Tuesday 26 January 2016

Sooner Or Later The Lights Are Going Out

It's been years since we started pointing out that no proper power stations are getting built.   From time to time a thin cry goes up from the MSM but it's not particularly near the top of the list for any prominent politician or commentator. 

There's a classic "report out today" from the Institute of Mechanical Engineers - probably to be soon dissmissed as special pleading, one imagines, though they get a bit of press coverage.  The numbers ought to be a bit sobering.
"the retirement of the majority of the UK’s ageing nuclear fleet by 2025 and growing electricity demand will leave the UK facing a 40-55% electricity supply gap"
They might not be right about the growing demand, as it happens, but that's a tiny factor compared to the closures, most of which are pretty much set in stone.  The Engineers are a bit confused as to how the problem they've identified is to be fixed:
"plans to plug the gap by building Combined Cycle Gas Turbine (CCGT) plants are unrealistic, as the UK would need to build about 30 new CCGT plants in less than 10 years ... the country has neither the resources nor enough people with the right skills to build this many power stations in time"
That's us f****d, then, because there is no other plausible solution.  The Engineers have a suggestion of their own: 
"Government needs to take urgent action to work with industry to create a clear pathway with timeframes and milestones for new electricity infrastructure to be built including fossil fuel plants, nuclear power, energy storage and combined heat and power. With CCS now out of the picture, new low carbon innovations must be supported over the course of the next 10 years"
But if we don't have the "resources nor people" for 30 CCGTs - pretty quick & straightforward compared to nukes, storage and "new low carbon innovations" - how does that help?  At least they are right about CCS ...
*  *  *  *  *  *

So - when does anyone get up off their arse?  Trouble is, the National Grid is just too good at applying the sticking plasters.  Really good at it - spraying our money around (and taking a % for themselves) on all manner of finger-in-the-dyke schemes and scams.  With a bit of luck (I almost said 'with a following wind ...') they can keep that trick going for, what, maybe a couple more winters?  Then people will start to notice.  At very least it will be a genuine issue at the next election.

Lead-time for just the construction of a serious power plant (> 400 MW) is 3 years - and that's if you have all your ducks in a row (ordered the turbines, got all the permits etc etc).  It's hard to imagine what nuke-and-frack-obsessive Osborne plans to do about it all, seeing that neither of those technologies will contribute a single extra kWh by winter 2019-20.  If he comes up with a new scheme this year to throw money at CCGT developers (I'm predicting he will), and it finds immediate uptake (rather less likely), he might just get two gas start-ups by then.  But I doubt it.

UPDATE:  EDF running away from the decision on Hinkley - again.  Laughably, the Grauniad says
"The opening of Hinkley Point C has been delayed twice, from 2017 to 2025"
Twice?  It's been delayed twice a year, every year since they bought British Energy back in '08.  And to think they gave the Chief Frog an honorary knighthood.  Refund, I should say.


Wildgoose said...

And this is why I installed a wood burning stove a few years back - when the electricity goes off, so does the gas because your fancy new boiler is electrically controlled.

And let's face it, it will happen when the system is under heavy load such as during arctic conditions in the middle of winter - exactly when you need to keep your family warm.

rwendland said...

But EDF's nuclear retirement dates ("Accounting closure date") is not to be believed as the year they will actually shut. EDF is forever working at getting life extensions agreed ~5 years at a time.

5 AGRs and Sizewell B will still be running in 2029 if, as is pretty likely, they get the AGRs to a 40 year lifetime (Full Operation year + 40). That's 5 out of 7 AGRs - the majority. EDF will be hoping for another 5 years, to get to ~45 years life, though they may very well not go that long.

For a very long time the nuclear lobby have been using unrealistic closure years in PR to chivvy politicians into earlier new nuclear.

Of course there is the risk the AGRs will hit some generic problem which torpedoes the regular life time extensions - graphite moderator erosion/cracking is a concern. But the AGRs were built by different firms, to somewhat different specifications, so the risk a generic problem hits the whole fleet is reduced.

Blue Eyes said...

Are people applying for permission to build new power stations?

Maybe electricity is not yet expensive enough?

Nick Drew said...

For a very long time the nuclear lobby have been using unrealistic closure years in PR to chivvy politicians into earlier new nuclear

- and demanding outright subsidies for the existing! - bloody De Rivaz again

Are people applying for permission - yes, all the time; the permits are good for 5 years, there is an entire industry involved in applying for, then selling the permits, sites etc etc

electricity isn't remotely expensive enough for an honest producer when (a) the wholesale prices is routinely trashed by zero marginal-cost windpower-built-with-subsidies etc; and in any case (b) the game is to wait until directly bribed

rwendland said...

BE, 3 reactor designs are in the UK nuclear regulator Generic Design Assessment (GDA) process to get generic permission to be used in the UK. The US/Toshiba AP1000, Japanese ABWR and (soon - agreed by the government) Chinese Hualong One.

Given our highest nuclear subsidies in the world, loads of nuc builders want to build new nuclear in the UK. Impossibly many it seems to me, so at some point the govt will have to disappoint some that the govt have led up the garden path.

My list of provisionally/outline agreed new UK nuclear is:

[1.2 GWe Sizewell B (60 year life extension taking this to 2055)]
3.2 GWe EDF+China Hinkley Point C (2 EPR @1.6GWe)
3.3 GWe Toshiba/NuGeneration (3 AP1000 @1.1GWe near Sellafield)
6.7 GWe Hitachi/Horizon (5 ABWR @1.35GWe at Wylfa and Oldbury)
3.4 GWe China (guess: 3 Hualong One @1.15GWe at Bradwell)
3.3 GWe (possibly) EDF/Sizewell C (2 EPR @1.65GWe)

21.1 GWe TOTAL, over a third of peak UK winter production, half summer

The risk of so much new nuclear actually being built must be a disincentive to CCGT builders who take the risk generation prices will drop very low. CfD protects the nuclear owners from electricity price drop risks - the customers will pick up the tab instead.

rwendland said...

BE, sorry I misread your question. My one-track nuclear mind got the better of me!

Electro-Kevin said...

And while these power station closures are taking place they want to switch diesel trains for electric and build HS2.

Electro-Kevin said...

Blue Eyes - They wouldn't be allowed to build new power stations if they wanted to. These are EU green targets we're trying to hit - not consumer satisfaction ones.

Demetrius said...

This one has been coming for the last two decades and the blancmange will soon be in the fan.

andrew said...

well, next time some young scrote asks me what degree to do, sounds like something to do with power generation is a good idea.

Anonymous said...


HMG has lots of our money, it just wastes it on; £210 billion p/a welfare, £60 billion on quangos, £14 billion on foreign aid and sending it to Brussels - £19 billion, £55 billion servicing the National debt.

Britain going, going, a gonna..... unless an immediate start is granted to building new coal fired plant and stop the early closure of the remaining coal/nuclear plant.

Otherwise, it will all be switched off - the country.

Baron B said...

Off Topic:

Anon 9.47: "£55 billion servicing the National debt."

Bring back the Bradbury pound.

andrew said...

The good thing about the Bradbury pound is you can tell you are just about to get one by the pricking in your thumbs.

Blue Eyes said...

ND, I am interested about your comment on wind. Even if wind does sometimes push the spot price of electricity to zero or negative, wind still (will only ever?) produces a small fraction of the overall. Nobody (surely) bids to build, say, a new gas plant on the basis that it will be run at full capacity at all times.

So, there must be a point at which it does make sense to turn a permit into an actual new power station. You have said before that a new gas station can be brought online quite quickly.

I imagine that mothballed capacity could be brought back fairly quickly too, given the right price signals.

So I don't think we will run out of power as such, we just may find ourselves paying a lot more for it.

rwendland said...

BE, ND, I'd have thought the uncertainty about a lot of new nuclear 15 years forward would be more worrying than occasional low price, at times of low demand, due to wind. A CCGT project finance model must be trying to forecast prices 5 to 25 years in the future (20 year plant life still?), the second half of which would be seriously affected by new nuclear prospects.

Do you know if this is the case ND?

While EDF have delayed the Hinkley C finance decision yet again, and it may well be abandoned, the Chinese and Japanese proposals (14 GWe) are solid with previously built reactors and pretty likely to come to fruition at a lower CfD price. In fact Hinkley C failing could very well suit the Chinese, as they get out of a very risky project run by a shaky third party, but have already gained UK political agreement in principle for their own project (perhaps their primary objective) and have kudos points with the UK nuclear lobby for at least trying to back EDF.

NB interesting Telegraph comment on Hinkley C: "It has since emerged the UK had attached a sub-investment grade BB+ credit rating to the [Hinkley C] project" and FT's "taken off the agenda because of last-minute concerns expressed by some of the company’s most important [financial] backers."

Nick Drew said...

BE, it's worth taking a look at the effects of wind (and solar) in the German "market": they are big enough there to have baleful market-wide effects week after week, and we are headed in that direction

I say "market" because there is so much intervention, ex-ante the end of the formal day-ahead market and also ex-post (as the operators intervene within-day to make a feasible running-plan), it's a parody of a true commercial nexus of willing buyers and willing sellers (and meaningful price formation)

no, a CCGT owner doesn't expect to run baseload: but nor do they expect to be relegated to peaking capacity duties, living off scraps by way of waiting for those operators to call them up at short notice asking for couple of hours (admittedly at high unit prices) here and there

that's neither efficient in operating terms, nor sufficiently reliable in revenue terms - hence the new vogue for 'capacity payments', guaranteed income for being on standby. But at the current level of UK CP's (we are the first in Europe to have big C-auctions of this kind), that alone ain't enough to encourage new CCGT's to be built (- hence my prediction of a new scheme later this year). Same phenomenon with CPs in US markets where they've been trying it for longer

A CP is, of course, a nice bit of bunce for a superannuated old existing plant that can just about drag itself out of bed a few more times - be that a CCGT, a coal plant or a nuke

(and the CPs are enough to finance a cheap-n-nasty diesel park ...)

some mothballed capacity is as you say, fairly easy to bring back online, it all depends on how deeply the mothballs are stacked: the CPs have lured some mothballed CCGTs (and some that were just downrated to less efficient OCGT status) back into the fleet

as has the recent collapse in (wholesale) gas price, with coal plants closing at the same time

Nick Drew said...

Mr W, the best example we have of a really successful, sustained boom in CCGT development was of course 1989-2001 ish, when the investment model was not 'forecast prices many years hence' but 'get a 15-year hedge', via back-to-back 15-yr gas purchase and power sales contracts

in the early part of this period the 15-year hedges were put on for almost all the capacity, latterly being for less than 100%, all the way down to a handful of unhedged projects (which didn't end well)

market conditions have changed (big topic) and suffice to say, in a world ruled by subsidies and government whim, pretty much all the likely players have fallen out of the habit of making 15-year commitments without direct government-backed subvention - effectively, a private-enterprise investment strike, and who can blame them

because, as you say, who can guess what the next mighty market-distorting intervention will be? Gissa bung, mate is the ruling ethos

we may be grateful that the gas markets are sufficiently global and deep that governments haven't yet tried to micro-manage them - but they would if they could, and I reckon the EC is about to try ...

rwendland said...

ND, an interesting reminder of for how long you can hedge. And if you can get ROI within 15 years, you largely get out ahead of the worst of any new nuclear overcapacity risk.

Have you noticed the Hitachi boss is now applying lessons from EDF on softening up Philip Hammond + UK energy establishment for subsidies: "Hinkley Point nuclear fiasco spooks Hitachi boss"?

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