Tuesday, 17 July 2018

Fossil Fuel Divestment Bill a Token Gesture and Commerically Reckless

The Irish Government is set to divest over €300 million of it's investments in mostly US fossil fuel companies. This paves the way for more investments in renewables, including the Irish wind sector which as this blog has shown has been making losses in recent years. 

BP data shows that oil, natural gas and coal will still be the dominant energy sources in the future even with rapid growth in renewables. 

BP Data

In transport, oil will comprise over 80% of the energy sources used by 2040. 

The mission statement of the NTMA (National Treasury Management Agency) is to manage public assets and liabilities commercially and prudently.  The fossil fuel divestment bill is at odds with this mission statement as it's purpose is to divest from the most profitable energy markets and from energy sources that will be in high demand for many more years to come. The NTMA do not seem to have carried out a commercial assessment of renewable sources like wind energy. Is it commercially viable or not ? The fact that many Irish wind energy companies are selling up and divesting from the wind energy business altogether might give you a clue. 

The farcical nature of the discussion that took place around the Bill was on full display in the Dail (Irish parliament) with contributions made like this one by Michael D'Arcy of Fine Gael :

I am concerned about something that is happening now, which I see in my own county, whereby people are objecting to everything. It is everywhere. Wind farms are objected to. We brought in new controls to keep turbines back from property boundaries, which is appropriate. There are objections to solar farms. People are creating fear and doubt and saying the craziest things about renewable energies that are clean and tested and have been for decades. It has to stop or we will never meet these targets.  Events like what happened with the Apple data centre in Athenry cannot continue. People who object to a project because it is close to them are wrong in so doing.

It doesn't take too much research to learn that data centres will consume more fossil fuels and make it harder to meet our targets. But here we have somebody in government who believes the opposite. I was waiting for him to say the sun revolves around the earth next.

The fossil fuel divestment bill is a token gesture, will have zero impact on global emissions and will result in losses for the taxpayer.

Tuesday, 10 July 2018

Wind Taken Out of Government's Plans - NAMA for Wind Beckons

by Owen Martin

All Island Wind (in green) Vs Demand (in red) for the past two months - above and below graphs

The capacity factor for wind was 13% over the past two months according to data taken from Eirgrid's dashboard

There have been unprecedented low levels of wind energy in the past two months as the two charts above reveal.  The unusual hot and calm weather is due to a large area of high pressure in the Atlantic Ocean which is blocking the prevailing south westerlies :

High Pressure region in the Atlantic

Some green campaigners are saying that this is caused by "more energy in the climate" due to climate change, but actually in this case there is less energy. Cloudless skies, no wind, no rain, it looks like a climate devoid of energy to me. 

There is now around 4,500MW of wind installed on the island of Ireland, enough capacity to meet almost all summertime demand. However, as can be seen in the graphs above, wind has had a dire performance with a capacity factor of about 13% over the past two months. In other words, they've only performed at 13% of potential output. Historically, they have a capacity factor of 27% in Ireland. Most, if not all, wind farms will be making large losses. The longer this calm weather continues, the closer we get to a bailout for wind, or as Colm McCarthy put it, a NAMA for wind.

How much would a NAMA for wind cost ?

A megawatt of wind energy capacity costs somewhere in the region of € 1-2 million. So 3,500MW of wind (in the Republic of Ireland) would cost about  €5 billion to bail out. If we take a discount of about 50% for serviced debt and a haircut for shareholders, this means the cost to the taxpayer would be €2.5 billion.  This is roughly equal to the total wholesale cost in electricity bills, which comprise 50% of an average bill. So a NAMA for wind could cost the consumer about half of an average annual electricity bill. 

Monday, 9 July 2018

Trumponomics Good For Ireland (So Far)

Irish Exports to US up € 1 billion in 2017 

Export figures published by the Central Statistics Office show that Irish exports to the USA since Trump was sworn in as President in January 2017 were up €1.1 billion (3%) from 2016 to €33 billion. And compared to 2015, Irish exports to US have shot up by 23%, a total increase of € 6.2 billion.

The biggest increases were in dairy, cereals and other food products, beverages, textiles, medical and pharmaceutical products, power generating machinery and manufactured articles. 

Trump's "America First" policies of tax cuts, reduced regulation and energy independence have led to increased investment and economic growth in America. This in turn means that America have imported more goods from Ireland. Some commentators warned that the opposite could happen - that USA would become more isolated and less dependent on imports - but the reality is that people living in strong performing economies purchase more goods, including imported goods.

USA remains Ireland's largest exporting market. The impact of Trump's tariffs is not known yet. He has also attempted to lure FDI back to America.

Saturday, 7 July 2018

North South Interconnector in Doubt Following Northern Ireland Ruling

An appeal court in Northern Ireland has ruled that civil servants could not give the green light to a controversial incinerator in Belfast in the absence of a full Executive in Stormont. This ruling will have consequences for another legal challenge in the North against the North South Intereconnector which was made on the same basis i.e. civil servants making a decision on large infrastructure projects in the absence of an Executive. 

While many will argue that this could lead to the lights going out in Northern Ireland, this blog has made the case that other options were never looked at and closed off from the beginning. More here and here

Appeal Panel Rule in Favor of Huntstown Power Station

An Appeal Panel appointed by the Department of Communications has determined that the Energy Regulator (CRU) erred in making changes to the licence of Huntstown gas powered station following the power station's failure to secure capacity payments in the recent capacity auction. The Regulator's decision would have forced the power station to give three years notice of closure, which meant the plant would have had to run at a loss for those years. 

"The CRU has effectively turned up the heat and locked the door of the kitchen.” - Appeal Panel decision

 The Appeal Panel was made up of three barristers - Eilis Brennan BL, Joe Jeffers BL and Aoife Carroll BL. They ruled that the Regulator had made a “serious and significant error (by omission)” by not reaching a negotiated settlement to help manage the power station's exit from the market through a Targeted Contracting Mechanism (TCM). In a further blow to the already delayed I-SEM, the Regulator had failed to include a TCM in it's setup.

It's uncertain as to the consequences of this ruling and whether it will actually be implemented at all. However, it does highlight the urgent need for some independent oversight in Ireland.

I wrote previously about the capacity auction here.

Wednesday, 4 July 2018

Overcoming Grid Constraints Fails to Solve Inherent Problems with Wind Energy

In 2014, the maximum level of wind energy allowed into the grid was 50%. In 2017, this was increased to 60% and by November of last year trials were run at 65%.  So some of the obstacles to higher levels of wind energy such as grid constraints have been partly overcome, which theoretically speaking should result in higher wind outputs from individual turbines (the capacity factor). 

In 2014, the capacity factor for wind was 27%. In both 2016 and 2017, the capacity factor remained at 27% despite the higher wind penetrations allowed. 

An analysis of wind speeds shows that wind speeds were fairly similar for those years, with 2015 being somewhat higher.  I took a sample of six weather stations from around Ireland, the average wind speeds I obtained neatly fitted with the capacity factors for wind. 

Average wind speed (knots)9.610.49.39.7
Capacity Factor Wind27%32%27%27%
Max wind penetration (SNSP)50%55% Trial from Oct55% Perm from Mar60% Perm from Mar - 65% trial Nov 

As can be seen from the last part of the table above, we went from allowing 50% wind into the grid to 60% and by the end of last year 65%. As wind had more access to the grid, we should have seen a higher capacity factor for wind.

This seems to suggest that we have already reached saturation point for wind energy. I would be interested to hear what people think. I have already written about market cannibalisation and diseconomies of scale. Here is strong evidence that supports that argument. Most of the best sites for onshore wind have been used up. The turbine layout at some sites is too dense and newer larger wind turbine models have failed to deliver any significant additional output. And after all, the wind resource itself is limited, particularly in Midland regions. 


Eirgrid Constraint Report 2017


Wind speeds from Met Eireann website (in knots)


All stations record wind speeds at 10m above ground level.

Note that total wind output did increase in 2017 by about 18% by adding an extra 530mw of wind capacity, an increase of about 20% on the previous years installed wind capacity. The capacity factor measures the actual output in relation to potential output if the entire wind turbine fleet had been operating at full output for the entire year. So theoretically if wind speeds increase so should the capacity factor. Or if wind speeds stay the same and the maximum level of wind permitted into the grid increases, then capacity factor should also increase.

Monday, 2 July 2018

Agriculture Emissions Should be Reducing in a More Extreme Climate

Agricultural emissions has been in the news lately after the minister for agriculture claimed that agricultural emissions had been decoupled from production. Many groups rightly corrected the minister who had compared increased dairy herd and milk production with total agricultural emissions.
"in the five-year period 2012-2016, dairy cow numbers have increased by 22 per cent and corresponding milk production by 27 percent while emissions increased just 8 per cent, demonstrating a level of decoupling is occurring.”

Other agriculture emissions include methane and N2O from 6 million beef cattle, N2O from pigs and fertiliser; CO2 from liming fields, GHG from fishing industry, fossil fuel for tractors etc. so including those in the eight percent total increased emissions figure was obviously a mistake. In reality, dairy emissions increased at about the same rate as production. Emissions from agriculture are the largest single contributor to Ireland's greenhouse gas emissions.

This got me thinking, what would happen if agricultural emissions decreased? According to the climate changers, there would be less global warming so this would be a good thing. And what could drive emissions down ? If there was a fodder shortage, for example, then this would lead to a reduction in the cattle herd and a reduction in emissions. Extreme weather, in the form of a long period of frost or drought, would lead to such a fodder crisis. And what causes extreme weather ? Climate change / Global warming of course ! So if the climate is really becoming more extreme, then agriculture emissions should be falling - they should be self regulating without any need for Government herd or dairy quotas.