Friday, 9 February 2018

Wind Farm that caused huge landslide makes losses for ESB

Photo : Irish Examiner

The Commission claims also that the construction of the wind farm required the destruction of large areas of coniferous forest amounting to 263 hectares.
 The Commission adds that, after the landslide which occurred on 16 October 2003 and the consequent ecological disaster, when the mass of peat which was dislodged from an area under development for the wind farm polluted the Owendalulleegh river, causing the death of about 50 000 fish and lasting damage to the fish spawning beds, Ireland carried out no fresh environmental impact assessment of this construction before the resumption of work on the site by the developer in 2004 [European Court Ruling 2008].

The construction of Derrybrien wind farm in 2003 caused a huge landslide resulting in the ecological disaster described above by the European Courts of Justice. Ten years later, Ireland still has not complied with their ruling and the EU are now seeking to impose fines on Ireland of €2 million.  

The wind farm was the largest in Europe at the time with 70 vestas turbines (of 0.85MW each) giving a total output of 59.5MW. It began operation in 2006. Ten years later in 2016, the accounts show that the wind farm was making a loss of €2.3 million. Turnover dropped by 25% to €5m and operating costs increased by 17% to €6.3m from 2015.  The company is owned by ESB and €20m in loans are still outstanding to them. It cost €64m to build. 

The above graph compares the load factor (actual output / maximum output) for Derrybrien and the national average as published by Eirgrid since 2010. The load factor has dropped significantly in the past two years to 23% in 2016, which was less than the national average of 28%. Not great for a wind farm located in the windy west of Ireland.  It could be that these particular wind turbines lose capacity over time. The first indication of a loss in capacity occurred in 2015 after eight years of operation. The national average was high at 33% whilst Derrybrien had a load factor 20% less at 26%. 

A loss of wind turbine capacity means higher maintenance costs and this is reflected in the accounts where operating costs have increased to €6.3m from €5.4m in 2016.   

The obvious question that needs to be asked about all this is are the massive environmental impact of wind farms built in such delicate areas worth it ? Whilst ESB will probably absorb  these losses who finally pays ? ESB is 95% owned by the Government

National Load Factors - Page 24 here.

Load factors for Derrybrien wind farm for 2015 and 2016 as per published accounts, other years were estimated based on annual turnovers.

Sunday, 4 February 2018

Power Stations to Close

New Single Electricity Market rules now in force will see capacity payments cut by 30%.  In some cases, the power stations may not receive any capacity payment at all.

The inevitable consequence of this is the closure of older power stations and less dispatchable plant available to keep the lights on. Dispatchable plant is plant that can be switched on quickly when required. Renewables like Wind energy are not dispatchable because their output is uncontrollable. Ireland (All Island) currently has about 10,000MW of dispatchable plant and about 4,000MW of wind energy. About 1,000MW of capacity will not qualify for capacity payments. This leaves around 9,000MW of dispatchable plant remaining.

Dispatchable plant MW
Remaining dispatchable9,046
Max demand (2010)6,878
Capacity margin2,168
Minimum new data centres1,136
Capacity margin after data centres1,032
Reserve Generation500
Capacity Margin Net Surplus532

When everything is accounted for, including periods of high demand such as occurred in winter 2010 and planned data centres, there is a capacity margin of 1,032MW. Reserve generation is required incase a power station trips out. Currently this is about 500MW. This leaves a net capacity margin of 532MW.

This is quite tight but what happens if Viridian shut down not one but both of their gas power stations in Dublin (they have notified the Regulator that they will close both).  

This would leave a capacity margin of just 132MW. It would be lunacy to allow this to happen as blackouts would be inevitable in a harsh winter.  Dublin would be at most risk where there is a requirement for two large power stations to be on load at all times (three if the UK interconnector is out). 

While it would reduce costs, a blackout would come at a greater cost. 

And what of Northern Ireland ?  Where is the surplus power to come from to export to the North through the North South Interconnector ? The new auction will result in the closure of power stations in the North (Kilroot and part of Ballylumford). Northern Ireland is already at risk of power shortages.

But don't worry the Energy Regulator knows what they are doing I hear you thinking ? Well, I will just leave this here : 

Look for Tuesday 30th January "Electricity Supply".

The interviewer asks the Regulator how much power do the Viridian power stations supply in percentage terms ? It's worrying that the Regulator had not checked this very important statistic. She replies that they are 800MW capacity so out of 9,000MW, it would be a bit less than 10%. But the 9,000MW is not demand, it's total capacity (capacity must be higher than demand). She also never mentioned the little problem of a minimum requirement for power stations in Dublin. Again, something I thought she should know. 

1) SEMO Auction Results -

2) Eirgrid Constraints in Dublin Region -

3) Planned Data Centres -

4) Maximum demand all time -

Saturday, 3 February 2018

The Future of the EU and Relations with Ireland

The figures above were shown during the Irexit conference today in Dublin. They show that Ireland paid €400 million net towards the EU budget in 2016. Since there is now a €15 billion black hole in the EU budget due to Brexit, it is expected that Ireland will have to contribute a lot more. As a result, it is fairly predictable that the EU will want to force Apple and other multinationals in Ireland to pay more tax. They can see a money pot there and they need to get their hands on it. 

Right now the media ridicule any suggestion of an Irexit.  How things might soon change in Ireland if the likes of Apple decide to relocate as a result of EU pressure to pay more tax. 

Sunday, 28 January 2018

Gaelectric to Wind Down

Gaelectric, one of the largest wind and renewable energy companies in Ireland, is winding down. Staff numbers have been slashed from 100 to 20. In 2016, the company sold part of its wind farms to a Chinese Nuclear firm. The proceeds were used to pay off their debt of €350 million. A second sale to the same Chinese company fell through last year which has triggered the wind down.  Shareholders are only expected to be repaid a portion of the funds they put in. The Chinese firm expected Ireland to commit to a new renewable fixed tariff scheme, which has still not materialized. 

The accounts show a profit in 2017, but when gain on disposal of € 105m is discounted, there was a trading loss of € 44m. Cost of sales and admin expenses totaled € 50m exceeding sales of € 38m. Loan interest trebled to € 31m since 2016. 

Tuesday, 16 January 2018

For all the hot air about wind farms, we have never worked out the true costs - Cormac Lucey

From Cormac Lucey's blog

At the general election in 2016, Fine Gael’s manifesto stated: “Ireland’s long-term interests are best supported by further decreasing our dependence on foreign fossil fuels through the continued development of indigenous renewable energy.” The party differed little from the broad political consensus that has driven Irish energy policy over the past two decades.

Where political consensus exists, critical scrutiny suffers — and is replaced by reflexive, unthinking support for the new orthodoxy. For example, take a speech last November by the enviroment minister Denis Naughten at the Take Charge conference, run by the Institute of International and European Affairs and the ESB, which explored how to link Ireland’s future of low-carbon energy into the lives of people in a practical way.

“Ireland relies on high emissions and imported fossil fuels to meet over 88% of our energy needs,” said Naughten. “This costs around €5bn. That’s a cost we cannot afford in cash, and which our planet cannot afford at all. If the money that Ireland spends on energy imports can be redirected to energy efficiency and smarter energy services, it will replace imported fossil fuels with local jobs and opportunities for Irish companies.”

This is gobbledygook verging on baby talk.

Read the rest here :

Sunday, 14 January 2018

Irish State sold profitable Power Station for 10% of it's cost

In 2010, Bord Gais Energy, then owned by the Irish State, began operation of Whitegate Power Station, a 445MW  gas powered station in Cork. It cost € 400 million to build.   

In 2014, Bord Gais and it's assets was sold off to Centrica UK. It was rumored at the time that the State took a hit of as much as €360 million on the sale of Whitegate.
As this newspaper [Irish Independent] revealed last week, the "enterprise value" paid for Bord Gais by new owners Centrica was €210m. However, this included €60m of income that would have been earned anyway if the company wasn't sold. Furthermore, the book of 680,000 Bord Gais customers could have had a value of about €110m, so this suggests a value of just €40m was put on Whitegate, which cost €400m to build.
The 2014 accounts show the power station valued at € 39 million confirming the massive loss. Somehow the power station lost 90% of it's value in four years. Did they spend too much on it's construction ? ESB built an 884MW gas powered station in the UK costing € 820m which works out at just under a million euros per MW, roughly the same cost as Whitegate.  Aghada power station, which is situated close to Whitegate, was built for slightly less at € 360m, about € 0.8m per MW. So the loss in value of € 360 million could not be attributed to over spending on construction. 

The most recent accounts shows that operating profits at Bord Gais Energy jumped from €50m to €63m during 2016.  I cannot say how much of this profit is attributable to the power station but the accounts do say that :
Whitegate benefited from good reliability and availability throughout the year.
Within the energy generation market, Whitegate remains both reliable and efficient and continues to achieve high market availability. 

The generation profile for the power station below shows that it was generating less by 2014.

Source EPA

Presumably this was a trend that government officials thought would continue into the future but in reality, we can now see that the power station did in fact return to growth and achieved high market availability. 

The constant ramping up and down to accommodate more and more wind energy would also have been another contributing factor that led to the loss of it's value. But the recovery of the power station in the energy market is a surprise considering that about 650MW of wind farms were built between 2014 and 2016, which theoretically should have displaced more gas power. 

The above graph shows that the capacity factor (actual output / maximum output) for the gas power station increased to 68% while that of wind energy dropped to 27%. Whitegate now has the second highest capacity factor for gas in Ireland (Dublin Bay CCGT has the highest at 80%)

It appears that the government officials and consultants wrongly assumed that adding wind capacity meant more wind energy and less gas power. Of course, increased demand was another factor in Whitegate's market recovery. But no matter what excuses can be made, the loss to the Irish State of € 360 million shows gross incompetence. The Irish government bet on wind, whilst the private sector bet on gas. Where idealism meets pragmatism in the business world, the latter usually wins out. 

Has wind energy distorted asset values in the energy market ? Consider that recently Greencoat Renewables paid €2.5m per megawatt for a wind farm in Co.Kerry compared to the €0.9m per megawatt it cost to build Whitegate. 

The cost of Brexit to Ireland is estimated to be €200m per year, however our own government conducted business deals long before Brexit that cost us more than that. 

As usual, the taxpayer picks up the tab.

Wednesday, 10 January 2018

The Climate-Energy Problem : A Response

Engineers Ireland yesterday published a fairly in-depth article that caught my attention. There are some points I do agree with, for example, on the conservation of oil and the contribution of fossil fuels and Industrial Revolution to people's lives. I have done a short rebuttal of some of the other points made --

It goes without saying that the second stage of the Industrial Revolution is irreversible and must be sustained by new energy sources because the vast majority of people now reside in cities and earn their living in economic sectors which did not exist before 1900. These people cannot now return to their great grandparents’ employment in agriculture which has been mechanised.

1) Developed world people are not reproducing at rates like before when  huge families were the norm. Only poorer regions like Bangladesh and India have sustainable birth rates (higher than average IQ populations tend to have lower birth rates - see Japan and Hong Kong for example). If people in these poorer regions are using 35 times less oil per person than in the developed world (as stated later in article), then they can return much easier to an agricultural society as before. The Industrial Revolution in the developed world is therefore sustainable if there were low levels of immigration.

The problem is that this transition is unsustainable without the enormous mechanical energy output of more than a billion newly-invented oil, coal and gas-fuelled machines which have caused atmospheric carbon dioxide to reach 400 parts per million.
2) Co2 levels of 400 parts per million are low historically speaking and has helped greening of the planet.

An oil-burning heater does not increase anybody’s productivity. It has an HPM of zero hence heating oil is wasted oil, yet over 30% of global oil production is used for heating. Moreover the 700 litres of diesel emits almost 2 tonnes of carbon dioxide, yet biomass is an alternative which is both carbon-neutral and cheaper than oil.

3) For biomass to be sustainable you would have to cut down trees with a handsaw and transport it with a horse or wheelbarrow so you're back to pre-Industrial Revolution times.

It could and should initiate reforestation, dedesertification and carbon capture.

4) Renewables are often built on forested land displacing green spaces which should be left as forest areas (see Coillte) . Extra CO2 in atmosphere is leading to de-desertification in regions like the Sahara.

During the recent financial crisis in the US, the pragmatic Ben Bernanke pronounced, “Quantitive Easing is wrong in theory but it works in practise, and the Fed will drop money from helicopters if required.”

If something is wrong in theory but works in practise then query the theory. In the situation Bernanke found himself conventional economic theory had become obsolete and by dropping money from helicopters he averted an unnecessary decline in demand in the US economy which is now consumer-driven since the cost of production is so low.

Today an increase in the money in circulation causes an increase in demand which causes an increase in the quantity of products coming down existing, paid-for, automated mass-production lines (and from China, Korea etc.) This benefits manufacturers, distributors, retailers, and consumers.

In fact the exact opposite is true and the following chapter makes the irrefutable case that the free-market has within itself the seeds of its own destruction. 

5) Printing of the money supply, welfare state, government debt, mass immigration are all unsustainable.  Want to reduce CO2 ? Then you need to tackle all of these. These factors are not the fault of the free market - they are the caused by Government policy.

Why should any highly profitable oil company be serious about developing an alternative-to-oil which is less profitable than oil?

6) Oil has a high Energy Return on Investment (EROI). That is, the energy emitted through consumption is many times that of energy required to extract it. The same is not true for alternatives at the moment. It is interesting that as wind energy has increased in Ireland, offsite diesel generation has also done so. There are now nearly 400MW of demand side units.

It is interesting that all talk of Peak Oil has stopped or is not taken seriously anymore.

At any rate, why should it be up to Oil companies to develop a serious alternative ? Were motor cars developed by the horse industry ?

By Owen Martin