1/11/2014: IAE Raises Concerns with Irish Energy Policy Framework

Here is an interesting study published by the Irish Academy of Engineering in response to the Government Green Paper on energy: http://www.iae.ie/publications/publication/iae-response-to-green-paper-on-energy/.

To put matters into context IAE notes elsewhere that:

• Since 2007 energy prices in Ireland have risen by 29% in real terms compared with an  average rise of 20% in OECD countries.
• Between 2010 and 2013 Ireland’s electricity and gas prices rose between 5% and 15% more than the EU-28 average.
• Household electricity prices have increased by approximately 30% in the last 3 years.
• Household electricity prices in the Republic are 33% higher than in the UK. Industrial electricity prices are ca 12% higher than the UK and the EU-28 average (ex VAT)

According to IAE, at least in part, the above price distortions are accounted for by the wind generation policies.

Summarising the above document, IAE said that "Continuing with the existing policy and related conditions is likely to have adverse economic consequences. Commitments entered into in 2007 relating to the amount of renewable generation on the Republic’s electricity system ...could lead to the addition during the next decade of more than 3,000MW of Windpower onto a system that has already excess capacity.  Approximately 1,000MW of existing gas or coal fired power plants would be displaced with the following consequences:

• At current price differentials it would add €200 million to the annual cost of electricity.
• It would involve additional capital expenditure of between €1 - €2 billion to integrate this level of Windpower into the grid. (The entire Exchequer capital program for 2014 is €3.3 billion)."

I am not an energy or environmental economist to make an in-depth observations on technology and its economic efficiency, but it is clear that Irish energy policies to-date

1. Have been actively focused on renewables generation at the expense of consumers; and
2. Resulted in one of the most expensive energy generation and supply systems in the advanced world.

All of which suggests that our continued pursuit of increasing wind generation investments should be put to a rigorous and public scrutiny.

15/6/2014: Germany's Ifo: Putin and Flickering Power

I was sent an advanced copy of the Ifo Viewpoint Nr. 154 "Putin and Flickering Power" by Hans-Werner Sinn, President of the Ifo Institute which is the official translation of the German source here.

Selective quotes with comments in italics being my own:

"The unresolved conflict in Ukraine …is also endangering Germany’s oil and gas supplies, which in turn threatens its energy turnaround since Germany’s new energy policy cannot be implemented without Russian gas. Why? Because of the inconstancy of wind and solar energy. Both sources of energy require a technology to smooth out the vagaries of their power output. This task can ultimately only be performed by gas-fired power plants co-existing alongside wind and solar energy." [Although not directly referencing the EU's feeble attempts at delivering a cohesive and coherent energy policy, this thesis clearly puts the boot into Brussels well-meaning but economically infeasible push for renewables-driven energy markets.]

"Using the figures for wind and solar energy effectively supplied during all 8,760 hours of 2011, we calculated the storage capacity required to smooth out the output fluctuations. The installed nominal output of both power sources amounted to 54 Gigawatts (GW) in that year. Their combined output reached up to 27 GW at given times, but at others it dropped to 0.5 GW, giving an average power generation of 7.3 GW. The assured output available during 99.5 per cent of hours amounted to only 0.9 GW.

To make the average output reliably available for consumption and to bring up the 0.9-GW assured output as close to the average value as possible, a storage technology is absolutely essential. The most efficient method currently available is pumped hydro storage. Around 3,300 pumped storage facilities would be required to achieve a complete smoothing of the power supply based on 2011 figures, which represents around 100 times the number of facilities currently existing in Germany. New storage facilities, however, are difficult to get built since they tend to provoke angry citizen protests. In Bavaria’s Jochberg area people raised their scythes in protest when only one such power station was to be built." [Ah, that pesky problem of people power… Pragmatically, Ifo takes it into the account. Typically, for Brussels operations, EU neglects it. End game: dysfunctional centralised policy grafted onto the locally democratic institutions of policymaking.]

"So what about smoothing only part of the “fluctuating power” instead of all of it? The results for this model are also sobering. To smooth four-sevenths of the average power output, around 440 pumped storage facilities would still be needed in Germany. This remains beyond the realms of the politically possible."

"Alternatively, power could be stored in batteries. This would require 164 million battery packs of the type used in a BMW i3 – four times the number of cars of all stripes presently in existence in Germany. The one million electric cars that are supposed to be on Germany’s roads by 2020 would deliver a meagre 0.6 per cent of the storage capacity required. And those cars would not be able to drive on windless days of the year, to prevent their batteries from running out of power."

The storage problem can only be solved through the construction of natural gas storage facilities. Such facilities require less space, can be built on flat land and the production costs are much lower. With this technology power peaks are initially used to produce hydrogen. The hydrogen is then transformed back into methane gas, which the gas-fired power stations can use to generate power where necessary. A problem yet to be solved, however, is energy loss along this storage path. Since the efficiency factor in this procedure is only a quarter, the cost of any power sent through the methanisation and gas-fired power plants would quadruple."

[So, unhappy (for Brussels and Eastern Europe) conclusion:] "In short, it is ultimately much cheaper to buy gas from Putin’s gas traders, store it in Germany and then use it to generate power in gas-fired power stations when necessary to fill the gaps left by wind and solar energy. Putin gas costs around 3 cents per kilowatt hour, whereas gas from methane obtained from wind energy conversion would be at least six times as expensive, not including the costs of building the conversion plants. If the power were to be generated offshore it would be at least ten times as expensive." [The brilliant bit of this is that it shows the German way of thinking in terms of efficiencies as opposed to, say, Irish thinking in terms of 'romantic evocations' - remember Irish policy refrain that 'wind is free energy'? Right…]

"The use of Russian gas is therefore the only solution that is halfway viable in economic terms. Under this scenario, the fluctuating power from wind and solar power is blended and smoothed with power from methane storage facilities that are replenished by Putin’s gas traders and then tapped as needed. Overall, this leads to a regular supply of energy – and it is our only option. All other alternatives are mere pipedreams."