Sunday, September 22, 2013

Fighting against the Capacity Trap in the U.K.

An abstract problem is becoming more real around the world; jurisdictions procuring displacement sources of energy and ensuring them first rights to the grid are struggling to maintain significant capacity of reliable sources to meet demand requirements.

Picture from source article
Energy companies are to be paid ten of millions of pounds to keep old power stations on standby amid mounting fears of blackouts.
They will be paid to mothball, rather than demolish, power stations taken out of service.
The plans come as oil and coal plants are being closed due to European Union directives, which have been introduced to cut emissions that scientists have said lead to climate change.
The move is being planned after Ofgem, the energy regulator, warned of electricity shortages within the next three years.
Ofgem said the measure was needed because new wind farms and nuclear plants have not been built in time to replace the oil and coal power stations being phased out.
Critics of wind power said turbines were flawed because they do not generate electricity when there is little wind, while plans for nuclear power stations have yet to reach the construction stage.
Continue reading at the Telegraph


I drew from an Oxford Study in my long-term forecasting work in Ontario two years ago - it is the first reference on The Cost of Wind on my original content

Counting the Hidden costs of energy" Indicates Much Higher Cost of Wind and Solar (displacement sources) is a post from earlier this year which references a couple of studies via some more accessible summaries: one study on the hidden costs of displacement sources, and the other paper an extremely high level of the challenges of developing options to provide capacity (from ENTSOE)

I noted in Electricity Sector Lessons from Ontario and Germany that:
Ontario's recent history suggests the next price increases in Germany will not be directly associated with adding more renewable capacity, but the complimentary production capacity required because the wind and solar generation lacks capacity value.
Germany has recently passed legislation allowing it to force power plants to remain available (with compensation for doing so) - moves akin to those The Telegraph is noting in the U.K.

Today's Telegraph article references the capacity market being developed, which was the subject of Update on Electricity Market Reform: The Capacity Market

Last, but not least, The Capacity Trap: Ontario's Electricity Costs Soar as Emissions Drop demonstrates how Ontario's unique method of paying for capacity is combining with its procurement of displacement sources to drive costs up.

September looks almost certain to provide the 5th consecutive month the province will feature year-over-year increased pricing for the electricity commodity exceeding 20%.

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