Falling prices, falling windfarms

The FT notes an interesting side effect of falling wholesale electricity prices in the UK: as prices come down the subsidy paid to windfarms increases. Now at first sight this would appear to represent something of a dark cloud for the consumer, but in fact there is a substantial silver lining. Because the total amount of subsidy has been capped, there is effectively a limited pot of money and if the analysis of prices coming down faster than predicted is correct then that pot is going to be eaten up faster than expected:

This could have worrying implications for many big offshore wind projects in development, which are heavily reliant on state incentives.

The UK needs such projects to go ahead if it is to meet its legally binding target of generating 15 per cent of energy from renewable sources by 2020.

Signs have emerged that concerns about the size of the subsidy are already having a chilling effect.

So if they carry on in their current vein, the Westminster geniuses may achieve the remarkable feat of fixing the market in such a way that nobody is willing to build any new power plant of any kind.

Astonishing, when you think about it.

Wind and solar are worst

The venerable (and somewhat woolly liberal) Brookings Institution in Washington DC has published a working paper on the most cost-effective way to reduce carbon dioxide emissions. Commendably, the paper eschews the dishonest levelised-cost (LCOE) approach used by DECC and its colleagues in the green movement. 

The author, Charles Frank, concludes that solar and wind power are the worst possible approach to the problem:

...nuclear, hydro, and natural gas combined cycle have far more net benefits than either wind or solar. This is the case because solar and wind facilities suffer from a very high capacity cost per megawatt, very low capacity factors and low reliability, which result in low avoided emissions and low avoided energy cost per dollar invested.

Click to read more ...

Interconnecting confusion

In a new report published today, the think tank Policy Exchange examines the case for building a whole lot more interconnectors so that we can import electricity from overseas, in particular availing ourselves of hydro power from Scandinavia and geothermal from Iceland. The existence of a big pipe between the UK and Norway would also allow us to store energy generated in windfarms here in pumped hydro stations up there.

According to the authors, interconnectors are super-duper and will give us access to much cheaper power prices from these overseas markets. But the idea that we can interconnect our way out of trouble all starts to fall down when you read the chapter on barriers to building new interconnections. Given the opportunities for arbitrage, people should be building interconnectors on their own initiative - the profits available should be enormous. Unfortunately this doesn't happen. Reading between the lines the reason is that nobody in the investment community is going to place a massive bet on a UK electricity market which is built on a premise of fleecing the consumer for the forseeable future - they simply do not believe that politicians are going to be able to sustain such a policy. So in order to get investment politicians have to guarantee returns, an approach that is common in Europe.

Click to read more ...

The SNP's energy policy

So, the subsidies have flowed, the markets rigged, the countryside has been besmirched with windfarms, the coal-fired power stations closed or switched to biomass and the rooftops have been tiled with solar panels.

And the result?

The Scottish Government has missed its greenhouse gas emissions target following a rise in pollution last year.

Click to read more ...

Getting your message straight

From the beginning of Ed Davey's speech

If businesses don’t have confidence in the security of energy supply, their costs go up.

Higher insurance premiums, expensive back-up systems.

From the end of Ed Davey's speech

Demand Side Balancing Reserve will not force any single business or household to switch off or reduce their electricity.

It is entirely voluntary. Nobody will get cut off. No economic activity will be curtailed.

This is about rewarding volunteer businesses. With the flexibility to reduce their use of National Grid supplied electricity. At peak times only. If called upon.

By changing a shift pattern maybe. Or switching to on-site generation rather than relying on the Grid.

British Banana Republic

More evidence is emerging of Britain's decline into banana republic status, driven by the politicial establishment's eccentric attachment to all things green.

Britain may be forced to use “last resort” measures to avert blackouts in coming winters, Ed Davey, the energy secretary, will say on Tuesday.

Factories will be paid to switch off at times of peak demand in order to keep households’ lights on, if Britain’s dwindling power plants are unable to provide enough electricity, under the backstop measures from National Grid.

I am in awe of Mr Davey, who is trying to spin this as an opportunity for businesses:

He told the Telegraph businesses were “delighted” to get paid to reduce demand. Some would not actually “switch off” and would instead fire up their own on-site generators to replace grid supplies. Others, such as large-scale refrigeration firms, could temporarily cut power without any negative effects.

Of course the reason they are "delighted" is that they are going to be paid a great deal of money for switching off and using their own generators. The fact that this is going to cost consumers a great deal of money and increase carbon emissions to boot is, of course, not worthy of a mention.

Risky renewables

A briefing paper published by GWPF today points out the enormous risks that renewables represent to UK energy security. Here's the press release:

London, 2 June: A new paper published today by the Global Warming Policy Foundation warns that intermittent wind and solar energy pose a serious energy security risk and threaten to undermine the reliability of UK electricity generation.

Many people – including ministers, officials and journalists – believe that renewable energy enhances Britain’s energy security by reducing the dependency on fossil fuel imports. The ongoing crisis over the Ukraine and Crimea between Russia and the West has given much attention to this argument.

Written by Philipp Mueller, the paper (UK Energy Security: Myth and Reality) concludes that domestic and global fossil fuel reserves are growing in abundance while open energy markets, despite the conflict in the Ukraine, are enhancing Britain’s energy security significantly.

In contrast, the ability of the grid to absorb intermittent renewable energy becomes increasingly more hazardous with scale.

Germany provides a warning example of its growing green energy insecurity. Last December, both wind and solar power came to an almost complete halt for more than a week. More than 23,000 wind turbines stood still while one million photovoltaic systems failed to generate energy due to a lack of sunshine. For a whole week, conventional power plants had to provide almost all of Germany’s electricity supply.

Germans woke up to the fact that it was the complete failure of renewable energy to deliver that undermined the stability and security of Germany’s electricity system.

“Open energy markets are a much better way to ensure energy security than intermittent generation systems like wind and solar. It would be a huge risk in itself for Britain to go down the same route as Germany and destabilise what is still a reliable UK electricity grid,” said Philipp Mueller.

Full paper (PDF)

Mr Swinney's footwork

Readers will recall that a power cut put a large swathe of northern Scotland in the dark a few weeks back, apparently due to a faulty relay in a substation. However, a number of expert commentators have observed that this seems to be a somewhat implausible explanation and there have been several attempts to check the facts, including an FOI request submitted by yours truly.

One of the other attempts took the form of a question put in the Scottish Parliament by Alex Johnstone, the MSP for North East Scotland.  Here, such as it is, is the answer he received:

Electricity Grid Failure (Wind Turbines)
3. Alex Johnstone (North East Scotland) (Con): To ask the Scottish Government whether it has undertaken any further investigation into whether an overreliance on wind turbines as a source of electricity played a role in the grid failure on 16 April 2014. (S4O-03258)

Click to read more ...

Wind or not?

This little snippet appeared in Scottish Energy News yesterday:

MSP Alex Johnstone (Conservative, North East Scotland) has this week tabled question for answer in the Scottish parliament on causes of last month’s power black-out which cut off electricity to 200,000 homes in the Highlands and Islands.

So perhaps we will get to the truth.

Diary dates, comedy edition

A couple of events at the Hay Festival look amusing, with the festival organisers clearly "having a laugh".

On 27 May you can get your head round the wisdom of Marcus Brigstocke on the subject of climate change:

The comedian and broadcaster, who has witnessed the impact of climate change in the Arctic, is joined by Simms, author and campaigner with Global Witness, to discuss how close we are to crossing planetary environmental thresholds, how we got into this mess and what we need to do to get out of it.

I wonder what he saw there that made him so certain he was witnessing the impact of climate change?

Then, later the same day there is this comedy gem:

What would you do if you had to power the UK? Marcus Brigstocke and Libby Purves get to grips with how to generate enough energy to keep the lights on and power their appliances. Dependency on overseas supplies, volatile fossil fuel prices and the need for a low-carbon economy makes this one of the biggest challenges facing the country. Richard Smith of National Grid and David MacKay of the DECC are our expert advisors. Chaired by Mark Lynas and using the 2050 calculator.

Marcus Brigstocke and Libby Purves?! Praise the Lord. We're clearly all saved!

I'm not really familiar with what goes on at the Hay Festival, but is this typical of their output? Do people really go there to learn about energy policy from the likes of Marcus Brigstocke? Or is there some kind of post-modern irony that I'm missing? And how is this going to look if the lights go out next winter?

Hard hitting at the Times

The Times (£) has taken a look at UK energy policy and has come away pretty appalled with what it has found:

With zero margin for error, power cuts are virtually inevitable. Britons are in fact becoming more efficient in their use of energy. Overall consumption has fallen slightly since the 1970s and markedly since 2005. A crisis looms despite this trend because of steadily declining North Sea output and the planned obsolescence of ageing power stations.

There are extended excerpts at GWPF.

That blackout

Readers may recall the story I posted about a major power cut in the North of Scotland last month and the speculation that the underlying cause was windfarms. This has officially been put down to a faulty relay, but today Euan Mearns notes a letter by an electrical engineer in a local newspaper which tells another story:

SIR, I was amazed to learn that a Scottish Hydro Electric transmission spokeswoman said “repairs are being carried out on the faulty relay” that allegedly caused the power cut on April 16 (“works to fend off blackouts”, P&J, May 10).

I have been an electrical engineer for over 40 years and have never heard of anyone “repairing” a hermetically sealed relay switch.

Click to read more ...

Investors shun UK energy market

Peter Atherton of Liberum Capital has been liveblogging Centrica's briefing for analysts this morning, and it is clear that all is not well in the UK energy sector (as if we needed reminding):

Centrica expects to continue to shift capital from UK to north America. Lower political risk cited as one of the reasons.

And a few days ago he was telling us about US investors' views on the UK market:

I asked NY investors to rank UK utility sector 1 to 10 for attractiveness. 1 being no way and 10 being unmissable. Average score today was 4.

In Boston, the average was 3.

How are you going to talk your way out of this Mr Davey?

Security blanket

Updated on Apr 24, 2014 by Bishop Hill

Ed Davey has announced a further expansion of the government's renewable energy scheme, with eight new projects unveiled, blanketing the UK's waters with wind turbines. These projects are apparently so enormous that they will, on their own, produce a noticeable rise in household electricity bills of some 2%. The rise in industrial electricity prices that will result and which must also be absorbed by consumers - something like the same amount again - goes unstated.

Interestingly, the argument that renewables are cheap have gone out of the window. Instead, with Ukraine in the news on a daily basis, Davey is emphasising energy security:

Mr Davey defended the cost, arguing that these kind of low-carbon projects were essential to boost energy security and battle climate change.

Click to read more ...

Wind speculation

There was a major power cut in the north of Scotland at 8:30pm yesterday. At one time, as many as 200,000 homes were affected. According to the Scotsman, the current theory is that there may have been a problem in power lines near Inverness.

Teams of engineers are today out checking the thousands of kilometres of power lines across the region.

A spokesman for energy firm SSE said a helicopter was also assisting in the search for the cause.

He said: “Our engineers are still investigating the cause and location of the fault. It is a large geographical areas these guys have to search.

“Some times you really need to go out an inspect the lines by eye.”

It is understood engineers are concentrating their efforts on an area between Moray and Inverness.

However, over at the Scotland Against Spin Facebook page, speculation is rife that it may be something to do with the wind turbine fleet.

...having looked at yesterdays wind data something very strange happened at about 20.27.... that may have been the power cut which triggered it .. but wind dropped sharply.

Seems to me that [National Grid] were expecting a rise in wind speeds (which did come afterwards) and started to ramp down gas & coal in expectation of it, when the sudden lull arrived.

Intriguing!