Friday 5 September 2014

Not just ironic

This week, the FT reported that the National Grid was looking for emergency supplies of electricity for this winter ('Power shortage fears spur hunt for extra electricity', National News, FT September 03).
The emergency has come about it was said, because of shortages in output from the UKs coal gas and nuclear stations. In August, EDF, the main nuclear power generation company, had announced the closure, due to boiler faults, of four nuclear power stations and the resultant loss of a combined output of 2.3 GW ('Nuclear power plant warning puts spotlight on supply plans', National News, FT September 05).  In addition, fires at Ferrybridge and Ironbridge power stations, two key coal fired plants, have resulted in a further loss in electricity generation capacity. A gas fired station in Barking East London has also recently closed.

With the NG urgently looking for new sources of electricity, it seems ironic then, does it not, to find that several new electricity generating projects have recently been scrapped ('Offshore wind farms hit by new blow', National News FT August 01).  Centrica's project to develop the new 2.2GW Celtic Array, Europe's largest wind farm (which was to be sited off the North Wales coast near Anglesey) has been closed. To add to that, in recent months power companies have pulled out of a litany of offshore windfarm developments. The £4B Atlantic Array which was to have been built off the Devon coast by RWE has been scrapped. Scottish Power pulled out of it's Argyll Array project late last year and a second phase of Kent coast's London Array windfarm, run by a consortium of companies, has also ended up as more flotsam and jetsam.
The reasons given for the ditching of the Anglesey development are many and varied: Engineering difficulties, concerns about damage to shark and bird habitats, uncertainties about financial support, tightening of the Coalition government's subsidies regime, challenging ground conditions, the seabed of rock and sand leading to additional complexity and cost for the construction of footings for wind turbines. That’s a long list. The reasons given for the other project closures, as far as I can see, are similar - they cite, for example in the case of the Argyll project, problems with basking sharks and rocky seabeds.

UK based companies and others have amassed great skills in Offshore engineering from decades of marine oil and gas exploration projects and experience. Much is known about how to build footings for large structures on tricky seabeds. Energy companies enjoy a challenge it seems. BP and other companies mined seven miles! below the surface of the Mexican gulf to drill for oil. They have been and go to the most challenging parts of the world in an attempt to squeeze as much black gold from the earth as they are able. Environmental concerns - water table pollution, destruction of wildlife habitats, have always taken second place to the primary concern - profit. This last point has been rammed home more firmly today as BP has been found guilty of gross negligence and willful misconduct in the 2010 Deepwater Horizon disaster. If the energy companies were keen to go ahead with those offshore wind projects, all of the hurdles listed above would be straddled by using the means that have been used in the past to railroad through difficult schemes - with one sole proviso -providing there were returns to be had.

I don’t believe the reasons given for those project closures.

Renewable electricity generation, for example, windpower, produces electricity more cheaply than conventional generation, like coal, oil, gas and nuclear and brings the electricity price down for all forms of generation. This is because, once installed, a wind energy converter say, requires no fuel, and requires only a small amount of maintenance work. Electricity is produced continually (when the wind blows) at little (or no) extra marginal cost. Contrastingly, all other forms of electricity generation - nuclear, gas, coal and oil based power stations - require a constant supply of fuel and the associated labour required to deliver the fuel and to maintain the equipment.  

This can be confirmed to some extent, by taking a look at what is happening to electricity prices in Germany.
Europe's second largest electricity producer by capacity, RWE, has moaned that power prices are too low. The price of electricity has dropped there, it is said (The LEX Column, FT August 15), because of the excess capacity on the German electricity market, partly caused by the nationwide switch to renewables. The price of electricity in Germany has reached a seven year low at Euro 34 per MWh. That is significantly below the current electricity price in the UK. To compare this with the UK, the forecast UK baseload electricity price for October rose to £46.55 per MWh today according to the above quoted FT article (September 05).  
'Excess' renewables capacity is forcing RWE, as an operator of both renewables and also of conventional power generation, to close its (more expensive) conventional capacity when it has to choose as a result of dropping electricity demand (or lots of excess electricity due to high winds). The result is that the electricity price drops at these times when generation of electricity exceeds demand.

I believe that this underlines the primary reason for those closures listed above. Renewable generation brings the price of electricity down. Not just down for renewable electricity, but for all electricity, whether generated by nuclear, coal, oil, gas or wind turbines. Having more and more renewables generating electricity is not good for companies heavily invested in fossil and nuclear. If their prices have to drop, so do their profits from huge investments in conventional power.
In the UK, a contrasting phenomenon shines a little more light on the nature of renewable electricity and the politics surrounding it.
Rather than an energy company, as in Germany, moaning about low energy prices, a national newspaper bleats here about how 'A windfarm has been paid £11 million not to produce electricity'  (Sunday Telegraph August 24).
The National Grid has to constantly balance electricity supply with demand. Electricity cannot simply be thrown away once produced. Something must be done with it - heat an oven, light a room, power a fridge etc. If there is an excess of electricity being generated, then either some generation must be shut down, or some demand switched on. In Germany currently, it seems conventional plant is being switched off when necessary while in the UK, the choice, currently is to ask windfarm operators to temporarily stop their rotor blades from turning. That payment of £11 million would be arising from a pre agreed contract between National Grid and the generation company, that stated that amounts of cash would be handed over if a request was made to not generate. That kind of contract is drawn up between National Grid and every type of electricity generation organisation.  The choices behind the different approaches in the UK and Germany are political and commercially determined. In Germany (although how long this will last is unclear), the Government is favouring some renewable generation, while in the UK the Government is fully behind conventional fossil and nuclear generation (and of course is also behind the new kid on the block, fracking) as is evidenced by its removal of subsidies from onshore wind, and the recent announcement by the Department for Energy and Climate Change that rival technologies- implying offshore wind and fracking etc- would now have to compete for funding.

If we are to tackle effectively the most serious challenge affecting us regarding energy production - climate change - we should be building and installing more windfarms, not closing projects down.
The reason they are not being built fast enough and why sensible projects are in fact being closed down is because of the investment by the those multinational energy companies, those behind the projects mentioned above - some of the worlds most profitable firms - in oil and gas and their desire to keep making profits in the same old way from these investments with support in this from the UK government and governments in many countries worldwide.    

That the National Grid balances the electricity grid by  paying large amounts of money to windfarm companies to not produce electricity, while at the same time it is saying it is searching for emergency supplies of electricity elsewhere is one irony. Another is that while new, safe, clean and potentially reliable renewable electricity projects are shut down, massive amounts of investment continues to be spent on dirty dangerous unreliable old nuclear and fossil stations which frequently break down and require constant maintenance and safety inspections.
These ironies arise because of the irrational unpredictable outcomes that follow production for profit.

Much more investment should be made in energy storage and in building more electricity links (like the £1billion Western Link which will link Scottish renewable generation to the rest of the UK)
With more links and more electricity storage, windfarms would not have to be paid to shutdown, any excess would simply be used to satisfy demand further afield, or would be stored for use later when demand had risen or for when the wind did not blow. But this investment is not happening, or is not happening quickly enough and this is because of the profit motive. Renewables can produce clean cheap electricity, but its development threatens the profits of the most worlds most profitable and powerful companies.

 My new book, Safe Planet will be published on 26th September 

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