Germany's electricity market policy this week: A pure energy market with a safety net

There are 2 aspects of German energy policy that are clearly desired:

1. they wish "renewables" - which for the sake of this post are better called by Rod Adams' term "unreliables"
2. they don't want to subsidize fossil fuel generating stations

The two desires probably aren't compatible if one defines paying for capacity as a subsidy, which seems to have been the government's position since prior to the last election when then Minister Altmaeir stated; "I am against blanket subsidies for fossil energy, which would only increase power prices."

I'll review some recent news of how Germany's attempt to structure a market that could allow sufficient capacity at all, or maybe just most, times

New power market design without capacity mechanism in ministry plans | Clean Energy Wire

The German energy ministry has opted for a reformed energy only market (EOM), in which back-up power stations are financed through sharp peaks in power prices. Utilities insisted that a decision on the market's design - either an energy only market or their preference, a capacity market - was still open, saying they needed to be paid for keeping capacity available in the absence of power from renewable sources.
The government has rejected the idea of financial support for fossil-fuel power plants to back up fluctuating power from renewables, a leaked document agreed by the energy ministry and Angela Merkel's chancellery shows. In the paper seen by the Clean Energy Wire, the government argued it was convinced its plan without a capacity market would "guarantee a high level of supply security at low cost."
Reforming the power market is one of the next big steps in the country’s transition to a low-carbon economy, the so-called Energiewende...

continue reading at Clean Energy Wire.

The article notes that in an Energy Only Market. "Supply for peak demand should be secured by letting investors in back-up power stations make very high profits in times of scarcity." I'll opine this is a theoretical belief (I suspect the odd rolling blackout would be preferred), but it is the theory, and the place it's most pursued is probably Texas, where the maximum market price is being raised towards $10000/megawatt-hour.

Handelsblatt has a subscriber-only article on the topic titled, Gabriel Pulls Plug on Utility Bailout.

So the first storyline is that there will be no capacity market - because paying for capacity would just be propping up old utilities and their fossil fuel generating stations.

The other storyline is that Germany will be putting out calls for capacity

Ontario's outlaw Premier "will will discover that there is no juice to be squeezed from Hydro One"

Tom Adams and Mike Hilson have a column in the Financial Post today which cites one of my works.

Ontario’s Outlaw Premier Plots to plunder Hydro One is the work of mine that is cited in today's column. It's on my Wordpress site, which I'm using increasingly for posts I want to start and finish in the same sitting, perhaps leading to more analysis on my main Cold Air blog. In this instance you may want to read the post as background for the work by Adams and Hilson - theirs is the broader piece I'd hoped to have written on the topic.

Actually, that should be topics.

No windfall in selling off part of Hydro One notes multiple financial issues, including:

Even if the legislation was silent on the disposition of sale of Hydro One assets or if that legislation was repealed, the taxpayers would still be on the hook for all of OEFC’s liabilities.
Today, the book value of Hydro One is included as a financial asset in the government accounts. Any dilution of this interest would decrease the value of the investment. To avoid increasing the Province’s net debt, the proceeds of any sale would have to discharge existing debt. Only any premium over book value could be claimed as a gain, but the prospects for such a premium don’t look promising.

...and:

Similar questions arise with respect to Hydro One’s regulatory assets. Former teacher’s pension fund manager Jim Leech in his August report found the pension to be under water but all that is treated as an asset to be recovered in future rate increases. With power demand already retreating in the face of punishing rates, how solid are assumptions about future regulatory decisions to recover costs incurred to date but left for later recovery?

OPG's strong 2014 results: aka how I made OPG $243 million

OPG's final 2014 results have been released and the net income they are reporting is, if my records are correct, the highest since 1998

[Toronto]: – Ontario Power Generation Inc. (OPG or Company) today reported income of $568 million, before extraordinary gain, for 2014 compared to $135 million for 2013. Net income, after extraordinary gain, for 2014 was $811 million, compared to $135 million in 2013.

Let me tell you about extraordinary items.
but first...

There are new business segments for contracted generation (biomass, hydro and gas partnerships) and eliminated business segments (thermal, or fossil fuels, and non-regulated hydro).

I've flipped through OPG's 2014 MANAGEMENT’S DISCUSSION AND ANALYSIS and spotted some things of interest to me, relevant to many things I've written.

There's news in OPG's reporting that, I'll just put out there, maybe I should get a nice cheque for.

Big Think's response to anti-nuclear emoters' attack

Self-identified environmentalists went to Madison Avenue and got a slick campaign against nuclear energy.
Today David Ropeik wrote about it.

Naive Anti-Nuclear Videos Demonstrate the Danger of Thinking with Our Hearts, Not Our Brains | Big Think:

Five environmental groups have just released a series of videos attacking nuclear power that demonstrate a disturbing and frightening truth, a truth that has nothing to do with nuclear energy. The videos make depressingly clear that our intellectual ability to think carefully and objectively about the enormous and complex threats we face is hogtied by powerful subconscious instincts that produce perceptions based far more on emotion than reason. The videos are a stark reminder that for all the rational firepower of the human brain, the subjective and instinctive aspects of human cognition pose serious limitations on our ability to figure out how to keep ourselves safe 

The videos were produced in part by more strident, absolutist environmental groups, including Greenpeace, Friends of the Earth, and the Sierra Club. These groups all advocate action to combat climate change, of course, including clean energy. But to them, nuclear power remains a technological bogeyman that any true back-to-nature environmentalist is simply expected to oppose. Opposition to nuclear energy remains an established belief of the tribe, to be unquestioningly accepted and supported as a demonstration of one’s loyalty to environmentalist values. Which is why a good many greens will cheer these videos, and uncritically accept what they say as true. 

This instinct, to see the evidence the way our groups do, is ancient and powerful. We have evolved, as social animals, to depend on our tribes, the groups we identify with, for our very health and safety. It feels safe to go with what the group says, rather than think independently and take the risk of disagreeing with the group’s belief. That instinct for tribal loyalty may help us feel safe, but as these videos demonstrate, it can badly warp how we see the facts, and overwhelm our ability to keep an open mind and think about things carefully and objectively.

Read the entire work at Big Think.

This work (Ropeik is at Harvard) is not dissimilar to work I noted yesterday by Dan Kahan (Yale).

when "climate change" is unnecessary

I've seen a few condescending references on Twitter to a report that the terms "climate change" and "global warming" are not allowed at Florida's Department of Environmental Protection (DEP).

I'm citing the current article as it provides good excuse to also reference intellectually provocative articles with challenging facts such as:

Those who say they “do believe” [in evolution] are no more likely to be able to give a high-school biology-exam-quality account of how evolution works than those who say they “don’t.”

In Florida, officials ban term 'climate change' | Miami Herald

DEP officials have been ordered not to use the term “climate change” or “global warming” in any official communications, emails, or reports, according to former DEP employees, consultants, volunteers and records obtained by the Florida Center for Investigative Reporting.
...
“We were dealing with the effects and economic impact of climate change, and yet we can’t reference it,” the former employee said.
Former DEP attorney Byrd said it was clear to him this was more than just semantics.
“It’s an indication that the political leadership in the state of Florida is not willing to address these issues and face the music when it comes to the challenges that climate change present,” Byrd said.

Image from Miami Herald article

The image that leads on the web page for the article is of a writer contracted to write a series of educational fact sheets about how to protect the coral reefs north of Miami. ‘We were told not to use the term climate change,’ he said. ‘

Maybe he was told that because it's a stupid thing to do.

Keystone XL: Obama tars Canadian oil, relations

There have been a couple of stories over the past weeks I've commented on elsewhere, so a quick post to pull them together. Unfortunately I'll end with some references to video clips where the US President demonstrates his parochial views on trade.

---

I've felt Robert Rapier is a good energy analyst since I became aware of him following a 60 Minutes story with the exaggerated title, The Cleantech Crash. Vinod Khosla's KiOR was a focus of that that January 2014 report, and in fact it did file for bankruptcy by the end of 2014.

President Obama is Lying About the Keystone Pipeline | Robert Rapier

...when President Obama vetoed a bill last week that would have sped up the approval process for the Keystone XL pipeline, he repeated several false claims which were in direct contradiction to the U.S. State Department assessment of the project. The Washington Post — not exactly a bastion of Republicans out to discredit the President — recently took him to task on these claims in Obama’s claim that Keystone XL oil ‘bypasses the U.S.’ earns Four Pinocchios. The dreaded “Four Pinocchios” is defined as “Whoppers.” A gentler way of saying lies. Worse than their “Three Pinocchios” rating which means “Significant factual error and/or obvious contradictions.” And when the Washington Post is calling out a Democratic President like this, he (and his allies) should recognize that this isn’t just political enemies out to get him.
So what was the big lie that President Obama told? He claimed that the pipeline is for Canadian oil that will bypass the U.S., providing no benefit to the U.S....

DESAL and SMR: Russia and South Korea pursue nuclear exports into new markets

With all the stories about drought causing ISIS, I thought maybe a couple of technology stories on developments in nuclear power plants with a desalienation role might provide enough hope to keep Californians from beheading each other for a while.

SMART SMR Moves Ahead - in Saudi Arabia and at Home | Atomic Power Review

Image from Atomic Power Review

It has been announced that South Korea and Saudi Arabia have signed a Memorandum of Understanding (MOU) which includes the construction ofSMART Small Modular Reactor nuclear plants.
This follows the formation in January of a separate company to promote export of the SMART SMR.  See the text of Korea Atomic Energy Institute's press release on the formation of SMART Power Company below:

"...SMART is an integral-type small reactor, developed in 2012 after 15 years of research. It received the first-ever Standard Design Approval (SDA) from a regulatory body for a 100MWe (330MWth) integral reactor. SMART generates only a 1/10 of a large nuclear plant (over 1,000 MWe), but since it is an integral-type reactor it has enhanced the inherent safety by containing major components such as a pressurizer, steam generator, and reactor coolant pumps in a single reactor pressure vessel. It was designed especially for export and can supply a city with a population of 100,000 with 90 Mw electricity and 40 thousand tons of fresh water per day concurrently. ."

You can't be Syria-sh

I hit my 3rd Twitter block last night, for one tweet noting "making science tribal isn't scientific" linking back to a post on work indicating peoples stated positions on things like climate change and evolution marks their membership in a herd, not their knowledge level, and another only linking to a twitter discussion in which the writer of the Slate article that seems to have generated all the attention was challenged on whether the situation in Syria was caused by climate change.

New Study Says Climate Change Helped Spark Syrian Civil War | Slate | Eric Holtaus

We know the basic story in Syria by now: From 2006-2010, an unprecedented drought forced the country from a groundwater-intensive breadbasket of the region to a net food importer. Farmers abandoned their homes—school enrollment in some areas plummeted 80 percent—and flooded Syria’s cities, which were already struggling to sustain an influx of more than 1 million refugees from the conflict in neighboring Iraq. The Syrian government largely ignored these warning signs, helping sow discontent that ultimately spawned violent protests...

A new study ... is the first to examine the drought-to-war narrative in quantitative detail in any country, ultimately linking it to climate change.
“It’s a pretty convincing climate fingerprint,” said Retired Navy Rear Adm. David Titley, a meteorologist who’s now a professor at Penn State University.