I gave a guest lecture at Birkbeck College, of the University of London on the evening of 22nd February 2017 in the evening, as part of the Energy and Climate Change module. I titled it, “Renewable Gas for Energy Storage : Scaling up the ‘Gas Battery’ to balance Wind and Solar Power and provide Low Carbon Heat and Transport”.
The basic concept is that since wind and solar power are variable in output, there has to be some support from other energy technologies. Some talk of batteries to store electrical energy as a chemical potential, and when they talk of batteries they think of large Lithium ion piles, or flow batteries, or other forms of liquid electrolyte with cathodes and anodes. When I talk about batteries, I think of electrical energy stored in the form of a gas. This gas battery doesn’t need expensive metal cathodes or anodes, and it doesn’t need an acid liquid electrolyte to operate. Gas that is synthesised from excess solar or wind power can be a fuel that can be used in chemical reactions, such as combustion, or burning, to generate electricity and heat when desired at some point in the future. It could be burned in a gas turbine, a gas boiler or a fuel cell, or in a vehicle engine. Or instead, a chemically inert gas can be stored under pressure, and this compressed gas can also be used to generate power on demand at a later date by harnessing energy from decompression. Another option would be holding a chemically reactive gas under pressure, allowing two stages of energy recovery.
As expected, the Birkbeck audience was very diverse, and had different social and educational backgrounds, and so there was little that could be assumed as common knowledge, especially since the topic was energy, which is normally only an interest for engineers, or at a stretch, economists.
I decided when preparing that I would attempt to use symbolism as a tool to build a narrative in the presentation. A bold move, perhaps, but I found it created an emblematic thread that ran through the slides quite nicely, and helped me tell the story. I used Mathematical and Physical notation, but I didn’t do any Mathematics or Physics.
I introduced the first concept : the Delta, or change. I explained this delta was not the same as a river delta, which gave me the excuse to show a fabulous night sky image of the Nile Delta taken from the International Space Station. I demonstrated the triangle shape that emerges from charting data that changes over time, and calculating its gradient, such as the temperature of the Earth’s surface.
I explained that the change in temperature of the Earth’s surface over the recent decades is an important metric to consider, not just in terms of scale, but in terms of speed. I showed that this rate of change appears in all the independent data sets.
I then went on to explain that the overall trend in the change in the temperature of the Earth’s surface is not the only phenomenon. Within regions, and within years and seasons, even between months and days, there are smaller scale changes that may not look like the overall delta. A lot of these changes give the appearance of cyclic phenomena, and they can have a periodicity of up to several decades, for example, “oscillations” in the oceans.
These discrete deltas and cycles could, to a casual observer, mask underlying trends, especially as the deltas can be larger than the trends; so climatologists look at a large set of measurements of all kinds, and have shown that some deltas are one way only, and are not cycling.
Teasing out the trends in all of the observations is a major enterprise that has been accomplished by thousands of scientists who have reported to the IPCC, the Intergovernmental Panel on Climate Change, part of the UNFCCC, the United Nations Framework Convention on Climate Change. The Fifth Assessment Report is the most comprehensive yet, and shows that global warming is almost certainly ramping up – in other words, global warming is getting faster, or accelerating.
Many projections for the future of temperature changes at the Earth’s surface have been done, with the overall view that temperatures are likely to carry on rising for hundreds of years without an aggressive approach to curtail net greenhouse gas emissions to the atmosphere – principally carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O).
From observations, it is clear that global warming causes climate change, and that the rate of temperature change is linked to the rate of climate change. In symbols, this reads : delta T for temperature over t for time leads to, or implies, a delta C for climate over t for time. The fact that global warming and its consequential climate change are able to continue worsening under the current emissions profile means that climate change is going to affect humanity for a long stretch. It also means that efforts to rein in emissions will also need to extend over time.
I finished this first section of my presentation by showing a list of what I call “Solution Principles” :-
1. Delays embed and extend the problem, making it harder to solve. So don’t delay.
2. Solve the problem at least as fast as creating it.
3. For maximum efficiency, minimum cost, and maximum speed, re-deploy agents of the problem in its solution.
In other words, make use of the existing energy, transport, agriculture, construction and chemical industries in approaching answers to the imperative to address global warming and climate change.
So, the Department of Energy and Climate Change (DECC) have a new top dog – Alex Chisholm – formerly the attack beast in charge of putting pressure on the electricity utility companies over their pricing rip-offs when at the Competition and Markets Authority (CMA).
There’s a huge and dirty intray awaiting this poor fellow, including the demonstrable failings of the Energy Act that’s just been signed into law. I’d recommend that he call for the immediate separation of the department into two distinct and individually funded business units : Nuclear and The Rest. Why ? Because nuclear power in the UK has nothing to do with answering the risk of climate change, despite some public relations type people trying to assert its “low carbon” status. Plus, the financial liabilities of the nuclear section of DECC mean it’s just going to bring the rest of the department down unless there’s a divorce.
The UK Government have been pursuing new fission nuclear power with reams of policy manoeuvres. The call for new nuclear power is basically a tautological argument centring on a proposal to transition to meet all energy demand by power generation resources, and the presumption of vastly increasing energy independence. If you want to convert all heating and cooling and transport to electricity, and you want to have few energy imports, then you will need to have a high level of new nuclear power. If new nuclear power can be built, it will generate on a consistent basis, and so, to gain the benefit of self-sufficiency, you will want to transfer all energy demand to electricity. Because you assume that you will have lots of new nuclear power, you need to have new nuclear power. It’s a tautology. It doesn’t necessarily mean it’s a sensible or even practical way to proceed.
DECC evolved mostly from the need to have a government department exclusively involved in the decommissioning of old nuclear power plants and the disposal of radioactive nuclear power plant waste and waste nuclear fuel. The still existing fleet of nuclear power plants is set to diminish as leaking, creaking, cracking and barely secure reactors and their unreliable steam generation equipment need to be shut down. At which point, this department will lose its cachet of being an energy provider and start to be merely an energy user and cash consumer – since there’s not enough money in the pot for essential decommissioning and disposal and DECC will need to go cap in hand to the UK Treasury for the next few decades to complete its core mission of nuclear decommissioning. It doesn’t take too much of a stretch of the imagination to figure out why this department will remain committed to the concept of new nuclear power. It would certainly justify the continuing existence of the department.
The flagship DECC-driven nuclear power project for Hinkley Point C has run aground on a number of sharp issues – including the apparent financial suicide of the companies set to build it, the probably illegal restructuring loans and subsidy arrangements that various governments have made, what appears to be the outright engineering incompetency of the main construction firm, and the sheer waste of money involved. It would be cheaper by around 50% to 70% to construct lots of new wind power and some backup gas-fired power generation plant – and could potentially be lower carbon in total – especially if the gas is manufactured low carbon gas.
In order to stand a chance of making any new low carbon energy investment in the UK, the Department of Energy and Climate Change needs to split – much like the banks have. The risky, nuclear stuff in one team, and the securely certainly advantageous renewable energy stuff in the other team. We will have more wind power, more solar power and more of lots of other renewables in the next 10 years. We are unlikely to see an increase in nuclear power generation in the UK for the next 15. It’s time to split these business units to protect our chances of successful energy investment.
Recently, I had a very helpful telephone conversation with somebody I shall call Ben – because that’s his name, obviously, so there’s no point in trying to camoflage that fact. It was a very positive conversation, with lots of personal energy from both parties – just the sort of constructive engagement I like.
Amongst a range of other things, we were batting about ideas for what could constitute a business model or economic case for the development of Renewable Gas production – whether Renewable Hydrogen or Renewable Methane. Our wander through the highways and byways of energy markets and energy policy led us to this sore point – that the National Grid is likely to resort to “fields of diesel generators” for some of its emergency backup for the power grid in the next few years – if new gas-fired power plants don’t get built. Various acronyms you might find in this space include STOR and BM.
Now, diesel is a very dirty fuel – so dirty that it appears to be impossible to build catalytic exhaust filters for diesel road vehicles that meet any of the air pollution standards and keep up fuel consumption performance. It’s not just VW that have had trouble meeting intention with faction – all vehicle manufacturers have difficulties balancing all the requirements demanded of them. Perhaps it’s time to admit that we need to ditch the diesel fuel itself, rather than vainly try to square the circle.
The last thing we really need is diesel being used as the fuel to prop up the thin margins in the power generation network – burned in essentially open cycle plant – incurring dirty emissions and a massive waste of heat energy. Maybe this is where the petrorefiners of Great Britain could provide a Renewable Gas alternative. Building new plant or reconfiguring existing plant for Renewable Gas production would obviously entail capital investment, which would create a premium price on initial operations. However, in the event of the National Grid requiring emergency electricity generation backup, the traded prices for that power would be high – which means that slightly more expensive Renewable Gas could find a niche use which didn’t undermine the normal economics of the market.
If there could be a policy mandate – a requirement that Renewable Gas is used in open cycle grid-balancing generation – for example when the wind dies down and the sun sets – then we could have fields of Renewable Gas generators and keep the overall grid carbon emissions lower than they would otherwise have been.
Both Ben and I enjoyed this concept and shared a cackle or two – a simple narrative that could be adopted very easily if the right people got it.
The energy “trilemma” is the dilemma of three dimensions : how to decarbonise the energy system, whilst continuing to provide affordable energy to consumers, at a high security of supply. The unspoken fourth dimension is that of investment : just who is going to invest in British energy, particularly if green energy booster subsidies and regulatory measures are binned ? The UK Government have in the past few years believed that they need to support new investment in new technologies, but it looks likely that this drive is about to lose all its incentives.
At last week’s Energy Live News conference, Andrea Leadsom, Minister of State for Energy at the UK Government’s Department of Energy and Climate Change (DECC), headed up the morning, with a bit of a lead in from ELN Editor Sumit Bose. He said that continuing challenges arose from the optimisation of balancing reserves and demand side management in electricity generation. He said that policy had perhaps swung away from the projection of 100% electrification of British energy, as this would require at least 15% more committed capital expenditure – although there would be savings to be had in operational expenditure. He also said that there is an ongoing budgetary conflict going on in government departments about the public money available to spend on investment in infrastructure (including that for energy). Obviously, the announcement of the Infrastructure Commission is going to help in a number of areas – including reaching for full electrification of the railways – a vital project. Then he introduced the Minister.
Andrea Leadsom said, “This government is determined to resolve the energy trilemma, decarbonising at the lowest cost to the consumer whilst keeping the lights on. In the past we did tend to have crazes on different technologies….”. At this point I wondered if she included nuclear power in that set of crazes, but her later remarks confirmed she is still entrenched in that fad.
Leadsom said, “There’s been a big move to renewable energy technologies, and quite rightly too. We need a wide diversity of electricity sources. We need to try and improve the new nuclear programme…”, at which point I thought to myself, “Good luck with that !”. She said, “Renewable energy has trebled. We need [to fund] that transition from unabated coal, [turn on to] gas and renewables. [But] as we saw yesterday – there is an intermittency of renewables.”
Andrea Leadsom was referring to the previous day, when National Grid has issued their first call for surplus top-up power generation since 2012. Owing to a confluence of weather systems over the UK, the atmosphere was becalmed, and wind power output was close to zero. However, this had already been predicted to happen. The lack of wind power was not the problem.
The problem lay in two other areas. Of the completely inflexible nuclear power plants, three generators were out of action for scheduled maintenance (Hunterston B, Reactor 3; Heysham 1, Reactor 1 and Hartlepool Reactor 1). And so when two coal-fired power plants which normally would have been operational were out of action, and one failed apparently between 12:45pm and 12:51pm (Eggborough, Fiddlers and Rugeley according to various sources) dropping approximately 640 megawatts (MW) out of the system (according to BM Reports data), National Grid had to resort to elements of their balancing “toolkit” that they would not normally use.
The operators generating for the National Grid were able to ramp up Combined Cycle Gas Turbine (CCGT), and various large electricity users with special arrangements with National Grid were stopped using power. By around 18:00 6pm the emergency was over, with peak demand for the evening levelling off at around 48 gigawatts (GW).
Although National Grid handled the problem well, there was a serious risk of blackouts, but again, not because of wind power.
If during the period of supply stress, one of the nuclear power plants had suddered an outage, that would have created the “nightmare scenario”, according to Peter Atherton, from Jefferies, quoted in The Guardian newspaper. The reason for this is that the nuclear power plants are large generators, or “baseload” generators. They have suffered from problems of unreliability over the recent years, and whenever they shutdown, either in a planned or an unplanned manner, they cause the power grid a massive headache. The amount of power lost is large, and there’s sometimes no guarantee of when the nuclear generation can be restored. In addition, it takes several hours to ramp up replacement gas-fired power plants to compensate for the power lost from nuclear.
Yes, Andrea Leadsom, more renewable energy is essential to meet decarbonisation goals. Yes, Andrea Leadsom, renewable energy technologies have an inherent intermittency or variability in their output. No, Andrea Leadsom, National Grid’s problems with power generation during the winter months is not caused by wind power on the system – wind power is providing some of the cheapest resources of electricity. No, Andrea Leadsom, insecurity in Britain’s power supply is being caused by ageing nuclear and coal power plants, and the only way to fix that is to create incentives to develop a plethora of differently-scaled generation facilities, including many more decentralised renewable energy utilities, flexible top-up backup gas-fired power plants, including Combined Heat and Power town-scale plants, and Renewable Gas production and storage facilities.
Everything in the UK world of energy hit a kind of slow-moving nightmare when the Department of Energy and Climate Change stopped replying to emails a few months ago, claiming they were officially ordered to focus on the “Spending Review” – as known as “The Cuts” – as ordered by George Osborne, Chancellor of Her Majesty’s Treasury.
We now know that this purdah will be terminated on 25th November 2015, when various public announcements will be made, and whatever surprises are in store, one thing is now for certain : all grapevines have been repeating this one word regarding British energy policy : “reset”.
Some are calling it a “soft reset”. Some are predicting the demise of the entire Electricity Market Reform, and all its instruments – which would include the Capacity Auction and the Contracts for Difference – which would almost inevitably throw the new nuclear power ambition into a deep dark forgettery hole.
A report back from a whispering colleague regarding the Energy Utilities Forum at the House of Lords on 4th November 2015 included these items of interest :-
“…the cost of battery power has dropped to 10% of its value of a few years ago. National Grid has a tender out for micro-second response back up products – everyone assumes this is aimed at batteries but they are agnostic … There will be what is called a “soft reset” in the energy markets announced by the government in the next few weeks – no one knows what this means but obviously yet more tinkering with regulations … On the basis that diesel fuel to Afghanistan is the most expensive in the world (true), it has to be flown in, it has been seriously proposed to fly in Small Modular Nuclear reactors to generate power. What planet are these people living on I wonder ? … A lot more inter connectors are being planned to UK from Germany, Belgium Holland and Norway I think taking it up to 12 GWe … ”
Alistair Phillips-Davies, the CEO of SSE (Scottish and Southern Energy), took part in a panel discussion at Energy Live News on 5th November 2015, in which he said that he was expecing a “reset” on the Electricity Market Reform (EMR), and that the UK Government were apparently focussing on consumers and robust carbon pricing. One view expressed was that the EMR could be moved away from market mechanisms. In other discussions, it was mentioned that the EMR Capacity Market Auction had focussed too much on energy supply, and that the second round would see a wider range of participants – including those offering demand side solutions.
Energy efficiency, and electricity demand profile flattening, were still vital to get progress on, as the power grid is going to be more efficient if it can operate within a narrower band of demand – say 30 to 40 GW daily, rather than the currently daily swing of 20 to 50 GW. There was talk of offering changing flexible, personal tariffs to smooth out the 5pm 17:00 power demand peak, as price signalling is likely to be the only way to make this happen, and comments were made about how many computer geeks would be needed to analyse all the power consumption data.
The question was asked whether the smart meter rollout could have the same demand smoothing effect as the Economy 7 tariff had in the past.
The view was expressed that the capacity market had not provided enough by way of long-term price signals – particularly for investment in low carbon energy. One question raised during the day was whether it wouldn’t be better just to set a Europe-wide price on carbon and then let markets and the energy industry decide what to put in place ?
So, in what ways could the British Government “reset” the Electricity Market Reform instruments in order to get improved results – better for pocket, planet and energy provision ? This is what I think :-
1. Keep the Capacity Mechanism for gas
The Capacity Mechanism was originally designed to keep efficient gas-fired power plants (combined cycle gas turbine, or CCGT) from closing, and to make sure that new ones were built. In the current power generation portfolio, more renewable energy, and the drive to push coal-fired power plants to their limits before they need to be closed, has meant that gas-fired generation has been sidelined, kept for infrequent use. This has damaged the economics of CCGT, both to build and to operate. This phenomenon has been seen all across Europe, and the Capacity Market was supposed to fix this. However, the auction was opened to all current power generators as well as investors in new plant, so inevitably some of the cash that was meant for gas has been snaffled up by coal and nuclear.
2. Deflate strike prices after maximum lead time to generation
No Contracts for Difference should be agreed without specifying a maximum lead time to initial generation. There is no good reason why nuclear power plants, for example, that are anticipated to take longer than 5 years to build and start generating should be promised fixed power prices – indexed to inflation. If they take longer than that to build, the power prices should be degressed for every year they are late, which should provide an incentive to complete the projects on time. These projects with their long lead times and uncertain completion dates are hogging all the potential funds for investment, and this is leading to inflexibility in planning.
3. Offer Negative Contracts for Difference
To try to re-establish a proper buildings insulation programme of works, projects should be offered an incentive in the form of contracts-for-energy-savings – in other words, aggregated heat savings from any insulation project should be offered an investment reward related to the size of the savings. This will not be rewarding energy production, but energy use reduction. Any tempering of gas demand will improve the UK’s balance of payments and lead to a healthier economy.
4. Abandon all ambition for carbon pricing
Trends in energy prices are likely to hold surprises for some decades to come. To attempt to set a price on carbon, as an aid to incentivising low carbon energy investment is likely to fail to set an appropriate investment differential in this environment of general energy pricing volatility. That is : the carbon price would be a market signal lost in a sea of other effects. Added to which, carbon costs are likely to be passed on to energy consumers before they would affect the investment decisions of energy companies.
Out of the blue, I got an invitation to a meeting in Whitehall.
I was to join industrial developers and academic researchers at the Department of Energy and Climate Change (DECC) in a meeting of the “Green Hydrogen Standard Working Group”.
The date was 12th June 2015. The weather was sunny and hot and merited a fine Italian lemonade, fizzing with carbon dioxide. The venue was an air-conditioned grey bunker, but it wasn’t an unfriendly dungeon, particularly as I already knew about half the people in the room.
The subject of the get-together was Green Hydrogen, and the work of the group is to formulate a policy for a Green Hydrogen standard, navigating a number of issues, including the intersection with other policy, and drawing in a very wide range of chemical engineers in the private sector.
My reputation for not putting up with any piffle clearly preceded me, as somebody at the meeting said he expected I would be quite critical. I said that I would not be saying anything, but that I would be listening carefully. Having said I wouldn’t speak, I must admit I laughed at all the right places in the discussion, and wrote copious notes, and participated frequently in the way of non-verbal communication, so as usual, I was very present. At the end I was asked for my opinion about the group’s work and I was politely congratulational on progress.
So, good. I behaved myself. And I got invited back for the next meeting. But what was it all about ?
Most of what it is necessary to communicate is that at the current time, most hydrogen production is either accidental output from the chemical industry, or made from fossil fuels – the main two being coal and Natural Gas.
Hydrogen is used extensively in the petroleum refinery industry, but there are bold plans to bring hydrogen to transport mobility through a variety of applications, for example, hydrogen for fuel cell vehicles.
Clearly, the Green Hydrogen standard has to be such that it lowers the bar on carbon dioxide (CO2) emissions – and it could turn out that the consensus converges on any technologies that have a net CO2 emissions profile lower than steam methane reforming (SMR), or the steam reforming of methane (SRM), of Natural Gas.
[ It’s at this very moment that I need to point out the “acronym conflict” in the use of “SMR” – which is confusingly being also used for “Small Modular Reactors” of the nuclear fission kind. In the context of what I am writing here, though, it is used in the context of turning methane into syngas – a product high in hydrogen content. ]
Some numbers about Carbon Capture and Storage (CCS) used in the manufacture of hydrogen were presented in the meeting, including the impact this would have on CO2 emissions, and these were very intriguing.
I had some good and useful conversations with people before and after the meeting, and left thinking that this process is going to be very useful to engage with – a kind of dragnet pulling key players into low carbon gas production.
Here follow my notes from the meeting. They are, of course, not to be taken verbatim. I have permission to recount aspects of the discussion, in gist, as it was an industrial liaison group, not an internal DECC meeting. However, I should not say who said what, or which companies or organisations they are working with or for.
The British Government do not have an energy policy. They may think they have one, and they may regularly tell us that they have one, but in reality, they don’t. There are a number of elements of regulatory work and market intervention that they are engaged with, but none of these by itself is significant enough to count as a policy for energy. Moreover, all of these elements taken together do not add up to energy security, energy efficiency, decarbonisation and affordable energy.
What it takes to have an energy policy is a clear understanding of what is a realistic strategy for reinvestment in energy after the dry years of privatisation, and a focus on energy efficiency, and getting sufficient low carbon energy built to meet the Carbon Budget on time. Current British Government ambitions on energy are not realistic, will not attract sufficient investment, will not promote increased energy efficiency and will not achieve the right scale and speed of decarbonisation.
I’m going to break down my critique into a series of small chunks. The first one is a quick look at the numbers and outcomes arising from the British Government’s obsessive promotion of nuclear power, a fantasy science fiction that is out of reach, not least because the industry is dog-tired and motheaten.
The Electricity Market Reform of the Energy Act enacted in the last parliament included a facility for “Contracts for Difference” (CfD), an auction for government subsidies. Solar photovoltaic projects bid successfully, but the generation capacity was low, and today I learned that some of these projects could be at risk of non-completion.
The CfD auction is for large solar schemes. Smaller schemes, such as those for residential housing, still have the Feed in Tariff to support them – however the meeting considered the impact on growth in this area owing to step change degression in this subsidy support.
If the failure of the CfD and FiT to stimulate wider uptake of solar power wasn’t concerning enough, the meeting looked at issues with grid connection for new renewable energy projects. This was shown to be the result of a “perfect storm” of low ambition in government, underestimates of growth, long lead times for connection processes, uncertainties in guarantees for connection, and the long turnaround time for pushing through technological changes.
Several people that I spoke to in the breaks highlighted physical problems in the grid network that mean that the power grid is “full” through large parts of the South West of England, the Midlands and southern Wales. One person ventured that the problem could easily be getting worse in Scotland, where enormous wind power projects have begun to saturate the grid connections to England. And the view held by some was that this problem has a four year lead time to fix.
If the Conservative Government wants to grow solar power, besides managing the massively complex web of actors in the solar power industry, it’s going to need to show more oversight of this vital physical barrier – the electricity grid is in sore need of major improvement and expansion, and without this, solar will be going nowhere.
Last week, on the invitation of Dr Paul Elsner at Birkbeck, University of London, I gave a brief address of my research so far into Renewable Gas to this year’s Energy and Climate Change class, and asked and answered lots of questions before demolishing the mythical expert/student hierarchy paradigm – another incarnation of the “information deficit model”, perhaps – and proposed everyone work in breakout groups on how a transition from fossil fuel gas to Renewable Gas could be done.
A presentation of information was important before discussing strategies, as we had to cover ground from very disparate disciplines such as chemical process engineering, the petroleum industry, energy statistics, and energy technologies, to make sure everybody had a foundational framework. I tried to condense the engineering into just a few slides, following the general concept of UML – Unified Modelling Language – keeping everything really simple – especially as processing, or work flow (workflow) concepts can be hard to describe in words, so diagrams can really help get round the inevitable terminology confusions.
But before I dropped the class right into chemical engineering, I thought a good place to start would be in numbers, and in particular the relative contributions to energy in the United Kingdom from gas and electricity. Hence the first slide.
The first key point to notice is that most heat demand in the UK in winter is still provided by Natural Gas, whether Natural Gas in home boilers, or electricity generated using Natural Gas.
The second is that heat demand in energy terms is much larger than power demand in the cold months, and much larger than both power and heat demand in the warm months.
The third is that power demand when viewed on annual basis seems pretty regular (despite the finer grain view having issues with twice-daily peaks and weekday demand being much higher than weekends).
The reflection I gave was that it would make no sense to attempt to provide all that deep winter heat demand with electricity, as the UK would need an enormous amount of extra power generation, and in addition, much of this capacity would do nothing for most of the rest of the year.
The point I didn’t make was that nuclear power currently provides – according to official figures – less than 20% of UK electricity, however, this works out as only 7.48% of total UK primary energy demand (DUKES, 2014, Table 1.1.1, Mtoe basis). The contribution to total national primary energy demand from Natural Gas by contrast is 35.31%. The generation from nuclear power plants has been falling unevenly, and the plan to replace nuclear reactors that have reached their end of life is not going smoothly. The UK Government Department of Energy and Climate Change have been pushing for new nuclear power, and project that all heating will convert to electricity, and that nuclear power will provide for much of this (75 GW by 2050). But if their plan relies on nuclear power, and nuclear power development is unreliable, it is hard to imagine that it will succeed.
The UK Government’s Electricity Market Reform (EMR) is a moving feast, or “trough”, if you are of the opinion that any state subsidy is a subsidy too far. My, how people complained and complained about the Renewables Obligation (RO), perhaps one of the world’s best stimuli for pushing forward wind power development. Yes, some rich engineering firms and rich landowners got richer on the back of the RO. What do you expect ? The wealthy always leverage their capital. But at least the RO has produced some exceptional wind power generation numbers. In the period 2017 to 2018 however, the RO is set to be staged down and replaced by several elements in the EMR, most notably, the CfD or Contracts for Difference, otherwise affectionately and quite inaccurately described as the FiT CfD – Feed-in Tariff Contracts for Difference.
The basic plan for the CfD is to guarantee to new electricity generators, or old generators building new plant, a definite price on power sold, in order to ensure they can get debt and equity invested in their projects. However, this is a huge state intervention and potentially entirely scuppers the efforts to create a market in electricity. More dangerously, although the CfD is supposed to encourage the freeing up of capital to support new energy investment, it might fail in that, at least in the short-term, and it may even fail to make capital cheaper. This is due to the new kinds of risk associated with the CfD – particularly because of the long lead time from auction to allocation, and the cap on allocations. The CfD is designed to create project failures, it seems.
I recently attended an event hosted at the Queen Elizabeth II Conference Centre in Westminster in London, called Energy4PowerLive 2014 and managed by GMP. The first session I attended was in the RenewablesLive 2014 stream, and featured a panel discussion between Andrew Buglass from Royal Bank of Scotland (RBS), Philip Bazin of Triodos and Steve Hunter, Investment Director of Low Carbon.
What follows is not verbatim, and is based on my handwritten notes, and my handwriting is appalling, so that sometimes, even I cannot read it.
[ Andrew Buglass, Managing Director and Head of Energy, Royal Bank of Scotland (RBS) : “Financing CfD projects – initial impressions from a lender” ]
[You may have an interest in the actions of] RBS [heckle from the audience, “We own it !”]. We built our first renewable energy project in 1991 – an onshore wind turbine. Now we [have helped] finance 9 gigawatts of renewable energy. I have 15 minutes – only possible to scratch the surface of CfDs [Contracts for Difference – a subsidy under the UK Government Department of Energy and Climate Change (DECC) Electricity Market Reform (EMR))]. The EMR journey has been a very long one – four years. We have offered advice to the government – about the bankability of the policy. DECC have a different policy perspective – they are going over here [in this direction] whether or not… [Their aim was to] encourage new sources of investment debt and equity, [currently] not here in the UK. […] Matt Hancock, new [energy] minister […] £115 [billion ?] […]. Half of £100 billion needed by end of decade. The EMR framework is [intended] to bring in new sources of debt and equity – its ability to track that into the market. I’m not going to review whether the EMR will be successful. It’s a “Nought to Sixty” question [reference to how quickly it takes for cars to accelerate], how quickly is capital going to be delivered [getting up and running]. There will be a big step up in terms of work […] how are different counterparties [countersigning parties in the CfD contracts] responding ? Now is the time to deliver on the [practical economics] for those to decide whether to invest or not. Need to engage the ratings agencies – getting debt from bond markets – to convince Standard and Poor etc to convince […] The first projects are going to take a long time – cutting their teeth. Cost, availability, terms of debt. The risks that will [come into play] :
A. OFFTAKE RISK – BASIS RISK
[At the start of the EMR discussions] we highlighted that small generators found it hard to get PPAS [Power Purchase Agreements]. With the CfDs “lender of last resort” “offtaker of last resort” […] may support less strong balance sheets for PPAs. Great – because we need a lot more liquidity in PPAs. [However] the basis risks on the strike price compared to the reference price – if this is [changed, different] – a concern about whether they might be matching in the middle [and so conferring no benefit to having arranged the CfD]].
B. WHOLESALE PRICE RISK
In offshore wind – wild – the economics of generating. In onshore wind power, the wholesale price has less of a way to fall [because of many years of learning and maturing of supply chains etc].
C. INDEX INFLATION RISK
The CfDs are to be linked to CPI [Consumer Price Index] rather than the RPI [Retail Price Index]. This may seem like a not very important difference – but at the moment you cannot hedge against the CPI. […] we recommend RPI – linked to lock in. Can’t do that with CPI.
D. FORCE MAJEURE RISK
[Risk] especially during construction. The CfD does not pick up during construction – need to see [how this pans out].
E. CHANGE IN LAW (CIL) RISK
Twenty pages of the CIL clause – doesn’t seem to give you much protection – what is a “foreseeable change in law” ? Unless you’re a big utility you will not have been tracking [policy and legislation] for the last ten years. Big risk ? In the RO [Renewables Obligation], CIL risk was set to the offtaker. Law firms are going to really agonise [over this in the CfD].
F. LIFETIME MANAGEMENT RISK
Risk relating to managing CfD contract during its lifetime. There is a risk from the termination of a CfD – more than in the RO. May need to do more work to keep lender involved to manage termination risk.
Leads to a gloomy approach – in banking paying back on time is good – anything else is bad.
The EMR has cross-party support, but this is the most interventionist approach since the CEGB (Central Electricity Generating Board market). The politicians are saying “no, no, we’d never change anything” – from three parties. It would help if there were a public statement on that (I get calls about “too many turbines”). Initial projects will probably take longer to start than [under] RO. Collectively fund pragmatic solutions.
[ Philip Bazin, Head Project Finance Team, Triodos Bank : “Financing CfD projects – initial impressions from a different bank” ]
Triodos was established in 1980, and started in the UK in 1995 with the acquisition of Mercury […] Our portfolio in the UK is still relatively small. Over a third of the £500 million is in renewable energy. Our investment […] basis of positive social and environmental outcomes. […] Core lending of £1 to £15 million finance […] construction […] and up to 15 years [on loan repayment]. Smaller developers – best fit. The bank is almost becoming part of the supply chain in the bidding process. Give a forward fixed rate of interest. We’ve had to think about how we provide this derivative. Discussions with PPA providers. Feeling that most a lot of new players. The whole rush around CfD was quite unhelpful. We haven’t been engaging with any bidders for this round [of CfDs]. Our customers are small generators or community groups. Smaller projects are risk-averse and would [probably] use the RO instead of the CfD [for now]. These markets are going to find this new structure [offputting]. Not ideal if you’re a professional investor. [Andrew has explained the risks well] The biggest one for me is the risk of failing to achieve your LONGSTOP DATE [failure to start electricity generation by an agreed date], which would risk a termination [of the CfD subsidy agreement. This would destroy the economics of the whole project and therefore the investment]. What protections do you have as a sub-contractor ? Another point is about wayleaves. [If you can’t get your wayleaves in time…] Fundamentally, the [CfD] mechanism is bankable. [However] in trying to fix a problem it [may] have created a total mess. Don’t know if more capital will be going into projects.
[ Steve Hunter, Investment Director, Low Carbon : “CfDs from an equity perspective” ]
[Our business is in] Solar PV, Onshore wind, CSP in the Mediterranean area. We get there when project developer is doing land deals. We have a cradle-to-grave perspective. Land planning and grid access are major risks [and the guarantee of biomass feedstock for a biomass project]. The WHOLESALE POWER PRICE RISK – someone needs to take it. Your view depends on your equity horizon. For us, the two big changes [from the RO] are the introduction of the ALLOCATION RISK and the removal of the power price risk. Don’t know the budget for allocation. Only know one month before the [CfD] auction ! The government has not released [a budget] for “emerging technology”. Timing : doesn’t really work for solar. The idea of CfD versus RO for solar will not work. [It’s all down to the project lifecycle] – you could be waiting 14 or 15 months for a CfD allocation after making a bid, but grid connection deals are now closing in [at around 12 months – if you do not take up your grid connection permission, you will lose it]. At the moment there is no competition between technologies. Is there enough CfD set aside for offshore wind projects ? Yes. If CfDs are intended to deliver technology-neutral [energy mix] – it doesn’t yet. The REFERENCE PRICES for me are the significant risk. This is entirely new for CfDs. Because the CfD intended to bring lower cost of capital – there is an implication for return [on investment] to the investor. Government will set [the reference prices]. Government just released [for some technologies] – decreased [in a forward period]. The Government may have a very different view on forward power prices… These reference prices come out of the air [there seems to be no basis for them]. When is final not final ? When it comes from DECC. If consider 2018/2019 September, the tightest budget, you could afford 1,000 MW of offshore, [if there is a change in the reference price] you could only afford 700 MW. In the TEC Register from National Grid – download this – there is 1,000 to 1,200 MG in the pipeline onshore. If I was a wind developer with [grid] connection dates after the end of the RO, you can bet I’ve already bid [for a CfD allocation] already. The political risk of changing the RO. May be a small amount of solar – but anyway it’s too expensive. If the CfD is only to support onshore wind power – is it achieving its goals ? There will almost certainly be some modification [to the CfD or the reference prices ?]. Transparency ? Oversupply ? [Oversight ?] of setting reference prices. Increase in frequency of the CfD auction would be helpful. Would give developers more time to bid. Technologies like solar PV that could deliver large savings… If no large solar is built… They could put a minimum in [for the subsidy allocated to each technology] – more positive. CfD represents long-term support. If the industry drives down the cost of renewable energy, CfD gives us an infill fix on revenue. It will give that certainty to get debt [and equity] in. It may be the support mechanism we need in the long-term. It could be the support mechanism we need for renewable energy…
Amongst the chink-clink of wine glasses at yesterday evening’s Open Cities Green Sky Thinking Max Fordham event, I find myself supping a high ball orange juice with an engineer who does energy retrofits – more precisely – heat retrofits. “Yeah. Drilling holes in Grade I Listed walls for the District Heating pipework is quite nervewracking, as you can imagine. When they said they wanted to put an energy centre deep underneath the building, I asked them, “Where are you going to put the flue ?””
Our attention turns to heat metering. We discuss cases we know of where people have installed metering underground on new developments and fitted them with Internet gateways and then found that as the rest of the buildings get completed, the meter can no longer speak to the world. The problems of radio-meets-thick-concrete and radio-in-a-steel-cage. We agree that anybody installing a remote wifi type communications system on metering should be obliged in the contract to re-commission it every year.
And then we move on to shale gas. “The United States of America could become fuel-independent within ten years”, says my correspondent. I fake yawn. It really is tragic how some people believe lies that big. “There’s no way that’s going to happen !”, I assert.
“Look,” I say, (jumping over the thorny question of Albertan syncrude, which is technically Canadian, not American), “The only reason there’s been strong growth in shale gas production is because there was a huge burst in shale gas drilling, and now it’s been shown to be uneconomic, the boom has busted. Even the Energy Information Administration is not predicting strong growth in shale gas. They’re looking at growth in coalbed methane, after some years. And the Arctic.” “The Arctic ?”, chimes in Party Number 3. “Yes,” I clarify, “Brought to you in association with Canada. Shale gas is a non-starter in Europe. I always think back to the USGS. They estimate that the total resource in the whole of Europe is a whole order of magnitude, that is, ten times smaller than it is in Northern America.” “And I should have thought you couldn’t have the same kind of drilling in Europe because of the population density ?”, chips in Party Number 3. “They’re going to be drilling a lot of empty holes,” I add, “the “sweet spot” problem means they’re only likely to have good production in a few areas. And I’m not a geologist, but there’s the stratigraphy and the kind of shale we have here – it’s just not the same as in the USA.” Parties Number 2 and 3 look vaguely amenable to this line of argument. “And the problems that we think we know about are not the real problems,” I out-on-a-limbed. “The shale gas drillers will probably give up on hydraulic fracturing of low density shale formations, which will appease the environmentalists, but then they will go for drilling coal lenses and seams inside and alongside the shales, where there’s potential for high volumes of free gas just waiting to pop out. And that could cause serious problems if the pressures are high – subsidence, and so on. Even then, I cannot see how production could be very high, and it’s going to take some time for it to come on-stream…” “…about 10 years,” says Party Number 2.
“Just think about who is going for shale gas in the UK,” I ventured, “Not the big boys. They’ve stood back and let the little guys come in to drill for shale gas. I mean, BP did a bunch of onshore seismic surveys in the 1950s, after which they went drilling offshore in the North Sea, so I think that says it all, really. They know there’s not much gas on land.” There were some raised eyebrows, as if to say, well, perhaps seismic surveys are better these days, but there was agreement that shale gas will come on slowly.
“I don’t think shale gas can contribute to energy security for at least a decade,” I claimed, “even if there’s anything really there. Shale gas is not going to answer the problems of the loss of nuclear generation, or the problems of gas-fired generation becoming uneconomic because of the strong growth in renewables.” There was a nodding of heads.
“I think,” I said, “We should forget subsidies. UK plc ought to purchase a couple of CCGTS [Combined Cycle Gas Turbine electricity generation units]. That will guarantee they stay running to load balance the power grid when we need them to. Although the UK’s Capacity Mechanism plan is in line with the European Union’s plans for supporting gas-fired generation, it’s not achieving anything yet.” I added that we needed to continue building as much wind power as possible, as it’s quick to put in place. I quite liked my radical little proposal for energy security, and the people I was talking with did not object.
There was some discussion about Green Party policy on the ownership of energy utilities, and how energy and transport networks are basically in the hands of the State, but then Party Number 2 said, “What we really need is consistency of policy. We need an Energy Bill that doesn’t get gutted by a change of administration. I might need to vote Conservative, because Labour would mess around with policy.” “I don’t know,” I said, “it’s going to get messed with whoever is in power. All those people at DECC working on the Electricity Market Reform – they all disappeared. Says something, doesn’t it ?”
I spoke to Parties Number 2 and 3 about my research into the potential for low carbon gas. “Basically, making gas as a kind of energy storage ?”, queried Party Number 2. I agreed, but omitted to tell him about Germany’s Power-to-Gas Strategy. We agreed that it would be at least a decade before much could come of these technologies, so it wouldn’t contribute immediately to energy security. “But then,” I said, “We have to look at the other end of this transition, and how the big gas producers are going to move towards Renewable Gas. They could be making decisions now that make more of the gas they get out of the ground. They have all the know-how to build kit to make use of the carbon dioxide that is often present in sour conventional reserves, and turn it into fuel, by reacting it with Renewable Hydrogen. If they did that, they could be building sustainability into their business models, as they could transition to making Renewable Gas as the Natural Gas runs down.”
I asked Parties Number 2 and 3 who they thought would be the first movers on Renewable Gas. We agreed that companies such as GE, Siemens, Alstom, the big engineering groups, who are building gas turbines that are tolerant to a mix of gases, are in prime position to develop closed-loop Renewable Gas systems for power generation – recycling the carbon dioxide. But it will probably take the influence of the shareholders of companies like BP, who will be arguing for evidence that BP are not going to go out of business owing to fossil fuel depletion, to roll out Renewable Gas widely. “We’ve all got our pensions invested in them”, admitted Party Number 2, arguing for BP to gain the ability to sustain itself as well as the planet.
I took some notes from remarks made by Professor David MacKay, the UK Government’s Chief Scientific Advisor, yesterday, 1st May 2014, at an event entitled “How Will We Heat London ?”, held by Max Fordhams as part of the Green Sky Thinking, Open City week. I don’t claim to have recorded his words perfectly, but I hope I’ve captured the gist.
[David MacKay] : [Agreeing with others on the panel – energy] demand reduction is really important. [We have to compensate for the] “rebound effect”, though [where people start spending money on new energy services if they reduce their demand for their current energy services].
Things seem to be under-performing [for example, Combined Heat and Power and District Heating schemes]. It would be great to have data. A need for engineering expertise to get in.
I’m not a Chartered Engineer, but I’m able to talk to engineers. I know a kilowatt from a kilowatt hour [ (Laughter from the room) ]. We’ve [squeezed] a number of engineers into DECC [the Department of Energy and Climate Change].
I’m an advocate of Heat Pumps, but the data [we have received from demonstration projects] didn’t look very good. We hired two engineers and asked them to do the forensic analysis. The heat pumps were fine, but the systems were being wrongly installed or used.
Now we have a Heat Network team in DECC – led by an engineer. We’ve published a Heat Strategy. I got to write the first three pages and included an exergy graph.
[I say to colleagues] please don’t confuse electricity with energy – heat is different. We need not just a green fluffy solution, not just roll out CHP [Combined Heat and Power] [without guidance on design and operation].
Sources of optimism ? Hopefully some of the examples will be available – but they’re not in the shop at the moment.
For example, the SunUp Heat Battery – works by having a series of chambers of Phase Change Materials, about the size of a fridge that you would use to store heat, made by electricity during the day, for use at night, and meet the demand of one home. [Comment from Paul Clegg, Senior Partner at Feilden Clegg Bradley Studios : I first heard about Phase Change Materials back in the 1940s ? 1950s ? And nothing’s come of it yet. ] Why is that a good idea ? Well, if you have a heat pump and a good control system, you can use electricity when it’s cheapest… This is being trialled in 10 homes.
Micro-CHP – [of those already trialled] definitely some are hopeless, with low temperature and low electricity production they are just glorified boilers with a figleaf of power.
Maybe Fuel Cells are going to deliver – power at 50% efficiency [of conversion] – maybe we’ll see a Fuel Cell Micro-Combined Heat and Power unit ?
Maybe there will be hybrid systems – like the combination of a heat pump and a gas boiler – with suitable controls could lop off peaks of demand (both in power and gas).
We have designed the 2050 Pathways Calculator as a tool in DECC. It was to see how to meet the Carbon Budget. You can use it as an energy security calculator if you want. We have helped China, Korea and others to write their own calculators.
A lot of people think CHP is green and fluffy as it is decentralised, but if you’re using Natural Gas, that’s still a Fossil Fuel. If you want to run CHP on biomass, you will need laaaaaarge amounts of land. You can’t make it all add up with CHP. You would need many Wales’-worth of bioenergy or similar ways to make it work.
Maybe we should carry on using boilers and power with low carbon gas – perhaps with electrolysis [A “yay !” from the audience. Well, me, actually]. Hydrogen – the the 2050 Calculator there is no way to put it back into the beginning of the diagram – but it could provide low carbon heat, industry and transport. At the moment we can only put Hydrogen into Transport [in the 2050 Calculator. If we had staff in DECC to do that… It’s Open Source, so if any of you would like to volunteer…
Plan A of DECC was to convert the UK to using lots of electricity [from nuclear power and other low carbon technologies, to move to a low carbon economy], using heat pumps at the consumer end, but there’s a problem in winter [Bill Watts of Max Fordham had already shown a National Grid or Ofgem chart of electricity demand and gas demand over the year, day by day. Electricity demand (in blue) fluctuates a little, but it pretty regular over the year. Gas demand (in red) however, fluctuates a lot, and is perhaps 6 to 10 times larger in winter than in summer.]
If [you abandon Plan A – “electrification of everything”] and do it the other way, you will need a large amount of Hydrogen, and a large Hydrogen store. Electrolysers are expensive, but we are doing/have done a feasibility study with ITM Power – to show the cost of electrolysers versus the cost of your wind turbines [My comment : but you’re going to need your wind turbines to run your electrolysers with their “spare” or “curtailed” kilowatt hours.]
[David Mackay, in questions from the floor] We can glue together [some elements]. Maybe the coming smart controls will help…can help save a load of energy. PassivSystems – control such things as your return temperature [in your Communal or District Heating]…instead of suing your heat provider [a reference to James Gallagher who has problems with his communal heating system at Parkside SE10], maybe you could use smart controls…
[Question] Isn’t using smart controls like putting a Pirelli tyre on a Ford Cortina ? Legacy of poor CHP/DH systems…
[David MacKay in response to the question of insulation] If insulation were enormously expensve, we wouldn’t have to be so enthusastic about it…We need a well-targeted research programme looking at deep retrofitting, instead of letting it all [heat] out.
[Adrian Gault, Committee on Climate Change] We need an effective Government programme to deliver that. Don’t have it in the Green Deal. We did have it [in the previous programmes of CERT and CESP], but since they were cancelled in favour of the Green Deal, it’s gone off a cliff [levels of insulation installations]. We would like to see an initiative on low cost insulation expanded. The Green Deal is not producing a response.
[Bill Watts, Max Fordham] Agree that energy efficiency won’t run on its own. But it’s difficult to do. Not talking about automatons/automation. Need a lot of pressure on this.
[Adrian Gault] Maybe a street-by-street approach…
[Michael Trousdell, Arup] Maybe a rule like you can’t sell a house unless you’ve had the insulation done…
[Peter Clegg] … We can do heat recovery – scavenging the heat from power stations, but we must also de-carbonise the energy supply – this is a key part of the jigsaw.
From: Richard A. Sears
Date: 24 February 2014
To: Jo Abbess
Subject: Question from your TED talk
I was looking back over older emails and saw that I had never responded to your note. It arrived as I was headed to MIT to teach for a week and then it got lost. Sorry about that.
Some interesting questions. I don’t know anybody working specifically on wind power to gas options. At one time Shell had a project in Iceland using geothermal to make hydrogen. Don’t know what its status is but if you search on hydrogen and Iceland on the Shell website I’m sure there’s something. If the Germans have power to gas as a real policy option I’d poke around the web for information on who their research partners are for this.
Here are a couple of high level thoughts. Not to discourage you because real progress comes from asking new questions, but there are some physical fundamentals that are important.
Direct air capture of anything using current technology is prohibitively expensive to do at scale for energy. More energy will be expended in capture and synthesis than the fuels would yield.
Gaseous fuels are problematic on their own. Gas doesn’t travel well and is difficult to contain at high energy densities as that means compressing or liquefying it. That doesn’t make anything impossible, but it raises many questions about infrastructure and energy balance. If we take the energy content of a barrel of oil as 1.0, then a barrel of liquefied natural gas is about 0.6, compressed natural gas which is typically at about 3600psi is around 0.3, and a barrel (as a measure of volume equal to 42 US gallons) of natural gas at room temperature and pressure is about 0.0015 (+/-). Also there’s a real challenge in storing and transporting gasses as fuel at scale, particularly motor fuel to replace gasoline and diesel.
While there is some spare wind power potential that doesn’t get utilized because of how the grid must be managed, I expect it is a modest amount of energy compared to what we use today in liquid fuels. I think what that means is that while possible, it’s more likely to happen in niche local markets and applications rather than at national or global scales.
If you haven’t seen it, a nice reference on the potential of various forms of sustainable energy is available free and online here. http://www.withouthotair.com/
Hope some of this helps.
Richard A. Sears
Department of Energy Resources Engineering
From: Jo Abbess
Date: 24 February 2014
To: Richard A. Sears
Many thanks for getting back to me. Responses are nice – even if they
are months late. As they say – better late than never, although with
climate change, late action will definitely be unwise, according to an
increasing number of people.
I have indeed seen the website, and bought and spilled coffee on the
book of Professor David MacKay’s “Sustainable Energy Without The Hot
Air” project. It is legendary. However, I have checked and he has only
covered alternative gas in a couple of paragraphs – in notes. By
contrast, he spent a long chapter discussing how to filter uranium out
of seawater and other nuclear pursuits.
Yet as a colleague of mine, who knows David better than I do, said to
me this morning, his fascination with nuclear power is rather naive,
and his belief in the success of Generation III and Generation IV
lacks evidence. Plus, if we get several large carbon dioxide
sequestration projects working in the UK – Carbon Capture and Storage
(CCS) – such as the Drax pipeline (which other companies will also
join) and the Shell Peterhead demonstration, announced today, then we
won’t need new nuclear power to meet our 4th Carbon Budget – and maybe
not even the 5th, either (to be negotiated in 2016, I hear) :-
We don’t need to bury this carbon, however; we just need to recycle
it. And the number of ways to make Renewable Hydrogen, and
energy-efficiently methanate carbon monoxide and carbon dioxide with
hydrogen, is increasing. People are already making calculations on how
much “curtailed” or spare wind power is likely to be available for
making gas in 10 years’ time, and if solar power in the UK is
cranked/ramped up, then there will be lots of juicy cost-free power
ours for the taking – especially during summer nights.
Direct Air Capture of carbon dioxide is a nonsensical proposition.
Besides being wrong in terms of the arrow of entropy, it also has the
knock-on effect of causing carbon dioxide to come back out of the
ocean to re-equilibrate. I recently read a paper by climate scientists
that estimated that whatever carbon dioxide you take out of the air,
you will need to do almost all of it again.
Instead of uranium, we should be harvesting carbon dioxide from the
oceans, and using it to make gaseous and liquid fuels.
Gaseous fuels and electricity complement each other very well –
particularly in storage and grid balancing terms – there are many
provisions for the twins of gas and power in standards, laws, policies
and elsewhere. Regardless of the limitations of gas, there is a huge
infrastructure already in place that can store, pipe and use it, plus
it is multi-functional – you can make power, heat, other fuels and
chemicals from gas. In addition, you can make gas from a range of
resources and feedstocks and processing streams – the key quartet of
chemical gas species keep turning up : hydrogen, methane, carbon
monoxide and carbon dioxide – whether you are looking at the exhaust
from combustion, Natural Gas, industrial furnace producer gas,
biological decomposition, just about everywhere – the same four gases.
Energy transition must include large amounts of renewable electricity
– because wind and solar power are quick to build yet long nuclear
power lead times might get extended in poor economic conditions. The
sun does not always shine and the wind does not always blow (and the
tide is not always in high flux). Since demand profiles will never be
able to match supply profiles exactly, there will always be spare
power capacity that grids cannot use. So Power to Gas becomes the
optimal solution. At least until there are ways to produce Renewable
Hydrogen at plants that use process heat from other parts of the
Renewable Gas toolkit. So the aims are to recycle carbon dioxide from
gas combustion to make more gas, and recycle gas production process
heat to make hydrogen to use in the gas production process, and make
the whole lot as thermally balanced as possible. Yes. We can do that.
Lower the inputs of fresh carbon of any form, and lower the energy
requirements to make manufactured gas.
I met somebody working with Jacobs who was involved in the Carbon
Recycling project in Iceland. Intriguing, but an order of magnitude
smaller than I think is possible.
ITM Power in the UK are doing a Hydrogen-to-gas-grid and methanation
project in Germany with one of the regions. They have done several
projects with Kiwa and Shell on gas options in Europe. I know of the
existence of feasibility reports on the production of synthetic
methane, but I have not had the opportunity to read them yet…
I feel quite encouraged that Renewable Gas is already happening. It’s
a bit patchy, but it’s inevitable, because the narrative of
unconventional fossil fuels has many flaws. I have been looking at
issues with reserves growth and unconventionals are not really
commensurate with conventional resources. There may be a lot of shale
gas in the ground, but getting it out could be a long process, so
production volumes might never be very good. In the USA you’ve had
lots of shale gas – but that’s only been supported by massive drilling
programmes – is this sustainable ?
BP have just finished building lots of dollars of kit at Whiting to
process sour Natural Gas. If they had installed Renewable Gas kit
instead of the usual acid gas and sulfur processing, they could have
been preparing for the future. As I understand it, it is possible to
methanate carbon dioxide without first removing it from the rest of
the gas it comes in – so methanating sour gas to uprate it is a viable
option as far as I can see. The hydrogen sulfide would still need to
be washed out, but the carbon dioxide needn’t be wasted – it can be
made part of the fuel. And when the sour gas eventually thins out,
those now methanating sour gas can instead start manufacturing gas
from low carbon emissions feedstocks and recycled carbon.
A normal, everyday Monday morning at Energy Geek Central. Yes, this is a normal conversation for me to take part in on a Monday morning. Energy geekery at breakfast. Perfect.
Nuclear Flower Power
This whole UK Government nuclear power programme plan is ridiculous ! 75 gigawatts (GW) of Generation III nuclear fission reactors ? What are they thinking ? Britain would need to rapidly ramp up its construction capabilities, and that’s not going to happen, even with the help of the Chinese. (And the Americans are not going to take too kindly to the idea of China getting strongly involved with British energy). And then, we’d need to secure almost a quarter of the world’s remaining reserves of uranium, which hasn’t actually been dug up yet. And to cap it all, we’d need to have 10 more geological disposal repositories for the resulting radioactive spent fuel, and we haven’t even managed to negotiate one yet. That is, unless we can burn a good part of that spent fuel in Generation IV nuclear fission reactors – which haven’t even been properly demonstrated yet ! Talk about unconscionable risk !
Baseload Should Be History By Now, But…
Whatever the technological capability for nuclear power plants to “load follow” and reduce their output in response to a chance in electricity demand, Generation III reactors would not be run as anything except “baseload” – constantly on, and constantly producing a constant amount of power – although they might turn them off in summer for maintenance. You see, the cost of a Generation III reactor and generation kit is in the initial build – so their investors are not going to permit them to run them at low load factors – even if they could.
There are risks to running a nuclear power plant at partial load – mostly to do with potential damage to the actual electricity generation equipment. But what are the technology risks that Hinkley Point C gets built, and all that capital is committed, and then it only runs for a couple of years until all that high burn up fuel crumbles and the reactors start leaking plutonium and they have to shut it down permanently ? Who can guarantee it’s a sound bet ?
If they actually work, running Generation III reactors at constant output as “baseload” will also completely mess with the power market. In all of the scenarios, high nuclear, high non-nuclear, or high fossil fuels with Carbon Capture and Storage (CCS), there will always need to be some renewables in the mix. In all probability this will be rapidly deployed, highly technologically advanced solar power photovoltaics (PV). The amount of solar power that will be generated will be high in summer, but since you have a significant change in energy demand between summer and winter, you’re going to have a massive excess of electricity generation in summer if you add nuclear baseload to solar. Relative to the demand for energy, you’re going to get more Renewable Energy excess in summer and under-supply in winter (even though you get more offshore wind in winter), so it’s critical how you mix those two into your scenario.
The UK Government’s maximum 75 GW nuclear scenario comprises 55 GW Generation III and 20 GW Generation IV. They could have said 40 GW Gen III to feed Gen IV – the spent fuel from Gen III is needed to kick off Gen IV. Although, if LFTR took off, if they had enough fluoride materials there could be a Thorium way into Gen IV… but this is all so technical, no MP [ Member of Parliament ] is going to get their head round this before 2050.
The UK Government are saying that 16 GW of nuclear by 2030 should be seen as a first tranche, and that it could double or triple by 2040 – that’s one heck of a deployment rate ! If they think they can get 16 GW by 2030 – then triple that by 10 years later ? It’s not going to happen. And even 30 GW would be horrific. But it’s probably more plausible – if they can get 16 GW by 2030, they can arguably get double that by 2040.
As a rule of thumb, you would need around 10 tonnes of fissionable fuel to kickstart a Gen IV reactor. They’ve got 106 tonnes of Plutonium, plus 3 or 4 tonnes they recently acquired – from France or Germany (I forget which). So they could start 11 GW of Gen IV – possibly the PRISM – the Hitachi thing – sodium-cooled. They’ve been trying them since the Year Dot – these Fast Reactors – the Breeders – Dounreay. People are expressing more confidence in them now – “Pandora’s Promise” hangs around the narrative that the Clinton administration stopped research into Fast Reactors – Oak Ridge couldn’t be commercial. Throwing sodium around a core 80 times hotter than current core heats – you can’t throw water at it easily. You need something that can carry more heat out. It’s a high technological risk. But then get some French notable nuclear person saying Gen IV technologies – “they’re on the way and they can be done”.
Radioactive Waste Disposal Woes
The point being is – if you’re commissioning 30 GW of Gen III in the belief that Gen IV will be developed – then you are setting yourself up to be a hostage to technological fortune. That is a real ethical consideration. Because if you can’t burn the waste fuel from Gen III, you’re left with up to 10 radioactive waste repositories required when you can’t even get one at the moment. The default position is that radioactive spent nuclear fuel will be left at the power stations where they’re created. Typically, nuclear power plants are built on the coast as they need a lot of cooling water. If you are going for 30 GW you will need a load of new sites – possibly somewhere round the South East of England. This is where climate change comes in – rising sea levels, increased storm surge, dissolving, sinking, washed-away beaches, more extreme storms […] The default spent fuel scenario with numerous coastal decommissioned sites with radioactive interim stores which contain nearly half the current legacy radioactive waste […]
Based on the figures from the new Greenpeace report, I calculate that the added radioactive waste and radioactive spent fuel arisings from a programme of 16 GW of nuclear new build would be 244 million Terabequerel (TBq), compared to the legacy level of 87 million TBq.
The Nuclear Decommissioning Authority (NDA) are due to publish their Radioactive Waste Inventory and their Report on Radioactive Materials not in the Waste Inventory at the end of January 2014. We need to keep a watch out for that, because they may have adapted their anticipated Minimum and Maxmium Derived Inventory.
Politics Is Living In The Past
What you hear from politicians is they’re still talking about “baseload”, as if they’ve just found the Holy Grail of Energy Policy. And failed nuclear power. Then tidal. And barrages. This is all in the past. Stuff they’ve either read – in an article in a magazine at the dentist’s surgery waiting room, and they think, alright I’ll use that in a TV programme I’ve been invited to speak on, like Question Time. I think that perhaps, to change the direction of the argument, we might need to rubbish their contribution. A technological society needs to be talking about gasification, catalysis. If you regard yourselves as educated, and have a technological society – your way of living in the future is not only in manufacturing but also ideas – you need to be talking about this not that : low carbon gas fuels, not nuclear power. Ministers and senior civil servants probably suffer from poor briefing – or no briefing. They are relying on what is literally hearsay – informal discussions, or journalists effectively representing industrial interests. Newspapers are full of rubbish and it circulates, like gyres in the oceans. Just circulates around and around – full of rubbish.
I think part of the problem is that the politicians and chief civil servants and ministers are briefed by the “Old Guard” – very often the ex-nuclear power industry guard. They still believe in big construction projects, with long lead times and massive capital investment, whereas Renewable Electricity is racing ahead, piecemeal, and private investors are desperate to get their money into wind power and solar power because the returns are almost immediate and risk-free.
Together in Electric Dreams
Question : Why are the UK Government ploughing on with plans for so much nuclear power ?
1. They believe that a lot of transport and heat can be made to go electric.
2. They think they can use spent nuclear fuel in new reactors.
3. They think it will be cheaper than everything else.
4. They say it’s vital for UK Energy Security – for emissions reductions, for cost, and for baseload. The big three – always the stated aim of energy policy, and they think nuclear ticks all those three boxes. But it doesn’t.
What they’ll say is, yes, you have to import uranium, but you’ve got a 4 year stock. Any war you’re going to get yourselves involved in you can probably resolve in 4 days, or 4 weeks. If you go for a very high nuclear scenario, you would be taking quite a big share of the global resource of uranium. There’s 2,600 TWh of nuclear being produced globally. And global final energy demand is around 100,000 TWh – so nuclear power currently produces around 2.6% of global energy supply. At current rates of nuclear generation, according to the World Nuclear Association, you’ve got around 80 years of proven reserves and probably a bit more. Let’s say you double nuclear output by 2050 or 2040 – but in the same time you might just have enough uranium – and then find a bit more. But global energy demand rises significantly as well – so nuclear will still only provide around 3% of global energy demand. That’s not a climate solution – it’s just an energy distraction. All this guff about fusion. Well.
Cornering The Market In Undug Uranium
A 75 GW programme would produce at baseload 590 TWh a year – divide by 2,600 – is about 23% of proven global uranium reserves. You’re having to import, regardless of what other countries are doing, you’re trying to corner the market – roughly a quarter. Not even a quarter of the market – a quarter of all known reserves – it’s not all been produced yet. It’s still in the ground. So could you be sure that you could actually run these power stations if you build them ? Without global domination of the New British Empire […]. The security issues alone – defending coastal targets from a tweeb with a desire to blow them up. 50 years down the line they’re full of radioactive spent fuel that won’t have a repository to go to – we don’t want one here – and how much is it going to cost ?
My view is that offshore wind will be a major contributor in a high or 100% Renewable Electricity scenario by 2050 or 2060. Maybe 180 GW, that will also be around 600 TWh a year – comparable to that maximum nuclear programme. DECC’s final energy demand 2050 – several scenarios – final energy demand from 6 scenarios came out as between roughly 1,500 TWh a year and the maximum 2,500 TWh. Broadly speaking, if you’re trying to do that just with Renewable Electricity, you begin to struggle quite honestly, unless you’re doing over 600 TWh of offshore wind, and even then you need a fair amount of heat pump stuff which I’m not sure will come through. The good news is that solar might – because of the cost and technology breakthroughs. That brings with it a problem – because you’re delivering a lot of that energy in summer. The other point – David MacKay would say – in his book his estimate was 150 TWh from solar by 2050, on the grounds that that’s where you south-facing roofs are – you need to use higher efficiency triple junction cells with more than 40% efficiency and this would be too expensive for a rollout which would double or triple that 150 TWh – that would be too costly – because those cells are too costly. But with this new stuff, you might get that. Not only the cost goes down, but the coverage goes down. Not doing solar across swathes of countryside. There have always been two issues with solar power – cost and where it’s being deployed.
Uh-Oh, Summer Days. Uh-Oh, Summer Nights
With the solar-wind headline, summer days and summer nights are an issue.
With the nuclear headline, 2040 – they would have up to 50 GW, and that would need to run at somewhere between 75% and 95% capacity – to protect the investment and electric generation turbines.
It will be interesting to provide some figures – this is how much over-capacity you’re likely to get with this amount of offshore wind. But if you have this amount of nuclear power, you’ll get this amount […]
Energy demand is strongly variable with season. We have to consider not just power, but heat – you need to get that energy out in winter – up to 4 times as much during peak in winter evenings. How are you going to do that ? You need gas – or you need extensive Combined Heat and Power (CHP) (which needs gas). Or you need an unimaginable deployment of domestic heat pumps. Air source heat pumps won’t work at the time you need them most. Ground source heat pumps would require the digging up of Britain – and you can’t do that in most urban settings.
District Heat Fields
The other way to get heat out to everyone in a low carbon world – apart from low carbon gas – is having a field-based ground source heat pump scheme – just dig up a field next to a city – and just put in pipes and boreholes in a field. You’re not disturbing anybody. You could even grow crops on it next season. Low cost and large scale – but would need a District Heating (DH) network. There are one or two heat pump schemes around the world. Not sure if they are used for cooling in summer or heat extraction in the winter. The other thing is hot water underground. Put in an extra pipe in the normal channels to domestic dwellings. Any excess heat from power generation or electrolysis or whatever is put down this loop and heats the sub-ground. Because heat travels about 1 metre a month in soil, that heat should be retained for winter. A ground source heat sink. Geothermal energy could come through – they’re doing a scheme in Manchester. If there’s a nearby heat district network – it makes it easier. Just want to tee it into the nearest DH system. The urban heat demand is 150 TWh a year. You might be able to put DH out to suburban areas as well. There are 9 million gas-connected suburban homes – another about 150 TWh there as well – or a bit more maybe. Might get to dispose of 300 TWh in heat through DH. The Green Deal insulation gains might not be what is claimed – and condensing gas boiler efficiencies are not that great – which feeds into the argument that in terms of energy efficiency, you not only want to do insulation, but also DH – or low carbon gas. Which is the most cost-effective ? Could argue reasonable energy efficiency measures are cheapest – but DH might be a better bet. That involves a lot of digging.
Gas Is The Logical Answer
But everything’s already laid for gas. (…but from the greatest efficiency first perspective, if you’re not doing DH, you’re not using a lot of Renewable Heat you could otherwise use […] )
The best package would be the use of low carbon gases and sufficient DH to use Renewable Heat where it is available – such as desalination, electrolysis or other energy plant. It depends where the electrolysis is being done.
The Age of Your Carbon
It also depends on which carbon atoms you’re using. If you are recycling carbon from the combustion of fossil fuels into Renewable Gas, that’s OK. But you can’t easily recapture carbon emissions from the built environment (although you could effectively do that with heat storage). You can’t do carbon capture from transport either. So your low carbon gas has to come from biogenic molecules. Your Renewable Gas has to be synthesised using biogenic carbon molecules rather than fossil ones.
[…] I’m using the phrase “Young Carbon”. Young Carbon doesn’t have to be from plants – biological things that grow.
Well, there’s Direct Air Capture (DAC). It’s simple. David Sevier, London-based, is working on this. He’s using heat to capture carbon dioxide. You could do it from exhaust in a chimney or a gasification process – or force a load of air through a space. He would use heat and cooling to create an updraft. It would enable the “beyond capture” problem to be circumvented. Cost is non-competitive. Can be done technically. Using reject heat from power stations for the energy to do it. People don’t realise you can use a lot of heat to capture carbon, not electricity.
Young Carbon from Seawater
If you’re playing around with large amounts of seawater anyway – that is, for desalination for irrigation, why not also do Renewable Hydrogen, and pluck the Carbon Dioxide out of there too to react with the Renewable Hydrogen to make Renewable Methane ? I’m talking about very large amounts of seawater. Not “Seawater Greenhouses” – condensation designs mainly for growing exotic food. If you want large amounts of desalinated water – and you’re using Concentrated Solar Power – for irrigating deserts – you would want to grow things like cacti for biological carbon.
Say you had 40 GW of wind power on Dogger Bank, spinning at 40% load factor a year. You’ve also got electrolysers there. Any time you’re not powering the grid, you’re making gas – so capturing carbon dioxide from seawater, splitting water for hydrogen, making methane gas. Wouldn’t you want to use flash desalination first to get cleaner water for electrolysis ? Straight seawater electrolysis is also being done.
It depends on the relative quantities of gas concentrated in the seawater. If you’ve got oxygen, hydrogen and carbon dioxide, that would be nice. You might get loads of oxygen and hydrogen, and only poor quantities of carbon dioxide ?
But if you could get hydrogen production going from spare wind power. And even if you had to pipe the carbon dioxide from conventional thermal power plants, you’re starting to look at a sea-based solution for gas production. Using seawater, though, chlorine is the problem […]
Look at the relative density of molecules – that sort of calculation that will show if this is going to fly. Carbon dioxide is a very fixed, stable molecule – it’s at about the bottom of the energy potential well – you have to get that reaction energy from somewhere.
How Much Spare Power Will There Be ?
If you’ve got an offshore wind and solar system. At night, obviously, the solar’s not working (unless new cells are built that can run on infrared night-time Earthshine). But you could still have 100 GWh of wind power at night not used for the power grid. The anticipated new nuclear 40 GW nuclear by 2030 will produce about 140 GWh – this would just complicate problems – adding baseload nuclear to a renewables-inclusive scenario. 40 GW is arguably a reasonable deployment of wind power by 2030 – low if anything.
You get less wind in a nuclear-inclusive scenario, but the upshot is you’ve definitely got a lot of power to deal with on a summer night with nuclear power. You do have with Renewable Electricity as well, but it varies more. Whichever route we take we’re likely to end up with excess electricity generation on summer nights.
In a 70 GW wind power deployment (50 GW offshore, 20 GW onshore – 160 TWh a year), you might have something like 50 to 100 GWh per night of excess (might get up to 150 GWh to store on a windy night). But if you have a 16 GW nuclear deployment by 2030 (125 TWh a year), you are definitely going to have 140 GWh of excess per night (that’s 16 GW for 10 hours less a bit). Night time by the way is roughly between 9pm and 7am between peak demands.
We could be making a lot of Renewable Gas !
Can you build enough Renewable Gas or whatever to soak up this excess nuclear or wind power ?
The energy mix is likely to be in reality somewhere in between these two extremes of high nuclear or high wind.
But if you develop a lot of solar – so that it knocks out nuclear power – it will be the summer day excess that’s most significant. And that’s what Germany is experiencing now.
Choices, choices, choices
There is a big choice in fossil fuels which isn’t really talked about very often – whether the oil and gas industry should go for unconventional fossil fuels, or attempt to make use of the remaining conventional resources that have a lower quality. The unconventionals narrative – shale gas, coalbed methane, methane hydrates, deepwater gas, Arctic oil and gas, heavy oil, is running out of steam as it becomes clear that some of these choices are expensive, and environmentally damaging (besides their climate change impact). So the option will be making use of gas with high acid gas composition. And the technological solutions for this will be the same as needed to start major production of Renewable Gas.
But you still need to answer the balancing question. If you have a high nuclear power scenario, you need maybe 50 TWh a year of gas-fired power generation. If high Renewable Electricity, you will need something like 100 TWh of gas, so you need Carbon Capture and Storage – or low carbon gas.
Even then, the gas power plants could be running only 30% of the year, and so you will need capacity payments to make sure new flexible plants get built and stay available for use.
If you have a high nuclear scenario, coupled with gas, you can meet the carbon budget – but it will squeeze out Renewable Electricity. If high in renewables, you need Carbon Capture and Storage (CCS) or Carbon Capture and Recycling into Renewable Gas, but this would rule out nuclear power. It depends which sector joins up with which.
Carbon Capture, Carbon Budget
Can the Drax power plant – with maybe one pipeline 24 inches in diameter, carrying away 20 megatonnes of carbon dioxide per year – can it meet the UK’s Carbon Budget target ?
I was talking with people at my friend’s big birthday bash yesterday. I mentioned I’m writing about Renewable Gas, and this led to a variety of conversations. Here is a kind of summary of one of the threads, involving several people.
Why do people continue to insist that the wind turbine at Reading uses more energy than it generates ?
Would it still be there if it wasn’t producing power ? Does David Cameron still have a wind turbine on his roof ? No. It wasn’t working, so it was taken down. I would ask – what are their sources of information ? What newspapers and websites do they read ?
They say that the wind turbine at Reading is just there for show.
Ah. The “Potemkin Village” meme – an idyllic-looking setting, but everything’s faked. The Chinese painting the desert green, etc.
And then there are people that say that the only reason wind farms continue to make money is because they run the turbines inefficiently to get the subsidies.
Ah. The “De-rating Machine” meme. You want to compare and contrast. Look at the amount of money, resources, time and tax breaks being poured into the UK Continental Shelf, and Shale Gas, by the current Government.
Every new technology needs a kick start, a leg up. You need to read some of the reports on wind power as an asset – for example, the Offshore Valuation – showing a Net Present Value. After it’s all deployed, even with the costs of re-powering at the end of turbine life, offshore North Sea wind power will be a genuine asset.
What I don’t understand is, why do people continue to complain that wind turbines spoil the view ? Look at the arguments about the Jurassic Coast in Dorset.
I have contacts there who forward me emails about the disputes. The yachtsmen of Poole are in open rebellion because the wind turbines will be set in in their channels ! The tourists will still come though, and that’s what really counts. People in Dorset just appear to love arguing, and you’ve got some people doing good impressions of curmudgeons at the head of the branches of the Campaign for the Protection of Rural England (CPRE) and English Heritage.
There are so many people who resist renewable energy, and refuse to accept we need to act on climate change. Why do they need to be so contrarian ? I meet them all the time.
People don’t like change, but change happens. The majority of people accept that climate change is significant enough to act on, and the majority of people want renewable energy. It may not seem like that though. It depends on who you talk with. There’s a small number of people who vocalise scepticism and who have a disproportionate effect. I expect you are talking about people who are aged 55 and above ?
Example : “Climate Change ? Haw haw haw !” and “Wind turbines ? They don’t work !” This is a cohort problem. All the nasty white racists are dying and being buried with respect by black undertakers. All the rabid xenophobes are in nursing homes being cared for in dignity by “foreigners”. Pretty soon Nigel Lawson could suffer from vascular dementia and be unable to appear on television.
The media have been insisting that they need a balance of views, but ignoring the fact that the climate change “sceptics” are very small in number and not backed up by the science.
Why does Nigel Lawson, with all his access and privilege, continue to insist that global warming is not a problem ?
Fortunately, even though he’s “establishment” and has more influence than he really should have, the people that are really in charge know better. He should talk to the climate change scientists – the Met Office continue to invite sceptics to come and talk with them. He should talk to people in the energy sector – engineers and project managers. He should talk to people in the cross-party Parliamentary groups who have access to the information from the expert Select Committees.
And what about Owen Paterson ? I cannot understand why they put a climate change sceptic in charge of the Department of the Environment.
Well, we’ve always done that, haven’t we ? Put Ministers in Departments they know nothing about, so that they can learn their briefs. We keep putting smokers in charge of health policy. Why do you think he was put in there ?
To pacify the Conservative Party.
But I know Conservative Party activists who are very much in favour of renewable energy and understand the problems of climate change. It’s not the whole Party.
We need to convince so many people.
We only need to convince the people who matter. And anyway, we don’t need to do any convincing. Leaders in the energy industry, in engineering, in science, in Government (the real government is the Civil Service), the Parliament, they already understand the risks of climate change and the need for a major energy transition.
People should continue to express their views, but people only vote on economic values. That’s why Ed Miliband has pushed the issue of the cost of energy – to try to bring energy to the forefront of political debate.
What about nuclear fusion ?
Nuclear fusion has been 35 years away for the last 35 years. It would be nice to have, because it could really solve the problem. Plus, it keeps smart people busy.
What about conventional nuclear fission power ?
I say, “Let them try !” The Hinkley Point C deal has so many holes in it, it’s nearly collapsed several times. I’m sure they will continue to try to build it, but I’m not confident they will finish it. Nuclear power as an industry is basically washed up in my view, despite the lengths that it goes to to influence society and lobby the Government.
It’s going to be too late to answer serious and urgent problems – there is an energy crunch approaching fast, and the only things that can answer it are quick-to-build options such as new gas-fired power plants, wind farms, solar farms, demand reduction systems such as shutting down industry and smart fridges.
How can the energy companies turn your fridge off ?
If the appliances have the right software, simple frequency modulation of the power supply should be sufficient to trip fridges and freezers off. Or you could connect them to the Internet via a gateway. The problem is peak power demand periods, twice a day, the evening peak worse than the morning. There has been some progress in managing this due to switching light bulbs and efficient appliances, but it’s still critical. Alistair Buchanan, ex of Ofgem, went out on a limb to say that we could lose all our power production margins within a couple of years, in winter.
But the refrigerators are being opened and closed in the early evening, so it would be the wrong time of day to switch them off. And anyway, don’t the fridges stop using power when they’re down to temperature ?
Some of these things will need to be imposed regardless of concerns, because control of peak power demand is critical. Smart fridges may be some years away, but the National Grid already have contracts with major energy users to shed their load under certain circumstances. Certain key elements of the energy infrastructure will be pushed through. They will need to be pushed through, because the energy crunch is imminent.
The time for democracy was ten years ago. To get better democracy you need much more education. Fortunately, young people (which includes young journalists) are getting that education. If you don’t want to be irritated by the views of climate change and energy sceptics, don’t bother to read the Daily Telegraph, the Daily Express, the Daily Mail, the online Register or the Spectator. The old school journalists love to keep scandal alive, even though any reason to doubt climate change science and renewable energy died in the 1980s.
Although I’ve long since stopped trusting what a journalist writes, I’m one of those people who think that you should read those sources.
I must admit I do myself from time to time, but just for entertainment.
In the long view, some things are inevitable, and I don’t just mean death and taxes. Within the lifetime of children born today, there must be a complete transformation in energy. The future is renewable, and carefully deployed renewable energy systems can be reliable, sustainable and low cost, besides being low in carbon dioxide emissions to air. This climate safety response is also the answer to a degradation and decline in high quality mineral hydrocarbons – the so-called “fossil” fuels. Over the course of 2014 I shall be writing about Renewable Gas – sustainable, low emissions gas fuels made on the surface of the earth without recourse to mining for energy. Renewable Gas can store the energy from currently underused Renewable Electricity from major producers such as wind and solar farms, and help to balance out power we capture from the variable wind and sun. Key chemical players in these fuels : hydrogen, methane, carbon monoxide and carbon dioxide. Key chemistry : how to use hydrogen to recycle the carbon oxides to methane. How we get from here to there is incredibly important, and interestingly, methods and techniques for increasing the production volumes of Renewable Gas will be useful for the gradually fading fossil fuel industry. Much of the world’s remaining easily accessible Natural Gas is “sour” – laced with high concentrations of hydrogen sulfide and carbon dioxide. Hydrogen sulfide needs to be removed from the gas, but carbon dioxide can be recycled into methane, raising the quality of the gas. We can preserve the Arctic from fossil gas exploitation, and save ourselves from this economic burden and ecological risk, by employing relatively cheap ways to upgrade sour Natural Gas, from Iran, for example, while we are on the decades-long road of transitioning to Renewable Gas. The new burn is coming.
I generally avoid reading The Economist magazine – apart from the Science and Technology section – as it tends to make my blood boil. The writing style frequently includes such things that I would describe as casual generalisation, unquestioned third party claims, suppositions used in place of factual account, and the selective use of statistics to construct meaning – all of which have the power to annoy. Sometimes an article has so many trigger points, that I simply cannot finish reading it.
This week I risked reading an article recommended to me about power generation in Europe, and I was pretty soon gnashing my teeth and wailing. I was indignant because the arguments being used ignored vital parts of European energy policy, and just parroted the complaints of utility companies, without challenging them, whilst at the same time ignoring the energy sector blackmail and brinkmanship. The article contradicted itself about energy investment and energy prices, and failed to make the case for utilities to diversify in order to survive.
“[…] During the 2000s, European utilities overinvested in generating capacity from fossil fuels, boosting it by 16% in Europe as a whole and by more in some countries […] The market for electricity did not grow by nearly that amount, even in good times; then the financial crisis hit demand. According to the International Energy Agency, total energy demand in Europe will decline by 2% between 2010 and 2015.”
“[…] the old-fashioned utilities […] So far, it is true, they have managed to provide backup capacity and the grid has not failed, even in solar- and wind-mad Germany. […] But […] it is getting harder to maintain grid stability. […] The role of utilities as investors is […] being threatened. […]”
How can the privatised power utilities on the one hand have “overinvested”, and at the same time not invested enough to protect the grid in future ?
The article writer misses several key points. The underlying reasons for investment in Europe in fossil fuel-fired generation during the 2000s was not in anticipation of higher power demand. The vast majority of new investment in the period 2000 to 2010 in the European Union was in Natural Gas-fired power plants, in anticipation of carbon emissions control and other environmental policy, and in anticipation of the retirement of a number of power plants reaching the ends of their lives. It was also viewed as a no-regrets option given there were plans to diversify the unified European power market to increase competitiveness – incorporating new, smaller players, and new, variable renewable power resources. Flexible gas generation would therefore always be in demand – the ability to turn off and on as required. Requiring gas plants to operate flexibly divorces generation capacity from generation demand, and so invalidates The Economist writer’s statement.
And on to the problem of a contradiction over prices :-
“[…] Renewable, low-carbon energy accounts for an ever-greater share of production. It is helping push wholesale electricity prices down, and could one day lead to big reductions in greenhouse-gas emissions. For established utilities, though, this is a disaster. […] In short, they argue, the growth of renewable energy is undermining established utilities and replacing them with something less reliable and much more expensive. […]”
How can renewable electricity be lowering the prices of wholesale power, and yet also be replacing established utilities with something “much more expensive” ?
I think the clue for this poor reasoning lies with a faulty interpretation of Germany’s Renewable Energy Surcharge – the EEG-Umlage, which is held up as the proof that green power costs more than fossil fuel power. The article says :-
“[…] Electricity prices have fallen from over €80 per MWh at peak hours in Germany in 2008 to just €38 per MWh now […] These are wholesale prices; residential prices are €285 per MWh, some of the highest in the world, partly because they include subsidies for renewables that are one-and-a-half times, per unit of energy, the power price itself). […]”
The Economist’s calculation of the green power subsidies at “one-and-a-half times” the wholesale power price is €57/MWh, so that’s only 20% of the total price of power to the consumer. Other costs besides the actual wholesale cost of the electricity, add up to €190, 67% of the cost of power to the household – far more of an impact than the renewable energy subsidies. I found the data from the BDEW to confirm these figures – from the “Power prices for households” presentation for May 2013, the price of electricity for consumers (for a standard three person house) is at €287.3/MWh, and the combination of Renewable Energy surcharges – including the VAT and the Offshore Wind surcharge – come to €59.82/MWh. So the numbers aren’t wrong, but the way The Economist article paragraph is written it gives the impression that asking end consumers to pay the costs of transitioning to green power is a huge burden. It’s not.
These charges to households would be less if all energy users were to participate in paying for the renewable energy subsidies – but some companies do not, using the argument of anti-competitiveness. If they have to pay the surcharge, they reason, they will lose business to other countries. Quite effective blackmail, burdening the end consumer with higher power bills. In addition the electricity supply companies are trying to maintain their profit margins so may not be passing all the reductions in power costs to their consumers. One calculation suggests the total cost of Germany’s power will reduce by over €5.5 billion in 2014, and yet household electricity costs are expected to rise. The heightening effect of the Renewable Energy Act (EEG) surcharge on power prices is not going to last forever, however, as it’s promoting cheaper wholesale prices, and building in protection from the risks of sharply-rising prices for fossil fuels. Electricity supply companies are going to be able to sell progressively cheaper energy, and this differential will eventually reach the consumers, even if that needs to be legislatively enforced.
Next, on to the assertion that increasing renewable electricity is pushing flexible gas-fired power generation out of the frame :-
“[…] Renewables have “grid priority”, meaning the grid must take their electricity first. This is a legal requirement, to encourage renewable energy in Europe. But it is also logical: since the marginal cost of wind and solar power is zero, grids would take their power first anyway. […] But unlike the baseload providers already in place (nuclear and coal), solar and wind power are intermittent, surging with the weather. […] Now, when demand fluctuates, it may not be enough just to lower the output of gas-fired generators. Some plants may have to be switched off altogether and some coal-fired ones turned down. […] It is costly because scaling back coal-fired plants is hard. It makes electricity prices more volatile. And it is having a devastating effect on profits. […] Gérard Mestrallet, chief executive of GDF Suez, the world’s largest electricity producer, says 30GW of gas-fired capacity has been mothballed in Europe since the peak, including brand-new plants. The increase in coal-burning pushed German carbon emissions up in 2012-13, the opposite of what was supposed to happen.”
The real core of this issue is that baseload is history – or it should be – and it will be for Germany in the near future – as some coal-fired power plants will need to close or be transitioned under the Large Combustion Plants Directive, and it’s successor, the Industrial Emissions Directive (9,000 coal-fired installations will be affected by the IED); and the nuclear power plants are all scheduled to close. It is very unlikely that much in the way of new European nuclear power will come on-stream within the next 15 years. The price of coal fuel might stay reasonable, due to a number of factors, but the cost of burning it is likely to become higher, so the baseload paradigm should be well and truly broken.
That gas-fired power plants would be finding profit margins slim is something that has been anticipated widely, so it’s not exactly a shock, although it’s being used as a bargaining chip by utilities in ongoing negotations to launch an EU-wide “Capacity Market” for flexible power generation (principally gas, of course, since neither nuclear nor coal are flexible, and coal is practically on the edge of extinction in policy terms).
“[…] Gas plant closures : One of the biggest impacts of the disturbed gas and electricity markets is the rapid closure of numerous gas plants in the region. A recent study by IHS estimates that about 130,000 MW (130 GW) of gas plants across Europe (around 60% of the total installed gas fired generation in the Region) are currently not recovering their fixed costs and are at a risk of closure by 2016. These plants – essential to safeguarding security of supply during peak hours – are being replaced by volatile and unforecastable renewable energy installations that are heavily subsidised. […]”
“[…] The pain being suffered by owners of European gas-fired power plant has escalated over the last 12 months. Weak power demand, subsidised renewable build and relatively high gas prices have conspired to crush gas fired generation margins […] It is difficult to imagine how market sentiment around gas-fired plant could get much worse. About a year ago we questioned the prospect of a European gas plant bust in the form of plant mothballing, closures and the distressed sale of assets. There is clear evidence of a bust gathering steam in 2013, with a number of utilities pursuing exactly these actions. […]”
Instead of complaining and game-playing, electricity utilities should accept the need to adapt. In line with EU Directives, they can expect to be able to make a good profit by diversifying into energy services – so they end up not simply selling energy, but selling energy demand control. They would move from being E. Co.’s to ESCOs. If they accept the challenge to diversify, they can keep their shareholders happy, and they will be able to survive the slim margins they can make from gas-fired electricity generation during periods of peak demand, or to load balance grids increasingly dependent on renewable electricity generation.
If the power utilities fail to adapt, they’re not too big to fail. I would suggest that European Governments renationalise them, as we’re going to have to fork out gazillions of euros to keep the Capacity Market running the way the utilities would like, so we might as well own the assets, too.