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.......

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.

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 in Scotland, and we believe that Scottish Ministers should have full control over any new financial support mechanisms for renewables and CCS in Scotland'

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 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