Tuesday, 1 May 2012

Price not the only factor

One of the frequent criticisms of the wind farm industry has been that the turbines would not be built were it not for the subsidies – and the concomitant that those subsidies directly increase the price of electricity to the end-consumer because they are passed on through electricity bills.  As far as they go, such criticisms are valid, but they only tell part of the story.
The Government says that any new nuclear stations will be built without a penny of government subsidy, but that isn’t really true.  Without the government effectively underwriting the unknown costs of ultimate decommissioning and waste disposal, there will be no new nuclear power stations built.  Such costs are unknown, in the future, and paid for through taxation rather than through electricity bills, but subsidy it is, neverthless.
The Government pays no direct subsidy to coal-fired power stations, but the environmental costs associated with coal ultimately fall again on the taxpayers.  Perhaps ‘clean coal’ will overcome such problems; but I somehow doubt it.  As this report said last week, current best figures suggest that carbon capture and storage will only be viable with long term government support – a subsidy by any other name.
The overall picture is not that renewables receive subsidies, of one sort or another, whilst fossil-fuel stations do not; it is that the subsidies are paid in different ways.  Whilst we pay the renewables subsidy through our electricity bills, we pay subsidies for other sources of energy through our taxes.  And that makes it very difficult to compare prices directly in the way that opponents of wind try to do.  All we can really say is that the ‘renewables surcharge’ which affects our bills is more immediately visible than other forms of subsidy.
However, even if it does work out, when all the sums are properly done and all sources of electricity treated on an even-handed basis, does it matter if renewables were to come out more expensive than other sources?  To those struggling to pay their energy bills, price is certainly a major and immediate issue, but the fact then clean energy is more expensive than dirty energy shouldn’t be a reason for choosing the dirty option.  Fuel poverty is, and should be treated as, a separate issue from the question of energy generation policy.
The challenge is not to respond to any price differential by choosing the cheapest option, but how we make sure that we act collectively to use the cleaner option.  It’s another instance where driving policy on the basis of competition rather than co-operation leads to bad decisions. 

22 comments:

Boncath said...

John
New Nuclear power stations have other associated costs especially bearing in mind that the end use is predominantly in a handful of English locations. The new Pembroke LNG power station has required the total overhaul of the National grid from Pembroke into England following the closure and demolition of the oil powered station there.

There are political costs --imagine if all new nuclear stations for the UK were to be built in Wales thats not an impossibility since no one has come out with a definition of size for nuclear power stations nor are there construction or operational criteria requirements that cannot be overcome

Every one bats on about production but my experience is the problem is that of unbridled consumption.

Left to itself the human species will consume itself to extinction - remember the dodo was wiped out because it was a cheap meal obtained with minimal effort.

People en masse will always opt for the cheapest, less labour intensive to them ie self interest in the now regardless of any other factors.

The future is someone elses problem

Siônnyn said...

John - Carbon Capture and storage is as much pie in the sky as Fusion is - a future technology that will remain in the future for ever.

At the moment the Renewable Obligation Certificate premium - or subisdy to renewables - is about 9%, and projected to increase to 30% by 2020. This is a heavy tax for the poor to be paying, though I do agree that polluting energy sources are paid for in other ways. In the case of coal, it is in the high rate of illness and death caused by the particulates.

I am still not convinced by the case for intermittent renewables, though. Balancing the national grid becomes a lot more problematic, and therefore expensive, and relies heavily on nuclear base load capacity (according to the National Grid.

Rather than look to generate more electricity, we shoul look to store more energy so that we have the capacity to release it when needed. Dinorwyg does this and is a crucial part of the UK Grid's balancing services, but we could build smaller, scaled facilities to retain unused capacity from our wind farms with little impact on our landscape.

I return again to the potential for Thorium fuelled reactors - small scale, and safe, that will be available within 5-10 years using proven technology. I believe Wales should at least express an interest in this, and be an enthusiastic early adopter. Of course we need to attain control over our own energy policies first, which will not happen under Labour.

Wales has plentiful supplies of Thorium in our south Wales valleys, and it is very energy intensive, so you don't need much to supply the whole country's energy needs.

John Dixon said...

Siônnyn,

Agree with most of what you say, particularly about the need to 'store' energy in order to smooth out the variability of production from renewables. Not sure, though, that "Balancing the national grid ... relies heavily on nuclear base load capacity" is a fair reading of what the National Grid are saying.

Certainly, their scenario for energy production in future includes a large element of nuclear, but the question is whether that it because it's their, or the only, choice, or whether it's because they're trying to produce a scenario based on realistic assumptions in the light of UK Government policy. I read it as being the second, and I don't blame them for building their scenario that way. Why bother producing alternatives when the UK Govt is pushing them in a particular direction? It doesn't mean, though, that it's the only or inevitable approach.

We've debated thorium before, and I won't rehearse the arguments again. I'm not averse to considering it as part of the mix once we're clear what the actual, rather than the theoretical, implications are on waste and decommissioning, and would support further research in the interim - but I still think that your '5-10' years is optimistic!

Siônnyn said...

Johen - I agree that the NG's plans for balancing the grid are based on what they have been told they will be given to deal with, but if it is not nuclear for baseload (which appears increasingly likely) then what? More imported Coal? Shale? Gas? It won't be intermittent renewables, will it?

5-10 years is not outlandish, given that two reactors were run continuously in the US for nearly a decade, so many of he engineering problems have been addressed and solved. A small fraction of the defence budget could secure a working prototype, and many private companies would be prepared to take up the challenge of producing factory-built, scalable models. Unfortunately, all the contractors the UK goernment choses to engage with prefer the Light Water, heavy engineering - very expensive and hazardous - model, as that is all they know. There swill be money in Thorium reactors, but far, far, less than in Uranium.

If you accept that thorium is more energy dense than uranium, and that 99% of Thorium is consumed in the reactor, as opposed to less than 1% of Uranium, then even if the waste was as dangerous, there would be a mere fraction of it, and, given that it only takes 300 years to return the radioactivity to background levels, as opposed to 30,000 years for Uranium Waste geological storage becomes a practical possibility.

John Dixon said...

Siônnyn,

"I agree that the NG's plans for balancing the grid are based on what they have been told they will be given to deal with, but if it is not nuclear for baseload ... then what?"

Firstly, there are some questions of terminology which are confusing the debate here. One of those is the idea that renewables are 'intermittent'. A better description is 'variable'. Most renewable sources can produce electricity for much of the time; it isn't so much that they regularly stop (although they do stop on occasions, like any other source) as that the level at which they produce varies. And the second is the division between 'base load' and 'peak load'. The distinction between the two is useful for consumption analysis purposes, but I'm not convinced that it's useful when distinguishing between sources of production.

There is no reason why we cannot meet the whole of our needs for electricity from renewable sources, provided that:

a. We have a mix of sources, rather than over-dependence on a single source (and over-dependence on wind is a valid criticism from the antis),

b. We invest more in storage systems so that we can use rather than waste generating capacity when demand is low,

c. We have connectors with other grids in other countries (this is in progress) so that no area is excessively subject to the vagaries of local weather conditions, and

d. We accept that there would be a greater gap between total installed capacity and the actual capacity being used at any point in time. There is a significant gap even with 'conventional' generation, but I'd accept that it would increase under a 'renewables-only' scenario.

Of course there's a cost to a renewables-only scenario; but there's a cost to continuing with current sourcing as well. It's just that we pay the costs in different ways and can't easily compare the costs accurately - which was the point of the original post.

You certainly make the period of 5-10 years look reasonable; but I remain highly sceptical. Let's have the debate again in 2022 and see who's right!

Siônnyn said...

John - I don't think we are actually that far apart in principle. As you know, I am a passionate advocate of Tidal impoundments (lagoons) around the coast. These are as 'renewable' m- or more accurately, sustainable as you can get, but have been quietly opposed and confounded by the Wind lobby, and especially by the Severn Barrage lobby, which rather adds to my animosity towards those two technologies - over and above the obvious technical limitations that is inherent in both.

I would like to see every wind farm include an energy storage facility (possibly compressed air, or pump storage), and then I wmight become more favourable towards them. At the moment I see them only as a huge scam, intended only to salve middle class consciences. If I am wrong, how is it that it is impossible to obtain figures for electricity output for wind that was ACTUALLY a contributor to satisfying demand? All the figures I can find are based on some very dodgy theoretical maxima.

John Dixon said...

"how is it that it is impossible to obtain figures for electricity output for wind that was ACTUALLY a contributor to satisfying demand?"

I don't know the answer to that. The figures must be available somewhere - after all, the producers are being paid for the electricity which they feed into the grid so both the payers and the payees must know the answer. It's not a question that I've asked, though, because I'm not sure that the answer would tell us much of any use, for the following reasons.

Balancing supply with demand is a simple process in concept, but a complex one in practice. Generating caqpacity is regularly being switched on and off for a variety of reasons; when supply exceeds demand, there are a number of factors involved in deciding what to turn off. One driver is to produce as much 'green' electricity as possible; if that were the only driver, then one would expect that wind energy would be 'preferred' as a source. But it isn't the only driver; other drivers come into play. One of course is the ease with which capacity can be turned on and off - and wind turbines are much easier to turn off than coal stations. Another is economics; it costs more to turn off some capacity than it does to turn off other capacity.

The net result of all this will be that the figures, wherever they are (and I see no reason why they should not be in the public domain), will show that wind contributed less to meeting demand than it could have done.

My response to that would be 'so what?'. All we can really say in the current scenario is that ANY demand met by wind is demand which would otherwise have been met by non-renewable sources, and that, to that extent, wind is replacing fossil fuel energy.

I agree with you on tidal lagoons; whilst I suport the use of wind turbines, I cannot see that we ever could or should rely on them for more than about 15-20% of our electricity needs; we need a mix.

I also agree with you on storage; the more we can store electricity produced when demand is low, the more we can depend on renewables to meet our needs. And another form of storage is using electricity to extract hydrogen from water, for use in fuel cells; something which could be done both on a large scale at or near the generating capacity, and on a small scale for domestic transport.

I don't agree with you that wind is a 'scam'. The underlying problem in debating it sensibly is the lack of a proper energy policy and the reliance on the 'market' to respond to 'incentives'.

Siônnyn said...

John - the reason I called Wind a Scam is that I believe that wind farmers are paid a premium price for electricity (or electricity potential, based on the potential output, even when their blades are feathered) whether it is actually used on the grid or not. I can't find the reference where that is tated (which I saved a few years ago) but I believe it is true. Windmill electric is not traded on the energy market as coal and gas, and indeed, nuclear electricity is, where the price varies with demand, and becomes almost zero when demand is low.

As to your wager - you've on! I'll also wager you £50 that the first commercial Thoroum liquid rector will be implemented before the first commercial Carbon Capture and Storage system.

John Dixon said...

I don't know about the trading on the market bit; but I'm not a fan of the idea that price is decided by markets anyway. I can understand why we might need to interfere in the market to ensure priority is given to renewables, even if the current mechanism is not the best one.

As to the wager - I certainly won't accept your second one. I might be sceptical about your timescale for Thorium reactors - but I'm even more sceptical about CCS!

Siônnyn said...

. . But John! - CCS is the great white hope, the magic that is going to save the electric industry! (According to the big players). It is all smoke and mirrors, though. Thorium is not.

Anonymous said...

John.....You say that wind farm producers are being paid for the electricity which they feed into the grid. That is not true. Wind farm producers have a 'theoretical capacity base contract' with National Grid, augmented by a subsidised feed-in tariff. This results in the bizarre scenario where wind farm companies are paid extra for NOT feeing into the grid at times of glut. In 2011, Crystal Rig wind farm was paid to not produce any electricity. The owners asked for £999 per megawatt hour of theoretical energy they would have produced had the turbines been running, as part of the National Grid auction of switch offs. Fred Olsen were paid a total of £1.2 million to switch them off, making no electricity. This example explains why Siônyn has a very valid point. It should also be noted that the Fred Olsen arrangement is of the same type as the (10 times bigger) Vattenfall proposal for the South Wales valleys.

Siônnyn said...

Anon 12.23 - do you have a reference for that, please?

One of my biggest objections to wind is that the massive lobbting ower of the big business involved - along with the huge consortia that are still dreaming of a severn barrage - have effectively quashed the most promising development of all - lagoons. There is a story to be told there, that needs a real investigative journalist to write. One day , heads like Andrew DSavies's and Peter Hain's will hang in shame!

John Dixon said...

Anon,

"You say that wind farm producers are being paid for the electricity which they feed into the grid. That is not true. "

In context, my point was simply that the grid should know what they're getting and what they're paying for. I accept that the contracts are more complex than that, but the basic point stands. I'm not sure, though, that it's only wind energy producers who get paid for electricity they haven't produced; I thought that the contracts with other generators also included contractual provisions relating to periods when the grid asks them not to produce due to supply exceeding demand. We need to separate out the arguments about the different accounting practices from the decision about how we want to source our energy, which was really the point of the original post.

Anonymous said...

http://www.telegraph.co.uk/earth/energy/windpower/8770937/Wind-farm-paid-1.2-million-to-produce-no-electricity.html


John...You miss the point. The 'switch off clauses' in wind farm contracts are unique, and it relates to the load balancing performed by National Grid. There are three demand curves (a) Annual, more in winter due to cold weather, (b) Daily, more in the day than at night, and (c) Events, a surge at half time when Wales are beating England and the kettles go on. All of these demand curves can be predicted and catered for with various supply elasticity. Nuclear the least elastic, gas takes an hour or so to power up, and hydro almost instantaneous. The problem with wind is it's unpredictability, and plays no role in elasticity in supply to cover demand curves or spikes. The larger the wind component, the greater the need for 'switch off clauses' as there is a cost to powering down other types of generation during demand troughs.

The most efficient load balancing for wind is with 'smart grids' where consumers opt for renewable usage. This concept was first introduced in the 1970s with 'off-peak' metering in the daily cycle (Economy7), to take nuclear night gluts. Logically, and with current smart metering technology, it would be possible for consumers to demand wind power when it's available, by having for example, electronic switching of domestic appliances like washing machines and augmentation of storage heating when wind generation is in glut.

One of the most efficient ways this is pioneered is in Malmo (Sweden) where on new build housing regional construction regulations stipulate that domestic immersion water heaters has to have two heating elements, one circuit wired to renewable smart switch on local grid and on-demand pulling from the CHP feed. The former draws during renewable glut, the latter is a top-up in energy consumption. The Western Harbour wind farm only feeds directly into the local grid, and is metered locally, providing a price incentive to directly consume renewable electricity when it generates. This also allows the CHP feed to large buildings (government offices, schools, and offices) to be cut forcing them to draw on renewables. The gas plant is then 'tweeked' to offset feed that would otherwise go to the local grid as an export to the rest of Sweden, or to Denmark where a bi-lateral 2.5Mw agreement is in place.

Why doesn't Wales do this?

Siônnyn said...

Anon 11:37 - 'Why doesn't Wales do this?' you ask - the reason is we do not control our own grid or indeed most of our energy capacity.

Thank you for a very lucid explanation of what is a murky subject. As well as opting IN for green energy shouldn't one be able to opt out, and save some money?

You say gas take about an hour to fire up - true, but they take days to power down because of the high temperatures involved. Diesel is the most flexible source of contingency power, (apart, of course, from hydro) as I understand it.

Why are we not looking at more hydro - small scale pump storage schemes for instance, on our hills instead of largely useless and disfiguring windmills?

John Dixon said...

Anon,

Thank you - I had indeed misunderstood the point you were making. I haven't looked at the contracts so won't pretend that I was aware of the detail which you outline.

Your point about mechanisms to make the best of renewables when they are available is well-made, and it underlines a point which has often been made that merely treating wind turbines as an add-on to what we are currently doing is short-sighted; we also need to do more to spread the demand, and to 'store' electricity when generation is higher than demand.

As to why Wales doesn't do this, I broadly agree with Siônnyn's response, although a government with any imagination would be trying to move in that direction by agreement and persuasion rather than depending on the 'no powers' argument.

Siônnyn,

Just when I thought that we were getting close to agreement on some issues, you come out with this one! There are two things that I fundamentally disagree with in your comment.

The first is the idea that people should be able to opt out of using 'green' energy in order to save money. There is a real problem with fuel poverty, but this is not the answer. It's a bit like the UK saying that reducing carbon emissions costs too much, so we'll opt out of doing it and leave the problem to everyone else. (And that's not far from what some politicians seem to be suggesting at times!) IF we agree that carbon emissions need to be reduced (and I'll accept that's an increasingly big if), then it will only happen through collective action. Opting out is a 'no change' approach.

Then we have your comment that windmills are 'largely useless'; but I think we've debated that one before...

Siônnyn said...

John - my 'opt out' suggestion was mostly tongue in cheek prompted by the 'green tariffs' that became a badge of middle class environmetalism some years ago -(salving their consciences while they were driving the kids to school in their4x4s).

I call the windmills largely useless because I am unable to find any statistics that prove otherwise. Perhaps you can help?

John Dixon said...

Well, Siônnyn, I doubt that I'll be able to provide any statistics which will convince you, because, as we've discussed before, the position is not as black and white as I'd like it to be. I'm quite happy to state that any wind-produced electricty which we use displaces conventionally-produced electricity; it's the extent of that displacement which is unclear, and particularly so when the proportion of total capacity which wind represents is as small as it is, and when decisions on what to use and what not to use are taken for reasons other then selecting the 'greenest' electricity.

Surely, though, lack of statistics to prove the contrary is not the same as availability of statistics to prove the thesis? 'Useless' without stats to disprove the assertion sounds a bit like guilty until proved innocent.

Siônnyn said...

But John - the fact that occasionally wind is used to displace conventional generating capacity actually can imbalance the economics of the other generators. Because of the lunacy of privatising and marketizing energy under Thatcher, actually securing the baseload capacity has become difficult at best - especially if we want it to come from the least harmful sources. You might find THIS useful reading - certainly made me think!

Siônnyn said...

ANd BTW John - after so long - 20 years now - wouldn't you expect there to be convincing stats widely available of the actual benefits of wind? I would.

The Monarchy justify their existence and their cost to the public on, amongst other things, a mythical tourism bonuse. After all these years, you would expect them to have been able to provide some evidence. Do you accept their say-so, as you appear to do with the wind industry?

John Dixon said...

Siônnyn,

"lunacy of privatising and marketizing energy" - that's one thing on which we can agree, at least!

And the link you provided confirms that point; those in search of profit will choose the most profitable sources of energy, not the greenest. Although, returning to the subject of the original post, there is an argument that coal only looks cheaper because the environmental costs are externalised into taxation, so the comparison is not an entirely fair one. But as long as things are as they are, the 'cheapest' source of electricity under current rules and processes may well be coal - but only someone who believes that price should determine everything would then conclude that we should build more coal-fired stations.

Your suggestion that I am simply accepting the say-so of the wind industry is, if I may say, a long way short of your usual approach to debate. I could just as easily suggest that you are accepting the propoaganda of the antis; but neither statement adds a great deal to the sum of human knowledge.

The problem, as I see it, is not that there are no stats available, but that not everyone is convinced by those stats. I suspect that the figures you are seeking ("figures for electricity output for wind that was ACTUALLY a contributor to satisfying demand") are available somewhere. Have you asked the people at the Grid, for instance?

I'll repeat, though, that I just don't think that such a figure would actually add much to a discussion. We know that wind turbines produce only a proportion of their theoretical maximum capacity. There's debate about what that percentage is, but let's accept for the sake of argument that it's around 25% for currently installed turbines (although likely to be higher for newer ones). I think that the figure you are seeking is for the percentage of that actually used. To the extent that it is fed into the grid, the answer is 100%, obviously; if it is not fed into the grid, then the figures will be lower.

So what? If decisions are being taken now (and have been taken historically) not to use wind electricity when it is available (and I'm happy to assume, again, for the purposes of debate, that that is what the figures you are seeking would tell us), then that tells us a lot about the decision-making process, based as it is on factors such as economics; but it tells us nothing about the usefulness of the technology itself, or the potential contribution it might make in the future.

What we do know for certain is this: every MWH of wind electricity fed into the Grid is a MWH which has not come from burning fossil fuels, and therefore displaces fossil-fuel electricity.

That much is surely indisputable - the debate is around such issues as the extent to which fossil-fuel plant is actually turned off as a result (and we've debated that on a previous post); whether turbines are value for money; whether they are worth the cost in terms of damage to landscape. These are all issues on which opinions will vary; buyt they are not about the functional usefulness of the technology.

Siônnyn said...

Sorry John- I did not mean to demean your understanding - though I do think that you leave most of the questions I posed unanswered, and I do not accept that every 'green' MWH fed into the grid displaces carbon consumption. The market does not work like that.

My concern is that the crisis facing us in Wales -and indeed in the Western World - is that if we don't want our lights to go off, then we need a far more radical solution to energy generation than Windmills can possibly provide.