Saturday, 2 May 2015

Cost Benefit Analysis obligations for Ireland's Renewable Action Plan - Part Two

What has been the benefit to date from our expenditure?

By Pat Swords BE CEng FIChemE CEnv MIEMA

Ireland's Renewable Energy Action Plan (NREAP) was prepared in 2010 without any proper assessment of costs and impacts. Table 10 of the NREAP provides us with the bottom line on electricity generation, namely by 2020 the installation of 4,094 MW of onshore wind and 555 MW of offshore wind. For wind energy installed in Ireland, where project costs are higher than elsewhere, approximately €2 million per MW is the installed cost for onshore installations and at least €3 million per MW for offshore installations. This then gives a total cost for installed wind energy of almost €10 billion.

Additional electricity infrastructure is required in transmission to facilitate wind energy, already we have had the investment in the East West Interconnector to Wales at €0.6 billion, with more and even longer interconnectors to come to the UK and France – as described on page 79 of the NREAP. As a result the total cost of such interconnectors will conservatively come to another €3 billion.

In the Republic of Ireland there is the roll out of Grid 25 to expand the high voltage grid, for which an accurate cost is not known, but it is reported as some €4 billion and will undoubtedly rise, as the Energy White Paper of 2007 stated:

  • We will ensure completion of the ongoing capital investment programme in transmission and distribution networks by 2010 and oversee further extensive investment in a programme expected to total €4.9bn up to 2013.

Not only is there over 800 km of new high voltage lines to be constructed in Grid 25, but as the All Island Grid Study demonstrated, there is an additional 5,000 km of medium voltage grid connections required to connect all these wind farms to the high voltage grid. For instance, in November 2011, the European Investment Bank, i.e. the EU’s bank, lent the ESB some €235 million for network expansions to facilitate increased deployment of wind energy. Further similar loans totaling €300 million followed in 2013 and 2014. Their total loans to the ESB to facilitate network expansions for wind farms in Ireland have by the end of 2014 totaled €1 billion.

So between high voltage and medium voltage grid expansions, plus interconnectors, there is a bill of some €8 billion, for which if we add the turbines, the total now reaches €18 billion. However, we are not done yet, as the electricity grid is now, with all this wind energy, in an unstable state. As a result it is necessary to roll out so called ‘smart meters’ to regulate consumers and their demand habits. These smart meters are described on page 77 of the NREAP and for their funding; we can throw in another billion or two into the financial pot.

However, this won’t ‘cure’ the fundamental problem the grid will experience, as more and more highly intermittent wind energy is installed and given priority access over conventional thermal power generation. As the former Green Party leader and Minister for Environment John Gormley's stated in his ‘Carbon Budget’ of October 2008:

  • The target is underpinned by analysis conducted in the recent All Island Grid Study which found that a 40% penetration is technically feasible, subject to upgrading our electricity grid and ensuring the development of flexible generating plant on the electricity system.

In essence we will have to mothball our current base load Combined Cycle Gas Turbines (CCGTs), which although they cannot rapidly respond to changing loads, have efficiencies over 55% and greater. New open cycle fast response gas turbines, which are at best only 40% efficient, will have to be built to replace these CCGTs:

Efficiency curve for an aero-derived gas turbine, LM2500+, which is typical of the technology, which is used for open cycle gas turbines

Equally as bad as the poor efficiency obtained with these open cycle gas turbine, is how their emissions start to rise significantly at lower loads:

Emissions profile for a LM2500+ gas turbine

So given that a the UK authorities report that the installed cost of a CCGT is £0.9 million per MW and the installed cost of an open cycle plant (OCGT) about £0.6 million per MW, and we will require at least 1,000 MW of fast response power to balance the grid fluctuations, there is going to be no change out of another billion Euro in terms of investment in new plant and premature write offs of CCGTs.

So all in all over €20 billion plus was committed in capital investment alone as a consequences of the NREAP. By 2015 we have already installed 2,100 MW of wind energy, plus the East West Interconnector and network upgrades as previously highlighted, so we have spent quite conservatively €6 billion already. To that you have to add the operating costs, profit for the wind investors and the costs of inefficient operation of the grid. So it is not surprising that in their 2014 submission to the Irish Green Energy Paper, the Irish Academy of Engineering pointed out:

  • Without wind generation, Ireland’s electricity generation costs in the period 2005 to 2013 would have increased by 1.2 cents per kWh due to the increased cost of imported fossil fuels. But over the same period, Ireland’s business electricity prices actually increased by 4.0 cents per kWh and household electricity prices increased by 8.85 cents per kWh. This clearly shows that increased fossil fuel import costs were not the cause of electricity price increases in Ireland but rather government policies which did not place appropriate emphasis on price competitiveness.

Considering that the Irish domestic electricity rate is between 19 and 20 cents per kWh, to which additional levies are applied, clearly without wind energy, the rate would be a third less, around 12.5 cent per kWh. This is not an isolated issue; the Union of the Electricity Industry – Eurelectric had a report produced by Accenture in 2014, which provides the rather sobering graphic of how costs to the consumer are soaring, in particular due to Renewable Energy Sources (RES):

Graphic from Eurelectric report

It is also worthwhile reflecting some more as to the so called reason and what we got for this in terms of environmental protection. If we consider Ireland’s first application for State Aid to establish the first phase of the REFIT scheme for supporting 1,450 MW of almost exclusively wind energy, then the 2007 clarification documentation with the EU Commission, in respect of what environmental results were anticipated and over what period, stated:

  • Wind technology will be the dominant technology. The overall environmental improvement, based on wind technology data, will deliver emissions savings as indicated in the following table.

Table A

Annual savings per 100 MWs installed
Tonnes of oxide

Carbon Dioxide
0.19 ml

Sulphur Dioxide

Nitrogen Oxides

Ml = millions
k = thousands

It was therefore claimed back in 2007, as basis for the 'environmental protection' to justify the State Aid funding that for each 1,000 MWs of installed wind energy capacity, 1.9 million tonnes of CO2 savings would result. So what did we actually get for our money?

If we go to the National Renewable Energy Action Plan (NREAP) progress reports to the EU, we can see that the Irish report dated February 2014 claims 1,763 MW of wind energy were installed by 2012 and 2,738,072 tonnes of CO2 savings occurred that year. If we look at Table 1 b of the same progress report, then wind energy was responsible for (4,247 / 5,659) or 75% of the renewable electricity, therefore 2.05 million tonnes of CO2 savings.

This is equivalent to 2.05 / 1.763 = 1.17 million tonnes of CO2 savings per 1,000 MW of installed capacity – certainly not what was claimed for in the REFIT documentation.

However, we do know this ‘saving’ documented in the NREAP progress report is also completely inaccurate, as the calculation method is false. Namely, the calculation method does not allow for the considerable inefficiencies induced on the grid, by this intermittent input of wind energy, which requires the power stations to operate in a stop start variable manner, i.e. increased balancing. As page 29 of the Irish NREAP progress report clarifies:

  • The limitations and caveats associated with this methodology include that it ignores any plant used to meet the associated reserve requirements of renewables. These open cycle plants will typically have lower efficiency and generate increased CO2 and NOx emissions compared with CCGT and these emissions should be incorporated into the analysis. The purpose of presenting a simplified analysis here is to provide initial insights into the amount of fossil fuels that are displaced by renewables and the amount of emissions thereby avoided.

Note: Open cycle gas turbines are at best 40% efficient as compared to Combined Cycle Gas Turbines (CCGT), which are 55% efficient.

As the Sustainable Energy Authority of Ireland (SEAI) has been criticised for inaccurate claims, they produced another report quantifying fuel and emissions savings, this time where they claimed their modelling output allows for inefficiencies on the grid. The conclusion of this revised report was that for 2012, wind energy saved 1.5 million tonnes of CO2.

Therefore with this more in-depth assessment methodology the claimed savings are now at 1.5 / 1.783 = 0.85 million tonnes of CO2 savings per 1,000 MW of installed wind capacity. Sadly, this is actually less than half (45%) of what they claimed would occur when REFIT was initiated back in 2007 to fund the building of this infrastructure in the first place.

Furthermore, it has to be said that the SEAI report above is highly suspect, in that it is based on computer models, which concluded that increased ramping up and down of gas plants occurred, for the situation where there was no wind installed on the grid. Yet it is well known that power plant operators are complaining that the degree of ramping is now greater to compensate for the increased wind energy input. Indeed, the whole grid is being redesigned, not with the goal of fuel efficient generation, but instead to prioritise fast response, as recent documentation from the Irish grid regulator on this subject demonstrates.

Not only are the 1.5 million tonnes of CO2 savings for 2012 somewhat exaggerated, but these savings are not going to get a whole lot better as the NREAP progresses. In 2004, Eirgrid produced a report on the “Impact of Wind Power Generation in Ireland on the Operation of Conventional Plant and the Economic Implications”, which clarified:

  • The adverse effect of wind on thermal plant increases as the wind energy penetration rises. Plant operates less efficiently and with increasing volatility.

In other words, it is a case of diminishing returns as more wind energy is installed to comply with the trajectory of the NREAP. For Ireland total greenhouse gas emissions in 2013 were 58 million tonnes, while electricity generation amounted to less than 11 million tonnes. So these savings on a national basis are extremely poor when compared with the reckless enthusiasm by decision-makers for renewable energy and their disregard for both the resulting financial and environmental costs. Plus, these alleged savings from Irish wind energy are only 0.004% of global annual emissions of carbon dioxide, which given that there has been no increase in global temperatures since 1998, is the classic case in terms of effectiveness of ‘a drop in the ocean’.

1 comment:

  1. The scientific way to judge wind energy, is to compare a system with no wind installed with one with considerable amounts of wind. The more wind installed, the more noticeable the differences are. There are two different types of customers, Captive and free. The captive ones are the domestic consumers, while the free ones are the industries. Industries here are complaining, Cadburys are gone to Poland. many complain about electricity costs. We had a perfectly adequate simple tried and tested power generation system. It was largely state run leaving it open to becoming a plaything for politicians. They could not leave good enough alone. The day dreams of idiots have become government policy.