Monday, October 27, 2014

European energy policy – winding down

Energy policy columns for a Monday morning...

European energy policy – time to start again | Nick Butler:
image from The Telegraph:
Wind farms can 'never' be relied upon to deliver UK energy security
The deal reached at last week’s European summit on climate change will satisfy no one.
...The fractious debate which led up to the summit should be understood as marking the end of the “consensus” on energy policy established in 2008.
...Although not a total consensus, the 2008 policy was grounded on the broad acceptance of four cornerstone propositions, which over time have turned to dust. These core beliefs were:
  • fossil fuel prices would rise inexorably as global demand exceeded supply; 
  • Europe could gain a material competitive advantage by being the first major region in the world to develop a low-carbon economy based on renewables; 
  • a gradually rising carbon price would increase the cost of externalities including air pollution and climate change, until renewables became fully competitive; 
  • the negative effects of higher energy costs on competitiveness would be mitigated by a global deal with all the world’s major economies making progress towards the common goal of reducing emissions.
The inconvenient truth is that none of these beliefs have proved to be true.
Read the entire column at the Financial Times

Wind goes:

I've seen columns in The Daily Mail and The Telegraph on a new study from the Adam Smith Institute claiming what has been obvious to me - and probably all who looked analytically at data.

Although it is claimed that the wind is always blowing somewhere in the UK, the model reveals this ‘guaranteed’ output is only sufficient to generate something under 2% of nominal output. The most common power output of this 10GW model wind fleet is approximately 800MW. The probability that the wind fleet will produce full output is vanishingly small.
Long gaps in significant wind production occur in all seasons. Each winter of the study shows prolonged spells of low wind generation which will have to be covered by either significant energy storage ... or maintaining fossil plant as reserve.
The preceding deficiencies suggest the model wind fleet would require an equal sized fossil fuel generation fleet operating alongside it, especially during winter months
Nothing new.

It's clear that wind, and solar in northern climates, are "displacement" sources which serve only to displace fuel, not generating capacity, and should be valued as such.

Together with the FT column's debunking of the assumption that "fossil fuel prices would rise inexorably", it's clear wind contracts have tremendously over-valued the output of industrial wind.


The New York Times ran an article on the weekend, BASF, an Industrial Pillar in Germany, Leans Abroad. It received less attention on my Twitter feed than I'd have expected - probably because it was negative about the European energy experience.
While many note emissions reductions compared to a base year of 1990, few note the impacts of outsourcing industrial emissions in achieving emissions. With that in mind, the NY Times article provides hope for more emissions reductions in Europe:
...German companies increasingly prefer to make them elsewhere.
Mr. Schwager outlined other big investment plans for the Gulf Coast of the United States, including a plant that will make propylene, which is used in a wide range of products including paints, carpets and diapers, from natural gas. The company is still scouting for a site for the plant, which would be its largest investment in the region, costing more than €1 billion.
“The whole shale gas revolution really has created a renaissance in the petrochemical industry,” said Heidi Alderman, BASF’s senior vice president for North America, who is based in Houston. “Investments that previously might not be considered in North America are now coming to North America.”
Other European companies are also being drawn to the United States.
Wacker Chemie, based in Munich, is building a $2 billion plant in Tennessee to make polysilicon, a material that is used to make solar panels. Wacker’s manufacturing process will rely heavily on chlorine, a chemical whose manufacture requires huge amounts of energy.
In September, the German industrial giant Siemens agreed to buy Dresser-Rand, a Houston-based maker of equipment for the energy industry, for $7.6 billion. Two Austrian steel makers, Voestalpine and Benteler, are building mills on the Gulf Coast in Texas and Louisiana.
“The bad thing from a European perspective, not from a company perspective but for the region Europe, is it’s not only BASF,” Mr. Schwager said. “It is many European companies which are energy-intensive. They are finding out that the benefits of shifting investment from Europe to the U.S. are significant.”

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