Thursday, August 11, 2016

Renewables and gas and Hinkley Point

I'd been thinking the discussion around the new May government's delay of a decision on EPR reactors at Hinkley Point was featuring well known voices tossing off half-cooked ideas as alternatives to the project, and am now inspired to say so by...

“All other things equal, a 1% percent increase in the share of fast reacting fossil technologies is associated with a 0.88% percent increase in renewable generation capacity in the long term,” the study reports. Again, this is over 26 separate countries, and more than two decades.“Our paper calls attention to the fact that renewables and fast-reacting fossil technologies appear as highly complementary and that they should be jointly installed to meet the goals of cutting emissions and ensuring a stable supply,” the paper adds.
“When people assume that we can switch from fossil fuels to renewables they assume we can completely switch out of one path, to another path,” says Verdolini. But, she adds, the study suggests otherwise.
Verdolini emphasized this merely describes the past — not necessarily the future. That’s a critical distinction, because the study also notes that if we reach a time when fast-responding energy storage is prevalent — when, say, large-scale grid batteries store solar or wind-generated energy and can discharge it instantaneously when there’s a need — then the reliance on gas may no longer be so prevalent.
Ah the future - a country unknown to all but zealots.

The study seems to find what I'd expect. Renewables in much of the world (certainly Ontario) lack meaningful capacity value, so they are always additional generation. They do not replace other generators.
Thinking through the eternal promise of storage, I argue wind and solar should be viewed as fuels for the batteries (or other storage) which would be the generators.

It seems to me these issues have been around long enough, they should be obvious, and yet it remains common to see renewables presented as alternatives to actual generators - such as the proposed Hinkley C.

From U.K. Labours shadow energy secretary:
“The Government [said] they would pay £92.5 per megawatt hour. You know that onshore wind is that £70 per megawatt hour.

“Offshore wind, the latest deal off the coast of Holland, is down to £80 per megawatt hour....”
I jumped at the question "how many [wind turbines] are needed to replace a power plant?" on Twitter yesterday, responding with another question:
how many potatoes are required to replace a dog?
Potatoes and...

From an explainer, on the pending, or not, contract for EPRs at Hinkley, in the Economist:
Once the plant is built and the subsidy starts filling up EDF’s pockets, it would lock bill-payers into supporting a price for 35 years, which will seem even more expensive as the cost of other clean-energy technologies, such as wind and solar, continue to fall. What’s more, the type of inflexible “baseload” power that HPC could provide may become an anachronism as the renewable alternatives become cheaper. Because wind and solar are intermittent sources of energy, subject to the weather and the time of day, they need nimble back-up power that can be turned on and off quickly. Presently that is best provided by gas-fired turbines. Over the next few decades, batteries or other technologies may become affordable enough to do a cleaner, better job.
Well, it seems the Economist has not done any math on whatever suite of things they know would be required as an alternative to Hinkley, but somehow know they are far less than the big known number for Hinkley Point.

From the Guardian's editors:
Hinkley is predicted to cost £18bn to build, and it will cost consumers upwards of £30bn to run. It will displace billions of pounds of investment that could otherwise be spent reducing demand and developing renewable alternatives. 
...Better than any of these nuclear options, however, would be investment in renewables. Technology for tidal energy that will come from projects like the lagoons at Cardiff and Swansea is maturing. One of the world’s largest proposed wind farms, at Dogger Bank, off the north-east Yorkshire coast, could challenge the output from Hinkley C. More extensive interconnection with France, Norway and Denmark could smooth supplies. Most effectively, an investment of less than £1bn a year in domestic and industrial energy efficiency would halve demand by 2050.
I assume they are telling French and Chinese investors to put their money in not energy work instead of energy work. More faerie hopes of tidal, a wonderful idea there'll always be supply somewhere else cuz' smoothing, and the zealot's knowledge that there's no supply better than no demand.

Hand waving stuff.

The best argument against Hinkley, in my opinion, comes from Matt Ridley - in the column that best explains why the "subsidy" claim is rising.
If Hinkley Point C goes ahead, the cost for consumers of subsidizing it will be £30 billion, according to the National Audit Office, or five times what was originally estimated. The increase comes largely from the fact that fossil fuels are cheaper than even the lowest possibility envisaged by the late and unlamented Department of Energy and Climate Change. 
[In 2012 DECC forecast three scenarios for fossil fuel prices. In the “high” scenario, the oil price, per barrel, in 2016 was expected to be $137.2; in the medium scenario, $119.2 and in the “low” scenario, $98.8. The price today is $43, that is less than half the lowest scenario envisaged by DECC just four years ago.]
The purpose of this subsidy is to ensure that we have very-low-carbon electricity to replace ageing coal and nuclear plants, the better to mitigate global warming. Since Hinkley would emit half a billion fewer tonnes of carbon dioxide during its 35-year life than comparable gas-fired projects, that implies a cost per tonne of carbon dioxide avoided of £60 ($80). 
A carbon price that would make the project sensible.

That is what is required for the alternatives too, and if people continue pretending there's a number of kumquats that would replace a cat (an amount of wind turbines that would replace firm generators), they can't get to this point.

Perhaps more pertinently, people are citing market rates that are increasingly irrelevant to consumer prices (in Europe and Ontario, particularly). Market prices  are based on gas prices so low they are unlikely to be sustainable, while policy is set on avoiding the consumption of the low-priced fuel - via subsidy. That the Hinkley subsidy is claimed to be going up over the past 4 years, due to drastic drops in fuel costs, should be a good indication that today's fuel costs are a bad metric to project costs over 35 years with.

Ridley's conclusion that "It is clear that our cheapest option for keeping the lights on is gas" won't clash with the "wind turbines are cheap" crowd - and without ever pricing the option, all generation is likely to again be duplicated - causing cheap market rates and rising consumer prices.

The scenario has played out repeatedly in multiple jurisdictions, but most have avoided noticing.

August 16th Postscript

Jessica Shankleman produced a much better article at Bloomberg, although it still fails to attempt to price wind and whatever it's teamed with - and thus seems lazily titled.
Britain could scrap the 18 billion-pound ($23 billion) nuclear power plant at Hinkley Point and get the same amount of electricity from offshore wind turbines for roughly the same investment.
That’s the assessment of Bloomberg New Energy Finance following Prime Minister Theresa May’s decision to review whether to proceed with the first new atomic plant in more than three decades. For the same capital costs, the U.K. could install about 830 new turbines at sea, which would generate 25 terawatt hours a year -- the same amount of power the Hinkley reactors would produce, according to the London-based researcher.
and that's not the same
The BNEF assessment includes only the capital cost of erecting various forms of generation, not operating expenses or the price of fuel. It also sidesteps the question of what would have to be invested to create storage at a giant scale capable of smoothing out power delivered from renewables when the sun isn’t shining and the wind isn’t blowing.
so interesting - but meaningless.
EDF, the nuclear company behind Hinkley Point, is allowed to respond:
“Hinkley Point C is competitive with all other forms of low carbon electricity generation...The price of 92.50 pounds per megawatt-hour for Hinkley Point’s output compares to an average of 123 pounds per megawatt-hour for renewable schemes in the early 2020s without including the extra costs of their intermittency. Recent contracts for offshore wind were agreed at an average of 137 pounds per megawatt-hour.”
And the writer shows she understands the difference value of outputs from nuclear and wind:
Matching Hinkley’s 3.2 gigawatts of electricity output with renewables would require wind turbines and solar panels with a much higher capacity, since those forms of clean energy don’t work at night or when there’s no breeze. Nuclear by contrast is classed as “baseload” energy generating 90 percent of the time it’s switched on...
Since offshore wind farms generate only about half the time, Britain would need double the capacity to deliver the same amount of power as Hinkley...Batteries or hydroelectric storage would also be needed for days when the wind doesn’t blow.
days - or longer.

Better work in this article, but there's still no serious attempt at pricing alternatives to Hinkley that I've seen, aside from Matt Ridley's post.

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