On the face of it the Scottish Government's targets and statements about renewable energy seem impressive, but under the surface doubts are emerging about how strong this policy really is. At the end of 2010 it seemed that the Scottish Government was critical of of the Westminster Government's proposals for Electricity Market Reform (EMR) which threatens to shift subsidies away from renewable energy and towards nuclear power. However, in recent months the Scottish Government has fallen silent on this topic.
For example, the Scottish Government appears to have accepted without challenge the 10 per cent cut in incentives for onshore wind outlined in the Department of Energy and Climate Change (DECC) review of banding of Renewable Obligation Certificates (ROCs). This is despite the centrality of onshore wind for reaching the Scottish Government's ambitious '100 per cent' renewable energy supply target for Scotland by 2020.
Of course the reduction in incentives for onshore wind will at least go some way to satisfy the pressures coming from Tory backbenchers to cut funding for so-called 'low windspeed' sites. This is despite the fact that even so-called 'low windspeed' sites represents a cheaper source of energy than nuclear power (given that new nuclear power will require higher levels of incentives and guarantees to go ahead).
However, coincidentally, in November (the same month as the results of the renewable banding review was announced) the Government announced that the Treasury was releasing £103 million to be given to the Scottish Government. This money comes from profits made by the Government in selling electricity generated from old renewable projects set up under the renewable Non-Fossil Fuel Obligation (NFFO) scheme that operated in the 1990s. The Treasury otherwise pockets the money that comes from the sale, by the Non Fossil Purchasing Agency (NFPA which adminisiters renewable NFFO contracts), of renewable electricity through its auctions.
So, has the Scottish Government done a deal with the UK Government so that a sop can be given to English lowland Tories at the expense of onshore wind development? Certainly there seems little financial sense in this if renewable energy targets both north and south of the border are concerned, but the Scottish Government seems very pleased about the £103 million which it can use to pay for direct investments into renewables. Yet while such investment is very welcome, it is coming from Westminster, and not from Scotland.
Moreover, the Scottish Government has been unable to clear up uncertainty over the future of renewable incentives created by the possibility that Scotland will become independent after the referendum. The financial analysts Citigroup expressed such fears in a recent report. Asked specifically about this by the BBC, Scotland's First Minister Alex Salmond seemed unable to guarantee the continuation of renewable incentives under Scottish independence. On the contrary, he implied that the English would continue to pay for offshore renewables installed in Scottish waters!
Salmond told the BBC that investors 'know that renewable power from the seas around Scotland is going to be required to fulfill England's electricity requirements....it is power for export'. See
http://www.bbc.co.uk/news/uk-scotland-scotland-politics-15551366
Salmond seems to assume that the English will have no other choice but to buy Scottish offshore renewable power to keep the lights on. However, given the direction of UK Government policy of cutting incentives for renewables, it seems increasingly likely that the UK Government would simply build more gas fired power stations before they paid extra for renewables from an independent Scotland.
Of course, the power can only be exported if somebody is willing to pay for it to be generated in the first place. It does require a bit of leap of faith to believe that another country will pay the extra incentives needed to produce offshore renewable energy from schemes located in Scottish waters. Given that the UK Government is opposing plans for Scottish independence renewable energy interests can be forgiven for being rather sceptical that the continuation of incentives for renewable energy is more-or-less guaranteed.
The remaining confidence for continued incentives being available for renewable energy seems to reside in a belief that Scottish independence will not actually happen and that Scottish renewables will continue to be supported by English money. The fact that the Scottish Government seems all too compliant in allowing the UK Government to cut support for the most cost-effective widely available renewable energy source, onshore wind, does not encourage faith in the Scottish Government's ability or willingness to back up their bold pronouncements about renewable targets with the deeds necessary to make them happen.
Friday, 16 December 2011
Sunday, 11 December 2011
Storm causes sudden shutdown of Hunterston B nuclear power plant...again
A Scottish nuclear power station was forced to shutdown by the storm on December 8th. Attention has been focussed by anti-windfarm sources on the shutdown of windfarms in and around Scotland in what has been called the strongest winds in 25 years, but what has received hardly any attention was the storm-induced grid failure which shutdown the 480 MW Hunterston B nuclear power station in Ayrshire.
Such sudden nuclear shutdowns are in fact quite common, and, as covered in my blog on a Sizewell B failure on March 14th (scroll down to read this), these quite unexpected shutdowns of nuclear power stations are much more dangerous to grid stability and supply services to consumers than storm-induced shutdowns of windfarms. This is because storms can be predicted in advance, meaning that the National Grid System Operator can take mitigatory measures in good time on the basis of anticipated declines in windfarm production of electricity, and also because the windfarms, which will typically cut out when windspeeds reach 25 metres per second, do not all cut out at exactly the same instant.
Unfortunately when nuclear power stations cut out (and the most 'modern' ones are over 1000 MW in capacity), they do so without warning taking off large chunks of generating capacity off the grid in an instant. That is far more dangerous to the prospects of 'keeping the lights on' than the well known variability of windfarm output. This emphasises how wind power is in fact more reliable for grid stability purposes compared to nuclear power stations. See a report on the storm shutdowns (both wind and nuclear) on http://www.bloomberg.com/news/2011-12-09/battered-u-k-turbines-switch-on-after-halting-in-165-mph-winds.html. This is not the first time a storm has suddenly shutdown Hunterston B. See also the1998 report: http://news.bbc.co.uk/1/hi/uk/244765.stm.
Of course, because nuclear power stations are built to run all the time they are useless in providing so-called 'back-up' to windfarm variability, but they are a major threat to grid variability compared to windfarms. So don't accept any of the nonsense about how nuclear power is better than renewable energy because it provides firm power. It needs plenty of back-up itself!
Such sudden nuclear shutdowns are in fact quite common, and, as covered in my blog on a Sizewell B failure on March 14th (scroll down to read this), these quite unexpected shutdowns of nuclear power stations are much more dangerous to grid stability and supply services to consumers than storm-induced shutdowns of windfarms. This is because storms can be predicted in advance, meaning that the National Grid System Operator can take mitigatory measures in good time on the basis of anticipated declines in windfarm production of electricity, and also because the windfarms, which will typically cut out when windspeeds reach 25 metres per second, do not all cut out at exactly the same instant.
Unfortunately when nuclear power stations cut out (and the most 'modern' ones are over 1000 MW in capacity), they do so without warning taking off large chunks of generating capacity off the grid in an instant. That is far more dangerous to the prospects of 'keeping the lights on' than the well known variability of windfarm output. This emphasises how wind power is in fact more reliable for grid stability purposes compared to nuclear power stations. See a report on the storm shutdowns (both wind and nuclear) on http://www.bloomberg.com/news/2011-12-09/battered-u-k-turbines-switch-on-after-halting-in-165-mph-winds.html. This is not the first time a storm has suddenly shutdown Hunterston B. See also the1998 report: http://news.bbc.co.uk/1/hi/uk/244765.stm.
Of course, because nuclear power stations are built to run all the time they are useless in providing so-called 'back-up' to windfarm variability, but they are a major threat to grid variability compared to windfarms. So don't accept any of the nonsense about how nuclear power is better than renewable energy because it provides firm power. It needs plenty of back-up itself!
Wednesday, 7 December 2011
US to tax solar panels?
As if it was not bad enough that European states are clawing back on the solar feed-in tariff rates, the US is moving towards actually artificially increasing prices of solar panels through putting TAXES on imported solar pv panels. I will explain that even more starkly. While Europe is still subsidising solar pv panels, the US is going to tax them! The US International Trade Commission has, according to the online journal Renewable Energy World, 'unanimously determined that Chinese solar panel and cell imports are harming the American solar manufacturing industry'. This, it seems, is a precursor of import duties being levied on solar panels imported from China. To add an ironic twist, this policy is being promoted by some US based solar companies themselves. They argue that China is 'dumping' lots of solar panels on the US market and putting them out of business.
Essentially, Chinese manufacturers are selling at cheaper prices than western ones. Partly this is a case of the Chinese having the foresight to invest in green industries, and partly this is a part of the busienss cycle that you get when periodically supply exceeds demand, as opposed to vice versa which pushes up prices.
However, for the solar industry to start arguing that, in effect, prices must be put up through protectionism is the complete opposite of what should be an ecologically driven policy to drive down global prices for renewable energy technologies. The US position is also sacrificing progress in solar technology for protectionist purposes, and this at a time when the world needs to be as internationalist as possible in its trade policies to avoid the selfish nationalism of the 1930s which brought ruin on everybody. If the allegedly idealistic renewable energy industries cannot hold the line on this, who can?
As far as I can see, the main US case seems to rest on claims that the Chinese are putting barriers in front of imports of US solar panels. It is in fact fairly debateable to argue that Chinese barriers are worse than US ones for renewable energy given, for example, the relative availability of incentives like the production tax credit for US based rather than non-US based companies. At its most charitable best the US argument is one for taking the issue to the WTO. It is certainly not an argument for taking unilateral action, such as setting import tariffs on solar panels, which is likely to adduce retaliation of various sorts. At worst this is sheer hypocrisy as the west in general (including the US) subsidises its own industries in various implicit and often quite obvious ways (as in the case of agriculture) to allow its products to be well and truly 'dumped' on developing nations.
We often hear disparaging noises from the US (even from some solar companies) about European feed-in tariff policies. Well, parts of Europe are developing large capacities of solar pv, led by Germany, that stand in contrast to the sluggishness of progress in the USA. US policies seemed designed not only to fail to give much encouragement to expansion in solar capacity, but actually to stop it happening by increasing prices for solar power through restrictive trade tariffs and policies. What this issue does expose is the sad truth that the leadership of the renewable energy industries has increasingly little to do with the US.
See the Renewable Energy World Report on:
http://www.renewableenergyworld.com/rea/news/article/2011/12/itc-determines-harm-in-solar-trade-case?cmpid=WNL-Wednesday-December7-2011
Essentially, Chinese manufacturers are selling at cheaper prices than western ones. Partly this is a case of the Chinese having the foresight to invest in green industries, and partly this is a part of the busienss cycle that you get when periodically supply exceeds demand, as opposed to vice versa which pushes up prices.
However, for the solar industry to start arguing that, in effect, prices must be put up through protectionism is the complete opposite of what should be an ecologically driven policy to drive down global prices for renewable energy technologies. The US position is also sacrificing progress in solar technology for protectionist purposes, and this at a time when the world needs to be as internationalist as possible in its trade policies to avoid the selfish nationalism of the 1930s which brought ruin on everybody. If the allegedly idealistic renewable energy industries cannot hold the line on this, who can?
As far as I can see, the main US case seems to rest on claims that the Chinese are putting barriers in front of imports of US solar panels. It is in fact fairly debateable to argue that Chinese barriers are worse than US ones for renewable energy given, for example, the relative availability of incentives like the production tax credit for US based rather than non-US based companies. At its most charitable best the US argument is one for taking the issue to the WTO. It is certainly not an argument for taking unilateral action, such as setting import tariffs on solar panels, which is likely to adduce retaliation of various sorts. At worst this is sheer hypocrisy as the west in general (including the US) subsidises its own industries in various implicit and often quite obvious ways (as in the case of agriculture) to allow its products to be well and truly 'dumped' on developing nations.
We often hear disparaging noises from the US (even from some solar companies) about European feed-in tariff policies. Well, parts of Europe are developing large capacities of solar pv, led by Germany, that stand in contrast to the sluggishness of progress in the USA. US policies seemed designed not only to fail to give much encouragement to expansion in solar capacity, but actually to stop it happening by increasing prices for solar power through restrictive trade tariffs and policies. What this issue does expose is the sad truth that the leadership of the renewable energy industries has increasingly little to do with the US.
See the Renewable Energy World Report on:
http://www.renewableenergyworld.com/rea/news/article/2011/12/itc-determines-harm-in-solar-trade-case?cmpid=WNL-Wednesday-December7-2011
Monday, 28 November 2011
How Tories have abandoned pre-election solar promises
Those of us who were active in the campaign to install feed-in tariffs for small renewables remember how the Conservatives captured the support of many greens at the end of 2007 with their policy paper 'Power to the People - The decentralised energy revolution'. Now, far from extending the decentralised revolution, the Conservatives are busy destroying the industry that was established by Labour legislation.
The cut of 43 p/KWh to 21 p in the solar pv feed-in tariff will, as we have heard through industrial testaments recently, kill off most of the solar pv industry. Meanwhile, despite the Government's intentions about seeking the most cost-effective renewable policy, it is cutting back incentives for the most cost-effective widespread renewable source, onshore windpower. Its 'ROC' value is being reduced by 10 per cent as a political sop to anti-windfarm campaigners. Essentially, then, this policy is about giving ground to the strident calls from the political right and pro-nuclear interests for incentives to renewable energy to be cut. Never mind that lots of voters thought that they were voting for a Conservative Party that wanted better support for renewable energy at the 2010 election.
Let us remember a few of the bold statements from the Conservatives' 2007 green makeover document:
'Other European countries have shown what can be done. In Germany, there
has been a micro-generation revolution, based principally on photovoltaic
technology, over the last decade (p 19)
‘With a feed-in tariff system, a fixed price is paid for the electricity producedfrom decentralised, low-carbon energy sources, usually with different price
levels set for different technologies. In Germany, for example, the basic tariff
paid for electricity generated from solar photovoltaics was 0.518 euros in
2006 (p 23)’
Of course, in its 2010 election manifesto itself, the Conservatives were allowing an impression to be formed that we would follow the German example with regard to solar power.
Of course, in its 2010 election manifesto itself, the Conservatives were allowing an impression to be formed that we would follow the German example with regard to solar power.
Talking of the city of Freiburg, the manifesto commented: 'Solar panels have been installed across the city – on schools, churches and private houses, and even on the sports stadium and the City hall' (p91)
But the final quote must come from the Conservatives 2007 document which says:
'By contrast with Germany and the Netherlands, the British micro-generation
industry is tiny' (p 20)
Yes, and Government policy will ensure things stay that way!
Yes, and Government policy will ensure things stay that way!
Sunday, 2 October 2011
Split up the big six! - Green Competition not brown oligopolies!
I wrote this post in October 2011, but it makes sense now as well since some independent generators have recently been reported as complaining that they cannot compete with the stranglehold of the Big Six. Their 'oligopoly' ensures that their generation gets priority for sale to their suppliers rather than other options - David Toke, August 2014:
Is Labour Energy spokesperson's Meg Hillier suggesting that the 'bix six' energy companies that control most of the UK electricity market will be split up into 'generation' and 'supply'? That would be a significant boost for prospects for more green and decentralised energy if she is saying this. However, a danger has already arisen that the issue is being diverted into a debate about whether we should have some sort of 'pool' arrangement for selling wholesale electricity or the current system of 'bilateral trading' where generators and energy suppliers find their own arrangements to buy and sell electricity in the wholesale market. That is a secondary issue.
The central point is that the current set-up whereby the big electricity generators also own the main electricity suppliers means that the big six make it very difficult for independent companies, whether generators or suppliers, to compete. The current regulations make a distinction between generation, distribution, transmission and supply of electricity. But they allow generators to own suppliers, which mean they own most of the suppliers! This has a significant impact on sustainable energy policy. The big six make the bulk of their profits from generating electricity - not in supplying it - so it will not usually be in the interests of the electricity suppliers to do anything that decreases, rather then increases, the production of electricity. But if the generators did not own the suppliers, if they were prevented from owning suppliers (or at least, suppliers to whom they sold energy) then the suppliers would have more of a choice to choose between making money by avoiding generation options and choosing demand side reduction measures instead.
This makes a big difference when it comes to balancing fluctuating renewable energy supplies. In California major electricity suppliers have installed 'smart' devices in commercial premises. Such devices mean that when demand for electricity is at peak periods the microchips can decide whether electricity, used in say heating or cooling services, can be temporarily suspended without affecting the services themselves. This avoids the need to buy in expensive electricity supplies and means that fewer power plant are needed to 'back up' the system. In the UK companies such as Flexitricity are working to implement this type of activity. See http://www.flexitricity.com/
What are called 'demand response' measures such as these (and there are various types of measures adding up to a lot of equivalent power plant capacity) have obvious advantages for balancing fluctuating renewable energy supplies. You can reduce the need for so-called 'back-up' plant. Yet the current market domination by the 'big six' electricity companies means that there is little interest in developing such strategies. The big six make their money from generating electricity from power stations, so if they control the suppliers they will want them to buy power from the power stations, not look for demand reduction options.
In addition to this it is possible to encourage electricity suppliers to be more interested in saving energy through conventional energy efficiency measures if they are not controlled by generators and made to sell as much power as they can. That involves a lot of detail, but we cannot even start thinking about it under present arrangements where the interests of the power plant producers are paramount.
Of course splitting up generation and supply reduces control, by the 'big six', of the market so that they are less able to disadvantage their smaller, often decentralised, competitors. Many more independent generators, combined heat and power plant and also those offering demand side measures could gain a foothold in the market without the dead hand of the big six. Also independent electricity suppliers would have more of a chance to compete.
Splitting up the big six is not going to green the electricity system by itself - we need regulated, real, feed in tariffs and energy efficiency measures for that - but it will introduce some genuine competition into the system and make some much needed green techniques more possible. That is what we need - green competition rather than the brown oligopolies we have at the moment.
Is Labour Energy spokesperson's Meg Hillier suggesting that the 'bix six' energy companies that control most of the UK electricity market will be split up into 'generation' and 'supply'? That would be a significant boost for prospects for more green and decentralised energy if she is saying this. However, a danger has already arisen that the issue is being diverted into a debate about whether we should have some sort of 'pool' arrangement for selling wholesale electricity or the current system of 'bilateral trading' where generators and energy suppliers find their own arrangements to buy and sell electricity in the wholesale market. That is a secondary issue.
The central point is that the current set-up whereby the big electricity generators also own the main electricity suppliers means that the big six make it very difficult for independent companies, whether generators or suppliers, to compete. The current regulations make a distinction between generation, distribution, transmission and supply of electricity. But they allow generators to own suppliers, which mean they own most of the suppliers! This has a significant impact on sustainable energy policy. The big six make the bulk of their profits from generating electricity - not in supplying it - so it will not usually be in the interests of the electricity suppliers to do anything that decreases, rather then increases, the production of electricity. But if the generators did not own the suppliers, if they were prevented from owning suppliers (or at least, suppliers to whom they sold energy) then the suppliers would have more of a choice to choose between making money by avoiding generation options and choosing demand side reduction measures instead.
This makes a big difference when it comes to balancing fluctuating renewable energy supplies. In California major electricity suppliers have installed 'smart' devices in commercial premises. Such devices mean that when demand for electricity is at peak periods the microchips can decide whether electricity, used in say heating or cooling services, can be temporarily suspended without affecting the services themselves. This avoids the need to buy in expensive electricity supplies and means that fewer power plant are needed to 'back up' the system. In the UK companies such as Flexitricity are working to implement this type of activity. See http://www.flexitricity.com/
What are called 'demand response' measures such as these (and there are various types of measures adding up to a lot of equivalent power plant capacity) have obvious advantages for balancing fluctuating renewable energy supplies. You can reduce the need for so-called 'back-up' plant. Yet the current market domination by the 'big six' electricity companies means that there is little interest in developing such strategies. The big six make their money from generating electricity from power stations, so if they control the suppliers they will want them to buy power from the power stations, not look for demand reduction options.
In addition to this it is possible to encourage electricity suppliers to be more interested in saving energy through conventional energy efficiency measures if they are not controlled by generators and made to sell as much power as they can. That involves a lot of detail, but we cannot even start thinking about it under present arrangements where the interests of the power plant producers are paramount.
Of course splitting up generation and supply reduces control, by the 'big six', of the market so that they are less able to disadvantage their smaller, often decentralised, competitors. Many more independent generators, combined heat and power plant and also those offering demand side measures could gain a foothold in the market without the dead hand of the big six. Also independent electricity suppliers would have more of a chance to compete.
Splitting up the big six is not going to green the electricity system by itself - we need regulated, real, feed in tariffs and energy efficiency measures for that - but it will introduce some genuine competition into the system and make some much needed green techniques more possible. That is what we need - green competition rather than the brown oligopolies we have at the moment.
Tuesday, 30 August 2011
Government to cut subsidies for community wind power?
Despite being acclaimed as being a low cost carbon source even by the nuclear-friendly Committee on Climate Change, onshore wind is due to have its subsidies cut in a Government review of the Renewables Obligation (RO). This will ensure that many community wind power schemes cannot be built.
See
http://scotlandonsunday.scotsman.com/news/Cut-looms-for-wind-turbines.6826574.jp
PLEASE WRITE TO YOUR MP TO ASK FOR INCENTIVES FOR ONSHORE WIND POWER TO BE MAINTAINED AT THEIR CURRENT LEVELS RATHER THAN SPENT ON NULCEAR POWER
The Renewables Obligation is the system that currently funds renewable development through renewable developers being able to sell 'renewable obligation certificates' (ROCs) to the electricity suppliers who have to achieve an increasing obligation to supply renewable energy, or pay a penalty. It is the electricity consumers who effectively pay a levy to support this of course. But the Government is under pressure from its own backbenchers who do not want the windfarms in their constituencies, and so a good way of stopping the windfarms is to cut the subsidies.
This has nothing to do with costs, or efficiency, as the Government claim - since onshore wind on even the less windy sites is still very cost-effective (and likely to receive much less subsidy than will be given to nuclear power in various forms). It is to do with meeting demands of anti-wind farm groups who do not want the landscape to be graced by the sight of windfarms. Also, by coincidence, of course, cutting subsidies for windfarms will enable such subsidies to be transferred to nuclear power from 2017.
The Government is considering cutting the number of ROCs that are awarded to onshore windpower. Currently it is 1 ROC per MWh generated. The Government is considering cutting this to 0.75 ROCs or even 0.5 ROCs. Community wind power schemes tend to be established on the lower wind power sites and thus will be the most likely to be the schemes that are prevented from going forward.
In addition to this the Government proposals for a 'contract for differences' feed-in tariff (to be introduced from 2017) are likely to mean that independent generators will receive at least 30 per cent less income per unit generated than the stated feed-in tariff rate, the bulk of this money going to the major electricity suppliers. See the recent post on this blog about this 'Give feed-in tariffs to renewable energy not electricity suppliers!' (August 1st).
You can see information about Community Windfarms projects in the UK from the following websites:
http://www.westmill.coop/westmill_home.asp
http://www.energy4all.co.uk/projects.asp
See
http://scotlandonsunday.scotsman.com/news/Cut-looms-for-wind-turbines.6826574.jp
PLEASE WRITE TO YOUR MP TO ASK FOR INCENTIVES FOR ONSHORE WIND POWER TO BE MAINTAINED AT THEIR CURRENT LEVELS RATHER THAN SPENT ON NULCEAR POWER
The Renewables Obligation is the system that currently funds renewable development through renewable developers being able to sell 'renewable obligation certificates' (ROCs) to the electricity suppliers who have to achieve an increasing obligation to supply renewable energy, or pay a penalty. It is the electricity consumers who effectively pay a levy to support this of course. But the Government is under pressure from its own backbenchers who do not want the windfarms in their constituencies, and so a good way of stopping the windfarms is to cut the subsidies.
This has nothing to do with costs, or efficiency, as the Government claim - since onshore wind on even the less windy sites is still very cost-effective (and likely to receive much less subsidy than will be given to nuclear power in various forms). It is to do with meeting demands of anti-wind farm groups who do not want the landscape to be graced by the sight of windfarms. Also, by coincidence, of course, cutting subsidies for windfarms will enable such subsidies to be transferred to nuclear power from 2017.
The Government is considering cutting the number of ROCs that are awarded to onshore windpower. Currently it is 1 ROC per MWh generated. The Government is considering cutting this to 0.75 ROCs or even 0.5 ROCs. Community wind power schemes tend to be established on the lower wind power sites and thus will be the most likely to be the schemes that are prevented from going forward.
In addition to this the Government proposals for a 'contract for differences' feed-in tariff (to be introduced from 2017) are likely to mean that independent generators will receive at least 30 per cent less income per unit generated than the stated feed-in tariff rate, the bulk of this money going to the major electricity suppliers. See the recent post on this blog about this 'Give feed-in tariffs to renewable energy not electricity suppliers!' (August 1st).
You can see information about Community Windfarms projects in the UK from the following websites:
http://www.westmill.coop/westmill_home.asp
http://www.energy4all.co.uk/projects.asp
Tuesday, 23 August 2011
New Statement from Committee on Climate Change
I have had a further message from the Committee on Climate Change, as below, saying that I have got things wrong, and asking me to clarify the position. I thus print below the relevant communications. I do not want to be accused of misrepresenting their position, so I reproduce the letter in fulll. I must say however, that I do not understand what they are saying now.................I certainly do not see how nuclear power 'appears' to be the most cost-effective low carbon source given the arguments and data so far generated.
To see my original argument you will have to scroll down to the end of this post. My original complaint was addressed to Professor Mike Grubb, who I thought was on the Committee, but who I learned later had left the Committee in April, just prior to the publication of the Committee's 'Renewable Energy Review'.
From: Barrs, Alice (CCC)
Sent: Tuesday, August 23, 2011 5:50 PM
To: David Toke
Cc: Thompson, Mike (CCC)
Subject: RE: criticism of Climate Change Committee
Dear David –
Having just read your recent blog article, and following on from your comments below, I think you have misunderstood my previous response. I would like to clarify our position on this so that you understand the Committee’s position and so that you can ensure your post is accurate (which currently we don’t think it is).
The CCC have not changed our position from the one set out in the Renewable Energy Review published in May.
The conclusions of that review (as set out on the first page of the executive summary) in relation to electricity were that:
· ‘there is scope for significant penetration of renewable energy to 2030’
· ‘The optimal policy is to pursue a portfolio approach with each of the different technologies playing a role.’
· ‘new policies are required to support technology innovation and to address barriers to uptake in order to suitably develop renewables as an option for future decarbonisation’
See also the summary box on the second page:
· “A range of options exists for delivering decarbonisation of the power sector by 2030 at reasonable cost. This includes renewables, nuclear and CCS
· A portfolio approach to technology support is therefore appropriate”
This was based on analysis set out on the third and fourth pages of the executive summary (some of which was discussed in the earlier e-mail exchange). Note that the bullets there discuss costs under the heading ‘Current uncertainties’, where we noted that key factors include ‘the ability to build nuclear to time and cost’.
We pointed out that nuclear ‘currently appears to be the most cost-effective of the low-carbon technologies’, but also that ‘full reliance on nuclear would be inappropriate, given uncertainties over costs, site availability, long-term fuel supply and waste disposal, and public acceptability’. We went on to state that ‘Given these uncertainties, a portfolio approach to development of low-carbon technologies is appropriate’. In the detailed analysis in the full report (and further reported in the technical annex) we consider discount rate as one of the factors contributing to cost uncertainty (p.62-63).
There was no intention in the previous e-mail correspondence to imply a different analysis and I hope it is clear that the CCC’s position and evidence base is unchanged from the one set out in the review. Further to that, we would be grateful if you could clarify this on your blog, which currently misrepresents our position.
We aim to be open in our analysis and up-to-date in our evidence base, and are very aware of the difficulties in estimating costs and applying discount rates. As such we’d be happy to arrange a teleconference with analysts in the team, or arrange a meeting at our offices in London should you be in town.
Kind regards
Alice
From: David Toke [mailto:d.toke@bham.ac.uk]
Sent: 09 August 2011 11:55
To: Barrs, Alice (CCC); d.toke@bham.ac.uk
Subject: RE: criticism of Climate Change Committee
Dear Alice,
Many thanks for the time you have taken to enable a reply to be made. I shall study the additional calculations made by the CCC to which you refer with interest.
I note that you say:
‘Whilst we think it is likely that nuclear will be cost competitive, consideration of the uncertainties demonstrates why it is inappropriate to base policy on a conclusion that nuclear (or onshore wind, or offshore wind...) is “the” cheapest option.’
This is clearly different to the substance in the RER itself which reads e.g. on page 12 in the Executive Summary:
‘Nuclear power currently appears to be the most cost-effective of the low carbon
Technologies’
I am very grateful for this correction being made. This may restore some lost faith in the Committee, although this will not reverse the publicity that attended the publication of the Report in May which focussed heavily on the ‘nuclear is most cost effective’ claim.
Best Wishes,
David Toke
From: Barrs, Alice (CCC)
Sent: 09 August 2011 11:41
To: d.toke@bham.ac.uk
Subject: RE: criticism of Climate Change Committee
Dear David,
Emily passed on your query to me.
In looking forward to the 2020s and 2030s for the appropriate mix of low carbon generation technologies, it is clear that there are considerable uncertainties. They impact each of the technologies, including new nuclear build. We set out the considerations in the review.
Whilst we think it is likely that nuclear will be cost competitive, consideration of the uncertainties demonstrates why it is inappropriate to base policy on a conclusion that nuclear (or onshore wind, or offshore wind...) is “the” cheapest option.
Rather, given uncertainty over future costs, as well as constraints on resource and technical considerations, the key conclusion in the review was a portfolio approach is appropriate, with nuclear, carbon capture and storage (CCS) and a portfolio of renewables.
In relation to required rates of return, the CCC commissioned Oxera to look at the appropriate discount rates for various low-carbon technologies. They identified a number of risks faced by generators, and that mature technologies (such as gas CCGT) face lower rates than less mature (e.g. offshore wind). In the Renewables Review, we use a commercial cost of capital of 10% - frequently used in comparative analysis of this kind - whilst also considering sensitivities at lower rates (7.5% and 3.5%).
We have subsequently published further analysis looking at current costs based on a wider range of discount rates, including 9% and up to 13% for nuclear, 10-14% for offshore wind, and 7-10% for onshore wind (see our website<http://www.theccc.org.uk/reports/renewable-energy-review/technical-annexes>). In the ‘real world’ the required return for an investor may well be higher or lower than this range. However, under a supportive policy environment (for example, long-term contracts under new market arrangements) and technology development there are good reasons to believe that the cost of capital may fall.
The possibility of rates differing between technologies increases the uncertainty involved in assessing in relative costs. The analysis further demonstrates the overlapping ranges of cost estimates for different technologies, depending on assumption, and supports the key conclusion to follow a portfolio approach.
Kind regards,
Alice
Dear Professor Grubb,
I am writing to express my concern and dismay at the way the Committee on Climate Change handled relative costings for renewable energy and nuclear power in its ‘Renewable Energy Review’ published in May. At the time I was annoyed to see a series of bases for costings of wind power and nuclear power using criteria which, while supporting a conclusion that ‘nuclear is cheaper’, seemed not to pay much attention to the fact that the criteria, in particular the discount rate criteria, bear little relation to judgments made by financial markets. My annoyance at this has increased now that reports from city analysts are being made confirming my own thoughts that pension funds etc will apply rather higher discount rate tests to proposed nuclear investments than they would even with offshore wind power, and certainly compared with onshore wind.
Discount rates of 15-20 per cent (for debt and equity elements combined) are the ‘real world’ tests being applied to nuclear power investments while the rates applied to onshore wind, for example will be much less than this . If you had a windfarm proposal about which there were as many cost and performance uncertainties as with new nuclear, then such higher discount rates would apply to them. But they don’t; wind power technologies, certainly onshore, and to a growing extent, offshore, are, as the Government’s own White Paper now points out, mature technologies, whilst nuclear power seems to be ‘un-maturing’.
I rather suspect that even in the case of offshore wind at the moment, if you offered a pension fund a prospect of a) building an offshore windfarm or b) a nuclear power station at a long term contract price of 15 p/KWh they would choose the offshore windfarm. Such issues are in addition, of course, to the arguments about how far nuclear construction costs can escalate.
In short the contention that nuclear power is the cheapest low carbon source is highly tendentious in the case of onshore wind, and somewhat debateable even in the case of offshore wind power. The ‘long term’ assessment using a ‘social discount rate’ of 3 per cent on energy investments used by the CCC, (and prominently displayed in the Executive Summary) is nothing short of fantasy given that it can only be realised if the electricity system is taken back into public ownership and it has access to Government borrowing terms. Even EDF does not have this facility for French power plant any more.
The CCC ought to have been a great deal more circumspect about pronouncements about which low carbon options are ‘cheapest’. Its faith in nuclear power over wind power is, well, merely faith. Of course we can be charitable and say that the CCC’s analysis is no less partial than one funded, for example, by Greenpeace (except coming to different conclusions of course). But then, if the CCC is to be regarded as just another interest with its own opinions, does it deserve much attention?
Best Wishes,
David Toke
To see my original argument you will have to scroll down to the end of this post. My original complaint was addressed to Professor Mike Grubb, who I thought was on the Committee, but who I learned later had left the Committee in April, just prior to the publication of the Committee's 'Renewable Energy Review'.
From: Barrs, Alice (CCC)
Sent: Tuesday, August 23, 2011 5:50 PM
To: David Toke
Cc: Thompson, Mike (CCC)
Subject: RE: criticism of Climate Change Committee
Dear David –
Having just read your recent blog article, and following on from your comments below, I think you have misunderstood my previous response. I would like to clarify our position on this so that you understand the Committee’s position and so that you can ensure your post is accurate (which currently we don’t think it is).
The CCC have not changed our position from the one set out in the Renewable Energy Review published in May.
The conclusions of that review (as set out on the first page of the executive summary) in relation to electricity were that:
· ‘there is scope for significant penetration of renewable energy to 2030’
· ‘The optimal policy is to pursue a portfolio approach with each of the different technologies playing a role.’
· ‘new policies are required to support technology innovation and to address barriers to uptake in order to suitably develop renewables as an option for future decarbonisation’
See also the summary box on the second page:
· “A range of options exists for delivering decarbonisation of the power sector by 2030 at reasonable cost. This includes renewables, nuclear and CCS
· A portfolio approach to technology support is therefore appropriate”
This was based on analysis set out on the third and fourth pages of the executive summary (some of which was discussed in the earlier e-mail exchange). Note that the bullets there discuss costs under the heading ‘Current uncertainties’, where we noted that key factors include ‘the ability to build nuclear to time and cost’.
We pointed out that nuclear ‘currently appears to be the most cost-effective of the low-carbon technologies’, but also that ‘full reliance on nuclear would be inappropriate, given uncertainties over costs, site availability, long-term fuel supply and waste disposal, and public acceptability’. We went on to state that ‘Given these uncertainties, a portfolio approach to development of low-carbon technologies is appropriate’. In the detailed analysis in the full report (and further reported in the technical annex) we consider discount rate as one of the factors contributing to cost uncertainty (p.62-63).
There was no intention in the previous e-mail correspondence to imply a different analysis and I hope it is clear that the CCC’s position and evidence base is unchanged from the one set out in the review. Further to that, we would be grateful if you could clarify this on your blog, which currently misrepresents our position.
We aim to be open in our analysis and up-to-date in our evidence base, and are very aware of the difficulties in estimating costs and applying discount rates. As such we’d be happy to arrange a teleconference with analysts in the team, or arrange a meeting at our offices in London should you be in town.
Kind regards
Alice
From: David Toke [mailto:d.toke@bham.ac.uk]
Sent: 09 August 2011 11:55
To: Barrs, Alice (CCC); d.toke@bham.ac.uk
Subject: RE: criticism of Climate Change Committee
Dear Alice,
Many thanks for the time you have taken to enable a reply to be made. I shall study the additional calculations made by the CCC to which you refer with interest.
I note that you say:
‘Whilst we think it is likely that nuclear will be cost competitive, consideration of the uncertainties demonstrates why it is inappropriate to base policy on a conclusion that nuclear (or onshore wind, or offshore wind...) is “the” cheapest option.’
This is clearly different to the substance in the RER itself which reads e.g. on page 12 in the Executive Summary:
‘Nuclear power currently appears to be the most cost-effective of the low carbon
Technologies’
I am very grateful for this correction being made. This may restore some lost faith in the Committee, although this will not reverse the publicity that attended the publication of the Report in May which focussed heavily on the ‘nuclear is most cost effective’ claim.
Best Wishes,
David Toke
From: Barrs, Alice (CCC)
Sent: 09 August 2011 11:41
To: d.toke@bham.ac.uk
Subject: RE: criticism of Climate Change Committee
Dear David,
Emily passed on your query to me.
In looking forward to the 2020s and 2030s for the appropriate mix of low carbon generation technologies, it is clear that there are considerable uncertainties. They impact each of the technologies, including new nuclear build. We set out the considerations in the review.
Whilst we think it is likely that nuclear will be cost competitive, consideration of the uncertainties demonstrates why it is inappropriate to base policy on a conclusion that nuclear (or onshore wind, or offshore wind...) is “the” cheapest option.
Rather, given uncertainty over future costs, as well as constraints on resource and technical considerations, the key conclusion in the review was a portfolio approach is appropriate, with nuclear, carbon capture and storage (CCS) and a portfolio of renewables.
In relation to required rates of return, the CCC commissioned Oxera to look at the appropriate discount rates for various low-carbon technologies. They identified a number of risks faced by generators, and that mature technologies (such as gas CCGT) face lower rates than less mature (e.g. offshore wind). In the Renewables Review, we use a commercial cost of capital of 10% - frequently used in comparative analysis of this kind - whilst also considering sensitivities at lower rates (7.5% and 3.5%).
We have subsequently published further analysis looking at current costs based on a wider range of discount rates, including 9% and up to 13% for nuclear, 10-14% for offshore wind, and 7-10% for onshore wind (see our website<http://www.theccc.org.uk/reports/renewable-energy-review/technical-annexes>). In the ‘real world’ the required return for an investor may well be higher or lower than this range. However, under a supportive policy environment (for example, long-term contracts under new market arrangements) and technology development there are good reasons to believe that the cost of capital may fall.
The possibility of rates differing between technologies increases the uncertainty involved in assessing in relative costs. The analysis further demonstrates the overlapping ranges of cost estimates for different technologies, depending on assumption, and supports the key conclusion to follow a portfolio approach.
Kind regards,
Alice
Dear Professor Grubb,
I am writing to express my concern and dismay at the way the Committee on Climate Change handled relative costings for renewable energy and nuclear power in its ‘Renewable Energy Review’ published in May. At the time I was annoyed to see a series of bases for costings of wind power and nuclear power using criteria which, while supporting a conclusion that ‘nuclear is cheaper’, seemed not to pay much attention to the fact that the criteria, in particular the discount rate criteria, bear little relation to judgments made by financial markets. My annoyance at this has increased now that reports from city analysts are being made confirming my own thoughts that pension funds etc will apply rather higher discount rate tests to proposed nuclear investments than they would even with offshore wind power, and certainly compared with onshore wind.
Discount rates of 15-20 per cent (for debt and equity elements combined) are the ‘real world’ tests being applied to nuclear power investments while the rates applied to onshore wind, for example will be much less than this . If you had a windfarm proposal about which there were as many cost and performance uncertainties as with new nuclear, then such higher discount rates would apply to them. But they don’t; wind power technologies, certainly onshore, and to a growing extent, offshore, are, as the Government’s own White Paper now points out, mature technologies, whilst nuclear power seems to be ‘un-maturing’.
I rather suspect that even in the case of offshore wind at the moment, if you offered a pension fund a prospect of a) building an offshore windfarm or b) a nuclear power station at a long term contract price of 15 p/KWh they would choose the offshore windfarm. Such issues are in addition, of course, to the arguments about how far nuclear construction costs can escalate.
In short the contention that nuclear power is the cheapest low carbon source is highly tendentious in the case of onshore wind, and somewhat debateable even in the case of offshore wind power. The ‘long term’ assessment using a ‘social discount rate’ of 3 per cent on energy investments used by the CCC, (and prominently displayed in the Executive Summary) is nothing short of fantasy given that it can only be realised if the electricity system is taken back into public ownership and it has access to Government borrowing terms. Even EDF does not have this facility for French power plant any more.
The CCC ought to have been a great deal more circumspect about pronouncements about which low carbon options are ‘cheapest’. Its faith in nuclear power over wind power is, well, merely faith. Of course we can be charitable and say that the CCC’s analysis is no less partial than one funded, for example, by Greenpeace (except coming to different conclusions of course). But then, if the CCC is to be regarded as just another interest with its own opinions, does it deserve much attention?
Best Wishes,
David Toke
Tuesday, 9 August 2011
Committee on Climate Change in Nuclear Costs Climbdown
The Committee on Climate Change, which said in May[1] that nuclear power was currently ‘the most cost effective of the low carbon technologies’, has now effectively abandoned that claim. A Senior Analyst of the Committee told Dr David Toke of the University of Birmingham earlier today that: ‘Whilst we think it is likely that nuclear will be cost competitive, consideration of the uncertainties demonstrates why it is inappropriate to base policy on a conclusion that nuclear (or onshore wind, or offshore wind...) is “the” cheapest option.’
The new story from the Committee on Climate Change emerged in response to a complaint by Dr Toke about the way that the Committee had analysed relative costings of nuclear power and renewable sources such as onshore and offshore wind power. Dr Toke argued that ‘the contention that nuclear power is the cheapest low carbon source is highly tendentious in the case of onshore wind, and somewhat debateable even in the case of offshore wind power’.
In his letter Dr Toke argued that the real world attitudes of the financial markets to uncertainties about nuclear power station costs and performance were not taken sufficiently into account by the Committee in their calculations. Onshore and even offshore Windpower involve rather less financial uncertainty. Hence investors and banks will require higher rates of return for investments in new nuclear power stations compared to investments in wind power. Alice Barrs, the Committee Analyst who replied to Dr Toke, maintains that ‘The possibility of rates differing between technologies increases the uncertainty involved in assessing in relative costs. The analysis further demonstrates the overlapping ranges of cost estimates for different technologies, depending on assumption, and supports the key conclusion to follow a portfolio approach.’
Dr Toke commented: ‘This response restores some faith in the Committee in that they concede the points made by me criticising the notion that nuclear is the cheapest low carbon technology. The Committee now need to re-examine their portfolio approach, including their view, also made in its Renewable Energy Review in May, that there ought to be a limit of no more than 13 GW of offshore wind being installed by 2020. Making this sort of judgement implies that there is some sort of trade-off in investment between nuclear power and renewable energy. In re-examining its portfolio approach The Committee on Climate Change ought to consider whether subsidies from electricity consumers should be reserved solely for renewable energy rather than offered also to nuclear power, as is planned by the Government in its proposals for Electricity Market Reform.’
[1] Committee on Climate Change (2011) Renewable Energy Review, http://www.theccc.org.uk/reports/renewable-energy-review
Monday, 1 August 2011
Give feed-in tariffs to renewable energy not electricity suppliers!
I have just written to the Environmental Audit Committee asking them to launch an inquiry into the Government's proposals for a renewable energy feed-in tariff which appear in the Government's recently published 'Electricity Market Reform' (EMR) White Paper. Essentially, rather than use the well tried and tested German system of feed-in tariffs they are adopting a scheme that will be used by electricity suppliers to earn windfall profits and heavily penalise all but the very largest renewable energy developers. The Government's proposals will, according to an analysis written by a Cambridge Economics Professor, lose the electricity consumer upwards of £250 million a year compared to a scheme which involves a German-style 'fixed' feed-in tariff .
See my letter below, written to the Chair of the Environmental Audit Committee, Joan Walley MP:
See my letter below, written to the Chair of the Environmental Audit Committee, Joan Walley MP:
Dear Joan,
I am writing to encourage you to press for the Environmental Audit Committee to study the issue of feed-in tariffs for renewable energy as discussed in the EMR White Paper. I fear the Government is about to get it wrong on renewable incentives yet again and, according to an independent analysis, waste over £250 million of electricity consumers’ money every year (and rising as offshore wind is connected) for the likely amount of renewable energy generation output. In addition, medium sized renewable developers (under 100 MW) are likely to lose at least 20 per cent of their income to electricity suppliers.
Essentially the Government is sidelining the well trodden continental style so-called ‘fixed’ FIT idea for silly political reasons and adopting a 'contract for differences' (CFD) proposal that will simultaneously increase consumer costs, reduce the income stream for developers (especially ones under 100MW) and (yet again) hand windfall profits to the electricity majors. What is described (in the EMR White Paper) as a ‘fixed FIT’ is a tried and tested system used on the continent (such as Germany), and this can be adapted to British conditions without undue difficulty to produce much lower costs for the consumer than what the Government is proposing. This judgement is supported by an independent analysis performed by a leading Cambridge Economics Professor, a copy of which a copy of which can be seen at
I do know a lot about feed-in tariffs, and also about the loss of income that developers who cannot, unlike electricity suppliers, trade on wholesale electricity markets, will suffer. I ran the British end of an EU project on CHP and electricity wholesale markets and looked at the pitfalls for smaller generators (by ‘small’ I mean here anything up to 100 MW). Of course I also was the person who helped to open up the discussion originally in 2007 on feed-in tariffs in the UK (working with the World Future Council) which led to the system of feed-in tariffs for the smallest generators. Unfortunately, under the EMR proposals, it is the small to medium sized generators who will fall into a rather big crack in between the electricity suppliers themselves and the small FIT that has now been established.
I would certainly look forward to making a submission to the EAC on the subject. There is also the issue of auctions for FIT contracts of course, although there are signs that the Government is accepting that these are not a good idea to start off with at least. As already mentioned, Prof David Newbery has produced a paper on FITs - I agree with his conclusions on this issue (that a fixed FIT is better) - and the independent analyst Nigel Cornwall believes that a fixed FIT is necessary at least for projects under 100MW. He knows that you need to be a big company with a high credit rating and also employ people specifically to trade on the markets, which is mainly viable for only for electricity suppliers and large power stations.
In fact a fixed FIT is very simple to operate. A body, say the System Operator, can issue contracts at a fixed price according to the technology, and the electricity that is produced then becomes the property of the System Operator who sells it on to the electricity markets. This saves consumer’s money compared to the Government proposals because, put simply, it is much more cost-effective to balance fluctuating wind power output on a national basis than it is for individual renewable energy developers to buy what is known as ‘imbalance’ risk. This requires a Fixed FIT, not a CFD FIT as espoused by the Government. In their analysis the Government simply assumed that in the case of a fixed FIT the monetary value of electricity generated to was lost to the markets - it may be with the current small FIT scheme, but in fact it does not have to operate this way, and certainly should not be the case in a scheme organised for medium to large scale renewable energy projects.
The Government's proposals have definitely lost the plot, in pursuit of some idea of making it difficult to tell where subsidies are going (to renewables or nuclear) in a system supported by electricity majors who will be able to earn a premium themselves. Part of the problem is that historically, OFGEM, in a desire to incorporate a FIT system into market trading arrangements, have overlooked the fact that it is relatively simple to devise a system whereby a fixed FIT system can reclaim the market value of the electricity generated by renewable electricity schemes – as Professor Newbery outlines in his paper on the subject. Indeed this is a much more cost effective way of organising a FIT system. In doing so, upwards of £250 million a year will be saved for electricity consumers compared to the scheme that the Government are proposing.
I am sure lots of independent renewable companies will support the fixed FIT idea when they realise what is going on. An inevitable danger with the Government’s proposals is that anti-windpower campaigners will seize upon the inefficiencies of the system to support their position. So the EAC could be ahead of the game here and save the system a lot of wasted time, money and argument by helping to get it right from the start. We ought not to repeat the experience with the Renewables Obligation and realise some years later that a badly designed system is leading to electricity consumer’s money going into the hands of the electricity majors rather than the developers.
Best Wishes,
David Toke, Senior Lecturer in Energy Policy, University of Birmingham
Friday, 29 July 2011
'Green' Investment Bank to fund nuclear power?
The Government has refused to rule out funding nuclear power through the 'Green Investment Bank' (GIB). In a response to the Environmental Audit Committee the Government said:
'Ministers will set the strategic direction of the GIB in due course. In view of the breadth of opportunities and challenges associated with greening the economy, the intention is to maintain a broad remit for the GIB. No decisions have been definitively taken as to what particular sectors might be prioritised at different times.'
With electricity giants such as E.ON and RWE having abandoned their interests in building nuclear power stations this leaves EDF struggling to put funds together to build their first power station at Hinckley C. Utilities are currently under great financial pressure at the moment to reduce risky investments (like nuclear power) and it seems likely that Centrica, EDF's partner, will decide not to take up their option of a 20 per share in nuclear investments. With private sector banks and pension funds unlikely to fund nuclear power stations, EDF's need for Government underwriting of its construction risks (or actual funds in advance of construction) is growing. In other words, nuclear power will not only need the 'same' subsidies as renewable energy, it will need a lot more! (this is on top of even the insurance and nuclear waste handling subsidies that nuclear power receives).
The total funding of the Green Investment Bank is slated as being £3 billion. This would not even fund half a nuclear power station, but, if EDF can reduce its risk, it might help it go ahead. It's just hard luck for the offshore windfarms or energy efficiency schemes etc who might hope to get the investment funds instead..........
See the Government Response on http://www.publications.parliament.uk/pa/cm201012/cmselect/cmenvaud/1437/143704.htm
'Ministers will set the strategic direction of the GIB in due course. In view of the breadth of opportunities and challenges associated with greening the economy, the intention is to maintain a broad remit for the GIB. No decisions have been definitively taken as to what particular sectors might be prioritised at different times.'
With electricity giants such as E.ON and RWE having abandoned their interests in building nuclear power stations this leaves EDF struggling to put funds together to build their first power station at Hinckley C. Utilities are currently under great financial pressure at the moment to reduce risky investments (like nuclear power) and it seems likely that Centrica, EDF's partner, will decide not to take up their option of a 20 per share in nuclear investments. With private sector banks and pension funds unlikely to fund nuclear power stations, EDF's need for Government underwriting of its construction risks (or actual funds in advance of construction) is growing. In other words, nuclear power will not only need the 'same' subsidies as renewable energy, it will need a lot more! (this is on top of even the insurance and nuclear waste handling subsidies that nuclear power receives).
The total funding of the Green Investment Bank is slated as being £3 billion. This would not even fund half a nuclear power station, but, if EDF can reduce its risk, it might help it go ahead. It's just hard luck for the offshore windfarms or energy efficiency schemes etc who might hope to get the investment funds instead..........
See the Government Response on http://www.publications.parliament.uk/pa/cm201012/cmselect/cmenvaud/1437/143704.htm
Friday, 22 July 2011
Nuclear power is less mature than renewables - says UK Government!
The UK Government's pro-nuclear mask has slipped. It has admitted, in the cold print of its latest formal Energy Policy statement, that nuclear power has to be given preferential types of subsidy compared to renewable energy. The reason, it says, is because nuclear power, along with CCS (carbon capture and storage), is less mature than a lot of renewable energy technologies.
On page 45 of the White Paper the Government states that onshore wind is a 'mature' technology, other renewables (offshore wind, solar, biomass) are 'rapidly maturing'. Meanwhile low carbon technologies like CCS or nuclear 'have less mature markets.'......'The sheer scale of the capital costs associated with these projects and the risks they face mean there is lower scope for new entry in the short term'. Yes, that is the Governement talking! They talk about the lack of possibilities for 'short term' market entry. Short term !!!!(????) nuclear power has only been going for 60 years as a major grid connected technology! All of this seems to support the view of nuclear critics such as Amory Lovins who has argued that nuclear power has been de-maturing as a technology whilst renewables have been maturing.
As I discussed in the last blog, the Government-appointed Committee on Climate Change has produced a piece of pro-nuclear propaganda in its claim that nuclear power is the cheapest low carbon electricity source. The Committee on Climate Change fail to account for the financial risks involved in building nuclear power stations which massively increase the costs compared to technologies such as wind power. Now, in their policy statement, the Government have effectively agreed with this criticism of the Committee on Climate Change’s analysis.
The Government suggestion (now hedged) that renewables feed in tariffs will be decided by 'auctions' or 'tenders' is still a policy that threatens to reduce the renewables deployment programme to a crawl. It would be a return to the Conservative Government's policies of the 1990s which led to a low implementation rate for projects. But for nuclear power, it seems, there will be some special terms.
The Government suggestion (now hedged) that renewables feed in tariffs will be decided by 'auctions' or 'tenders' is still a policy that threatens to reduce the renewables deployment programme to a crawl. It would be a return to the Conservative Government's policies of the 1990s which led to a low implementation rate for projects. But for nuclear power, it seems, there will be some special terms.
Of course the Government, having abandoned its (Tory and Lib Dem) manifesto commitments not to subsidise nuclear power, now says that (on page 9) that 'nuclear power stations should receive no public support unless similar support is available to other low-carbon technologies'. Yet the nuclear industry is pressing for extra subsidies and/or loan repayment guarantees to be given to nuclear power that will not be available to renewable energy. Certainly, reports from the financial markets indicate that without this there will be no nuclear power stations built in the UK anytime soon (or later). See, for example, http://www.reuters.com/article/2011/07/06/us-nuclear-citigroup-idUSTRE76548820110706.
Check out the details in the Government's statement on the Electricity Market Reforms for yourself at http://www.decc.gov.uk/en/content/cms/news/pn11_061/pn11_061.aspx
Check out the details in the Government's statement on the Electricity Market Reforms for yourself at http://www.decc.gov.uk/en/content/cms/news/pn11_061/pn11_061.aspx
Tuesday, 14 June 2011
Climate Change Committee shows pro-nuclear bias
I suppose when you are evaluating the costs of various power sources, you have to interpret the data, but the Committee on Climate Change has interpreted it in a pro-nuclear direction. The Committee says that nuclear power is the cheapest low carbon option, even cheaper than onshore wind. Well, in that case how come,in the USA, that nuclear power gets both the same tax credit subsidies as wind power, but gets in addition loan guarantees from the Federal Government? How can nuclear be said to be cheaper than wind power under this set of circumstances when it requires much bigger state support than wind power?. Please Committee on Climate Change, explain this paradox to us.
The fact is that the Committee on Climate Change gloss over the fact that nuclear power would not get financed by pension funds and banks without some sort of guarantee that the loans and equity returns will be repaid. That is the only way that nuclear power stations in the West, currently only four power stations in the US (2), Finland (1), France (1), are being built. So how much is the Committee on Climate Change's calculations worth?
Judge for yourself.
One wonders how the Government is going to hide the need to give guarantees for nuclear loan repayments. Probably by being in as much denial and using as much smoke and mirrors as it is using to hide the nuclear power subsidies it is already planning as part of the electricity market reforms it published last December. It will be interesting to see how they do it - and hide the fact that nuclear will get financial guarantees denied to renewable energy sources.
For some further comments of mine on this subject, see the current issue of Renewable Energy Focus, pages 4-6: http://e-ditionsbyfry.com/ActiveMagazine/welcome/rrf/rrf110501130727.asp
Please also see my account of the electricity market reform proposals which was carried in the previous issue of Renewable Energy Focus, pages 24-26:
http://e-ditionsbyfry.com/ActiveMagazine/welcome/rrf/rrf110301131626.asp
The fact is that the Committee on Climate Change gloss over the fact that nuclear power would not get financed by pension funds and banks without some sort of guarantee that the loans and equity returns will be repaid. That is the only way that nuclear power stations in the West, currently only four power stations in the US (2), Finland (1), France (1), are being built. So how much is the Committee on Climate Change's calculations worth?
Judge for yourself.
One wonders how the Government is going to hide the need to give guarantees for nuclear loan repayments. Probably by being in as much denial and using as much smoke and mirrors as it is using to hide the nuclear power subsidies it is already planning as part of the electricity market reforms it published last December. It will be interesting to see how they do it - and hide the fact that nuclear will get financial guarantees denied to renewable energy sources.
For some further comments of mine on this subject, see the current issue of Renewable Energy Focus, pages 4-6: http://e-ditionsbyfry.com/ActiveMagazine/welcome/rrf/rrf110501130727.asp
Please also see my account of the electricity market reform proposals which was carried in the previous issue of Renewable Energy Focus, pages 24-26:
http://e-ditionsbyfry.com/ActiveMagazine/welcome/rrf/rrf110301131626.asp
Saturday, 2 April 2011
Are Liberal Democrats turning against nuclear?
Are the Liberal Democrats, led by Nick Clegg, turning against nuclear power? No. Statements recorded by Nick Clegg fearing that nuclear power will be too expensive to be funded by the private sector in a post-Fukushima world seem more likely to be an attempt to throw some verbal sops to anti-nuclear Liberal Democrats who are fighting the local elections. There is no sign that the Electricity Market Reform (ERM), published in December, will be dropped, and that the Government's proposals for secret subsidies to be given to build nuclear power stations will be seriously amended.
The Government has chosen a very obscure and confusing way of cross subsidising nuclear through its 'contract for differences' proposal in the ERM. Nuclear power developments will be given guaranteed premium prices which will be funded by electricity consumers. The obscurity helps to cloak the breach of Tory and Lib Dem election promises not to subsidise nuclear power.
A further smokescreen of proposed increases in carbon taxes is added to attempt to hide the subsidies, The Government, in a further attempt to hide all this says that electricity prices will be a lot higher in ten years time because of its proposals for increases in the carbon floor price. In ten years time, note, not now. How can the Government increase prices in ten years time when it will not do it now? It can't. They will not in ten years time either! But it is all part of a smokescreen to hide the subsidies for nuclear and the fact that the subsidies for renewables are being cut to in order to fund nuclear power.
Added to this, prospective nuclear developers want their investments to be guaranteed by the Government. They will probably achieve some sort of scheme to do this, even though this is a facility that is denied to renewable energy developers, such as offshore wind companies, who could very much do with such guarantees to reduce their costs. Whether we shall hear about this is another matter. Democratic consultation is being suspended for nuclear energy issues to enable the people who know better to make the choices that the ordinary people are not clever enough to make. Questions will be deflected on the grounds of 'commercial
confidentiality'. All in keeping with the Liberal Democrat manifesto, of course.
The Government has chosen a very obscure and confusing way of cross subsidising nuclear through its 'contract for differences' proposal in the ERM. Nuclear power developments will be given guaranteed premium prices which will be funded by electricity consumers. The obscurity helps to cloak the breach of Tory and Lib Dem election promises not to subsidise nuclear power.
A further smokescreen of proposed increases in carbon taxes is added to attempt to hide the subsidies, The Government, in a further attempt to hide all this says that electricity prices will be a lot higher in ten years time because of its proposals for increases in the carbon floor price. In ten years time, note, not now. How can the Government increase prices in ten years time when it will not do it now? It can't. They will not in ten years time either! But it is all part of a smokescreen to hide the subsidies for nuclear and the fact that the subsidies for renewables are being cut to in order to fund nuclear power.
Added to this, prospective nuclear developers want their investments to be guaranteed by the Government. They will probably achieve some sort of scheme to do this, even though this is a facility that is denied to renewable energy developers, such as offshore wind companies, who could very much do with such guarantees to reduce their costs. Whether we shall hear about this is another matter. Democratic consultation is being suspended for nuclear energy issues to enable the people who know better to make the choices that the ordinary people are not clever enough to make. Questions will be deflected on the grounds of 'commercial
confidentiality'. All in keeping with the Liberal Democrat manifesto, of course.
Monday, 14 March 2011
Renewable energy is more reliable than nuclear
Far from nuclear power being reliable and renewable supplies being unreliable, the facts suggest the exact opposite. We can forecast production from wind turbines or solar farms hours in advance, but you cannot predict the sudden breakdowns in nuclear power plant. You don't need to look at the Fukushima crisis to understand that - just look at the UK where Sizewell B, the most modern British nuclear power station, went offline in May 26th 2008 leading to widespread blackouts across parts of the UK. This sort of incident is much more dangerous to the task of keeping the lights on than anything reneweable energy will throw up. The sheer size of these nuclear power plants and their inherent instability is a major threat to the continuity of the electricity supply system. - That is before you even consider the safety issues.
We can cope with variable production from renewables with a variety of hi-tech, low cost, measures - and minimise the need for extra 'back up'gas power stations. These hi-tech measures include demand side management techniques which involve shaving off the peaks in peak demand (using price signals to shift demand from one period to the next), building more interconnectors to shift power around Europe and gain the benefit of systems such as storage offered by Norweigian hydro, and in the future using 'extended range' electric cars to manage the variability of renewable supplies. See previous blog about electric cars - you can shift between petrol and electricity modes in these vehicles according to the variability in renewable production using computerised price signals - the same principle which applies to demand management using smart grids and giving the National Grid more incentives to use demand management techniques.
Is the Government going to adopt these hi-tech measures in its 'electricity market reform' (EMR)? Of course not! The aim of the EMR is to cut back the renewables programme and shift the incentives to nuclear power. Far from incentives being given to encourage demand side management or energy efficiency in the electricity system, bungs will be offered to the electricity companies to build more power plant. In fact there's more than enough gas power stations coming on line to provide loads of 'back up' already. The only reason you might need all of this plant is to provide emergency supplies when nuclear power stations break down unexpectedly!
We can cope with variable production from renewables with a variety of hi-tech, low cost, measures - and minimise the need for extra 'back up'gas power stations. These hi-tech measures include demand side management techniques which involve shaving off the peaks in peak demand (using price signals to shift demand from one period to the next), building more interconnectors to shift power around Europe and gain the benefit of systems such as storage offered by Norweigian hydro, and in the future using 'extended range' electric cars to manage the variability of renewable supplies. See previous blog about electric cars - you can shift between petrol and electricity modes in these vehicles according to the variability in renewable production using computerised price signals - the same principle which applies to demand management using smart grids and giving the National Grid more incentives to use demand management techniques.
Is the Government going to adopt these hi-tech measures in its 'electricity market reform' (EMR)? Of course not! The aim of the EMR is to cut back the renewables programme and shift the incentives to nuclear power. Far from incentives being given to encourage demand side management or energy efficiency in the electricity system, bungs will be offered to the electricity companies to build more power plant. In fact there's more than enough gas power stations coming on line to provide loads of 'back up' already. The only reason you might need all of this plant is to provide emergency supplies when nuclear power stations break down unexpectedly!
Sunday, 13 March 2011
Oil price hike - it's not just Libya
Commentators have fixed on Libya as the explanation for the latest oil price spike - but this is a trigger, not the cause of a crisis that will only be (temporarily) relieved by a slowdown in world economic growth. The underlying cause is simply that expansion in oil supply activities is unable to keep pace with the expansion in demand for oil.
The discussion about 'peak oil' probably oversimplifies what has been a rather more subtle trend since the 1970s that expansion of supply of oil has increasingly been unable to keep pace with demand. The oil crises of the 1970s were initially resolved by world economic recessions, especially at the beginning of the 1980s, but then the oil supply issues were ameliorated by technological shifts away from using oil as a fuel source. Countries around the world stopped using oil in electricity generation, less oil was used in industry and less oil was used for heating. This technological shift gave the world the false impression that there were no more oil supply pressures. Oil prices fell, and also fuel efficiency of vehicles, which had risen during the 1970s and early 1980s, fell once again.
The problem the world faces now is that demand for oil use in transport, especially motor vehicles, has continued to surge, with there being no expected barrier to this continued expansion - that is short of considerable oil price increases which choke off demand and induce people to buy more energy efficiency motor vehicles. This is the underlying problem - Middle Eastern political crises are triggers that make a chronic problem into a crisis. The point is that this present oil price spike would have happened anyway, perhaps in one or two years' time, regarded of political developments in the Middle East.
The problem that the world has now is that the market will not deliver the required technological shift away from oil use in transport any time soon. The market response is to induce purchase of more energy efficient vehicles, but only so long as oil prices remain very high with an ever-present danger of oil price spikes which lead to recessionary consequences. In this situation there is no such thing as 'sustainable' economic growth in any sense of usage of these terms. Indeed, the economic outlook for the coming period is bleak in that a world economic slowdown seems inevitable. Then only way this oil crisis will be resolved is likely to be by economic recession.
Of course Governments could do more interventionist action - although it seems for many US Republicans you probably have as much chance of persuading them that Karl Marx was not such a bad guy after all as to convince them of the necessity of immediate tight restrictions on motor vehicle fuel efficiency. The US actually did some of this in the 1970s with 'Corporate Average Fuel Economy' (CAFE) regulations - but things have moved on since those days when regulatory action by the state was not regarded as being quite so much the work of the Devil as it is viewed today.
In fact even such action will not be enough on its own. We need a shift towards electric cars. The state could help shift this in the right direction by incentivising so-called 'extended range' engines. These use a small petrol (gas) engine to power an electric motor with a small battery that can be used for small range travel and topping up the engine. These fit well into an electricity system powered by variable (renewable) electricity sources. These energy sources will never run out, unlike fossil fuels and nuclear power.
The discussion about 'peak oil' probably oversimplifies what has been a rather more subtle trend since the 1970s that expansion of supply of oil has increasingly been unable to keep pace with demand. The oil crises of the 1970s were initially resolved by world economic recessions, especially at the beginning of the 1980s, but then the oil supply issues were ameliorated by technological shifts away from using oil as a fuel source. Countries around the world stopped using oil in electricity generation, less oil was used in industry and less oil was used for heating. This technological shift gave the world the false impression that there were no more oil supply pressures. Oil prices fell, and also fuel efficiency of vehicles, which had risen during the 1970s and early 1980s, fell once again.
The problem the world faces now is that demand for oil use in transport, especially motor vehicles, has continued to surge, with there being no expected barrier to this continued expansion - that is short of considerable oil price increases which choke off demand and induce people to buy more energy efficiency motor vehicles. This is the underlying problem - Middle Eastern political crises are triggers that make a chronic problem into a crisis. The point is that this present oil price spike would have happened anyway, perhaps in one or two years' time, regarded of political developments in the Middle East.
The problem that the world has now is that the market will not deliver the required technological shift away from oil use in transport any time soon. The market response is to induce purchase of more energy efficient vehicles, but only so long as oil prices remain very high with an ever-present danger of oil price spikes which lead to recessionary consequences. In this situation there is no such thing as 'sustainable' economic growth in any sense of usage of these terms. Indeed, the economic outlook for the coming period is bleak in that a world economic slowdown seems inevitable. Then only way this oil crisis will be resolved is likely to be by economic recession.
Of course Governments could do more interventionist action - although it seems for many US Republicans you probably have as much chance of persuading them that Karl Marx was not such a bad guy after all as to convince them of the necessity of immediate tight restrictions on motor vehicle fuel efficiency. The US actually did some of this in the 1970s with 'Corporate Average Fuel Economy' (CAFE) regulations - but things have moved on since those days when regulatory action by the state was not regarded as being quite so much the work of the Devil as it is viewed today.
In fact even such action will not be enough on its own. We need a shift towards electric cars. The state could help shift this in the right direction by incentivising so-called 'extended range' engines. These use a small petrol (gas) engine to power an electric motor with a small battery that can be used for small range travel and topping up the engine. These fit well into an electricity system powered by variable (renewable) electricity sources. These energy sources will never run out, unlike fossil fuels and nuclear power.
Wednesday, 2 March 2011
New book on the politics of renewable energy published
Ecological Modernisation and Renewable Energy, published by Palgrave this month, discusses the emergence and development of the new renewable energy industry. David Toke reinvigorates ecological modernisation (EM), a key theory of environmental development. Renewable energy was developed from the grass roots into an industry that is challenging the position of conventional fuel sources by maintaining a distinct identity which attracts popular support. Toke analyses this 'identity EM' and highlights the continuing role of alliances between the renewable industries and environmental NGOs. The politics of technological identity are explored in several case studies which include studies of California in the 1970s and 1980s and the USA since the 1990s. Other countries discussed include Denmark, Germany, Spain, UK, Australia and China. Examination of what policies are needed to promote renewable energy is carried out through analysis of institutions, interest and discourse to cut through stereotyped debates about whether 'market based' or 'command and control' strategies are better.
In its concluding section the book also contains a critique of David Mackay's work, in particular for MacKay's numerical treatment which appears to reduce the importance of renewables compared to other ways of interpreting the statistics. Toke questions MacKay's wisdom of relying on a strategy which is heavily reliant on development of nuclear power.
See entry on Palgrave website: http://www.palgrave.com/products/title.aspx?pid=327250
In its concluding section the book also contains a critique of David Mackay's work, in particular for MacKay's numerical treatment which appears to reduce the importance of renewables compared to other ways of interpreting the statistics. Toke questions MacKay's wisdom of relying on a strategy which is heavily reliant on development of nuclear power.
See entry on Palgrave website: http://www.palgrave.com/products/title.aspx?pid=327250
Sunday, 20 February 2011
Stop Government cuts to solar (and wind)!
This month the Government has announced moves to cut funding to solar power as well as wind power. We knew that a lot of Tories hate wind power, but spending on commercial solar pv is another example of what the Government wants to cut in the Renewables Programme in order to shift resources to nuclear power. The Government is reviewing support, under the small (up to 5MW) feed-in tariff scheme, to support solar photovoltaic (pv) schemes over 50 KW in size. The feed-in tariff for small renewable energy projects was approved in 2008.
Amazingly, Chris Huhne, the energy frontman for what is allegedly the 'greenest ever government' sees commercial solar pv schemes as a 'threat'. That is according to the title of a DECC press release that says: 'Huhne takes action on solar power threat'. The press release (http://www.decc.gov.uk/en/content/cms/news/pn11_010/pn11_010.aspx) says that commercially sized solar pv farms 'might soak up money intended to help homes, communities and small businesses generate their own electricity'. What money is this? Actually it is electricity consumers' money which the Government prefers to divert to nuclear power rather than solar power. Has the Government asked the electricity consumers whether they would prefer to see their money spent on solar farms rather than nuclear power? Please let your MP what you think of all of this, preferably by writing to them to support funding solar power rather than nuclear power. See more details of the support solar campaign on:
http://wesupportsolar.net/
Meanwhile, Chris Hendry has signalled a clampdown on funding for onshore wind power. In a press release trying to placate anti-wind Tory backbenchers he said:
What are unsuitable locations for windfarms, one wonders? Where there is a local Tory MP with the wind up? Yes, I assume that is what they mean. But of course an advantage for the Government in cutting spending on wind power is that (for a given level of electricity consumer bills) the less money is spent on windfarms, the more money is left for spending on nuclear power! The 'review of the funding mechanism' to which Chris Hendry refers is part of the Electricity Market Reform which this blog has already denounced as a means of curbing renewable energy expansion in favour of nuclear power. Once again I say, stop the efforts to cut renewable energy funding; on the contrary spend more on renewable energy instead of spending to subsidise nuclear power. Write to your MP telling him/her this!
Amazingly, Chris Huhne, the energy frontman for what is allegedly the 'greenest ever government' sees commercial solar pv schemes as a 'threat'. That is according to the title of a DECC press release that says: 'Huhne takes action on solar power threat'. The press release (http://www.decc.gov.uk/en/content/cms/news/pn11_010/pn11_010.aspx) says that commercially sized solar pv farms 'might soak up money intended to help homes, communities and small businesses generate their own electricity'. What money is this? Actually it is electricity consumers' money which the Government prefers to divert to nuclear power rather than solar power. Has the Government asked the electricity consumers whether they would prefer to see their money spent on solar farms rather than nuclear power? Please let your MP what you think of all of this, preferably by writing to them to support funding solar power rather than nuclear power. See more details of the support solar campaign on:
http://wesupportsolar.net/
Meanwhile, Chris Hendry has signalled a clampdown on funding for onshore wind power. In a press release trying to placate anti-wind Tory backbenchers he said:
'Wind turbines should be positioned where the wind resource is strongest. So this year we are bringing forward a full review of the funding mechanism, so we can ensure that subsidies will not make it attractive to put windfarms in unsuitable locations.' See http://www.decc.gov.uk/en/content/cms/news/hendry_onshore/hendry_onshore.aspx
What are unsuitable locations for windfarms, one wonders? Where there is a local Tory MP with the wind up? Yes, I assume that is what they mean. But of course an advantage for the Government in cutting spending on wind power is that (for a given level of electricity consumer bills) the less money is spent on windfarms, the more money is left for spending on nuclear power! The 'review of the funding mechanism' to which Chris Hendry refers is part of the Electricity Market Reform which this blog has already denounced as a means of curbing renewable energy expansion in favour of nuclear power. Once again I say, stop the efforts to cut renewable energy funding; on the contrary spend more on renewable energy instead of spending to subsidise nuclear power. Write to your MP telling him/her this!
Friday, 4 February 2011
How renewables get squeezed with nuclear power
Using figures from the Government's own Digest of United Kingdom Energy Statistics we can see how the nuclear construction programme will squeeze the renewables programme. On the most plausible projections renewables share of UK electricity generation is likely to remain less than 20 per cent, certainly a lot less than the 30 per cent quoted as the target by the Government. In this way the demands of companies like EDF can be met for renewable development to be limited so that the commercial interests of nuclear power will be protected.
The Government plans to build 16 GW of nuclear power by 2025, according to its 'National Policy Statement'. When this amount is added to the existing commitment to build new gas combined cycle generation turbines (CCGTs), it is simple to see that there is no chance of renewables making anywhere near the 30 per cent target share of electricity (by 2020 or any other time). According to the Government’s proposals renewables will, through the proposed ‘low carbon mechanism', either be in direct or indirect competition for resources (paid by electricity consumers through increased prices) with nuclear power. There will be no level playing field in this ‘competition’ between nuclear and renewables. No doubt nuclear will be given back-door guarantees for support which will not be available for renewable energy developers, as is always the case with nuclear power.
The figures speak for themselves on how renewables will be crowded out using average load factors (per centage time that plant generate on average in the UK compared to their maximum production). 16 GW of new nuclear power stations at an 80 per cent load factor produces 141 TWh per year. 39 GW of the existing (or planned) CCGTs at just 67 per cent load factor gives 229 TWh. UK Electricity supply for 2009 was 357 TWh, so even if this increases to 450 TWh renewables will be left with just 80 TWh, or less than 18 per cent of total electricity supply. It should be remembered that UK electricity demand/supply has been static over the last decade because of high energy prices, so supply might not even increase to 450 TWh by 2025. It should also be remembered that this 18 percent residue will become smaller as schemes for carbon capture and storage are developed.
Note that 25GW of CCGTs is already constructed and operating! There's no doubt about that! Gas already generates around 40 per cent of UK electricity, and those gas plant are relatively recently built, so will be around for a long time. Note that another 14 GW of CCGTs are being planned or constructed now.
It is hardly surprising therefore, that the UK Government is proposing ‘auction’ style mechanisms for awarding contracts to supply renewable energy, misleadingly called ‘feed-in tariffs’, as a backdoor method of constraining renewable growth after 2017. These auctions, tried and failed in the 1990s (and in all other cases where they have been tried around the world), are almost designed to constrain renewables while maintaining a fiction of relatively ambitious targets. They will severely limit renewable and especially wind power development after the Renewables Obligation is phased out in 2017. Under 'auction' systems prospective developers tend to make unrealistically low bids for contracts to supply renewable energy in order win in the auctions, and then half of the projects are not implemented because of poor likely economic returns. In the case of onshore wind the problem is even worse since half of the remaining projects fail to achieve planning consent in the UK.
Note that 25GW of CCGTs is already constructed and operating! There's no doubt about that! Gas already generates around 40 per cent of UK electricity, and those gas plant are relatively recently built, so will be around for a long time. Note that another 14 GW of CCGTs are being planned or constructed now.
It is hardly surprising therefore, that the UK Government is proposing ‘auction’ style mechanisms for awarding contracts to supply renewable energy, misleadingly called ‘feed-in tariffs’, as a backdoor method of constraining renewable growth after 2017. These auctions, tried and failed in the 1990s (and in all other cases where they have been tried around the world), are almost designed to constrain renewables while maintaining a fiction of relatively ambitious targets. They will severely limit renewable and especially wind power development after the Renewables Obligation is phased out in 2017. Under 'auction' systems prospective developers tend to make unrealistically low bids for contracts to supply renewable energy in order win in the auctions, and then half of the projects are not implemented because of poor likely economic returns. In the case of onshore wind the problem is even worse since half of the remaining projects fail to achieve planning consent in the UK.
Of course the auction system presents the Government with an alibi for lack of delivery of renewable energy. It simply blames the developers. We need a transparent, open ended system of feed-in tariffs for renewable energy with good rates set for each technology as exists in Germany with no constraints on who can get contracts provided they are supplying renewable energy such as wind, solar, small hydro, biogas, wave, tidal stream etc. Of course the Renewables Obligation at the moment would be much preferable compared to what the Government are proposing. It is an expensive system, but we need reforms to the system that continues to encourage capacity build up,not a system that constrains renewables for the benefit of nuclear power development.
The bulk of the Round 3 proposals for offshore windfarms will never be implemented under the Government proposals. Really, the UK should be generating 50 per cent of electricity from renewables by 2025, but instead we will be sailing off into what the Government apparently sees as a nuclear powered future. Those of us who believe that a renewable future is far preferable to a global nightmare of uranium depletion followed by fast breeder reactors seem, at the moment, to be failing to get our message across. Do we need to wait five years before we realise that this Government's priority is nuclear power rather than renewable energy?
Saturday, 29 January 2011
China - powering the way ahead for a renewable future?
China has now overtaken the USA as the country with the largest amount of installed wind power capacity. It is also manufacturing increasing quantities of solar photovoltaic (pv) panels. Just as installation rates of wind power falls off in the USA (because the incentives for wind power fail to counteract the decline in natural gas prices in the USA), so the Chinese are rapidly increasing their installations of wind power. It is being done through a 'feed-in tariff' system (a real feed-in tariff system - not the version that the UK Government are considering which restricts wind development - see earlier blogs). This will bring down the cost of wind power plant as Chinese companies increasingly provide competition to western wind turbine manufacturers. This will reduce the prices of wind power generally around the world.
The Chinese manufacture of solar pv has also massively expanded and resulted in big declines in the costs of solar pv. Not good news for the German based pv manufacturers that have done so well recently, but very good for the solar technology in general as it becomes more competitive with conventional fuels. So how is the West reacting? Well, the USA is just letting its renewable energy industries waste away. The UK is deciding to give a lot of its incentives to nuclear power rather than renewables (see earlier blogs). And people in the West worry that one day they will become uncompetitive with China.......
The Chinese manufacture of solar pv has also massively expanded and resulted in big declines in the costs of solar pv. Not good news for the German based pv manufacturers that have done so well recently, but very good for the solar technology in general as it becomes more competitive with conventional fuels. So how is the West reacting? Well, the USA is just letting its renewable energy industries waste away. The UK is deciding to give a lot of its incentives to nuclear power rather than renewables (see earlier blogs). And people in the West worry that one day they will become uncompetitive with China.......
Thursday, 20 January 2011
Government double-talk on offshore supergrids undermined by OFGEM
Government claims to be supporting the EU supergid concept are undermined by the actions of its own agencies. OFGEM is actually refusing to sanction proposals made by the National Grid to build even a small part of such a supergrid, saying instead that individual offshore windfarm projects should connect to the grid by themselves, not through any 'supergrid'. OFGEM is the 'Office of Electricity and Gas Management', the energy regulators. Essentially OFGEM are providing evidence for what a lot of us fear - that the Government is really more interested in building nuclear power stations than funding much offshore wind. When I say 'Government' I mean the Conservatives and the Treasury where the real decisions about funding are being made. Chris Huhne means well, but may not, in reality, be able to ensure that much of Round 3 of the offshore windfarm programme actually gets built.
OFGEM is saying that Round 3 offshore windfarm operators should not connect into a transmission network that connects different windfarms into an international electricity transmission network because the other offshore windfarms may not get built, thus leaving the investment in networks that could connect into a supergrid as 'stranded capital'. In effect OFGEM is implicitly undermining confidence in the Government's claims to be supporting real progress towards a European supergrid as stated in the press releases issued by the Department of Energy and Climate Change. Indeed OFGEM has, in the past (and I assume still holds this position), been a keen supporter of the type of 'auction' proposals for issuing contracts for renewable energy capacity promoted by the Government's Electricity Market Reform proposals. These 'auction' proposals would, as discussed in previous entries of this blog, emasculate the UK renewable energy programme.
See story in 'Business Green' which gives the usual Government 'green hype' that we're sailing into an offshore windfarm future when in reality policy is facing in a very different direction. http://www.businessgreen.com/bg/news/1938599/david-cameron-steps-support-north-sea-supergrid#disp
Thursday, 13 January 2011
More power to Holyrood to protect renewables programme?
As more people understand the details of the UK Government's electricity market reform (EMR) proposals the more it becomes clear that they threaten to emasculate the Scottish Government's renewables programme. There are potential advantages in giving more power over renewable energy policy to the Scottish Government.
The Scottish Government has a target of achieving the supply of 80 per cent of Scottish electricity demand by 2020. At the moment around 30 per cent of Scottish electricity is being supplied by renewable energy, with around half of this 30 per cent now supplied by wind power. The large bulk of the rest of the 80 per cent target is also expected to come from a mixture of onshore and offshore wind power.
Yet the UK Government's EMR proposals, establishing a 'low carbon mechanism', point to the establishment of an 'auction' system of allocating contracts to supply renewable energy. Only holders of the contracts will have a good chance of developing schemes - either (in the worst case scenario) directly in competition with nuclear power, or, indirectly through 'technology bands'. In both cases the renewable energy developers will have to compete, directly or indirectly, with nuclear power for restricted funds (charged to electricity consumers). This is because the UK Treasury will want to impose a limit on electricity price increases and thus the amount of financial support given to renewable and nuclear energy.
However, it gets worse for renewables, because an 'auction' of contracts will mean that the offshore wind programme is likely to achieve only half its targets for installed capacity and the onshore programme is likely to achieve only a quarter of its targets for capacity. Historically, when auction systems have been used, around half the proposals that are successful in bidding the lowest tenders (expressed in prices to be paid for their energy generated) have been put into practice. This is because prospective developers make over-optimistic bids (to ensure they secure the contracts) that later prove to be uneconomic. Hence a lot of the offshore windfarm proposals already agreed by The Crown Estates will not be implemented. In the case of onshore windfarms, however, there is the further hurdle of achieving planning consent. Only around half of proposed schemes are given planing consent. So with onshore wind, under an 'auction' system, we get 'half of half' of the target - that is a quarter.
So the UK Government can claim to be giving over twice as many contracts for wind power than is actually likely to be implemented. This may be a convenient ruse for a Westminster Government which is anxious to give priority to nuclear power and blame renewable energy developers for not meeting their targets, but it does nothing for the Scottish Government which is giving sole priority to renewables as opposed to nuclear power.
Of course the UK Government is calling their proposed system a 'feed-in tariff' - the same name given to successful renewable support systems such as used in Germany. But the two things are not the same as in the case of a German-style feed-in tariff good rates for electricity are given to renewable generators who are not limited in what they can do by having to win an 'auction' competition. But in the UK a real German style feed-in tariff only exists for small scehmes. Currently of course we have the Renewables Obligation which gives freedom to large developers to set up schemes provided they can achieve planning consent. if they do not succeed in one place, whether for planning or economic reasons, they can try somewhere else without having to win an auction contest. The Renewables Obligation involves issuing 'Renewable Obligation Certificates' or ROCs to renewable generators. This system has faults, but it is still much preferable to the UK Government's proposals.
Let us hope the Scottish Government sticks to its guns on this issue as reflected in its initial response (see quote below), and demands an effective financial support mechanism to support renewable energy. Indeed, given the conflicting priorities of the UK Government between renewables and nuclear power it seems there would be big advantages in having authority over renewable energy support mechanisms transferred from Westminster to Edinburgh. Scotland's First Minister said on December 16th:
'Any new system must be at least as effective as the current framework of banded ROCs, where we have delivered unique and enhanced levels of support for offshore wind and for wave and tidal capable of delivering capacity as well as new industries and jobs. We are concerned that changes which are designed chiefly to extend our support mechanisms to include nuclear power run a material risk of being delivered at the expense of investment in renewable generation and CCS in Scotland. We will strongly resist any change for a support mechanism for nuclear power at the expense of renewable generation and CCS inScotland , and we believe that Scottish Ministers should have full control over any new financial support mechanisms for renewables and CCS in Scotland'
The Scottish Government has a target of achieving the supply of 80 per cent of Scottish electricity demand by 2020. At the moment around 30 per cent of Scottish electricity is being supplied by renewable energy, with around half of this 30 per cent now supplied by wind power. The large bulk of the rest of the 80 per cent target is also expected to come from a mixture of onshore and offshore wind power.
Yet the UK Government's EMR proposals, establishing a 'low carbon mechanism', point to the establishment of an 'auction' system of allocating contracts to supply renewable energy. Only holders of the contracts will have a good chance of developing schemes - either (in the worst case scenario) directly in competition with nuclear power, or, indirectly through 'technology bands'. In both cases the renewable energy developers will have to compete, directly or indirectly, with nuclear power for restricted funds (charged to electricity consumers). This is because the UK Treasury will want to impose a limit on electricity price increases and thus the amount of financial support given to renewable and nuclear energy.
However, it gets worse for renewables, because an 'auction' of contracts will mean that the offshore wind programme is likely to achieve only half its targets for installed capacity and the onshore programme is likely to achieve only a quarter of its targets for capacity. Historically, when auction systems have been used, around half the proposals that are successful in bidding the lowest tenders (expressed in prices to be paid for their energy generated) have been put into practice. This is because prospective developers make over-optimistic bids (to ensure they secure the contracts) that later prove to be uneconomic. Hence a lot of the offshore windfarm proposals already agreed by The Crown Estates will not be implemented. In the case of onshore windfarms, however, there is the further hurdle of achieving planning consent. Only around half of proposed schemes are given planing consent. So with onshore wind, under an 'auction' system, we get 'half of half' of the target - that is a quarter.
So the UK Government can claim to be giving over twice as many contracts for wind power than is actually likely to be implemented. This may be a convenient ruse for a Westminster Government which is anxious to give priority to nuclear power and blame renewable energy developers for not meeting their targets, but it does nothing for the Scottish Government which is giving sole priority to renewables as opposed to nuclear power.
Of course the UK Government is calling their proposed system a 'feed-in tariff' - the same name given to successful renewable support systems such as used in Germany. But the two things are not the same as in the case of a German-style feed-in tariff good rates for electricity are given to renewable generators who are not limited in what they can do by having to win an 'auction' competition. But in the UK a real German style feed-in tariff only exists for small scehmes. Currently of course we have the Renewables Obligation which gives freedom to large developers to set up schemes provided they can achieve planning consent. if they do not succeed in one place, whether for planning or economic reasons, they can try somewhere else without having to win an auction contest. The Renewables Obligation involves issuing 'Renewable Obligation Certificates' or ROCs to renewable generators. This system has faults, but it is still much preferable to the UK Government's proposals.
Let us hope the Scottish Government sticks to its guns on this issue as reflected in its initial response (see quote below), and demands an effective financial support mechanism to support renewable energy. Indeed, given the conflicting priorities of the UK Government between renewables and nuclear power it seems there would be big advantages in having authority over renewable energy support mechanisms transferred from Westminster to Edinburgh. Scotland's First Minister said on December 16th:
'Any new system must be at least as effective as the current framework of banded ROCs, where we have delivered unique and enhanced levels of support for offshore wind and for wave and tidal capable of delivering capacity as well as new industries and jobs. We are concerned that changes which are designed chiefly to extend our support mechanisms to include nuclear power run a material risk of being delivered at the expense of investment in renewable generation and CCS in Scotland. We will strongly resist any change for a support mechanism for nuclear power at the expense of renewable generation and CCS in
Wednesday, 5 January 2011
response to 'UK needs nuclear' argument
See my response (in a letter published in the Guardian) to an argument that the lights will go off if the UK has renewables instead of nuclear power. See http://www.guardian.co.uk/environment/2011/jan/04/finnish-lesson-for-nuclear-advocates?INTCMP=SRCH Also see previous letter sent in by pro-renewable energy academics arguing that the Government's new energy policy will favour nuclear power rather than renewable energy
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