 per cent of the UK's energy' 'by 2030' pledge is itself a mistake, and that they really meant 'electricity' rather than 'energy', but of course that's not what the manifesto says. 60 per cent of electricity from renewables by 2030 is a much less radical target, although this in itself is similar to the Liberal Democrat pledge and much better than the Conservatives.

BUT IT SAYS ENERGY. And we wouldn't let them forget it! It can't include nuclear power since that is not zero carbon, and zero carbon doesn't exist anyway, as already pointed out. So it must mean renewables. Entirely. Saying that this was some sort of typo will just not wash! Of course you can guess from from my tone that this means the 60 per cent of ENERGY target is actually pretty radical - not far, in fact, behind Green Party policy (and no, I didn't write that by the way, though I approve its general direction). With that policy it will be all renewable hands on deck! Full speed ahead!

Indeed, achievement of this target would mark good progress towards achieving the task, enshrined in the 2008 Climate Change Act, of delivering, by 2050. a minimum of an 80 per cent reduction in 1990 levels of greenhouse gas emissions.

There is some confusion on what Labour policy means for nuclear power. There is talk for support for future nuclear projects, but then there is no mention of specifics like Hinkley C and an impression that this just might mean decommissioning projects and a bit of international marketing. If so, that would be damage limitation. Who knows? Probably not the people who wrote this!

There are some laudable promises on energy conservation, insulating 4 million homes (that would be a start, at least), offering home owners interest free loans for energy efficiency.

There is an interesting policy on establishing publicly owned 'locally accountable' 'energy companies and cooperatives'. This could in the right form, be highly innovative in various ways, and smacks of the influence of Alan Simpson.

But how innovative this foray into creating local energy companies will be really depends on what is meant by 'locally accountable'. If there are some local popular elections to fill the executives, then great! Lots of exciting things could happen. But I have a fear that what might actually happen is that the whole thing will be run by groups of Labour councillors, which is not really very accountable. They may appoint some 'energy' trade union guys from the GMB who might spend their time and money given to them trying to get 'small modular reactors' and 'carbon capture and storage' projects going which will never actually happen anyway.

That possibility aside of course, Labour's manifesto is a lot better for green energy than the Tory manifesto whose main preoccupation seems to be to persuade the English Tory shires that they will not be bothered by more wind turbines.

But, methinks, what is the chance of all this? Well, I console myself, at least there is a bigger chance of this happening than Donald Trump forming a coalition with Syria and Nicaragua to successfully 'renegotiate' the Paris Agreement on Climate Change!

NOTE: Some, however, still think even the 60 per cent of energy by 2030 target is conservative - or at least Keith Barnham writes to me saying so, explaining that, for example, offshore wind could be supplying all of UK electricity by the early 2020s. See a piece he wrote in 'Nature': https://www.nature.com/nmat/journal/v15/n2/full/nmat4485.html