Tuesday 19 February 2013

Energy, but at a price

Mr Drew is away, taken from us by mistress work to do his penury in far away places. And just as it seems the public is finally about to glimpse the coming disaster of an energy crisis.

A brief reminder of where we are. Ed Milliband as Energy minster, amongst 11 others over a few short years of Brownian rule, made broad and glorious speeches about the renewable future, Carbon Capture and other fanciful whimsies.

Sadly Milliband has been replaced by the equally useless Chris Huhne and now Ed Davey, both besotten with precious windmills and eco-platitudes to the gods of demagoguery.

And low, it has come to pass that we have now seriously started switching off the power stations in the UK and yet not a single new gas plant is under construction. They don't take too long, but none have been started. We face moving to a place where there is 5% capacity overage on the Grid, from 15% today.

Will it mean blackouts - probably not as those Frenchies with their vast nuclear power supply will be only to will to help out Perfidious Albion - they may though sense the potential of a rather large commercial opportunity for themselves. Similarly, that lovely Gazprom company from the land of Uncle Vladimir will surely help us too with much needed gas, for a small price.

So, here we are, blackouts of 20%-30% increases in prices - all without any increase in renewables or really reducing our carbon footprint (exporting the problem elsewhere surely doesn't count even for a Lib Dem?)

It says little for our democracy that long-term planning by Government in this space has become impossible - I don't fancy the chances of the Government that is charge when these particular chickens come home for a roost.

12 comments:

Blue Eyes said...

"overage"

That is the best new word I've come across in ages! Opposite of the lovely "outage" presumably.

So Ofgem today have been moaning about this, but have making a nonsense of it saying that imported gas is more expensive than domestic gas. Why would that be, unless domestic gas producers are banned from selling on the international market? And is our coal not imported anyway? And what of our uranium?

CityUnslicker said...

our uranium....really?

Imported gas is more expensive...its teh cost of transporting it and LNG storage.

Anonymous said...

French Nukes - Nein Danke - and its only a 2GW connector so hardly worth it.

CityUnslicker said...

I have a feeling the 2GW connector will get an upgrade, it not that wide the channel after all.

Anonymous said...

Err... Do you know something?

The connector was put in place in 1986. Same time as they stopped building anything.

http://en.wikipedia.org/wiki/HVDC_Cross-Channel

and

http://en.wikipedia.org/wiki/High-voltage_direct_current

Government lost control of energy policy long time ago. And look at the idiots they have in charge of it now. FFS who can take ED or GB seriously.

If there is a silver lining the 25p/KwH that is being handed out to 'roof farmers' will be seen to be parsimonious compared to the amounts that will need to be lobbed at the new station builders.

rwendland said...

No surprise no gas plant is under construction right now, as 6.5GW of new gas plant came online 2011/2012, and electricity demand dropped about 4%, leaving 32% of excess generation capacity a year or so ago. Centrica closed 2 gas plants and mothballed others last year.

Ofgem is ringing the alarm for 2016 onward I think. Until the govt decides if nuclear will be subsidised enough to get EDF/Hitachi to build some (maybe up to 12GW), I'd be surprised if we see any other big investment decisions as it is hard to forecast capacity/profits beyond 2025.

Nick Drew said...

actually there are some CCGTs being built right now (much as I hate to contradict CU & Mr W): EDF/West Burton and ESBI/Carrington

rwendland said...

Thanks ND on that reassuring info.

I've now read the Ofgem lecture overhead slides, and better see what he's getting at. It seems a lot of old coal & oil plant is closing 2013H1, ahead of the 2015 EU rule (2.5GW oil, which would hardly ever have run!). Also old gas plant continues to close or mothball, so the excess capacity is very rapidly being reduced.

So he anticipates gas plant will move from zero profitability (Spark Spread) now, to some profit this summer, with spare capacity falling to 4% in 2014. That does sound worrying, if I understand that right. Of course, as prices rise some gas plant will be de-mothballed. There is something called "shallow mothballed", which I guess is pretty easy to bring back on-stream if the price is right - unfortunately he does not list how much of that is there.

Most of his presentation is about international gas supply, and the problems we might have in a few years assuring supplies. A few interesting comments are that by the time US shale gas is turned into LPG and shipped to the EU, it is no cheaper than current supplies. And quotes Gazprom saying it only develops fields and pipelines to service long-term contracts (a la EON/RWE), not to supply spot markets (the UK mostly uses). Nearly all EU countries except UK have a "Public Service Obligation" upon suppliers - I assume this means a legal obligation to supply domestic customers!

Nick Drew said...

there is more than one way of taking a CCGT out of full-capacity mode

the simplest is to down-rate it to open-cycle (easily restored)

then, as you say, there are degrees of mothballing

"by the time US shale gas is turned into LPG and shipped to the EU, it is no cheaper than current supplies" - this is mere price-forecasting, which is (a) always intellectually disreputable and (b) deeply, deeply discredited as regards the gas market in recent years - 'consensus forecasts' of, say, 2008 vintage were so wrong it's derisory

don't have time to comment on the Gazprom/spot/long-term market issues you mention

there most certainly are are significant public-service obligations on UK utilities !

(a pedant writes: I think you mean LNG)

rwendland said...

Whoops ND, LNG, dead right.

I was pretty surprised about Alistair Buchanan's "Public Service Obligation" claim! His exact words on page 69 are:

"* Art 194: member states have self-determination in energy.

* Art 193: member states can set tougher local environmental laws.

* Virtually every member state – except GB – has a form of override in form of PSO: 4 forms of PSO being used by EU Governments.

GB HAS NO PSO (PUBLIC SERVICE OBLIGATION)"

Does that make any better sense? It seemed an odd thing to make an issue of, unless I misunderstand what he means. Seems important to him, to raise it in this kind of lecture.

Sorry to mention the Gazprom quote (page 32) when you are so busy, a bit unfair of me. Thought it would be something you'd take issue with. It was a 2009 quote, and probably not Gazprom's current real position, though maybe the public posture still. Interesting the Ofgem CEO quotes it though.

Nick Drew said...

will be back soon !

Agence communication said...

"" Will it mean blackouts - probably not as those Frenchies with their vast nuclear power supply will be only to will to help out Perfidious Albion - they may though sense the potential of a rather large commercial opportunity for themselves. Similarly, that lovely Gazprom company from the land of Uncle Vladimir will surely help us too with much needed gas, for a small price.

So, here we are, blackouts of 20%-30% increases in prices - all without any increase in renewables or really reducing our carbon footprint (exporting the problem elsewhere surely doesn't count even for a Lib Dem?)""