Thursday, 7 May 2020

Covid: Energy Sector Update

All manner of interesting things are happening as the lockdown and general paralysis works through the energy system.  Top of the list is, of course, severely reduced demand: residential up, but everything else significantly down.  Plus, customers' ability (and/or willingness) to pay is diminished.

Here are summaries of several current stories from the industry.     
 *   *   *   *   *  
Ofgem is in negotiations to pay more than £50m to EDF to reduce output from Britain's largest nuclear reactor (SZB) to avoid blackouts this summer.  Low demand threatens to overwhelm the network with surplus electricity, notably from nukes and windfarms that "must run".  National Grid warns of a "significant risk of disruption to security of supply" over the Bank Holiday unless it is granted emergency powers to disconnect excess solar and wind farms.  The costs of paying off all these plants will feed through to consumer energy bills - of course!
Ofgem (again) warns of a potential shock to consumers after research revealed only 35% have thought about the impact of coronavirus on their energy bills.  23% feel their finances are negatively impacted and 44% expect their financial situation to deteriorate in the next six months. 56% say they are using more energy than normal for the time of year, rising to 75% among families with children. Despite this, only 35% have given consideration to the roll-on impact to their bills, prompting the regulator to warn of potential “bill shock” further down the line
UK power network balancing costs for Q1 2020 climbed 36% year-on-year, driven by rising constraint payments to natural gas and wind powered facilities, National Grid data show: £430m, up from £312m in Q1 2019
Wind and solar power have stepped into the baseload role in Europe, with very little coal-fired plant running and less gas-fired plant than usual, wind and solar output having priority on the grid
*   *   *   *   * 
What's interesting about this last snippet is that it offers something of glimpse of where we expected to be in, say, 2030 as ever more renewables are developed, and ever more energy efficiency measures are taken.  Some grid operators are now proving able to manage grids at 70% or more renewable energy and with a much lower level of demand.  This would have been hard to believe until, errr, it actually happened.  Well, those grid chappies are good engineers - and they have a lot of tools at their disposal, some of them rather blunt instruments (see above).  What we'll learn later is, ahem ... the cost!  Which we shall all pay, one way or the other.

Finally, as a rather detailed but potentially significant consequence of all this, the output of gas-fired power plants in the UK and elsewhere has absolutely cratered (down by 90% in UK in April).  It is gas-fired plant that has been the great bulwark and standby in our system for two decades now - the grid's go-to source of flexibility, taking the strain of most of the ups-and-downs caused by intermittent wind generation (coal isn't nearly as flexible, and nukes not at all).  I foresee some very awkward premature closures in this sector - or, as above, the need to throw some big money at them to keep them available.

All the greenies (and a lot of lefties) are hoping these unexpected developments point the way to the green future of their dreams.  Maybe.  But it won't be cheap.

Oil might be, though ... 



Timbo614 said...

Wot no comments, I'll summarise:
If we use all the power we pay and the power co's moan about capacity problems.
If we don't use all the power we pay more and the power co's moan about capacity problems.

Nick Drew said...

This is just a Public Service Broadcast, Timbo

but thanks for chipping in!

E-K said...

Is it wise to have our wind farms out at sea ? Shouldn't we be training up more SBS ?

Energy prices going up. Yeh. That's about right. You know how kids home from university like their power showers.

rwendland said...

ND, I notice that the French Interconnect has been delivering around 1.5GW on average pretty consistently since Feb, plus also the Dutch about 700GW and Belgium 700GW. Do the rules allow NatGrid to close down the interconnects shedding 2.9GW of generation (basically subsidised in France's case) before they start paying constraint payments to natural gas and wind?

Also where do you get your data about CCGT being cratered in April? When I download the half-hour data from Exelon's and average them in a spreadsheet I get the average MW generation in Feb,Mar,April for CCGT to be 9562,11381,8490 which is not 90% cratering. For Wind it goes down more 9901,7516,4719 I guess largely from less windy weather. Have I messed up my spreadsheet analysis? I know I'm looking at post-constraint numbers, but still it doesn't seem to match CCGT being particularly cratered.

Nick Drew said...

"Between 23 March and 19 April, output from gas-fired power plants in the UK slumped by ~90%" (Cornwall Energy Consulting)

Not being a journalist or newspaper of record, I didn't check it! Shame on me if it's wrong

HOWEVER I was inclined to believe it because I am working right now on a CCGT asset deal and have actual examples (which I'm not going to name) of non-mothballed UK CCGTs that ran 0.00 in April.

Nick Drew said...

Would need to look up the rules on ICs. I have often looked into them in the past and have found them to be pretty price-sensitive to the wholesale markets on either end. The days of irrational baseload commitments are, I believe, over. But hey, commerce is commerce and if some Frenchman is willing to underprice power grossly in order to export their surplus ... the Germans do it all the time, to the dismay of their neighbours

rwendland said...

ND, I've double checked my Exelon data spreadsheet, by averaging with a different method (Pivot Table), and get the same result. Also charted the daily generation by main generation sources, and averaged before,in,after the 23Mar-19Apr Cornwall Energy analysis period (CCGT MW: 10509,9357,8219 - Wind: 9241,5648,4286). No sign of any overall CCGT cratering. (Now, if you were talking Coal generation, that cratered to flat zilch in that period.)

So assuming the Exelon data is correct, it seems Cornwall Energy Consulting are either trying to say something different and subtle (non-peak generation?) to my plain understanding of their words "output from gas-fired power plants in the UK slumped by almost 90% during the period", or amazingly for such a big consultancy they seemingly made a mistake.

Just in case this is important to you, I've put the spreadsheet in a public Gdrive folder below. Made with Libreoffice Calc to an .ods file, but I've also saved it as a .xlsx and .xls in case Excel does not grok the .ods. Note the chart and Pivot Table are in the 2nd and 3rd tabs, and the simple averaging is right at the bottom of the data way down in the first tab. Also dropped the daily chart as a .png file for simple viewing as Google Sheets for one does not show the chart.

Nick Drew said...

Thanks indeed, Mr W. Can't explain Cornwall - i tend to find them OK

(My particular interest at the time was specific CCGTs but the average is definitely interesting, too)