Oct 252013
 
 October 25, 2013  Posted by at 9:45 am Energy


Esther Bubley “BusStop” September 1943

“Idlers in front of the Greyhound bus stop between Memphis and Chattanooga”

In the first part of this series,, I talked about rising energy prices in the UK, and the government’s plans to increase supply with yet to be built nuclear plants, for which deals are in the process of concluding with construction largely to be done by a French consortium led by EDF, and financing coming from a range of Chinese investors, who will, if things go according to plan, end up owning the plants outright, with prices, at twice the current rate, guaranteed by the British nation (taxpayers) until 2058. I also touched on the underlying – and growing – energy problems, that I think far too few people are aware of:

Of course, it’s been clear for a long time that Britain would face, at some point in the not too distant future, very serious energy issues. It has very little left in the way of domestic energy resources, and it’s situated at the very end of a very long pipeline that delivers Russian gas to Europe.

 

I was lucky to receive an email from good friend and former co-contributor at the Oil Drum, Euan Mearns, entitled The changing face of UK electricity supply, which contains a bunch of graphs that make the problem more visible.

 

The first one shows the history of UK energy exports and imports. No doubt the depletion of their North Sea fields has hit the nation like a hammer.

 

 


Euan: This chart, provided by DECC, shows the swing from £9 billion energy surplus to £21 billion energy deficit in only 12 years. To put this in context, the UK current account deficit for 2012 was £59.8 billion. About one third of this is down to spiralling energy imports.

The second depicts UK primary energy. Do note the dramatic production drop from 2000-2010:

 


Euan: The history of UK primary energy production and consumption. The yawning gap that is opening up between production and consumption has resulted in the huge trade deficit shown in the first graph.

And here’s gas imports taking over from domestic production:

 


Euan: This chart shows the decline of indigenous UK gas production (blue) replaced by imports (red and orange). Exports in recent years are effectively imported gas passing through the UK distribution system to destinations in Europe and Ireland. Gas is injected to storage during the summer and withdrawn during the winter.

Euan also provides some comments, from which I picked a choice few (for more, do read his entire article):

 

Balancing Mechanism (BM) reports as recorded by Gridwatch provide insight to exactly how the UK grid is coping with and responding to the ever growing amount of intermittent wind energy.

• CCGT (Combined Cycle Gas Turbines) bears the brunt of load balancing in the UK for both diurnal demand and wind variability.

• A consequence of this is that CCGT is losing market share to wind whilst providing an ever larger and more valuable load balancing service.

• Reduction in coal generating capacity meant that coal fired power was running at capacity for periods last winter.

• Nuclear was also running at capacity for periods during the winter months.

• Continued growth of wind is going to squeeze CCGT out of the system – which is a consequence of the 2008 Climate Change Act. At some point CCGT generation may become unprofitable, but since it also provides essential grid balancing service, the industry may have to transfer to state ownership.

It is somewhat ironical that gas, which produces less CO2 per GWh than coal, is being squeezed out of the UK generating mix. With UK indigenous gas production in decline there is an inevitability that we should transition away from this transient windfall from the North Sea. The Climate Change Act is also specifically designed to squeeze out fossil fuel power generation. And so government must also shoulder part of the blame for the inevitable demise of our legacy power system.

I object to wind farms springing up all over the countryside as much as the next person. To be honest I object to some a lot more than others. But a choice needs to be made between having electricity or a return to a subsistence society. If we want to have electricity then we have to put up with the infrastructure that generates it. Personally I quite like having hospitals and schools.

 

In some ways, the system is already bursting at the seams. Coal and nuclear need to run at near capacity as gas is being forced out, all at the behest of the UK Climate Change Act which dictates, like so many other similar initiatives in other countries, that these sources are to be phased out. Because of load balancing, additional wind or solar power will only be able to make up for part of this.

And Euan may say that “government must also shoulder part of the blame for the inevitable demise of our legacy power system.”, but what’s a government to do? Well, at least in the UK, it’s made its choice clear: join the mad dash for more, come what may. Because energy is power, and they are where they are because they love the power game. Whether that is the best choice for the population is a different story altogether.

As I said in part 1:

 

“[Cameron] sees, for instance, great growth potential in the melting Arctic. So much so that I strongly suspect if you asked him in private, he would be more than glad to help speed up the process a little …”

 

Well, thar he goes:

 

UK aims to become hub for Arctic oil exploration

 

The government wants the UK to be a global centre of expertise in opening up the Arctic to exploration by oil and gas companies, promoting London as a hub of business services for the burgeoning exploitation of the polar regions, according to a Foreign Office strategy published on Thursday. The green light is likely to enrage conservationists, as a group of Greenpeace activists and journalists have been imprisoned in Russia after protesting against fossil fuel exploration in the region.

But ministers said the exploitation of the Arctic would have to be carried on in a responsible manner, minimising any threats to the “unique and fragile natural environment”. The UK does not have any territory in the Arctic, and so no formal role in negotiating international policy within the Arctic Council, but is regarded as an interested party because some of its northernmost reach is close to the region.

In the government’s Arctic framework, set out for the first time on Thursday, the Foreign Office pledged to “facilitate responsible business activity in the region by UK companies. The UK government will promote the UK as a centre of commercial expertise with direct relevance to many industries that are growing in the Arctic.”

That is likely to mean the construction of oil and gas platforms, in which the UK has decades of expertise from North Sea oil exploration, as well as lucrative ancillary services such as financial and legal advice, and shipping services as melting ice opens the region to transport. [..]

Mark Simmonds, minister for the Arctic at the Foreign Office, said: “We are the Arctic’s nearest neighbour and we have long-standing environmental and commercial interest there. Our climate, migrating birds, fishing and shipping industry, and energy needs are all reasons why what happens in the Arctic is of vital interest to us.”

 

That must be the priceless remark of the week: “We are the Arctic’s nearest neighbour” . What’s that, anything for a buck?! Ever looked at a map? Moreover, will anyone care when things get serious? And will anyone care about the environmental issues, or will it be all about the buck?

 

Of course, Cameron wouldn’t be PM if he didn’t try and get a deal with Denmark, which everybody thinks is a power miracle with electricity to spare from its wind turbines.

 

UK, Denmark to cooperate on subsea electricity link

 

Britain could get access to Denmark’s big reserves of wind power after grid operators in both countries agreed on Thursday to co-operate on building a power link that could supply up to 1,400 MW of electricity. An interconnector would be part of wider plan by Britain’s National Grid to diversify energy supplies by hooking up its electricity network with low carbon sources of power from Belgium, Iceland and Norway.

France, Ireland and the Netherlands already supply Britain with electricity through subsea cables. “The interconnector could unlock significant economic benefits for both countries in helping to maximise the potential of both offshore and onshore wind, add to security of supply and enable a competitive market,” National Grid and Denmark’s state-owned Energinet.dk said in a joint statement.

The two companies said they would look at possible routes and landing sites, budgets and permitting before making a decision on whether to proceed with the project. A National Grid spokeswoman declined to provide an estimate of the cost or capacity of a trans-North Sea power link to Denmark, but added that no more than 1,400 MW of electricity could be transmitted in either direction.

Denmark, a major producer of wind power, already exports electricity to Norway, Sweden and Germany, and may build a link with the Netherlands. Interconnectors are increasingly important in integrating Europe’s electricity markets as they allow excess production in one country, for example from wind farms, to flow easily to a neighbouring country that needs it. But some of Britain’s neighbours say proposed power links might not be economically viable because of energy market reforms. The UK government wants to include a so-called capacity mechanism that pays standby power facilities for producing extra electricity when required.

 

There’s far more to this than meets the eye. Denmark’s wind industry is not nearly as glamorous as it’s made out to be. No grid system can realistically allow for more than some 15-20% of its capacity to come from intermittent sources like wind and solar (again, because of load balancing), which means Denmark relies to a large extent on imported electricity from French nukes and other neighboring countries’ oil and gas plants if it wants to have a working electricity grid. It also means that Denmark can only effectively export power to Britain intermittently, since it needs the “dirty power” it imports to keep its national grid alive

And then, if and when Denmark’s neighbors start producing increasing amounts of energy from their own intermittent sources, and they all have big plans to do so, Denmark looks set to run into serious trouble. So do other countries, like Germany, with its vast array of green energy plans, and its decision to close down all its nuclear plants. Or do they maybe think they’re all going to be powered by Iceland’s hot water springs?

Unless something like what we see in the following article is successfully built. But that may not be easy (and for good reason), since there are still plenty people left in Europe who, first, like their countries’ independence, and second, remember Enron, and this quote from the article has Enron written all over it: “liberate European energy policy from the squalor of national constraints”. In essence, the promise of green energy depends on every country giving up control over its own power grid, so the kinds of power generation some countries say they no longer want, either because it’s nuclear or because of CO2 emissions, can be executed in countries that have less scruples. You can’t run a grid without sufficient baseload, and you don’t get baseload from wind or solar.

But what do we call that? “A Vision for Fueling Europe on Renewables”. Yeah, sure. Looks a lot to me like a Brussels power play for power generation. And what is Britain going to do when it wants to leave the EU? Leave the Supra European Grid as well? Then again, does it have a choice left even now? Energy truly is a power game, and its lack of resources will cost the UK its political independence, and UK citizens a lot of money to keep their homes warm.

 

Expanding the Grid: A Vision for Fueling Europe on Renewables

 

Until recently, European Energy Commissioner Günther Oettinger had to rely entirely on the power of his words to push through his policies. “The internal market is being ruined,” he said in reference to the Energiewende, Germany’s push to abandon nuclear energy and promote renewable sources. Still, he was unable to intervene.

That may change on Monday (Oct 14), as Oettinger presents a list of 200 infrastructure projects that he sees as crucial for Europe’s future energy supply For the first time, he now has real power — the power of money. He intends to spend a total of €5.8 billion ($7.9 billion) to promote the cross-border construction of new power lines, energy storage facilities and gas pipelines — provided, of course, the EU Parliament and EU Council don’t object.

 

Obviously, “new power lines, energy storage facilities and gas pipelines” don’t increase Europe’s future energy supply. They make it easier to send power across the continent, that’s true. So Germany can close its nuclear plants, buy electricity from France’s nuclear plants and appear nice and green by building wind and solar.

 

The former governor of the southern German state of Baden-Württemberg hopes to use this money to liberate European energy policy from the squalor of national constraints and, as an added bonus, help secure the German Energiewende. “This is a huge step forward for Europe,” he says.

It would also be a success for him personally. For the first time, a European energy commissioner can personally steer policies now that over €200 billion will have to be invested in Europe’s energy networks by the year 2020, according to EU forecasts.

The key eligibility criterion for Oettinger’s program is that at least two countries should always benefit from the new power lines. This would hopefully free some countries, like Ireland and the Baltic republics, from their general energy policy isolation. Oettinger’s list — a copy of which has been obtained by SPIEGEL — reveals that the EU has painstakingly ensured that each of the 28 EU countries receives its share of the bonanza from Brussels.

The proposed measures are highly tempting. For instance, it has been suggested that projects should benefit from low-cost loans and construction subsidies amounting to up to 75% of the investment sums. For those ventures where the risks and/or costs are too high for a private grid operator, the EU is prepared to help out with large subsidies.

 

Now, these wouldn’t be loans and subsidies guaranteed by taxpayers and meant to send at the power companies that already generate billions a year in profits, would they, only so these companies can generate even more profit?

 

Germany benefits from 22 large-scale projects. Oettinger wants to remove bottlenecks that have arisen in Germany as a result of the push to expand renewable energies. The list of projects slated to receive funding includes new power highways intended to transport surplus electricity from the wind turbines in northern Germany to the consumer centers of the south.

At the top of Oettinger’s list are high-voltage power lines for direct current, for example, between Wilster in northern Germany and Grafenrheinfeld in central Germany. Starting in early 2014, grid operators like Tennet and Amprion can apply for low-interest loans from the European Investment Bank. In addition to power lines, the list includes some 100 gas projects across Europe.

Although the majority of these projects were already part of Germany’s Federal Network Agency’s development plan, the driving idea behind the EU’s initiative is different: It seeks to improve Germany’s network with its neighbors.

One of the long-term goals is to create a North Sea electricity ring main. This would provide an ideal way of tapping into the reserves of other countries when there doesn’t happen to be enough wind to generate electricity. Oettinger sees it as an anachronism that every country maintains its own conventional gas and coal-fired plants for occasions when there is very little wind or sun. “Consumers ultimately have to pay a high price for this,” Oettinger argues.

But it’s not just unresolved financing issues that have been holding up plans to expand the power network. Many projects can’t make any headway because numerous citizens’ initiatives are blocking things like high-voltage transmission lines.

The EU has also taken a brash course on this front: The proposal would make it possible for the 200 top projects in Europe to receive a construction permit within three and a half years — with only one court that would hear the objections of project opponents.

 

That looks like a surefire way to kill protests. I guess you can’t go worry too much about democracy when power, both electrical and political, is at stake, can you?

 

Only time will tell whether such an approach actually works on the ground. “It took over 30 years before a power line between France and Spain could be built,” recalls an expert on the EU Commission. Former Italian Prime Minister Mario Monti finally had to intervene and mediate the conflict. He was successful because he used large amounts of money from Brussels to ensure that the transmission lines disappeared underground in some places.

In Germany there are also protests against virtually every major project of the Energiewende. For instance, the EU list includes the Riedl pumped-storage power plant near the southern German city of Passau. For years, Donaukraftwerk Jochenstein AG has proposed the construction of a colossal reservoir above the Danube Valley for €350 million. But conservationists object to the plan because they say it would threaten the upper Danube Valley.

Similar conflicts rage in many places in the Alpine region, where the EU plans specify the construction of new reservoirs for the Energiewende. Now Brussels hopes to accelerate the approval process here, too — using an approach that always works: money.

 

They’re not even really trying to hide it, are they? What it will all lead to is big battles, take-overs and mergers until there are just a handful of powerful power behemoths left in Europe, who can dictate to both people and to their governments what they want done. And by the looks of it, there’s no guarantee that even the behemoths will be in European hands, not with China owning 100% of British nuclear plants, and Russia having what verges on a monopoly for gas supply to the entire continent.

 

Talking about the power of money, guess who thinks both the Danish and the Supra European plans will succeed?

 

Goldman Sachs Buys $1.46 Billion Stake in Denmark’s Dong Energy

 

Goldman Sachs Group Inc. will buy an 8 billion-krone ($1.46 billion) stake in Dong Energy A/S, Denmark’s largest utility, which is shoring up its balance sheet after losing money on failed natural gas bets.

The purchase will give New York-based Goldman a 19% stake in Dong, which is controlled by the government, the utility said late yesterday. Danish pension funds ATP and PFA will pay 2.2 billion kroner and 800 million kroner to buy stakes of about 5% and 2%, respectively.

Denmark’s government, which pulled a planned initial public offering of Dong in 2008, said in February it will sell a stake in the Skaerbaek, Denmark-based company as writedowns soared. [..] Dong is the world’s largest operator of offshore wind turbine parks. The company also explores for oil and natural gas in the North Sea.

Dong is selling shares as part of a financial restructuring announced in February to cut costs, reduce debt and bolster investments in oil and gas exploration as well as wind farms. The plan includes cutting costs by 20% and selling assets to raise 10 billion kroner.

 

That puts the Danish power miracle in a different light, doesn’t it? They are as desperate for oil and gas as everyone else, even as they already produce more wind power than they can possibly use themselves. And they’re losing lots of money in the process. Some miracle.

 

Cameron, meanwhile, has one more trick upon his sleeve:

 

U.K. Plans to Increase Solar Power Eight-Fold by 2020

 

Energy Minister Greg Barker said the U.K. can multiply its capacity to produce solar power eight-fold by 2020 in an effort to reduce reliance on fossil fuels.

Barker said he’s consulting with companies about how the government can achieve its forecast of having 10 gigawatts of solar power within the next decade and thinks 20 gigawatts is achievable, up from 2.4 gigawatts at the end of June. In Birmingham, he said he will deliver a strategy for solar power in the spring of 2014 after assessing industry views.

“I believe we can go faster and further,” Barker said in a 38-page solar power strategy document today. “Along with many in the industry, I think that up to 20 gigawatts of deployed solar is not only desirable but also potentially achievable within a decade.”

By working with companies, Barker said the U.K. will be able to speed up progress toward grid parity, where solar power can compete with fossil fuels without relying on subsidies.

Solar capacity has risen from 94 megawatts at the end of 2010, according to Barker’s Department of Energy and Climate Change. Ministers identify the technology as one of eight that can help Britain meet its European Union target of getting 15% of all energy from renewables by 2020 and meeting a domestic goal to cut emissions 34% in the three decades through 2020.

In today’s strategy document, the energy department said solar deployment must be cost-effective, cut carbon dioxide, and be appropriately sited. Assistance to the industry must take into account its effects on balancing the power grid, the government said.

 

Now, first of all, the UK is not exactly “the land of sunshine”. But the reason to choose solar over wind is obvious: people complain about wind turbines. I understand. The second part of this, though, makes me suspicious. Instead of helping people pay to put solar panels on their roofs, through for instance feed-in tariffs program, the UK wants the power giants (the Big Six) to do the heavy lifting. Which makes me think someone ought to keep track of the taxpayer funds that will change hands in that scheme, and who’s really doing the lifting. I’ve seen, firsthand, governments in Canada, France and Spain let people invest in feed-in tariff solar plans only to have them unilaterally cut mere years later because the big power companies lose money over them, leaving people with huge debts and no recourse. Beware of Big Power.

 

So there you have it: a UK government that’s getting increasingly desperate, and trying very hard not to show it, lest its voters start panicking. But everything they try looks doomed before they even begin. Shale is such a shaky bet that it should be abandoned. More coal is not hip because of CO2. More gas is grossly expensive because it must be imported. More wind and solar can’t keep the grid functioning without either nuclear or CO2 producing fuels. And all the while there’s the threat of Putin pushing a button or turning a switch, or a ship blowing up in the Middle East.

Maybe the best way to try and make sure the lights don’t go out is not to keep them on all the time. And to redesign our communities and societies in such a way that they need far less energy than they do now. Instead of letting energy demand rise, we could try to make it decrease. If we don’t, the lights will go out at some point, guaranteed. And Britain, admittedly, is probably one of the worst-off nations in the western world when it comes to the friction between future energy demand and supply. But if and when continental Europe lets the handful of enormous multinational power consortiums who are in the process of taking shape right now, take over control of their entire grid systems, it won’t be any better off.

Both in finance and in energy, and certainly where the two come together, the ever-accelerating drive towards centralization has become such a threat to our lives, without us seeing it for now, that we don’t have a lot of time left before we’ll all be left in the position that crack addicts have vis-à-vis their dealers. The thing is, it’ll take a real effort to get out of that position, like any attempt at cold turkey does, and we’d rather watch TV or try to get our kids into the best schools, or get a better paying job, or make money in the markets, or save for our retirement; a.k.a. go through the motions. If we knew today what we’ll know in 10 or 20 years, we might find ourselves wishing that we’d have woken up from our crack induced stupor sooner.

 

 

Home Forums Energy Is A Power Game – 2 (Britain Is Losing)

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  • #9067

    Esther Bubley “BusStop” September 1943 “Idlers in front of the Greyhound bus stop between Memphis and Chattanooga”In the first part of this series,, I
    [See the full post at: Energy Is A Power Game – 2 (Britain Is Losing)]

    #8916
    gurusid
    Participant

    Hi Ilargi,

    Thanks for a great overview of the UK and EU energy crisis. I’ll keep my usual soliloquy short. I have my suspicions that ‘solar’ is being used to meet the 15% renewables by 2020 commitment purely on ‘nameplate’ capacity – that it gives a high capacity figure for relatively little or no cash outlay – the ultimate in empty bag handling. So not only do they get to claim an over inflated generating capacity from solar renewables, but its gets paid for by someone else – what’s not to like? Politicians get great photo ops on a cloud less midsummer day at the only time it generates any where near its ‘name plate’ capacity, meanwhile midwinter the energy companies get to fire up their gas and coal ‘standby’ plants at a bonus rate. Welcome to the new [strike]robber[/strike] energy barons! :dry:

    Mind you, wrt the Arctic Bubble, keep an eye on Unst property prices! 🙂

    + Brand and Paxman on changing the current system & Brand on not voting due to the ‘elites’ current control of everything:

    https://www.youtube.com/watch?feature=player_embedded&v=3YR4CseY9pk

    Within the existing paradigm change is not dramatic enough not radical enough… When there is a genuine option vote for that … why pretend why be complicit in this ridiculous illusion… Occupy movement… 1% vs. 99%… for the first time in a generation people are aware of massive corporate and economic exploitation.

    Welcome to UK politics, where politicians are comedians, and the comedians are politicians! 😆

    L,
    Sid.

    #8918
    Ken Barrows
    Participant

    I’ll say this for the UK (my mother is Welsh). The older folks know how to live with some deprivation. As for we Americans who enjoyed 6-7% annual oil production growth from the early days of the industry until 1970 or so and plenty of credit thereafter, there is no such luck.

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