Sunday, 17 March 2019

Labour undermines renewable energy pledges with state ownership plan for new nuclear power plant

Labour's energy spokesperson, Rebecca Long-Bailey, having previously pledged to put renewable energy on top of the energy agenda has now relegated it far below nuclear power. They have done this with a pledge to take partial state ownership of new nuclear power projects and saying they will do this for nuclear projects that have been abandoned. But giving state priority to these projects, far from keeping the lights on will actually ruin the chances of aspiring renewable energy generators.

The figures speak for themselves. Bailey pledges to reverse what she calls the Government's 'cancellations' of new nuclear projects (Moorside, Oldbury, Wylfa) (factcheck; it was the developers who cancelled them despite being promised tens of billions of state aid). If these projects are brought on line (in addition to the existing Sizewell B and still-not-cancelled projects of Hinkley C and Sizewell C) then nuclear generation will climb to at least 35 per cent of current generation - and even that does not count the Chinese led project at Bradwell.

Meanwhile renewable energy generated 33% of UK electricity in 2018, a figure that, with the recently announced 'sector deal' for offshore wind, will increase to around 65% by 2030 even without any more onshore wind and solar pv which the Labour Party claims to support. It doesn't need a mathematical genius to work out that with 35% coming from nuclear power, there simply will not be any market space for any more renewable energy.

Yet renewable energy, as we have discussed is cheap, becoming cheaper, and needs little or no public subsidy - a big contrast with nuclear, which despite all the promised support, high consumer subsidies, public guarantees of loan funding (none of which is available for new renewable schemes) has failed so far to generate a single kWh. And it will not until at least 2026 even if EDF's schedules for Hinkley C construction prove (miraculously in the light of recent nuclear construction history) to be achievable.

Of course there's no electricity generation shortfall in the near term, and in the medium term there cannot be either, given the amount of renewable energy coming online. There's no capacity shortage either, and there certainly won't be in the medium term given the potential replacement of up to 30 per cent of  our peak generating capacity by battery storage, or failing that, flexible gas generation. That's going to be much cheaper than nuclear power and much more certainly brought on line when we want it compared to nuclear. Batteries will be much cheaper than nuclear and right now gas engines and open cycle plant that are twenty times cheaper than nuclear power to install.

Even if only some of the new nuclear power which Labour wants to back came online, new renewable energy would still be crowded out. This is because electricity contracts given to nuclear power give them 'dispatch priority' over renewable energy, causing windfarms and solar farms to be turned off to give priority to nuclear power. Indeed, this is already happening with our current levels of nuclear and renewables, with, ironically, renewable energy detractors blaming the problem (and the compensation paid to the windfarms) on the windfarms themselves. So not only, in the future are we going to sink into an amazing public morass of handouts to fund these nuclear power stations, but in the process, at best, we are going to be ordering the turning off of renewable energy and paying the operators compensation for this! Of course this is crazy, and the result will be that many windfarms and solar will not be built if the new Labour plan to give priority to nuclear power is implemented.

What Labour ought to be talking about is how to expand the opportunities to substitute fossil fuels used in transport and heating so that the vast potential of renewable energy can be harnessed. Rather than throwing billions upon billions down nuclear black holes we need to spend (less) money on demonstration schemes for large scale heat pumps to serve new district heating systems, funding a much quicker roll-out of fast charge points for electric vehicles, reorganising the regulatory system to favour demand side response, decentralised generation and battery storage. I have written about how independent companies are doing this.  We need to support them. not nuclear power. In recent years electricity consumption has been falling, partly because of energy efficiency measures. We need to expand this strategy as well as giving more long term power purchase agreements to wind power and solar power both onshore and offshore.

There's certainly no shortage of renewable energy options. The Scottish Government is holding a consultation about issuing new offshore wind leases, and there is tremendous amount of onshore wind and solar pv being wasted, and then there are other renewable energy sources being seveloped, tidal of various sorts, and wave power.. Why doesn't the Labour Party insist on new buildings having to have solar pv installed by law (unless developers can show very good reason why not).

Instead of giving priority to these things Labour have come out with a daft policy that threatens to take us back to the dinosaur age by comparison.

I really hate to say this, but because the Tories have actually (so far) stopped short of the financial insanities involved in getting all of the projected new more nuclear power stations online and are thus leaving some space for new renewable energy schemes, there is actually a plausible argument to say that now, compared to Labour's new policy position the Conservative Party policy actually favours renewable energy more than Labour!

References:

https://labour.org.uk/press/tory-energy-cancellations-risk-power-20-million-homes-rebecca-long-bailey/

https://realfeed-intariffs.blogspot.com/2019/03/hammond-floats-scheme-to-offer-many.html

https://realfeed-intariffs.blogspot.com/2019/03/three-independent-led-developments-that.html

https://www.gov.uk/government/speeches/statement-on-suspension-of-work-on-thewylfa-newyddnuclear-project

Friday, 15 March 2019

How Wednesday's vote on Brexit postponement mirrors the Tories' catastrophic split in 1846

The split in the Conservative Party on Wednesday night when the majority of Tory MPs voted against the Government's proposals to delay Brexit is eerily similar to the catastrophic split the Tory Party suffered in 1846 as PM Robert Peel oversaw the repeal of the the Corn Laws. In 1846 the Tory party split irrevocably into two factions, one of which, the 'Peelites' later merged with the Whigs and Radicals to form the Liberal Party. The Tories were out of office for most of the next 30 years.

On Wednesday Mrs May, reflecting an earlier Commons vote to do all things possible to avoid  'no-deal' Brexit, proposed a motion saying that the Government would ask for Article 50 to be suspended.  - Not jut until the end of June, but potentially  for a long period if the Withdrawal Agreement (WA) was not approved by the House of Commons by March 20th. The motion was amazing in the sense that it was opposed by 60 per cent of the Tory MPs, and gained a majority (a good one at that) by dint of support from the Opposition. In 1846 Peel got his repeal of the Corn laws passed, but only after the measure was opposed by two-thirds of Tory MPs and passed with the help of the Opposition.
Of course May has an advantage over Peel in the sense that she has some levers to force the DUP and the hard line Brexiteers into line. With the DUP it is a question of squeezing their supporters with the threat of a no-deal tariff regime that allows tariff free access to goods from the Republic while having tariffs on good going south, something that would hit DUP supporting farmers where it hurts. That's the stick. The carrot is an offer of money to the DUP.
How much is a backstop worth? Or how much will the DUP have to be paid so that they will accept some face-saving gesture to get them to vote for the WA? And then the hardline Brexiteers are threatened with a scenario that a long Brexit delay could ultimately lead to a soft-deal Brexit or even a referendum and no Brexit at all.
Yes, Mrs May could go down as a modern version of Peel who ended up irrevocably splitting the Tories. Alternatively she could end up victorious and getting her WA passed and being hailed as a political magician....well for three weeks at least, before it sinks in that in terms of negotiating a final relationship with the EU, that was the easy bit!
On the other hand, if her Withdrawal Agreement is not approved..............

Wednesday, 13 March 2019

Hammond floats scheme to offer many billions of state handouts to nuclear power

While Philip Hammond was busy offering a few marginal measures for green energy he is busy planning to give nuclear power a massive multibillion state funded boost. Clothed in talk of a new means financing infrastructure projects is a silkily wrapped poison pill involving a massive public handout to nuclear power. 

Heralded as a key accompaniment to today's Spring Budget statement there is a misleading message that the Government is to adopt so-called 'Regulated Asset Base' (RAB) financing of nuclear power projects. This is said to be a successor vehicle to the much-abused PFI system. But if deployed to aid nuclear power the result, is likely to be much much worse than any horrors that have come from even PFI. 


In fact the notion of RAB financing is being grotesquely distorted to hide the fact that this is a cover for the Government risking very large sums of money to be lent to nuclear power developers. Put simply, if the nuclear power projects are as expensive as they usually are the electricity consumer will lose an awful lot of money and prices will be jerked upwards. Either that or the taxpayer takes a hit and funding of public services suffer big time.

You can see the cover up reproduced in the impression given by the Government to the Financial Times today where, we are told that 'For new nuclear power stations, for example, the government is keen on the use of “RAB” (regulated asset base) financing of the sort used to build the Thames Tideway tunnel' Under such schemes the developers are allowed to charge consumers in advance for the capital building projects.

What Ministers are not emphasising of course, is that in industries such as water the Government does not lend lots of money to the privatised companies. They raise this on private markets. But in the case of nuclear power plants the bulk of the money needed to build them will be borrowed from the Government. So if the nuclear plant has very big delays and cost overruns (as has happened to ALL nuclear power plant built in the West this century), the Government loses shedloads of money. The Treasury is likely to insist that this gets paid for by adding the (large) sums to electricity consumer bills.

RAB has been used to try to finance nuclear power plant in the USA, in the states of Georgia and South Carolina recently. The result was disaster and the developing company, Westinghouse, went bust. But this was 'normal' RAB where the developer takes the risk of cost overruns. But in the proposed UK nuclear version it will be the electricity consumer who goes bust when the almost inevitable cost-overruns set in!

The nuclear RAB is really a cover for a nuclear bailout. So let's call it a 'nuke bailout RAB'.

This will be embarrassing to navigate through the EU's state-aid rules (assuming we don't go down in a 'no-deal' Brexit) since the scheme will be seen as blatantly favouring the nuclear industry over renewable energy schemes who will not be offered such terms.

It will also produce a strange phenomenon, where, almost certainly the UK Government will end up bailing out foreign Governments. That's because (assuming Hitachi does withdraw from the Wylfa project) the only companies likely to take the risk of building more nuclear plant in the UK are owned either by the French or Chinese Governments. French owned EDF is already angling for Sizewell C to be funded by this 'nuke bailout' RAB. It is rumoured that CGN, the Chinese state owned nuclear developer (who want to develop a plant at Bradwell) could also take up Hitachi’s current option at Wylfa.

But private companies now want nothing to do with British nuclear power (or any for that matter) unless the Government agrees to underwrite all costs overruns. Under the Treasury approved version of nuke bailout RAB only the Government's liability for costs overruns is limited to the amount that the Government lend (which did not satisfy Hitachi). Hence only (foreign) Government owned developers will be able to get some of their losses paid for by the British Government.

What makes this move even more infuriating for green energy supporters is that Hammond offered what amount to a few superficial titbits for green energy in his Spring statement. Meanwhile renewable energy projects will not be able to take part in RAB projects. Not only will nuclear power be funded under much more preferential terms compared to offshore or onshore renewable energy projects but they will be directly funded by government and large parts, if not all, of their liabilities guaranteed by the treasury - again something that does not apply to renewable energy.

See FT: https://www.ft.com/content/330b5896-44e4-11e9-a965-23d669740bfb

Friday, 8 March 2019

The real story about the stricken Hunterston B nuclear power station


Incorrect Statements in BBC News “Hunterston B: Pictures show cracks in Ayrshire nuclear reactor”
By Dr IAN FAIRLIE, Independent Consultant and
Dr DAVID TOKE, Reader in Energy Policy at the University of Aberdeen

On March 8, the BBC published a news item (https://www.bbc.co.uk/news/uk-scotland-47485321)  about cracks in the Hunterston B nuclear reactors. Whilst it is good that the story highlighted reporting of the safety issues surrounding the plant and, in particular, included photographs of the cracked graphite core, we wish to correct several inaccuracies.  
The BBC article claims that early decommissioning could cause serious energy supply problems. This is simply not the case and is alarmist nonsense: the reality is that Scotland has, if anything, an oversupply of electricity. Both Hunterston and Torness could be closed without problem to Scotland’s electricity supplies. See https://www.ianfairlie.org/news/why-hunterston-b-nuclear-power-station-should-not-be-restarted/
The BBC article then stated it would probably mean more power coming from fossil fuels such as gas. Again this is incorrect: most likely it would come from the renewables. Again see https://www.ianfairlie.org/news/why-hunterston-b-nuclear-power-station-should-not-be-restarted/

The BBC article claims that Hunterston “supports around 700 posts”. This is incorrect. According to ONS data, AGR stations like Hunterston B in fact provide about 350 direct jobs on average.

The BBC article then states that “Concerns have also been raised about the consequences for local jobs if Hunterston closed early.”As pointed out in our article, few if any jobs would be lost if the reactors Hunterston B were closed permanently: dealing with the immense heat rates from radioactive decay even from closed reactors will guarantee jobs there for the first 2 to 3 years. After that decommissioning will provide more jobs then when the reactors operated, just as is occurring at the closed reactors at Dounreay. 

The BBC cites Councillor Tom Marshall as stating: "Most of the large employers round about here have disappeared - and this is one of the last major employers. So, if it is safe to run most people locally would be happy to see it running."

We obviously share the concerns of local people about deindustrialisation and the appalling effects of the UK Government’s uncivilised austerity programmes in Scotland. But local councillors should not be misled by incorrect statements by the nuclear industry. Closing Hunterston B for good will not lead to large numbers of job losses: the contrary in fact.

Dr Ian Fairlie
Dr David Toke

Three independent-led developments that herald the way towards the renewable-energy-storage revolution

In the last couple of weeks three developments led by independent companies herald the beginning of the renewables-plus-storage revolution in the UK. Slowly but surely companies using battery technology are edging forward towards what will be  a means of balancing very high levels of renewable energy generation without the need of fossil fuel reserve. But it is independent companies that are leading the way in this  - with the big companies and utilities issuing little more than PR gestures while their business model is gradually undermined. 

Three developments in the past couple of weeks indicate great progress is being made. One was the start of the installation of a subsidy free solar plus battery project by the independent sustainable energy company Gridserve. Second is the opening up, by OFGEM,  of the electricity balancing market to 'aggregators' who can put together solar pv and battery units in houses to provide balancing services. This will allow companies like Social Energy to use digital technology to link together home solar energy and storage systems to provide not only energy but services that will be equivalent to capacity to increasing portions of the electricity market. The third development was the start of a programme to build storage systems to substitute for electricity distribution upgrades to provide power for bus depots, again, something being done by an independent company. This is being done by Zenobe. All these developments will not only reduce the need for extra grid and distribution capacity, but also they will reduce the need for peak generating capacity.

Already storage systems are providing increasing amounts of short term 'frequency response' services to balance the grid. But now Ofgem has allowed aggregators to enter the balancing mechanism without registering as a full blown energy supplier. The amount of storage, while limited at the moment, is going to grow very quickly from three sources: home based storage, distribution based storage and electric vehicles through their batteries.

This opens to door for storage and renewables to reach much further into the electricity markets and pave the way for peak electricity generating capacity to be replaced by renewables - plus storage. By this I mean a third of our electrical generating capacity (20 GW out of 60) is peak, so potentially we could dispense with most of that peak with storage. Peaks occur. typically (in the UK) at morning and in evening. The peak lasts for 2 hours. So in order to provide storage to cover for this we need, say, 2(hours) xs by 20GW gives you a need of 40GWh storage to avoid 20 GW peak capacity for each peak time session. 

Well, for example, each Nissan Leaf has 24kWh storage, so if you used only half of that and there were 10 million cars with equivalent batteries, you'd have that's 10 million xs 12kWh storage or 100 GWh. - And you can have home based or industrially based batteries to do the same and more. In other words the potential is massive. 


We're already, admittedly still near the start, on the way forward to being able to cut peak demand spikes by large amounts with developments like Zenobe's https://zenobe.co.uk/wp-content/uploads/2019/02/Zenobe-Press-Release_19.02.19.pdf. What is needed is to expand storage with the right incentives and regulations and link that and other growing markets like car batteries with the right software. A lot of it isn't written yet, but it can be.

Whether we have windless and/or sunless days doesn't matter to the task of reducing demand peaks through storage - but of course having more storage helps integrate variable renewables and increases their effective penetration without the need to 'constrain' them. Installing large scale heat pumps to provide district heating systems with energy so they can provide heating (and store heat in hot water tanks) is another element in the pattern.

Renewable energy is rapidly eating up the electricity generation market. Already in 2018 a third of UK electricity was supplied by renewable energy. This week the Government has announced how offshore wind will supply a further 35 per cent by 2030. More should come on top of this of course.

What we need is the system to change to balance these supplies using and growing the increasing energy storage options. In fact the big companies, in the main, just issue press releases and spend large amounts of consumers' money on installing so-called 'smart meters' that do little to help. They do not, in practice, deliver the balancing services we ought to be getting, especially  allied to storage.

But the big electricity companies are being supplanted by innovative information technology age companies based on providing renewable energy and storage.  The dinosaurs will go out of business. The only question is: how quickly?






Monday, 18 February 2019

Why I cringe when economists claim carbon taxes are the most 'efficient' way of curbing carbon emissions

With gilets jaunes blocking French cities, initially sparked by a carbon tax added to motor fuel taxes, and schoolchildren striking for climate change you would think that politicians were being forced in two contradictory directions. Especially when you get big time economists like Margaret Yelland (former Chair of the Federal Reserve) saying that carbon taxes are the key measure to reduce carbon emissions because they will be most 'efficient'. 

Well, carbon taxes are not especially 'efficient' for two reasons. First because they are not very good at encouraging technical and social innovation and secondly however 'efficient' they may be in economists mind they are politically very unpopular if set at high levels (ie they are politically very inefficient).

Certainly big corporations and right wing politicians tend to argue that that carbon taxes can solve the world's climate problems much better than regulations. This appeals to some US audiences on an ideological level, but again, misses out the practical measures that need to be taken. Carbon taxes of course can be useful, but miss the point that in order to promote technological innovation you have to have some regulatory measures to encourage 'bottom' up' technological innovation. Innovation requires niches supported by relevant incentives/regulations.

Energy conservation programmes are popular insofar as they help reduce the impact of energy price increases. In the UK we had some programmes when oil became more difficult to source and the UK has to access more expensive overseas sources of natural gas as North Sea reserves run down. But we are lacking the regulatory drive to make buildings carbon neutral. Measures to makes homes zero carbon have been scrapped, and local councils have been stopped from setting their own standards. Indeed local councils usually do not even have the capacity to ensure that current building regulations governing energy efficiency are properly implemented.

On the other hand advances in wind power and solar power, whose costs have dropped tremendously this century, have had nothing whatsoever to do with carbon taxes, or even much (in a direct sense) to do with energy price increases. The cost reductions have been driven because incentives have been given to these nascent technologies.

 These technologies have been given markets leading to technical optimisation and economies of scale which have reduced their costs. Indeed, last year a third of UK electricity was supplied by renewable energy. Given the fact that the cost of renewable energy have dropped so much, all they need now is the right regulatory arrangements and they can carry on increasing this proportion very rapidly without increasing costs to the consumer. 80 per cent of our electricity could be supplied from renewable energy by 2030 this way – and there is enough offshore windfarms in the pipeline to assure this even if we only had modest increases in the amount of onshore renewable. We can deploy new technologies like heat pumps linked to district heating systems to convert electricity in heat and store the energy in various forms.

It is obvious to people in the electric car sector that take-up of electric cars is not hampered so much by a lack of carbon taxes but by a lack of reliable fast charging points! More incentives/regulations to promote them is the key to that issue!

Yes, we can make a lot of progress through various regulatory devices. This is as opposed to solely  relying on a one-size-fits-all carbon tax that encourages mainly existing large scale technologies -  and which, moreover, will encounter political resistance from large sections of the population.  This is because if carbon taxes are applied as the ONLY measure on the level necessary to achieve big carbon reductions they will cause  political rebellion on a much greater scale than anything attending the regulatory and incentive measures promoted by  the renewable or energy efficiency trade associations and other NGOs.  We need lots of different methods; incentives, regulations, carbon taxes, local cooperatives....whatever.

I have been recently been supporting an innovative wave power technology called ‘Resen Waves’. The company involved is now bidding for its first orders to supply power for communication buoys and also to supply power for oil and gas rigs in the North Sea that are being decommissioned. Once established in this niche it will be able to optimise, get economies of scale and upscale so that in a few years time it will be able to supply power directly to the electricity grid. That’s how new technologies develop, and we can help them by giving specific incentives to help them fill those niche markets. Carbon taxes will not do that.

Existing big business, on its own, won't deliver technological change. We need a bottom up approach that delivers innovation. Then, after some success in this pattern the big companies will decide to change what they are doing. Or go out of business

Friday, 15 February 2019

OFGEM to boost large gas power stations and increase costs for renewables

Remarkably, on the day thousands of schoolchildren protested in Parliament Square to demand Government action on climate change, the energy regulators, OFGEM were sharpening their knives to cut down renewable energy and boost large gas fired power plant. They are doing this by sneakily changing a couple of difficult to understand regulations governing electricity transmission and network charging. These are things that the children, OFGEM hope, won't notice! The costs of renewable energy could be increased by up to 20 per cent in some cases as a result.

For OFGEM renewables are a big problem and large gas fired power stations, evidently, are a big solution. In the conclusions to their so-called 'Targeted Charging Review' their proposals will end regulations that have encouraged local, that is 'embedded' generation, and bring in different regulations that benefit large, centralised combined cycle gas turbines (CCGTs).

In order to understand this apparent eco-destructive atavism you have to understand how the big utility players and their friends in the Government/regulatory apparatus have been frustrated that their attempts to subsidise large gas fired power stations through their 'capacity mechanism' have failed to produce new CCGTs.

The capacity mechanism is supposed to ensure that there is sufficient 'firm' capacity at all times. A big reason that CCGTs have not won contracts under these capacity mechanism auctions is simply that they cost too much compared to so-called 'embedded', decentralised generation. The generators that have bid the lowest prices in the auctions to fill the capacity market have been small generators of various types.

Some of the winners of the capacity mechanism contracts, controversially,  have diesel generators. Even though it would be simple to just penalise diesels and let small gas fired plant (which are much cheaper and much more flexble than large CCGTs) anyway so the job, the Government, sorry OFGEM, has decided instead to penalise all small generators, including all renewable energy schemes. This is done by a) altering the way capacity is charged on the electricity system, and also by b) removing the ability of 'embedded' generators to contribute to reducing the need for peak transmission capacity (abolition of 'triad' charging).

But the impact on renewables will be especially severe. Increases in the cost of renewables seem likely as a consequence to range from 10-20 per cent depending on the technology and area of the country in which they are sited. Before this change there were reasonable expectations that in the next round of bidding for offshore wind generation contracts auction prices for offshore wind would drop below £50 per MWh. That would be very good given that recently wholesale power prices have been running at around £60 per MWh. Now it could well be that there will be no contracts for difference (CfDs) awarded for offshore wind because no projects will be able to bid under the Government's 'cap' of £56 per MWh.

But, whilst renewable energy projects will be put out of business, there a bit more chance that we'll get some large gas fired power stations. What, OFGEM preparing for the decentralised energy revolution. You must be kidding!

Postscript

Quote from the introduction in OFGEM's document....you get the drift.....

'These current arrangements encourage users who can afford to invest in on-site generation, Demand Side Response or storage to reduce their exposure to residual charges. Where this change in behaviour is in response to market prices or forward charges recover the total costs of balancing the system in each half hour and other system costs, and are generally difficult to anticipate, and hence provide limited forward-looking signals to network users on how they can affect their contribution to these charges. Where these activities are prompted by residual charge avoidance, they will not reduce costs for the system, and in some cases may add to them. These activities will also push residual charges up for other users. We do not think this this is a fair outcome – all users should contribute to the ongoing costs of the network infrastructure in exchange for the benefits it provides' (page 9-10)

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/766791/QEP_Q3_2018.pdf (see pages 28-29)



Some other sources:

https://www.ofgem.gov.uk/system/files/docs/2018/11/targeted_charging_review_minded_to_decision_and_draft_impact_assessment.pdf

https://cdn.ymaws.com/www.renewableuk.com/resource/resmgr/policy_uploads/TCR_Response_SR_RUK_FINAL.pdf

http://projects.exeter.ac.uk/igov/wp-content/uploads/2019/02/Exeter-EPG-response-to-Ofgem-Targeted-Charging-Review-Feb-2019.pdf

http://projects.exeter.ac.uk/igov/new-thinking-the-embedded-benefit-saga/

https://www.smartestenergy.com/info-hub/blog/targeted-charging-review-how-will-it-affect-embedded-generators/


https://www.businessgreen.com/bg/opinion/3070296/ofgems-targeted-charging-review-shows-a-disregard-for-the-governments-energy-policy