Goodbye to FiTs

The European Commission is pushing for guaranteed price Feed In Tariffs (FiTs) to be replaced by more market-orientated funding schemes, despite their proposals being strongly opposed.  FiTs have been very successful at getting renewable capacity built, in Germany especially- about 70GW so far there.  But as renewable capacity grew, especially initially expensive PV solar, the FiTs had passed increasing amounts of surcharge on to consumer bills. The European Commission has now proposed new rules which will be phased in gradually, following a pilot phase from 2015-16. But from 2017 all member states will have to use tenders to support new green power facilities. The idea is to replace FiTs with auctions or bidding processes open to all green energy generators competing equally. In its draft paper ‘Services of DG Competition containing draft Guidelines on environmental and energy aid for 2014-2020’, it says, on ‘Aid granted by way of a feed-in-premium or feed-in-tariff’ that in future ‘aid is granted in a genuinely competitive bidding process on the basis of clear, transparent and non-discriminatory criteria’.

There are similarities with the Contracts for a Difference  (CfD) system now being introduced in the UK, which, in its latest variant, includes a competitive project assessment phases, and indeed also with the old  Non Fossil Fuel Obligation (NFFO) capacity auction system the UK started out with in the 1990s. That had proved very ineffective at getting capacity built:  some developers bid low to get the contracts but often were unable to go ahead with the project. Germany’s new premium market EEG system also has some similarities- FiT are mostly replaced by direct market competition. That has not gone down too well with critics like the World Future Council: ‘With this reform the German government ends its success story by putting the energy system back into the hands of those who have a deep interest in remaining with conventional, dirty fossil energy sources. The German government with its reform is slowing the rapid expansion of renewable power, as it forces investors to take higher risks when investing in a future-just energy system.’  http://power-to-the-people.net/2014/04/german-renewable-energy-act-reform-is-not-a-feed-in-tariff-2-0/

As with the new German scheme, the EC is proposing some exemptions for the EU wide scheme. As Reuters noted ‘Following extensive lobbying from companies, the new rules allow for exemptions in special circumstances, including sparing energy-intensive industries such as chemicals, metals, paper and ceramics from helping to pay for renewable power’ But, it added ‘That leaves ordinary household consumers to pick up the bill’, and, understandably, reactions from green groups have be very hostile. Claude Turmes, a member of the European Parliament representing the Green Party, told Reuters ‘Citizens will lose twice: they will pay for industries' new free ride and will continue to suffer from an outdated energy system.’ The European Wind Energy Association said that, while it was appropriate that the increasingly competitive wind industry be integrated into the market, the Commission should eliminate all fossil fuel subsidies as a priority. The EC was ‘ignoring the obvious market distortions that need to be tackled first, such as the majority of subsidies that go to fossil fuels and nuclear’.

 

Nuclear was included in an early draft of the proposals but, after protests, has now been excluded- developers/ governments have to make a special case for it, as in the case of Hinkley in the UK. But most of the rest of the proposals stayed. So now it’s goodbye to all the various variants of  FiTs . Instead, in most cases, there will be pressure to impose a one-size-fits-all market approach across the EU, with presumably the EC using the threat of baring other approaches under the ‘state aid’ subsidy rules, to police the system.

Views on all this will differ. Certainly the new market approach should reduce costs to consumers in the short term: that seems to be the ostensible aim, though that was not the result of the UK’s disastrous Renewables Obligation (RO) market orientated approach: that cost UK consumers  much more/kW and kWh than the FiTs used elsewhere. But just like imposing capacity caps (as in Germany and elsewhere), the market approach will no doubt slow the deployment of renewables- that’s how it will reduce costs. Though since increasingly expensive fossil fuel will therefore have to be used more, longer-term it will push prices up. However, despite the evidence from the RO and NFFO, devotees of market competition may argue that competition will lead to reduced renewable energy technology cost, so that may compensate, leading to more capacity for the same, or reduced, outlay. Place your bets!

http://uk.reuters.com/article/2014/04/09/eu-funding-energy-idUKL6N0N12FP20140409

EU energy market battles- who is in control?

 

Last year the Times reported that ‘Brussels is threatening to block a subsidy scheme for gas-fired power stations that the Government hopes will keep the country’s lights on’- the UK’s plan to create a Capacity Market to allow gas plants to compete for subsidies by acting as peak back-up suppliers when energy demand is high and wind-power low. It would be funded by levies on consumers’ bills. However, the European Commission has warned that this contradicted the aim of creating an internal EU-wide energy market. Evidently it would prefer grid balancing to be achieved by using supergrid links across the EU, trading power excesses between countries to meet local shortfalls, and enhancing competition. www.thetimes.co.uk/tto/business/industries/utilities/article3924542.ece

In the UK’s case that would mean building more undersea interconnector
s- which is already planned. But the UK’s proposed Capacity Market was meant to be more than just a mechanism for subsiding gas peaking plants, it was also meant to support other grid balancing options, including demand side management and energy storage.  As Germany has found, with a big renewables input, you need incentives to maintain backup since renewables undermine the peak power market. German energy expert Frank Peter says ‘We need a suitable market design for the new conditions. In the future, gas power stations, partly also coal power stations, need to be able to be operated economically within this system. This is one of the main challenges that the German government needs to focus on’. So they also need something like a capacity market. www.dw.de/energy-expert-renewables-can-compete/a-17204519

Interconnectors can certainly help. Although  Frank Peter says ‘as costs for renewable technologies drop dramatically, long distance energy transportation makes less and less sense’, he goes on ‘ it does make sense to connect the production of renewable energy over a large area. Conventional power stations can serve as a model for this. In this way, there is a higher probability that some kind of renewable source can produce energy at any given moment. The argument for a network connection is no longer to do with costs, but the fact that more renewable energy can be used’.

The big utilities of course don't like any of this- they would prefer the status quo, ideally without disruptive renewables, and some see supergrids also as undermining their control of local/regional markets by introducing cross-EU competition for all types of power.  However they are loosing traction. For example, according to energycollective.com, with consumers (or ‘prosumers’)  now generating their own power and selling excess back to the grid, Germany's giant RWE energy utility is shifting their activities to sales, trading and decentralized power. It evidently wants to depart from its traditional developer and ownership roles in relation to large centralized power plants and instead use its expertise to help manage and integrate renewables into the grid. This was necessary since ‘the massive erosion of wholesale prices caused by the growth of German photovoltaics constitutes a serious problem for RWE which may even threaten the company's survival’.

RWE's share price has lost one-third of its value over the last three years due to the European energy transition and the company now looks to be addressing the possibility of further shrinkage in a dramatic way. Under the proposed new model the guiding principle is ‘from volume to value' with, according to a document quoted by  energycollective.com, the focus on ‘technologies ranging from large-scale offshore wind and hydro to onshore wind or photovoltaic’. But it added ‘ we will no longer pursue volume or percentage targets in renewables. We will rather leverage our skill set by taking a ‘capital-light' approach. Based on funds sourced largely from third parties, we will position ourselves as a project enabler and operator, and [as a] system integrator of renewables.’ It went on, ‘developing an innovative and profitable prosumer business model is a challenge we also need to address successfully, as we see a billion-euro market emerging alongside our traditional value chain.’

However there were some row backs and prevarications.  RWE Innogy told Power Engineering International that, ‘there is no RWE strategy to transform its business completely to renewables. The last target for renewables was 25% of the capacity (not production) in 2025’, although the German newspaper Handelsblatt reported that RWE Chief Executive Peter Terium wanted no further investments in fossil-fuelled powered plants: ‘In 2020, conventional forms of power generation should contribute no more than one fifth of the operating result’.

It may take a bit of time, but as Stephen Lacey of GreentechGrid put it last October:  ‘We may be about to witness one of the most profound transitions ever to occur in the utility industry’, with RWE evidently planning to transform itself ‘ from a traditional electricity provider into a renewable energy service provider.’

And all this at least partly because of the spread of grass roots power! It can’t happen here!  www.morningstaronline.co.uk/a-30b3-Energy-for-tomorrow#.Uoqc1nDTmM8 But we live in hope that DECC will have noticed that elsewhere in the EU local ownership is the driving force for change, with ‘prosumers’ and local energy co-ops now running much of the show, in Germany especially, including in some cases, city-wide distribution grids being taken over from the utilities.

Even with decentral systems like this, there will still be a need for balancing capacity and interconnectors, and someone has to run that, but a new system could be emerging in which grid services like this are shared under some form of collective control, as they used to be when power systems were publicly owned.  Far fetched? Well it’s interesting that one of the results of the recent reactions against utility price rises has been a swing in public support for the idea of re-nationalising energy, with in a You Gov poll last November, 68% of the public saying the energy companies should be run in the public sector, while only 21% said they should remain in private hands…

http://www.leftwards.co.uk/the-case-for-renationalisation/

http://www.independent.co.uk/environment/should-the-big-six-be-nationalised-8981112.html

Back in the now, however, the Chancellor, desperate it seems to squeeze ‘green crap’, has capped the Carbon Price Support rate at £18/ton of CO2 from 2016-17 until 2020, saying ‘this will save a mid-sized manufacturer almost £50,000 on their annual energy bill. And it will save families £15 a year on their bills too - over and above the £50 we’ve already taken off.’  What he didn’t say was that this attack on the carbon market will, by reducing the carbon tax on fossil fuel, reduce the incentive to invest in non-fossil options like renewables and energy efficiency - and also, perversely, given the government’s commitment to it, nuclear power.   We’re not there yet, but we could be heading back to free market for fossil fuels..and a coal and gas boom. 

UK energy mess gets worse

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UK energy policy continues to be a mess. The Electricity Market Reforms, far from sorting out problems, have created many more. The sub text was always that the new system had to be able to support nuclear, while not appearing to do so more than it supported renewables. It has not worked. The Contracts for a Difference (CfD) system is being used in a way which privileges nuclear over renewables, with a 35 year contract for the proposed Hinkley nuclear plant, compared to 15 year contracts for renewables, and a promise of £10bn in investment guarantees for Hinkley.  And whereas the renewables are having to face a new complex series of competitive auctions and assessments to get access to CfD support, EDF was the only contender for Hinkley, with a strike price offered which on land-wind and even PV should better by the time work starts on it in 2015- if it goes ahead. By the time it actually starts up, presumably after some inevitable delays, in the mid 2020s, offshore wind could even be cheaper.

This disparity in treatment has been noticed. In its initial reaction to the proposed CfD subsidy for the Hinkley, the European Commission said the measures proposed by the UK may not ‘avoid overcompensation’ and ‘ has doubts on the structure of the CfD for nuclear which, by its design, duration and scope, has the potential for distorting competitive conditions.’ It also doubted ‘whether the combination of aid measures, and in particular of a CfD with inflation indexation and a credit guarantee, is proportional to the potential benefits.’ We now await the ECs detailed analysis. There is no formal deadline for this, or a final decision date, perhaps it might emerge by the end of the year.

The emerging and then final EC view on the nuclear CfD may have some impact on the CfDs for renewables, for which the UK government is also seeking to get EC clearance, so that early projects can start soon, maybe next year and certainly by 2017, when the CfD system is meant to replace the Renewables Obligation. That would be tragic- and unnecessary. The World Nuclear Association admitted that ‘support for renewable generation forms is specifically allowed under EC guidelines while no such guideline exists for nuclear power’, but the specifics of the CfD and EMR, which cover both, have yet to be agreed by the EC. As Alan Whitehead MP put it: ‘by sticking with the elision of nuclear and renewables within the contract for difference and investment instrument processes, future renewable underwriting risks becoming dragged down into a protracted nuclear state aid judgement  process. If it was separate, as it was originally under the Renewable Obligation, it would be clearly derogated from further state aid examination’. www.businessgreen.com/bg/opinion/2327295/why-the-beastly-eu-has-cried-foul-on-nuclear-state-aid

And, adding insult to injury, in an unusual move, given all the cut backs, Energy and Business Minister Michael Fallon implored executives in renewable energy companies to ‘support our case’ for the EDF Hinkley project by writing to Brussels, since it is ‘dependent on a positive state aid decision from the European Commission’. A unnamed industry source quoted by the Sunday Times  (March 16th) said: ‘the renewables industry is somewhere between bemused and appalled that Michael Fallon has asked them to lobby for Hinkley Point's [subsidy]. He is living in cloud-cuckoo-land.’                          

 

For the moment DECC is still proceeding as if the EMR/ renewable CfD arrangements will be accepted, but as noted above, it has also been shifting the goal post- by adding an auction process for the renewable CfDs, to increase competitive pressures. All in response to and endless right wing media came of opposition to green taxes and all things green.  It’s claimed that the policy changes, new assessment processes and uncertain mood have lowered the UK attractiveness as an investment location for new renewables projects. In the latest edition of its quarterly Renewable Energy Country Attractiveness Index , consultancy Ernst and Young (EY) says that Britain is ‘in a spin’ because of ‘a combination of prolonged policy uncertainty, less-than-welcome news that mature technologies must compete for contracts for difference from day one, and a series of offshore wind project cancellations.’

www.ey.com/UK/en/Industries/Cleantech/Renewable-Energy-Country-Attractiveness-Index

And it gets worse. To curb energy cost rises, the Chancellor has now frozen the UK unlilateral carbon floor price support (CPF) arrangement. Carbon prices in the EU Emission Trading system have remained stubbornly low, mainly due to the fact that, due to pressure from some carbon-intense countries, the overall carbon cap levels have been set quite high. However when the UK carbon floor price support system was started in April 2013, with a levy paid by a small extra charge on all consumers bills, the effective price of carbon was pushed up to £16 a tonne, with this set to rise to £30 by 2020.  Carbon prices don't effect renewables or nuclear directly but they do benefit these non-fossil energy projects indirectly, making them more competitive by comparison. That was the aim. Utility Week reported that according to analysts, the wholesale power price in 2020 would be £5 to £6/MWh lower with a freeze, compared with original projections and that ‘under the incoming [CfD] subsidy regime, this would make each contract for difference more expensive to finance, so the support budget would be used up on fewer projects’. Not surprising then, in a joint letter to the chancellor, the Nuclear Industry Association and Renewables UK (RUK) warned that a retrospective cut would ‘undermine confidence’ in their industries- although some greens might say a direct system of support (e.g. a FiT) that rewarded just renewables, not nuclear as well, would be better.

In the event the Chancellor ploughed on regardless, capping the Carbon Price Support rate at £18/ton of CO2 from 2016-17 until 2020, saying ‘this will save a mid-sized manufacturer almost £50,000 on their annual energy bill. And it will save families £15 a year on their bills too - over and above the £50 we’ve already taken off.’ He also enhanced the compensation scheme for energy intensive to protect them  ‘from the rising costs of the Renewable Obligation and the Feed-In Tariffs’. Otherwise he said ‘green levies and taxes will make up over a third of their energy bills by the end of the decade’. He also exempted electricity from Combined Heat and Power plants from the CPF levy. And he claimed ‘this entire package delivered  without any reduction in the investment in renewable energy’. Well not directly, but the CPF freeze will hurt, as will exempting CHP- robbing Peter to pay Paul. And the overall result will be that CO2 output will rise. www.gov.uk/government/publications/carbon-price-floor-reform                               

That also looks likely to be the outcome of the other big green levy cut. To cut energy costs the government also plan to change the Energy Company Obligation (ECO), delaying some measures by extending the scheme to 2017. But it’s been claimed that ECO was much more effective than the hapless Green Deal, which the government has left alone. See DECC’s consultation: www.gov.uk/government/consultations/the-future-of-the-energy-company-obligation Under ECO, over 50,000 measures had been installed each month in the second half of last year, compared to only about 11,000 assessments each month for the Green Deal and very few actual projects: www.gov.uk/government/publications/green-deal-and-energy-company-obligation-eco-monthly-statistics-february-2014  It’s said that over 400,000 households will miss out on savings of up to £400 a year on energy bills due to the national £35 a year per household ECO cuts: www.thetimes.co.uk/tto/news/politics/article4032597.ece

So overall it looks pretty grim. And there is not much confidence about the longer term, with no clarity about the post-2020 situation.  DECC’s position is that there should be no mandatory national targets and the European Commissions seems to have bowed to this idea, in its recent proposals. There would be just a 27% by 2030 EU wide indicative target for renewable energy, within a wider EU context of a 40% cut in emissions. That would leave each EU country free to choose how to proceed- with renewables, CCS, shale gas, nuclear or whatever the market chose. Welcome to the world of market chaos. Or rather political chaos. With the last straw being that the proposed new Ofgem ‘full market investigation’ of energy prices will not cover the cost of the Hinkley nuclear project, despite that being likely, as SSE put it, to ‘add considerable costs to consumer energy bills for 35 years.’ Energy Secretary Ed Davey said: ‘The investigation will not deal with that, because it involves policy on the generation mix. A mixed, diverse source of low-carbon energy is the best way in which to protect the consumer’.

A good input  https://theconversation.com/uk-energy-policy-gets-more-complex-but-goes-nowhere-23272

Also see http://www.carbonbrief.org/blog/2014/03/the-carbon-price-floor-disliked,-divisive-and-about-to-be-frozen/

Beyond delays and prevarications

 
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During the debate on shale gas fracking in the House of Commons last July,Tory MP Peter Lilley said  ‘The current cost of electricity produced from gas or coal is £50 per MWh. The current cost of producing it from windmills is £100/MWh. For offshore windmills, it is £150/MWh and for solar it is off the scale. If we think that we will get cheaper, lower energy bills by going to energy sources that are two, three or four times as expensive, we are living in la-la land [..] Unless and until we can find a pathway or a stabilisation level for CO2 that will produce greater benefits than its costs, we should not set about impoverishing this generation in the vague hope that we may make some generation in the future richer’. www.publications.parliament.uk/pa/cm201314/cmhansrd/cm130718/hallindx/130718-x.htm

A familiar approach, which has some incrementalist appeal. It always seems easier to wait until technologies get better/ cheaper- and stay with what we have.  But that way we never move down the learning curves.  At best we focus on ameliorative options like Carbon Capture and Storage, which may not offer much on a large scale, and just allow us to burn more fossil fuel, although BECCs buffs might hope that at some point it could help make biomass combustion carbon negative.  And at worst we get panic moves to nuclear, which few pretend will get cheaper fast..

Obviously the gas option is significant for the short term, but if we get too locked into that, it just delays the inevitable- a shift to renewables. Reducing energy waste is a fast and cheap option for the immediate future, and ought to be attractive since there is a lot of low hanging fruit. However, when we have achieved all the quick and easy energy savings it gets increasingly costly to save more - there are diminishing returns. Long term we need non-carbon supply and to get its cost down fast.

That is happening, with PV solar especially. It could be competitive with nuclear in the UK by 2020, and should continue to fall in price as the market builds and the technology improves. Onshore wind is already competitive with conventional sources in some locations, offshore wind could get down to £100/MWh or less by around 2020 and wave and tidal stream seem likely follow the same trend. How fast we can go is mostly politically determined- how much extra cost can/will consumer /taxpayers accept to accelerate down learning curves? And can we avoid diversions- sold to us as quick and cheap?  Can fossil and nuclear subsidies be redirected to cut the cost to consumers and taxpayers? Is Carbon Capture and Storage really worth exploring- given its likely high cost? A lot of uncertainties there, but if we are not deflected and if funding is targeted properly, by the mid 2020s, we might expect to see renewables challenging all comers.

La La land? Well, the US National Renewable Energy Lab says that wind and solar power generation will be cost competitive in parts of the USA with fossil fuels without recourse to federal subsidies by 2025. By then, even when transmission and integration costs are taken into account, solar and wind power could compete with new natural gas fired power plants on cost.www.nrel.gov/docs/fy13osti/57830-1.pdf

The Executive Director of the International Energy Agency, Maria van der Hoeven, recently said “Renewable power sources are increasingly standing on their on their own merits versus new fossil-fuel generation. Many renewables no longer require high economic incentives.” She reiterated the IEA’s calls for an end fossil fuel subsidies, which in 2011 “globally were six times higher than renewables”. www.iea.org/w/bookshop/add.aspx?id=453

Backup for this view came from a Prysma report ‘RE-COST’ for the IEA, which said says that in many OECD countries, renewables are becoming competitive with fossil fuels. Looking at Levelised Costs of Energy (i.e. with capital costs spread over plant lifetimes), including any new grid costs, it says, ‘the costs of RET generation are declining, and approaching the costs of thermal generation (gas- and coal-fired plants), especially if the hidden subsidies that thermal generation plants may receive are not factored in’.  It adds that ‘The rate of cost reduction is higher in large solar PV’ but notes that ‘On-shore wind generation is already competitive in the regions evaluated by RE-COST’.  By contrast it says ‘The cost of generation of new non-RET plants (including gas- and coal-fired plants) are increasing, and might exceed the costs of generation of new RET plants in the near future in the regions in the scope of this report’.

http://iea-retd.org/archives/publications/re-cost

No one pretends that the transition to renewables will be easy or cheap: some of the technologies are still expensive, but as indicated above all are falling in price, and they all have to advantage of avoiding the use of  polluting and increasingly expensive fossil fuel or risky and expensive nuclear technology. And long term there is no alternative- fossil and fissile reserves are finite.   We can prevaricate and delay, but, quite apart from the urgent need to respond to climate change, eventually we have to make the transition. So why not start now, when we still have some conventional energy left to support the transition? 

There are of course debates about exactly with paths to take:  for example what role with natural gas, or green gas, play in proving backup for variable renewables. I will look at that in my next post. But looking backwards to continued reliance on fossil fuels, backed up by hopes that CCS will be available on a large scale, and making comparisons with fossil fuel costs, is no help now- their relatively low (unabated) costs disguised their huge environmental and social costs.  We have to move on- and surely, as fast as possible.

Emissions: cut or pay

 

Some of the debates at the global Conference of Parties to the UN Framework Convention of Climate Change, COP 19, in Poland last year were dominated by the Philippines storm disaster, sometimes seen as at least partly climate change related, and by the prospect of compensation being sought by victims of major climate change related events in future. But who to sue? A new report list 90 companies who produced 63% of the cumulative global emissions of industrial CO2 and methane between 1751 and 2010. They include big coal and oil companies. Some may be feeling bit nervous. Litigation may have its merits, but it mostly earns lawyers fat fees; what we really need is changed policies for the future-though fear of litigation may lead to that. http://link.springer.com/article/10.1007/s10584-013-0986-y  But see the Onion’s satirical take on it: we are all responsible http://t.co/gPQaXKQzAP.

At the COP in Warsaw, an ‘international mechanism for loss and damage’ was agreed, but who knows what that means in practice. A perhaps more positive line was offered by the UN Environment Programme (UNEP), emphasing proactive and retargeted investment, in a context where, UNEP says, annual subsidies for fossil fuel have neared £600bn, 10 times more than for renewables. We need a change. See: www.ft.com/cms/s/0/a626880c-52cb-11e3-a73e-00144feabdc0.html?siteedition=uk#axzz2lk4RypoG.

The potential for a new climate deal at the COP in Paris in 2015, for 2020 and beyond, is still alive, even after what Greenpeace called the ‘bitter and divisive conference in Warsaw, which the Polish hosts tried to run as a showcase for the coal industry’. Although China, India,Venezuela and several other developing countries wanted to stay with the now lapsed Kyoto formula, under which only developed countries were mandated to make carbon cuts, agreement was reached that all countries would submit carbon reduction targets to the next COP. However, there was no agreement on their legal status, or on the level of aid each of  the developed countries should be required to offer to compensate for their historical emissions. A global sum of £100bn p.a by 2020 has been proposed. It’s not as if the perpetrators cannot afford it. A report from the Overseas Development Institute says that the 11 richest high-carbon countries provided a subsidy of $7 for every tonne of greenhouse gas emitted from fossil fuel combustion in 2011 www.odi.org.uk/subsidies-change-the-game

Some radical reallocation is needed.  On way ahead was offered by the UN ‘Sustainable energy for all’ initiative.  The World Bank and United Nations have appealed for billions of dollars to provide electricity for the poorest nations. World Bank president Jim Yong Kim said $600-$800 bn a year will be needed to meet the campaign target of universal access to electricity, doubling energy efficiency and doubling the share of renewable energy by 2030. In some countries, only 10% of the population has electricity. Kim said the World Bank is preparing energy plans for 42 countries. But he added ‘We don't do nuclear energy’, explaining that ‘Nuclear power from country to country is an extremely political issue. The World Bank Group does not engage in providing support for nuclear power. We think that this is an extremely difficult conversation that every country is continuing to have. And because we are really not in that business our focus is on finding ways of working in hydro electric power in geo-thermal, in solar, in wind’. Source: AFP/Google.

That’s very much in line with what the World Energy Council now sees as the way ahead. Its latest report says ‘No renaissance of nuclear energy is anticipated.’ While in terms of total primary energy, the share of renewable energy sources globally will increase from around 15% in 2010 to 20-30% in 2050, it thinks nuclear energy will only contribute 4-11% of total primary energy supply 2050– compared to 6% in 2010. But even with renewables supply perhaps up to 48% of global electricity by 2050, that still means a lot of fossil fuel would be used, which is why it is very keen to promote energy saving, along with CCS, in addition to renewables. 

www.worldenergy.org/publications/2013/world-energy-scenarios-composing-energy-futures-to-205 and www.worldenergy.org/news-and-media/news/world-energy-council-issues-official-statement-ahead-of-22nd-world-energy-congress/

However there is a way to go and it is getting ever more urgent. After reviewing a large number of new studies, UNEP warned it might not be possible to tackle climate if the world waits until 2020 since it will be ‘locked in’ to fossil fuel-based infrastructure, and energy saving opportunities will have been lost. It called on governments to step up action to prevent catastrophic climate change. But we seem instead just to get excuses and special pleading about the costs of phasing out fossil fuels and using renewables. It understandable then that some see cash raids on those responsible as a next step. Nevertheless, UNEP does also offer some other options. For example, it says simply tightening up the rules governing pledges in the climate negotiations could narrow the gap by about 1-2 GtCO2e, while if countries implement the maximum reductions already pledged without conditions could narrow it by 2-3 GtCO2e’. http://www.unep.org/emissionsgapreport2013/  A new report from the International Institute for Environment and Development also offers strategies for socially equitable and inclusive paths to sustainability: http://pubs.iied.org/17183IIED

We are not short of advice, analysis and proposals. What we now need is action. One practical approach is divestment- withdrawl of support for undesirable projects by investors, as promoted by American environmental activist Bill McKibben. So far the main focus has been on endowmement links by schools, colleges and universities. But it could spread. For an interesting overview see: http://www.spiegel.de/international/world/warsaw-climate-conference-shows-capitalism-root-of-climate-failure-a-937453.html

Energy- new players, new plays

 
The energy world is changing. The USA has drastically reduced its oil and gas imports, in part due to the arrival of shale gas, while despite its rapid expansion of renewables, China has become a net importer of coal, due to its continuing economic boom. Shale gas has yet to make much of a mark in Europe, but the demise of nuclear power and the spread of wind and PV solar has been hitting the profits of the big energy utilities in Germany.

The German situation illustrates what may well happen around the world as renewables expand. Income from nuclear plants has dwindled and the fossil plants can’t compete with PV, backed as it is by the Feed In Tariff (FiT) system, during peak daytime production periods, and wind is often cheaper at night, so the utilities are having to abandon some existing gas plants and are halting plans for new ones. With over 30GW of wind and over 30GW GW of PV on the grid so far and more expected, plans for around 20GW of new fossil plants look like being withdrawn.  See http://www.bloomberg.com/news/2013-08-11/german-utilities-hammered-in-market-favoring-renewables.html

The result of these changes should be lower emissions and, with no fuel costs, cheaper energy for consumers, offsetting the cost of paying for the FiTs.  However, longer term there is the problem that wind and PV need backup, and gas plants are one option.  Modern flexible coal-fired CHP plants can also play a role, and some are being built in Germany under earlier plans. But unless they have carbon capture and storage added, the result could be increased emissions, although that will be limited since they are replacing older much less efficient plants.  Other types of backup are less problematic. Pumped hydro storage is already used and is being extended, as are other forms of storage. For example the wind-to-gas option, involves converting the excess electricity, produced by wind farms when wind is high but demand low, into hydrogen and then methane, to be used to generate power when demand is high and wind low. Smart grid demand-side management options are also being explored.   But it will take time to get these new systems up and working on a significant scale.

So there are problems, but they are not insurmountable.  That is not the message you will get from the UK Global Warming Policy Foundation (GWPF), which has been relaying (and writing) news items which claim that the German green energy programme is collapsing and that coal is taking over.  And that this trend is spreading. See for example http://www.thegwpf.org/benny-peiser-europe-pulls-plug-green-future/

The GWPF is strongly pro shale gas and nuclear, so it is faced with some difficulties in relation to the USA, where nuclear has been undermined by shale gas, as well as by renewables. For example EDF has withdrawn from the US nuclear market, saying that it sees "no room for nuclear to expand in the U.S. at this time." It will shift its focus in the U.S. to renewable energy sources. Toshiba’s plans for new plants in Texas have been abandoned as have Duke Energy’s plans for new reactors in Florida and in North Carolina.  With existing plants also closing due to poor economics, and wind and PV solar booming, the output from renewables has overtaken that from nuclear.

EDF is still pressing ahead with nuclear in the UK.  Maybe because it’s one of the few places left in the western EU where new nuclear might stand a chance. EDF’s home territory, France, is off the agenda for the moment- since the new government is debating how many of its existing plants to shut down!  Italy and Belgium are no goes. Austria, Ireland and Denmark too. But the UK remains a possibility.   Given the relatively low level of support by the UK government, renewables may not be seen as a big threat  (their UK percentage  contribution so far is small by comparison with Germany) and shale gas will take time to build, if it goes ahead fully.  And of course the government seems willing to provide financial inducements for nuclear – like the £10bn investment  risk guarantee offered to EDF. This may not be enough. When they withdrew from the UK Horizon nuclear programme in 2012, E.ON said  ‘We have come to the conclusion that investments in renewable energies, decentralised generation and energy efficiency are more attractive- both for us and for our British customers.’  Certainly the potential for renewable expansion in the UK is very large, much more so than in Germany, which doesn’t have the same offshore renewable resource.

Japan is not so well blessed with renewables as the UK, but it is trying to develop offshore wind and PV, as part of its attempt to replace nuclear. Shale gas isn’t much an option there, but offshore methane hydrates might be. Otherwise, renewables apart, its gas imports or back to nuclear!

China is the leader in renewables, with around 70GW of wind now in place, followed by the EU and the USA.  As for the rest of the world, renewables continue to look like the best bet for most of the Middle East, although progress in Africa remains slow, less so in Latin America, but everywhere nuclear vendors are looking for toe holds to expand out of Asia- where India and S Korea remain strong players.  The joker in the pack is Russia- buttressed by gas exports and very keen on nuclear, but pretty indifferent to renewables

So overall, with local variations, the global situation is in flux in something of three cornered fight – nuclear v renewables v shale gas, with, as ever, energy saving left on the margins, but coal still threatening to make serious in-roads. Guess which options are best for the planet! But the stakes are high. Ed Davey, UK Energy secretary said  “There are some countries with a very large nuclear industry. If they close, we don’t have a cat in hell’s chance of tackling climate change. I would love to think we can replace that with renewables alone, but frankly we won’t be able to.” http://in.reuters.com/article/2013/08/14/eu-nuclear-idINL6N0GE0YH20130814  See my response: www.theecologist.org/blogs_and_comments/commentators/2199090/sustainable_energy_for_all.htm

The global state of play is reviewed in my new book, ‘Renewables; a review of sustainable energy supply options’  published by the Institute of Physics. http://iopscience.iop.org/book/978-0-750-31040-6

In Praise of PV Solar

 

While still backing nuclear (although not the current type!), the Guardian’s George Monbiot had a go at PV: ‘If every square metre of roof and suitable wall in the UK were covered with solar panels, they would produce 9% of the energy currently provided by fossil fuels’. www.theguardian.com/commentisfree/2013/oct/21/farce-hinckley-nuclear-reactor-haunt-britain

No one suggests that PV could meet all our energy needs. But UK PV trade lobbyist Solar Portal has suggested that PV on only 1% of total UK land area could meet all the UK’s electricity needs: www.solarpowerportal.co.uk/news/if_solar_covered_one_percent_of_the_uk_it_would_meet_the_countrys_2356 

That may be oversimplified, and it does mean building a lot of solar farms, but the general point is clear- PV could supply a lot of electricity. But so could wind, on and offshore. And wave and tidal. Which means that, since we could at times have a lot of surplus green electricity,  some of the PV output could perhaps  also be used supply some heat, thus saving gas.  You could for example run the spare PV electricity into storage heater system or an immersion heater. See for example www.immersun.co.uk. There are also some interesting PV-thermal hybrid systems emerging which absorb heat as well as light. The technical point is that PV cell efficiency falls of with rising temperatures so it is helpful to cool them. Adding a solar heat absorber does just that, increasing the units overall energy efficiency dramatically. Naked Energy’s ‘Virtu’ hybrid PV/solar thermal panel is claimed  to be able  to supply ~ 3 times as  much energy (as heat and electricity ) as a normal PV panel of the same power rating. http://www.nakedenergy.co.uk

Surplus PV electricity can also be used to charge battery Electric Vehicles. So it would be offsetting petrol use too. It is also possible to used PV electricity make  hydrogen by electrolysis and from there you can produce synfuels for vehicles. So there are technologies that would allow PV to meet heat, power and transport needs. Not all of them, but some.

How much can we expect? Last summer the UK’s then 2.3 GW of PV briefly supplied  about 2% of UK electricity. By 2020 DECC say PV might expand to 10GW or even  20GW in the UK, in which case, on these figures, at times it might supply up to around 23% of UK electricity, although by then demand may have risen slightly, so say just 20%.  For comparison, Germany has 32GW of PV at present, which sometimes supplies nearly 50% of its electricity needs.

Globally there is over 100GW of PV in use, and its adoption in accelerating, as costs fall.  The World Energy Council notes that in one its new scenarios ‘by 2050, globally, almost as much electricity is produced from solar PV as from coal,’ and Shells recent Oceans scenario envisaged solar as being the largest single energy source globally by 2060. Large and small, PV looks good.

That said there are some drawbacks. PV cells don't work at night and light intensity varies a lot during the day and over the year. That means that there will be a need for costly backup and grid balancing if there is a large PV contribution, much more than is needed for wind, which is often strong at night and certainly during the winter when energy demand is high. But PV does match well to some energy loads- daytime offices and their summer air-conditioning especially. And as cost continue to fall, and grid balancing and energy storage systems spread, PV can make a significant contribution.

Interestingly, the Solar Trade Association (STA) claims that the cost of PV will fall below the £92.5/MWh CfD strike price set for the proposed new Hinkley nuclear plant by 2018- 5 years before its expected to start up (in 2023) if it get EC permission. www.solarpowerportal.co.uk/guest_blog/solar_set_to_beat_nuclear_on_headline_strike_price_by_2018_never_mind_2023

DECC seem to have backed a looser there. And that is assuming all goes well with getting the finance for Hinkley agreed with the EU and then getting the plant built without delays. It could be a lot later and the price could escalate, as has happened with the EPRs being built in France and Finland.  For the UK, the tragedy is that under the CfD 35 year contracts, consumers will be locked into paying (EDF) for it until 2058, assuming a 2023 startup! The STA may be optimistic in its forecast for PV cost reductions, but by 2023, PV and on-land wind do look like beating the Hinkley CfD price and offshore wind shouldn’t be far behind, followed a bit later by wave and tidal. And by 2058, if it goes ahead, Hinkley is going to look decidedly out of place- with supposedly 25 years more then still to run! Maybe it will go bust and be shut early, and the large site will be converted in to solar farm or wind farm…We could of course do that now and avoid paying £1bn a year to EDF for it!  Amusingly, that's just what UK PV company Lightsource has suggested. It wrote to David Cameron claiming that PV could match the output of Hinkley within two years at comparable cost. http://www.clickgreen.org.uk/opinion/opinion/123982-renewable-energy-boss-tells-pm-solar-power-could-match-hinkley-in-2-years.html

That may be overstating the case, but it does look like PV is going to be big, even in the  cloudy UK. And maybe bigger than nuclear, with, as in Germany, much of the running being made by individuals and groups buying into it. Half a million UK consumers who had enough disposable income have already invested in PV systems- bringing the total to around 2.7 GW so far. It’s cold just now in wintery Britain, but sunny. Good PV weather. And PV can only get better.