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.

Time for Plan B

The UK now gets over 11% of its electricity from renewables (indeed in the last quarter it went up to 15%), including from around 10GW of wind capacity and 2.4 GW of solar PV. And it could continue to expand rapidly. National Grid’s 2013 edition of their ‘future energy scenarios’ has renewables supplying 34% of total energy by 2035 in their ‘Gone green’ scenario, with 60GW of wind, gas
heating almost totally replaced by electric heat pumps and around 17GW of domestic PV installed.
 www.nationalgrid.com/NR/rdonlyres/2450AADD-FBA3-49C1-8D63-7160A081C1F2/61591/UKFES2013FINAL3.pdf   

Wind  is certainly seen as likely to get big. DECC’s new ‘high wind’ scenario has 39GW of offshore wind by 2030, though DECC stresses that it’s scenarios are not targets- markets will decide on the mix! www.gov.uk/government/consultations/consultation-on-the-draft-electricity-market-reform-delivery  And DECC now say PV solar might reach 10GW or even 20GW by 2020…

Certainly, a cross-party think tank Policy Connect says that renewables like wind and PV might have to take on even more of a role. It says the government must develop in effect a renewables-focused ‘Plan B’ in case nuclear and Carbon Capture and Storage do not deliver as much as hoped. The report says ‘The Government expects that nuclear power is likely to provide the majority of additional low carbon electricity between 2020 and 2030. However, should costs or deliverability prevent this from happening, more low carbon electricity from renewables or fossil fuels with carbon capture and storage will be needed to meet carbon objectives.’ It claims that should nuclear, fossil fuels with CCS fail to deliver, ‘renewables could provide between 45 and 55% of total [electricity] generation by 2030’. That includes 10% from biomass.

The report calls on ministers to begin work with industry and academia to identify suitable "no and low regrets" investments and develop policies to encourage these options more . As it stands at present, the report warns that a lack of certainty over the policy environment post 2020 will make it harder to mobilise the necessary investment in renewables and that investment opportunities ‘could be missed, delayed or more expensive if there is insufficient confidence about long term demand for key technologies, such as offshore wind.’ It says ‘work by Government to help incentivise these investments would increase the likelihood that technology cost reductions are achieved and help mitigate against high costs if new nuclear or carbon capture and storage development fail or are delayed’.

The report says that the initial extra cost could be more than offset by energy efficiency savings, and, longer term, investing more in renewables would help avoid bill increases driven by fossil fuels. www.policyconnect.org.uk/cc/research/report-future-electricity-series-part-2-power-renewables

Well it may now be time to put this plan into action. The long drawn out negotiations with EDF over the proposed new EPR nuclear replant at Hinkley have delivered a very high cost package, including an offer of an extra £10bn in  investment risk reducing loan guarantees and a high level of long term (35 year) revenue support via the Contracts for a Difference system. And some funding from China. For future UK reactors, efforts are being made to get even more backing from foreign sources, including (once again) China (despite even more misgivings about handing over control over the development and management of  key infrastructure to  oversea powers), Japan (for upgraded versions of the Fukushima type of Boiling Water Reactor), and even Russia (for their VVER design, which is said to be vastly safer that than the Chernobyl design).

Inward investment may have its merits, but the UK’s attempt to get private funding for new nuclear from overseas, by offering juicy subsidies to be paid for by UK taxpayers and consumers, is sounding increasingly desperate, with any pretence that this is about competitive markets having been abandoned. Asked in parliament in September whether, prior to entering into negotiations with a single company for a new nuclear plant at Hinkley, DECC had invited tenders or expressions of interest from other companies, as required under Article 8 of EC Directive 2009/72, Energy Minister Michael Fallon said: ‘We do not consider that the potential investment contract for Hinkley Point C falls within the scope of Article 8. The investment contract, if agreed, is designed to be a market-based intervention to provide price stability for nuclear generation during the transition to a low carbon economy’.  The interventionist approach, what some have called ‘administrative pricing’,  though dressed up as all being about free markets, has gone so far that there has even been calls to go it alone completely- and state fund new nuclear projects.  

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http://www.telegraph.co.uk/finance/newsbysector/energy/10289972/Set-up-Olympics-style-body-for-new-nuclear-says-John-Armitt.html

The Engineer, wryly, said that in fact, with mostly state owned EDF, and now China, running the show, that had already happened: ‘we’ve now arrived at a situation where our nuclear sector is nationalised, just not by us.  Perhaps the ultimate irony is that with the emergence of China as a UK nuclear player, we now appear to be destined to entrust large chunks of our future energy infrastructure to an autocratic communist regime’.  http://www.theengineer.co.uk/opinion/comment/missing-the-hinkley-point/1017346.article?cmpdate=Wednesday%20Agenda:%20Wednesday%20Agenda:%20Missing%20the%20Hinkley%20point&cmpid=tenews_21854 

And all this for new very expensive and as yet mostly untried technology. It is true that some ABWRs have been built in Japan and elsewhere, although some have performed very poorly, but there are as yet no Westinghouse AP 1000’s running anywhere and the delays and cost over-runs faced by the French and Finnish EPRs have become increasingly surreal.  In the USA, where, for good or ill, market discipline may have more power, old plants are being closed early, plans for new plants abandoned and  EDF have finally concluded that there is  ‘no room for nuclear to expand in the U.S. at this time’ and it would instead focus there on renewables. Maybe the UK should do the same. And redeploy some of massive effort it has put into trying to push nuclear ahead to an accelerated renewables programme.  After all the UK does have the EU best offshore wind, wave and tidal resources and the (marine) engineering expertise to develop them. Surely that’s far better than importing French, US, Japanese or even Russian nuclear technology?  Or are we now the only country in the western EU where they can be dumped, with UK consumers and taxpayers picking up the ever expanding bill ? Renewables won’t be cheap, at least initially, but I know what I’d rather pay for!

For more, see my new book on Renewables. http://iopscience.iop.org/book/978-0-750-31040-6

The UK energy mess

-->It is no secret that UK energy policy is in a bit of a mess, or to put it more politely, in a state of flux, with regular U-turns, backtracks and delays. The media has focused on the big supply side issues- and the contests between nuclear, wind and shale gas, with the government seeming to back all, but actually favoring some more than others. For example, £10 billion has been offered to EDF to underwrite the risks of building nuclear plants, shale gas will get major tax concessions, while David Cameron was quoted in a the Telegraph (19/8/13) as saying ‘There’s a limited potential for onshore wind. We’ve just changed the rules, we’ve cut the subsidies and we’ve said that any schemes that go ahead have to give more benefit to local communities. So I wouldn’t expect to see a lot more wind power onshore in the UK.’ DECC also seemed to be unmoved by the Climate Change Committee’s warning that the proposed 13% reduction in CfD support for offshore wind over the next five years might be excessive, and that ‘without a commitment to ongoing investment in the 2020s, incentives for supply chain investment and project development are weak, and commercialisation of offshore wind is at risk’.

With several backers having abandoned the nuclear option, shale gas in some disarray and investment in wind uncertain, we still don’t know which way it will go. Similarly there has also been plenty of uncertainty in relation to the policies and programmes on domestic energy use. Take for example the high profile Green Deal domestic energy upgrade commercial loan scheme (so far a damp squib, with few takers), the already watered down Zero Carbon Homes programme for new build (now further diluted, with the Code for Sustainable Housing likely to be abandoned) and the massive £12bn smart meter roll out programme (delayed for a year due to ‘logistic problems’ and to allow for more tests).

That's not to say that improved versions of some of these ideas might not work. For example, DECC seems to have had a bit more success with the Green Deal when it involved local councils; allowing imports into homes from wind farms might help deal with the latter’s surplus generation (e.g. at night); and more advanced interactive smart meters could enable dynamic demand side management, leading to real savings (see this admittedly crude diy game: www.thegengame.com/Pages/default.aspx)

However what we seem to have seen is, arguably, ill-thought through big new policies coming unstuck, with usually academics and/or the industry/trade pointing out the problems. For example, few thought it would be possible for all new build homes to be fully zero carbon by 2016 using just in/on-house technology and few saw the rather dumb smart meters that were to be rolled out as benefiting consumers or saving much energy. Even relatively sensible ideas like the Renewable Heat Incentive have had problems- the start up of the full domestic scheme has been continually delayed and now is not expected until next year.

You might see all this as just the inevitable glitches that will occur with any new policies and programmes, but equally the reversals, revisions and delays do seem to indicate deeper problems. Basically, and putting it very simply, DECC is trying to launch green energy schemes with (the RHI aside) minimum direct state funding, passing on costs where it can to developers and/or consumers, whereas in the case of nuclear and shale gas it seems to be willing to offer public funds.  But, horror of horrors, even that may not work!  There is though some good news. Offshore wind is doing well (3.6GW so far) and so is PV solar (over 2.3 GW now installed). But the former is mainly due to the efforts of overseas companies, and the later is despite DECCs attempts to throttle back growth with cuts in the FiT for PV.

It gets worse. In the Draft Deregulation Bill, ostensibly an attempt to cut ‘red tape’, there is a proposal to omit from the Climate Change and Sustainable Energy Act 2006, a duty on the Secretary of State with respect to the promotion of community energy projects and a duty with respect to promoting the use of heat produced from renewable sources. See www.gov.uk/government/publications/draft-deregulation-bill  Surely community energy projects, for heat and power, are one of the key hopes for the future? And even DECC is now pushing green heat up the agenda- hence the RHI.

If you are dismayed by the situation, and the conflicting messages and policies, you might like to look at my new book on Renewables, now out, which reviews an alternative set of options.  Access at http://iopscience.iop.org/book/978-0-750-31040-6   It may not go down well in some circles.  

The Observers Business leader column (Aug 25^th, 2013) said ‘If there is a body of opinion that states that wind farms and energy efficiency can fill the looming energy gap, then it is small and deeply unrepresentative’ while Energy Secretary Ed Davey is reported to have said that it would be ‘unimaginably’ hard to create a zero-carbon Britain without getting electricity from nuclear.   Well, as you will see if you read the new book, I don't agree.  There really are viable, affordable and sustainable alternatives. After all, if Germany can aim to get 80% of its electricity from renewables by 2050, then the UK, which has a far better renewable energy resource base, should be able to do at least as well, and like Germany, phase out nuclear.  Like them, we need to switch over to ‘Plan B’, based on renewables and efficiency.