In recent years,
there has been more and more talk of a transition to renewable energy on the
grounds of climate change, and an increasing range of public policies designed
to move in this direction. Not only do advocates envisage, and suggest to
custodians of the public purse, a future of 100% renewable energy, but they
suggest that this can be achieved very rapidly, in perhaps a decade or two, if
sufficient political will can be summoned. See for instance this 2009 Plan to Power 100 Percent of
the Planet with Renewables:
A year ago former vice
president Al Gore threw down a gauntlet: to repower America with 100 percent
carbon-free electricity within 10 years. As the two of us started to evaluate
the feasibility of such a change, we took on an even larger challenge: to
determine how 100 percent of the world’s energy, for all purposes, could be
supplied by wind, water and solar resources, by as early as 2030.
See also, as an
example, the Zero
Carbon Australia Stationary Energy Plan proposed by Beyond Zero
Emissions:
The world stands on the
precipice of significant change. Climate scientists predict severe impacts from
even the lowest estimates of global warming. Atmospheric CO2 already exceeds
safe levels. A rational response to the problem demands a rapid shift to a zero-fossil-fuel,
zero-emissions future. The Zero Carbon Australia 2020 Stationary Energy Plan
(the ZCA 2020 Plan) outlines a technically feasible and economically attractive
way for Australia to transition to a 100% renewable energy within ten years. Social
and political leadership are now required in order for the transition to begin.
The Vision and a
Dose of Reality
These plans amount
to a complete fantasy. For a start, the timescale for such a monumental shift
is utterly
unrealistic:
Perhaps the most misunderstood
aspect of energy transitions is their speed. Substituting one form of energy
for another takes a long time….The comparison to a giant oil tanker,
uncomfortable as it is, fits perfectly: Turning it around takes lots of time.
And turning around
the world’s fossil-fuel-based energy system is a truly gargantuan task. That
system now has an annual throughput of more than 7 billion metric tons of hard
coal and lignite, about 4 billion metric tons of crude oil, and more than 3
trillion cubic meters of natural gas. And its infrastructure—coal mines, oil
and gas fields, refineries, pipelines, trains, trucks, tankers, filling
stations, power plants, transformers, transmission and distribution lines, and
hundreds of millions of gasoline, kerosene, diesel, and fuel oil
engines—constitutes the costliest and most extensive set of installations,
networks, and machines that the world has ever built, one that has taken
generations and tens of trillions of dollars to put in place.
It is impossible
to displace this supersystem in a decade or two—or five, for that matter.
Replacing it with an equally extensive and reliable alternative based on
renewable energy flows is a task that will require decades of expensive
commitment. It is the work of generations of engineers.
Even if we were
not facing a long period of financial crisis and economic contraction, it would
not be possible to engineer such a rapid change. In a contractionary context,
it is simply inconceivable. The necessary funds will not be available, and in
the coming period of deleveraging, deflation and economic depression,
much-reduced demand will not justify investment. Demand is not what we want,
but what we can pay for, and under such circumstances, that amount will be much
less than we can currently afford. With very little money in circulation, it
will be difficult enough for us to maintain the infrastructure we already have,
and keep future supply from collapsing for lack of investment.
Timescale and lack
of funds are by no means the only possible critique of current renewable energy
plans, however. It is not just a matter of taking longer, or waiting for more
auspicious financial circumstances. It will never be possible to deliver what
we consider business as usual, or anything remotely resembling it, on renewable
energy alone. We can, of course, live in a world of renewable energy only, as
we have done through out most of history, but it is not going to resemble the
True Believers' techno-utopia. Living on an energy income, as opposed to an
energy inheritance, will mean living within our energy means, and this is
something we have not done since the industrial revolution.
Technologically
harnessable renewable energy is largely a
myth. While the sun will continue to shine and the wind will continue to blow,
the components of the infrastructure necessary for converting these forms of
energy into usable electricity, and distributing that electricity to where it
is needed, are not renewable. Affordable fossil fuels are required to extract
the raw materials, produce the components, and to build and maintain the
infrastructure. In other words, renewables do not replace fossil fuels, nor
remove the need for them. They may not even reduce that need by much, and they
create additional dependencies on rare materials.
Renewable energy sounds so
much more natural and believable than a perpetual-motion machine, but there's
one big problem: Unless you're planning to live without electricity and
motorized transportation, you need more than just wind, water, sunlight, and
plants for energy. You need raw materials, real estate, and other things that
will run out one day. You need stuff that has to be mined, drilled,
transported, and bulldozed -- not simply harvested or farmed. You need
non-renewable resources:
• Solar power. While sunlight is
renewable -- for at least another four billion years -- photovoltaic panels are
not. Nor is desert groundwater, used in steam turbines at some solar-thermal
installations. Even after being redesigned to use air-cooled condensers that
will reduce its water consumption by 90 percent, California's Blythe Solar
Power Project, which will be the world's largest when it opens in 2013, will
require an estimated 600 acre-feet of groundwater annually for washing mirrors,
replenishing feedwater, and cooling auxiliary equipment.
• Geothermal power. These projects also
depend on groundwater -- replenished by rain, yes, but not as quickly as it
boils off in turbines. At the world's largest geothermal power plant, the
Geysers in California, for example, production peaked in the late 1980s and
then the project literally began running out of steam.
• Wind power. According to the American
Wind Energy Association, the 5,700 turbines installed in the United States in
2009 required approximately 36,000 miles of steel rebar and 1.7 million cubic
yards of concrete (enough to pave a four-foot-wide, 7,630-mile-long sidewalk).
The gearbox of a two-megawatt wind turbine contains about 800 pounds of
neodymium and 130 pounds of dysprosium -- rare earth metals that are rare
because they're found in scattered deposits, rather than in concentrated ores,
and are difficult to extract.
• Biomass. In developed countries,
biomass is envisioned as a win-win way to produce energy while thinning
wildfire-prone forests or anchoring soil with perennial switchgrass plantings.
But expanding energy crops will mean less land for food production, recreation,
and wildlife habitat. In many parts of the world where biomass is already used
extensively to heat homes and cook meals, this renewable energy is responsible
for severe deforestation and air pollution.
• Hydropower. Using currents, waves, and
tidal energy to produce electricity is still experimental, but hydroelectric
power from dams is a proved technology. It already supplies about 16 percent of
the world's electricity, far more than all other renewable sources
combined….The amount of concrete and steel in a wind-tower foundation is
nothing compared with Grand Coulee or Three Gorges, and dams have an
unfortunate habit of hoarding sediment and making fish, well, non-renewable.
All of these
technologies also require electricity transmission from rural areas to
population centers…. And while proponents would have you believe that a
renewable energy project churns out free electricity forever, the life
expectancy of a solar panel or wind turbine is actually shorter than that of a
conventional power plant. Even dams are typically designed to last only about
50 years. So what, exactly, makes renewable energy different from coal, oil,
natural gas, and nuclear power?
Renewable
technologies are often less damaging to the climate and create fewer toxic
wastes than conventional energy sources. But meeting the world's total energy
demands in 2030 with renewable energy alone would take an estimated 3.8 million
wind turbines (each with twice the capacity of today's largest machines),
720,000 wave devices, 5,350 geothermal plants, 900 hydroelectric plants,
490,000 tidal turbines, 1.7 billion rooftop photovoltaic systems, 40,000 solar
photovoltaic plants, and 49,000 concentrated solar power systems. That's a
heckuva lot of neodymium.
In addition,
renewables generally have a much lower energy returned on energy invested
(EROEI), or energy profit ratio, than we have become accustomed to in the
hydrocarbon era. Since the achievable, and maintainable, level of socioeconomic
complexity is very closely tied to available energy supply, moving from high
EROEI energy source to much lower ones will have significant implications for
the level of complexity we can sustain. Exploiting low EROEI energy sources
(whether renewables or the unconventional fossil fuels left to us on the
downslope of Hubbert's curve) is often a highly complex, energy-intensive
activity.
As we have pointed
out before at TAE, it is highly doubtful whether low EROEI energy sources can
sustain the level of socioeconomic complexity required to produce them. What
allows us to maintain that complexity is high EROEI conventional fossil fuels -
our energy inheritance.
Power systems are
one of the most complex manifestations of our complex society, and therefore
likely to be among the most vulnerable aspects in a future which will be
contractionary, initially in economic terms, and later in terms of energy
supply. As we leave behind the era of cheap and readily available fossil fuels
with a high energy profit ratio, and far more of the energy we produce must be
reinvested in energy production, the surplus remaining to serve all society's
other purposes will be greatly reduced. Preserving power systems in their
current form for very much longer will be a very difficult task.
It is ironic then,
that much of the vision for exploiting renewable energy relies on expanding
power systems. In fact it involves greatly increasing their interconnectedness
and complexity in the process, for instance through the use of 'smart grid'
technologies, in order to compensate for the problems of intermittency and
non-dispatchability. These difficulties are frequently dismissed as inconsequential in
the envisioned future context of super grids and smart grids.
The goal of modern
power systems is to balance supply and demand in real time over a whole
AC grid, which is effectively a single enormous machine operating in synchrony.
North America, for instance, is served by only four grids - the east, the west,
Texas and Quebec. System operators, who have little or no control over demand,
rely on being able to control sources of supply in order to achieve the
necessary balance and maintain the stability of the system.
Power systems have
been designed on a central station model, with large-scale generation in
relatively few places and large flows of power carried over long distances to
where demand is located, via transmission and distribution networks. Generation
must come on and off at the instruction of system operators. Plants that run
continuously provide baseload, while other plants run only when demand is
higher, and some run only at relatively rare demand peaks. There must always be
excess capacity available to come on at a moment's notice to cover
eventualities. Flexibility varies between forms of generation, with inflexible
plants (like nuclear) better suited to baseload and more flexible ones (like
open-cycle gas plants) to load-following.
The temptation
when attempting to fit renewables into the central station model is to develop
them on a scale as similar as possible to that of traditional generating
stations, connecting relatively few large installations, in particularly
well-endowed locations, with distant demand via high voltage transmission.
Renewables are ideally smaller-scale and distributed - not a good match for a
central station model designed for one-way power flow from a few producers to
many consumers. Grid-connected distributed generation involves effectively running
power 'backwards' along low-voltage lines, in a way which often maximizes power
losses (because low voltage means high current, and losses are proportional to
the square of the current).
This is really an
abuse of the true potential of renewable power, which is to provide
small-scale, distributed supply directly adjacent to demand, as negative load.
Minimizing the infrastructure requirement maximizes the EROEI, which is
extremely important for low EROEI energy sources. It would also minimize the
grid-management headache renewable energy wheeled around the grid can give
power system operators. Nevertheless, most plans for renewable build-out are
very infrastructure-heavy, and therefore energy and capital intensive to
create.
Both wind and
solar are only available intermittently, and when that will be is only
probabilistically predictable. They are not dispatchable by system operators.
Neither matches the existing load profile in most places particularly well.
Other generation, or energy storage, must compensate for intermittency and
non-dispatchability with the flexibility necessary to balance supply and
demand. Hence, for a renewables-heavy power system to meet demand peaks, either
expensive excess capacity (which may stand idle for much of the time) or expensive
energy storage would generally be required. To some extent, extensive reliance
on power wheeling, in order to allow one region to compensate for another, can
help, but this is a substantial grid management challenge.
Little storage
currently exists in most places, although in locations where hydro is
plentiful, it can easily serve the purpose. Where there is little storage
potential, relatively inflexible existing plants may be required to
load-follow, which would involve cycling them up and down with the vagaries of
intermittent generation. This would greatly reduce their efficiency, and that
of the system as a whole, reducing, or even eliminating, the energy saving
providable by the intermittent renewables.
Not all renewables
are intermittent of course. Biomass and biogas can be dispatchable, and can
play a very useful role at an appropriate scale. EROEI will be relatively low
given the added complexity and energy input requirement of transporting and/or
processing fuel, and also installing, maintaining and replacing equipment such
as engines.
Biogas is best
viewed as a means to prevent high energy through-put by reclaiming energy from
high-energy waste streams, rather than as a primary energy source. This will be
useful for as long as high energy waste streams continue to exist, but as these
are characteristic of our energy-wasteful fossil fuel society, they cannot be
expected to be plentiful in an energy-constrained future. The alternative -
feeding anaerobic digesters with energy crops - is heavily dependent on very
energy intensive industrial agriculture, which translates into a very low
EROEI, and will not be possible in an energy-limited future scenario.
Smart grid
technology, large and small scale energy storage, smart metering with
time-of-day pricing for load-shifting, metering feedback for consumption
control (active instead of passive consumption), demand-based techniques such
as interruptible supply, and demand management programmes with incentives to
change consumption behaviour could all facilitate the power system
supply/demand balancing act. This would be much more complicated than
traditional grid management as it would involve many more simultaneously
variable quantities of all scales, on both the supply and demand sides, only
some of which are controllable. It would require time and money, both in large
quantities, and also a change of mindset towards the acceptability of
interruptible power supply. The latter is likely to be required in any case.
Greater complexity
implies greater risk of outages, and potentially more substantial impact of
outages as well, as one would expect structural dependency on power to increase
enormously under a smart-grid scenario. If many more of society's functions were
to be subsumed into the electrical system - transport (like electric cars) for
instance - as the techno-utopian model presumes, then dependency could not help
but be far more deeply entrenched. In this direction lie even larger technology
traps than we have already created.
In Europe, where
indigenous fossil fuel sources are largely depleted, there has been a concerted
move into renewables in a number of countries, notably Germany and Spain, since
the 1990s. The justification is generally climate change, but security of
supply plays a significant role. Avoiding energy dependence on Russia, and
other potentially unstable or unreliable suppliers, by developing whatever
domestic energy resources may exist, is an attractive prospect. Public policy
has directed large subsidies into the renewable energy sector in the
intervening years.
Feed-in tariffs,
offering premium prices for renewable power put on to the grid, were
introduced, with different tariffs offered for different technologies and
different project sizes, in order to incentivize construction and grid
connection of all sources and sizes of renewable power. In addition, in a
number of jurisdictions, grid access processes have been streamlined for
renewables, and renewable power has preferential access to the grid when the
intermittent energy source is available. Other power sources can be constrained
off if insufficient grid capacity is available.
The European Dash
for Off-Shore Wind - Germany
Recently emphasis
has been placed on developing large-scale off-shore wind resources in
countries, such as Germany and the UK, where these are available. The
advantages are that it is a stronger and more consistent resource than on-shore
wind, and that planning hurdles can be avoided. Germany, which has decided to
phase out nuclear power by 2022, has been particularly interested in taking
this route, and plans to build 10GW of off-shore wind installations by 2020 and
26GW by 2030. It has been more
challenging than expected, however, particularly in
relation to the exceptionally expensive grid connections and extensions
required to bring power from a different direction than the grid had been
designed for:
Germany’s power-transmission
companies have tabled plans to build four electricity Autobahns to link wind
turbines off the north coast with manufacturing centres in the south … Tennet,
Amprion, 50 Hertz and Transnet BW said that building 3,800km high-voltage
electricity lines - at a cost of around €20-billion - over the next decade was
possible if politicians and public rallied behind the so-called energy
transformation…
…In a first blueprint for the
government, the companies proposed 2,100km of direct-current power lines -
similar to those used for undersea links like that between the U.K. to the
European continent - to connect the North Sea and the Baltic coasts to the
south. On top of that, 1,700km of traditional alternating-current lines would
have to be built, they said. These would complement 1,400km of this type of
line already planned or being built - at a cost of €7-billion - under the
government’s decade-old network plan.
Since Ms. Merkel closed eight
of the country’s 17 nuclear reactors last summer and brought forward the
phase-out of the energy source to 2022 from 2036, her biggest headache has
proved the stability of the electricity network, which was designed to pipe
nuclear electricity from south to north, not renewable electricity from the
coast.
The cost and
financial risk associated with building off-shore grid connections is so high
that power companies are struggling to fund them. They are liable to wind farm developers if the latter are unable to sell
their electricity for want of a grid connection. Significant connection delays
are occurring, described by the German wind industry as "dramatically
problematic". Delays could potentially leave completed wind installations unable to
deliver power to the mainland, and worse, requiring fossil fuel to run
them in the
meantime:
The generation of electricity
from wind is usually a completely odorless affair. After all, the avoidance of
emissions is one of the unique charms of this particular energy source. But
when work is completed on the Nordsee Ost wind farm, some 30 kilometers (19
miles) north of the island of Helgoland in the North Sea, the sea air will be
filled with a strong smell of fumes: diesel fumes.
The reason is as simple as it
is surprising. The wind farm operator, German utility RWE, has to keep the
sensitive equipment -- the drives, hubs and rotor blades -- in constant motion,
and for now that requires diesel-powered generators. Because although the wind
farm will soon be ready to generate electricity, it won't be able to start
doing so because of a lack of infrastructure to transport the electricity to
the mainland and feed it into the grid. The necessary connections and cabling
won't be ready on time and the delay could last up to a year.
In other words, before Germany
can launch itself into the renewable energy era Environment Minister Norbert
Röttgen so frequently hails, the country must first burn massive amounts of
fossil fuels out in the middle of the North Sea -- a paradox as the country
embarks on its energy revolution.
What started out as a bit of a
joke - last December Der Spiegel noted how RWE's Nordsee Ost wind farm, far
from delivering clean energy, was burning diesel to keep its turbines in
working order - has rapidly turned serious. Siemens, the contractor for
Germany's offshore transformer stations, has booked almost €500 million in
charges, according to Dow Jones. RWE is set to lose more than €100 million at
Nordsee Ost. And E.ON's head of Climate and Renewables, Mike Winkel, is on
record as saying that no one, at E.ON or anywhere else, will be investing if
the network connection is uncertain.
Sales of offshore wind
turbines collapsed in the first half, a sign the power industry and its
financiers are struggling to meet the ambitions of leaders from Angela Merkel
in Germany to Britain’s David Cameron. One unconditional order was made, for
216 megawatts, 75 percent less than in the same period of 2011 and the worst start
for a year since at least 2009, according to preliminary data from MAKE
Consulting, a Danish wind-energy adviser…
…"The industry in Germany
has been frozen for a few months because of grid issues," said Jerome
Guillet, the Paris-based managing director of Green Giraffe Energy Bankers,
which advises on offshore wind projects…
…Grid operators and their
suppliers in Germany underestimated the challenges of connecting projects,
Hermann Albers, head of the BWE wind-energy lobby, said in an interview earlier
this year. Albers expects Germany won’t reach its 10- gigawatt goal by 2020,
installing not more than 6 gigawatts by then.
Shares of Vestas, the world’s
biggest wind turbine maker, have fallen 80 percent in the past year,
underperforming the 56 percent decline in the Bloomberg Industries Wind Turbine
Pure- Play Index (BIWINDP) tracking 14 companies in the industry. Siemens,
which with Vestas dominates the offshore business, dropped 27 percent over the
same period.
In order to
mitigate the risk and prevent the wind programme from stalling, German
power consumers are to be on the hook to compensate wind farm
owners for the cost of grid connection delays:
The draft bill endorsed by
Chancellor Angela Merkel’s Cabinet of Ministers would make power consumers pay
as much as 0.25 euro cents a kilowatt-hour if wind farm owners can’t sell their
electricity because of delays in connecting turbines to the grid. The plan is
aimed at raising investments after utilities threatened to halt projects and
grid operators struggled to raise financing and complete projects on time.
The cost of
consumer surcharges to maintain the 'Energiewende' (the shift to
renewable energy) appears set to become an
election issue in Germany:
Germany's status as a global
leader in clean energy technology has often been attributed to the population's
willingness to pay a surcharge on power bills. But now that surcharge for
renewable energy is to rise to 5.5 cents per kilowatt hour (kWh) in 2013 from
3.6 in 2012. For an average three-person household using 3,500 kWh a year, the
47 percent increase amounts to an extra €185 on the annual electricity bill.
"For many households, the
increased surcharge is affordable," energy expert Claudia Kemfert from the
German Institute for Economic Research told AFP. "But the costs should not
be carried solely by private households." Experts have pointed out that
with many energy-intensive major industries either exempt from the tax or
paying a reduced rate, the costs of the energy revolution are unfairly
distributed.
Meanwhile, the German Federal
Association of Renewable Energies (BEE) maintains that not even half the
surcharge goes into subsidies for green energy. "The rest is plowed into
industry, compensating for falling prices on the stock markets and low revenue
from the surcharge this year," BEE President Dietmar Schütz told the
influential weekly newspaper Die Zeit.
Grid instability is
of increasing concern in Germany as a result of the rapid shift in the type and
location of power generated. The closure of nuclear plants in the south
combined with the addition of wind power in the north has aggravated
north-south transmission constraints, which are only marginally mitigated by
photovoltaic installations in Bavaria.
With a steep growth of power
generation from photovoltaic (PV) and wind power and with 8 GW base load
capacity suddenly taken out of service the situation in Germany has developed
into a nightmare for system operators. The peak demand in Germany is about 80
GW. The variations of wind and PV generation create situations which require
long distance transport of huge amounts of power. The grid capacity is far from
sufficient for these transports.
As the German grid
is effectively the backbone of the European grid, and faults can propagate very
quickly,instability is not
merely a German problem. Instability can result from a combination of factors, including
electricity imports and exports and the availability of fuel for conventional
generation. Germany narrowly avoided, causing an international problem in February 2012 due to power flows
between Germany and France and a shortage of fuel for gas-fired generation in
southern Germany.
Many new coal and
gas-fired plants are to be built in the south in order to address the problem. Old coal plants are likely to have their
lives extended and emission limits loosened in order to maintain needed
generation capacity. Thermal plants are being effectively
forced to operate uneconomically, as they must ramp up and
down in order to make way for the renewable power that has priority access to
the grid. Operating in this manner consumes additional fuel and produces
accelerated wear and tear on equipment. Price volatility is increased, making
management decision much more difficult.
On days when there is a lot of
wind, the sun is shining and consumption is low, market prices on the power
exchange can sometimes drop to zero. There is even such a thing as negative
costs, when, for example, Austrian pumped-storage hydroelectric plants are paid
to take the excess electricity from Germany….
….Germany unfortunately
doesn't have enough storage capacity to offset the fluctuation. And, ironically,
the energy turnaround has made it very difficult to operate storage plants at a
profit -- a predicament similar to that faced by conventional power plants. In
the past, storage plant operators used electricity purchased at low nighttime
rates to pump water into their reservoirs. At noon, when the price of
electricity was high, they released the water to run their turbine. It was a
profitable business.
But now prices are sometimes
high at night and low at noon, which makes running the plants is no longer
profitable. The Swedish utility giant Vattenfall has announced plans to shut
down its pumped-storage hydroelectric power station in Niederwartha, in the
eastern state of Saxony, in three years. A much-needed renovation would be too
expensive. But what is the alternative?
German industry is
already taking precautionary
measures as the risk of power interruptions is rising rapidly. Even momentary
outages due to minor imbalances can result in equipment damage and high costs,
and it is unclear who should shoulder the losses:
It was 3 a.m. on a Wednesday
when the machines suddenly ground to a halt at Hydro Aluminium in Hamburg. The
rolling mill's highly sensitive monitor stopped production so abruptly that the
aluminum belts snagged. They hit the machines and destroyed a piece of the
mill. The reason: The voltage off the electricity grid weakened for just a
millisecond.
Workers had to free
half-finished aluminum rolls from the machines, and several hours passed before
they could be restarted. The damage to the machines cost some €10,000
($12,300). In the following three weeks, the voltage weakened at the Hamburg
factory two more times, each time for a fraction of second. Since the machines
were on a production break both times, there was no damage. Still, the company
invested €150,000 to set up its own emergency power supply, using batteries, to
protect itself from future damages….
….A survey of members of the
Association of German Industrial Energy Companies (VIK) revealed that the
number of short interruptions to the German electricity grid has grown by 29
percent in the past three years. Over the same time period, the number of
service failures has grown 31 percent, and almost half of those failures have
led to production stoppages. Damages have ranged between €10,000 and hundreds
of thousands of euros, according to company information.
Producers of batteries and
other emergency energy sources are benefiting most from the disruptions.
"Our sales are already 13 percent above where they were last year,"
said Manfred Rieks, the head of Jovyatlas, which specializes in industrial energy
systems. Sales at APC, one of the world's leading makers of emergency power
technologies, have grown 10 percent a year over the last three years.
"Every company -- from small businesses to companies listed on the DAX --
are buying one from us," said Michael Schumacher, APC's lead systems
engineer, referring to Germany's blue chip stock index….
….Although the moves being
made by companies are helpful, they don't solve all the problems. It's still
unclear who is liable when emergency measures fail. So far, grid operators have
only been required to shoulder up to €5,000 of related company losses. Hydro
Aluminum is demanding that its grid operator pay for incidents in excess of
that amount. "The damages have already reached such a magnitude that we
won't be able to bear them in the long term," the company says.
Given the circumstances, Hydro
Aluminum is asking the Federal Network Agency, whose responsibilities include
regulating the electricity market, to set up a clearing house to mediate
conflicts between companies and grid operators. Like a court, it would decide
whether the company or the grid operator is financially liable for material
damages and production losses.
For companies like Hydro
Aluminium, though, that process will probably take too long. It would just be
too expensive for the company to build stand-alone emergency power supplies for
all of its nine production sites in Germany, and its losses will be immense if
a solution to the liability question cannot be found soon. "In the long
run, if we can't guarantee a stable grid, companies will leave (Germany),"
says Pfeiffer, the CDU energy expert. "As a center of industry, we can't
afford that."
The expectation of
uninterruptible power, and the extreme dependency it creates, is the problem.
Consumers do not feel they should be required to provide resilience with
expensive back up options, yet this is increasingly likely in many, if not
most, jurisdictions in the coming years. In emerging markets, it is common for
power supply to be intermittent, and for fall-back arrangements to be
necessary. We recently covered this situation in detail at The Automatic Earth,
using India as a case study.
The European Dash
for Off-Shore Wind - The United Kingdom
The UK's Renewable
Energy Roadmap has plans on a similar scale to Germany, proposing 18GW of wind
capacity by 2020 (or some 30,000 turbines). Scotland is particularly keen to
emulate, and surpass, Denmark, which generates 30% of its power from wind.
Denmark is able to do this because it does not operate in isolation. It is
effectively twinned with with Scandinavian hydro power, which provides the
energy storage component, albeit at a price. On windy days, Denmark can export
its surplus power to its neighbours, which have large enough grids to absorb
power surges, but it does so at a low price. When the wind is not blowing,
Denmark imports power at a high price. Ownership of the storage component makes
a significant difference to the economics.
Unfortunately for
Scotland, it currently has no access to a comparable hydro resource, either
within it own borders or in the English market where it would be selling
surplus power. As things stand, if wind power were developed at the proposed
scale, it would have to be twinned with gas plants, but North Sea gas is
already in sharp decline. For this reason, Britain
and Scandinavia are planning to build NorthConnect, which would join Britain and
Norway in the world's longest subsea interconnector (900km) at an estimated
cost of £1 billion (€1.3 billion), supposedly by 2020. This would follow on
from the BritNed interconnector linking Britain and the Netherlands as of 2011
- a 260km line developed at a cost of £500 million (US $807.9 million).
"Using state-of-the-art
technology, the interconnector will give the UK the fast response we will need
to help support the management of intermittent wind energy with clean hydro
power from Norway," Steven Holliday of the National Grid says. "It
would also enable us to export renewable energy when we are in surplus. At this
very moment a seabed survey is underway in the North Sea, looking at the best
way to design and install the cable, which would run through very deep
water."
If the project
were completed as projected, it would allow the British, like the Danes, to
subsidize the Norwegian power system, as the economic advantage lies with the
owner of the storage capacity. The odds of completing such an ambitious project
on time, however, and within budget, have to be regarded as low even if we were
not facing financial crisis. Given that we are, those odds fall precipitously.
The likelihood of having to twin whatever off shore wind is actually built with
gas therefore increases. UK gas production is falling and storage is limited.
The shale gas
reserves touted to provide affordable gas in the future amount to a mirage,
thanks to the very low EROEI and high capital requirement. The UK is facing a
future as a gas importer at the wrong end of a long pipeline from Russia. This
is not a secure position to be in, especially given the UK's gas dependence
following the 1990s dash for gas. Developing wind power will make little
difference if there is no flexible generating plant to provide back up.
The cost of
building the turbines, their grid connections, back up gas plants and
additional gas storage would be over ten times the amount
required to build a fossil fuel alternative. According to a recent report
to Britain's Department of Energy and Climate Change, the cost of the grid
connection alone would be greater than the entire cost o the alternative option.
The cost would
have to be borne upfront, while the payback would come over a long period of
time. This has significant implications for the net
present value, and 'effective EROEI', of wind energy, especially in a scenario
where the applicable discount rate is likely to skyrocket due to growing
instability:
When introducing a discount
rate of 5%, which can be considered very low both in non-financial and in
financial realms, and represents societies with high expectations for long-term
stability (such as most OECD countries), the EROI of 19.2 of this particular
temporal shape of future inputs and outputs is reduced to and 'effective' EROI
of 12.4 after discounting.
But discount rates are not the
same in all situations and societal circumstances. Investing into the same wind
power plant in a relatively unstable environment, for example in an emerging
economy, where discount rates of 15% are more likely, total EROI for this
technology is reduced to a very low value of 6.4, nearly 1/3 of the original
non-discounted value.
Currently stable
states are far more likely to resemble developing countries in a future of
upheaval.
The investment
choice having to be made at a time when financial crisis is beginning to bite,
thanks to Britain's disastrous financial position as the ponzi fraud capital of
the world. While wind is currently the preferred option, it is very likely the
decision will be revised over the next few years, with relatively few turbines
ever having been built, and perhaps even fewer actually connected to the grid.
Neither the turbines nor the gas alternative, if there turns out to be
sufficient capital to build either one, would last more than perhaps thirty
years, so both represent medium term solutions only.
The CEO of the
National Grid, in an interview last year with the Today Programme on BBC Radio
4, informed listeners that they would have to get used to intermittent power
supply. No one seemed to be paying attention. It is interesting to note that
under the old nationalized and vertically integrated CEGB in Britain, there was
a responsibility to keep the lights on. When the CEGB was broken up, the
National Grid inherited only the responsibility to balance supply and demand.
Millions of households are at
risk of power black-outs within three years because coal stations are being
replaced with wind farms, the energy watchdog has said. In its strongest ever
warning, Ofgem said there may have to be "controlled disconnections"
of homes and businesses in the middle of this decade because Britain has not
done enough to make sure it has enough electricity. The regulator's new
analysis reveals the risk of power-cuts is almost 50 per cent in 2015 if a very
cold winter causes high demand for electricity. Ofgem believes the lack of
spare power generation "could lead to higher bills", which are already
at record high of £1,300 per year.
Whitehall sources said there
is very little the Government can now do to avoid the risk of black-outs in the
middle of the decade. It will take around three or four years to build any new
gas plants and it would be very difficult to build more coal plants under
European rules.
Alistair Buchanan, chief
executive of Ofgem, said Britain's energy system is struggling under the
pressure of the "unprecedented challenges" of a global financial
crisis, tough environmental targets and the closure of ageing power stations.
Currently, Britain has 14 per cent more power plant capacity than is strictly
necessary to keep the lights on. However, this crucial buffer will fall to just
four per cent by the middle of the decade. Its report shows the risk of
power-cuts begins to increase sharply from next year onwards.
Given the time
scale for changes in generation and in infrastructure, preparations based on
joined-up thinking have to be made well in advance of any looming crunch
points. We are essentially experimenting with changes in a sporadic and
haphazard fashion, and finding we are running risks we had not anticipated due
to our failure
to understand infrastructure requirements and dependencies. The risks are building
rapidly, and it may already be too late to avoid unpleasant consequences.
Essentially, what appears to
be happening across Europe is that nations are falling in love with offshore
wind, permitting grand projects far out to sea - and then belatedly realizing
that it is not so easy to get the energy back to shore. It is a bit like
building hotels in the desert and forgetting to put the roads in. How come some
of the world's most advanced and industrialized countries are committing such a
colossal oversight?
The problem is one of mindset.
Ever since the first days of electricity, there has really only been one model
for energy distribution. You build a generating center, more or less wherever
you want it, and then create outbound distribution links to whoever needs
power. This hub-and-spoke model is deeply ingrained in every aspect of energy
distribution, from how utilities and grid operators work to the way regulators
and policy makers think. But for renewable energy, it does not work.
You cannot just put a wind
farm wherever you want. In fact, in the case of offshore wind, the locations
you have could hardly be more inconvenient from an energy transport point of
view. That means grid connections almost need to come first in the thinking
about offshore wind. How expensive will they be? How feasible? How can the
costs and installation timeframes be reduced?
These questions are fairly
obvious, and are nothing new. One renewable energy veteran remembers speaking
to an oil and gas representative a few years ago, who said that if we were
really serious about renewables then the first thing we would have to change is
the grid. Needless to say, that has not happened. If the issue is not addressed
soon then every offshore market runs the risk of having an experience like
Germany's.
A European
Supergrid?
A European supergrid, with many cross-border
transmission lines, has long been a European goal. The idea is to share power
as widely as possible, evening out disparities in supply and demand across Europe.
It is intended to be particularly applicable in terms of evening out the
effects of intermittent renewable energy, notably off-shore wind, which could
be linked with distant storage capacity. The vision even includes integrating
Icelandic geothermal power.
Initial
steps are already being contemplated with regard to integrating
off-shore wind in north-west Europe:
The North Sea Grid Initiative
consists of Germany, Denmark, Norway, Sweden, Belgium, France, Luxembourg, and
the United Kingdom. These countries signed a memorandum of understanding back
in 2011 to help spur offshore wind development and tap into the ideal types of
renewable energy in different parts of Europe within the next decade. More than
100 gigawatts (GW) of offshore wind are in the development or planning phases
throughout Europe.
Pooling grid
connection costs between countries by linking wind farms is projected to bring costs down substantially. Interconnectors are
extremely expensive, hence the incentive to reduce costs wherever possible.
To make offshore wind work in
northwest Europe, policymakers may have to adopt even more ambitious plans for
the technology, gathering individual projects into hubs further offshore to
capture more wind and pool connection costs, in a potentially high risk
strategy.
The approach could shave 17
percent off an estimated 83 billion euros to connect 126,000 MW of offshore
wind by 2030, according to a report produced last year by renewable energy
lobby groups, consultancies and university research departments,
"OffshoreGrid: Offshore Electricity Infrastructure in Europe".
Groups such as Friends of the Supergrid envisage an
exceptionally ambitious scaling up of power system integration, with a view to
transitioning to an electrified economy by 2050:
"Supergrid" is the
future electricity system that will enable Europe to undertake a once-off
transition to sustainability. The concept of Supergrid was first launched a
decade ago and it is defined as "a pan-European transmission network
facilitating the integration of large-scale renewable energy and the balancing
and transportation of electricity, with the aim of improving the European
market".
Supergrid is not an extension
of existing or planned point to point HVDC interconnectors between particular
EU states. Even the aggregation of these schemes will not provide the network
that will be needed to carry marine renewable power generated in our Northern
seas to the load centres of central Europe. Supergrid is a new idea. Unlike
point to point connections, Supergrid will involve the creation of
"Supernodes" to collect, integrate and route the renewable energy to
the best available markets. Supergrid is a trading tool which will enhance the
security of supply of all the countries of the EU.
The stated goal is
to a achieve a transition to sustainability, while providing for a low-carbon,
high-growth scenario. This is an obvious contradiction, given that high growth
not sustainable by definition. The plan appears to be the pinnacle of
techno-utopia, and a clear example of fashionable energy fantasy. Unfortunately
unrealistic dreams can be sold as safe
long term investments:
Despite these uncertainties,
others believe the supergrid is a smart investment. ‘There are pension funds
and many investors looking for safe returns,’ Julian Scola, spokesman for the
European Wind Energy Association in Brussels, said to the New York Times.
‘Electricity infrastructure, which is a regulated business with regulated
returns, ought to and does provide very safe and very attractive investment.’
Pension funds,
while they still exist in their current form, could be lured into backing
something too good to be true, as happened so extensively during the initial
phase of the credit crunch. Such investments are highly unlikely to pay off.
The Broader
European Energy Context
In addition to the
problems with off shore wind and grids, knock on effects are anticipated in other
energy markets with greater reliance on wind power:
There will be an increase in
gas-price volatility across Europe as markets with more wind capacity, such as
the U.K., Spain, France, Germany and the Netherlands, are linked to those with
less, James Cox and Martin Winter, consultants at Poyry in Oxford, England,
said in a research report published today. Wind will be the main source of
irregular supply, as output can still fall to zero no matter how much capacity
is installed, while solar continues to produce even under cloud cover.
"If it’s cold and still,
it’s much more extreme for the gas network because you get the heating demand
response to the cold weather and the power response to the still weather,"
Cox.
The European Union has reached
100 gigawatts of installed wind-energy capacity, equivalent to the output of 62
coal-fired power stations, the European Wind Energy Association said Sept. 27.
In the EU, about 5 percent of electricity came from wind last year.
The winners in this scenario
will be owners of so-called fast-cycling gas storage, which can respond rapidly
to falling wind generation, and traders who can take advantage of diverging
prices at Europe’s trading hubs as weather patterns vary by geography, Cox
said.
Once again,
ownership of key energy storage components is critical. In our financialized
world, it is also small wonder that traders playing an arbitrage game would be
expected to enjoy great opportunities for gain. This dynamic has already
threatened power supplies and is likely to do so
repeatedly:
Germany’s electricity grid
came to the brink of blackout last week – not because of the cold, but because
traders illegally manipulated the system. They tapped emergency supplies,
saving money but putting the system at risk of collapse.
Normal supply is maintained by
the dealers acting as go-betweens for the industrial and domestic electricity
consumers and the generators so that the latter know how much to supply. The
Berliner Zeitung said the dealers were legally obliged to continually order
enough electricity to cover what their customers need. But this was not done
earlier this month, according to the regulator’s letter. Instead dealers sent
estimates which were far too low, meaning the normal supply was almost
completely exhausted. Several industry insiders told the Frankfurter Rundschau
daily the tactic was deliberately adopted to maximise profits.
The dealers systematically
reduced the amount they ordered for their customers, avoiding the expensive
supply and forcing the system to open up its emergency supply – the price for
which is fixed at €100 a Megawatt hour. This is generally considered very
expensive – but compared to what else was on offer at the time, it represented
huge savings – yet put the entire electricity supply system on emergency footing
for no reason.
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