Saturday, 28 July 2018

Ireland Moves Towards Auction Based Support System for Renewables

The Minister for Energy and Climate has announced that Ireland will move to an auction system for renewables in 2019.

RESS been approved by Government and I will now seek EU State Aid approval. This Scheme will mark a shift from guaranteed fixed prices for renewable generators to a more market-oriented mechanism (auctions) where the cost of support will be determined by competitive bidding between renewable generators. The RESS is a critical step in bringing Ireland to a leadership role in relation to renewable energy, climate action, and energy efficiency. Communities are central to the design of the new Scheme and this will have a transformative impact on renewable energy projects right across the country.

 Theoretically, this should lead to lower electricity prices but let's wait to see the finer details of how it will work. The Press Release mentions the importance of not locking in higher costs for consumers - surely the first time an Irish minister has acknowledged that the existing REFIT scheme led to higher electricity prices. 

RESS auctions will be held at frequent intervals throughout the lifetime of the scheme. This will allow Ireland to take advantage of falling technology costs and by not auctioning all the required capacity at once, we will not be 'locking in' higher costs for consumers for the entirety of the scheme.

In the submission made by Irish Energy Blog to the consultation on the scheme (which can be read here), I outlined a scheme that would allow a low cost alternative to the fixed price REFIT scheme, which of course wasn't adopted, but I did warn about locking society into high energy costs : 

This would ensure that our society is not locked into high energy costs for many years to come.

The proposed auction scheme still requires EU State Aid approval.

Thursday, 26 July 2018

If We Really Care about Sustainability Then Lets Look at our Debt

by Owen Martin

The chart shows the latest data for Gross Irish General Government Debt over the period 2001 to 2017, with the 2017 outturn showing a level of 111.1 per cent for debt-to-GNI*.

Ireland's debt burden is understated by standard GDP comparisons. Using adjusted Gross National Income (GNI*), which adjusts GDP for the impact of foreign multinationals who book their large non Irish profits here, our debt burden remains high at 111% for 2017. Our government still runs up deficits each year adding to this debt. Government spending is still out of control. 

Ireland's unemployment rate in 2012 was 16%, it is now at 6%, a fall of 62%. Yet, social welfare payments (excluding pensions) have only fallen by €2 billion, from € 14.5bn to € 12.5bn, a fall of just 14%.  How can this be justified?

Our EU contribution has doubled since 2012 to €2.6bn. Our already bloated health sector, one of the most well funded in Europe, has had an increase of €1 billion in it's budget. The funding for housing has more than doubled to €3.3 billion. Superannuation and retired allowances have increased by €50m to €570m. Foreign Aid spending has increased by €40 million to €500m.  Spending on public broadcasting has also increased, now reaching € 255 million.

This level of debt and spending is clearly unsustainable and allows us basically to consume resources beyond our means - the very definition of unsustainability. Yet many politicians from all sides want to increase spending and debt further, whether it's hikes in public sector pay or bringing in more migrants who require public housing and medical services.  

This should be target number one on the list for groups like the Citizen's Assembly. But of course it doesn't even feature in climate change discussions as climate policy is just another justification for more spending, more taxation and more debt. 


2) Unemployment rate was 5.8% in may 2018. population increased by about 4% since 2011, according to CSO.

Monday, 23 July 2018

Meteorologist Slams Citizen's Assembly for Lacking in Scientific Impartiality

Professor Ray Bates Urges Prudence on Climate Change

Ray Bates, once head of research at Met Eireann and a former senior scientist at Nasa's Goddard Space Flight Centre, has urged the Government to pursue a prudent climate change mitigation strategy "consistent with safeguarding our economy" and has warned that "we could go seriously wrong if we continue with measures that may do incalculable damage to Ireland's economy and the well-being of its people".  He has criticized the Citizen's Assembly body, whose primary recommendation is that climate change be placed at the centre of policy making in Ireland, for "lacking in scientific impartiality".

The Bill under discussion and the recommendation of the Citizen's Assembly are based on a view that we are indeed in a climate emergency . They will involve costly unilateral actions by Ireland going far beyond anything we are required to do under our EU obligations. Given this, it is astonishing that more public debate has not taken place regarding the underlying assumptions.

Having attended the Assembly as an observer he found "the scientific talks given, to varying degrees, to be lacking in scientific impartiality. Rather they appeared to me to be tailored to promote the political goal embodied in the wording of the Assembly's assigned topic. Some examples :"  

•  Global warming predictions from the climate models were presented without the appropriate caveats regarding the models' reliability and their tuning to give a climate sensitivity lying in an anticipated acceptable range.

•  One researcher spoke of the dangers of increased flooding without making any reference to a 2017 article on which he himself was a co-author, which found that over the past 80 years, "the number of significant trends in major flood occurrence across North America and Europe was approximately the number expected due to chance alone. Changes over time in the occurance of major floods were dominated by multidecadal variability rather than by long term trends.

•  Another researcher stated that El Nino causes a change of only 0.1C in global average temperature, thereby denying the fact that it was El Nino, not greenhouse gases, that caused the 0.5C spike in global warming peaking in February 2016.

He also believes that recent media headlines suggesting that climate change was the cause of more weather extremes was "misleading, but feeding into recent developments in climate politics."

While acknowledging that climate change is happening and that greenhouse gases do indeed have a warming effect, Bates makes the point that the available evidence does not indicate that a climate emergency is looming :

Does the observed record of global warming indicate a climate emergency ? The most important index to examine in this regard is the global sea surface temperature. Ocean temperatures are free from the effects of urbanisation and land use changes that limit the reliability of land temperatures. The increase in the global average sea surface temperature from it's temporary peak around the middle of the last century to its present value is quite small: the difference between the 1936-1950 average and the 2000-2014 average is only 0.36C.  

Neither our recent unusual weather events nor the general progress of global warming provide sufficient evidence of a climate emergency to justify the costly unilateral climate measures that are now under way in this country.

The full article was published in the Sunday Business Post and can be found here.

One thing I have noticed with the Citizen's Assembly is that there is zero recognition of the fact that we have already installed 3,000MW of wind energy, roughly the equivalent of the capacity of seven or eight power stations, yet the Irish climate continues to be extreme i.e. wind energy has had zero impact on the climate yet they insist on more such measures to be introduced immediately rather than exercising prudence and basing policy on robust analysis as Professor Bates advocates. 

Saturday, 21 July 2018

Dr Neil Walker gives Green Politicians a Rare Dose of Realism

Reading through the "debates" in the Dail is a painful exercise. They often feature repetitive and conflicting speeches fueled by idealism and ideology and rarely containing any facts or rational thinking. This is particularly the case in debates on energy. So it was with great relief that an actual expert was recently questioned in a Dail committee. Dr Neil Walker is the energy representative of Ireland's largest business group IBEC. The discussion was on energy security and petroleum exploration. 

Dr. Neil Walker:
My doctorate is in climate policy. I want to come back on Deputy Eamon Ryan's [Green Party] question about why we would view one set of forecasts as more accurate than another. All forecasts are wrong, almost by definition. We tend to use the word "projections". We project under business as usual and then constrain it. Depending on the assumptions we make, the model will throw up different least-cost solutions. We can tell it we want a reduction of 8% or 95%. We can make assumptions on the roll-out of electrification of heat, deep retrofit, transport decarbonisation through electrification or gas fuel prices and the model will come up with different answers. Generally, they run the model numerous times and identify the no-regrets measures. Gas-fired generation is a no-regrets measure.
There is no obvious alternative. It is worth pointing out, though, that even if we were somehow able to achieve 100% wind power generation on the system, which would fall over on day one when the winds start blowing, it would be very difficult to get beyond 50%. We are leading the world in going up to 70% for short periods, but to get 50% on average through the year is an extraordinary technical achievement. Denmark is hugely interconnected to Germany so it can produce a lot more because it is relying on fossil generation, indeed, coal-fired generation, from Germany to keep the lights on when the wind stops blowing.
One of the points about renewable heat is that it is grossly underfunded.
In recent years, we have spent €300 million to €350 per annum on renewable energy sources for electricity, RES-E, but almost nothing on renewable heat or transport. That reflects policy measures that have been in place since Deputy Eamon Ryan was Minister. The emphasis has been on renewable electricity which, unfortunately, makes no contribution to our national target. Our 20% target excludes the power sector and was not intended to be met through domestic effort. The European Commission ran a model which determined the most cost-effective approach. It then weighted that because Ireland was regarded as a rich country - it was before the collapse of the economy. Three years later, in 2012, the Commission realised the sums were incorrect and re-ran the model to determine what each country's cost-efficient effort would be if there were no boundaries in Europe and everything was done cost-effectively in the effort-sharing sector. For Ireland, that would imply no reduction but we had a 20% target, with the implication that we would do whatever possible in terms of cost efficiency but would then have a significant shortfall and need to buy international credits.
Four or five years ago, it seemed likely that we would get at least halfway to the 20% target. However, the economy has since boomed, more cars are being driven, more houses are being built and we are consuming more energy but do not have the renewable heat and transport incentives which should have been in place ten years ago. We have strongly advocated for a significant increase in that expenditure. There was a very cordial exchange at the national economic dialogue in the past week or so and there is a general understanding among many NGOs, the business community and even the farming community about what needs to be done to reduce emissions.
On the issue raised by Deputy Bríd Smith, I cannot comment on the figure of 30% less emissions for European and indigenous oil and gas but, because I used to advise the Commission for Energy Regulation on natural gas, I am aware of the very big compressors in Moffat which pump gas from Scotland to Ireland. For every 100 therms that are shipped, approximately one to 1.5 therms must be burned. That is a small amount but the gas only needs to travel 200 miles. Proportionately more would have to be burned if the gas was travelling a far longer distance and far more so in the case of liquified natural gas, LNG.
Several years ago, the Economic and Social Research Institute pointed out the catastrophic consequences of a loss in gas, as might be caused by an issue at the connection point in Moffat, and welcomed the possibility of a backup source. In the absence of piped gas from an indigenous field as a backup, it was determined that an LNG terminal would probably be needed. LNG has a far bigger carbon footprint because the gas which comes out of the ground must be compressed in order to liquify it, which is very energy intensive. It must then be transported, stored and evaporated, all of which uses energy. The laws of physics mean that the production and delivery of LNG will always be more energy intensive than that of gas delivered through a long-distance pipeline. That is why LNG is more expensive and the reason a terminal has not been built in Ireland. Such a terminal would probably require a subsidy but the Department or regulator may decide that is what we need. There is a premium on having diversity or security of supply.
In terms of whether we are importing Russian, Norwegian or British gas, one must identify which would be the marginal producer if we were consuming one more therm of gas. Would Norway produce the extra therm or be producing flat out or constrained by the pipe? Britain may have untapped supplies or the gas may come from the Continent. If the additional therm of gas came from the Continent, one must seek its origin. In the case of a country at the end of the pipe which is consuming more because less is being produced domestically, one must ask which marginal producer will cover the shortfall. Russia may be that producer. I have never investigated that issue but I suspect the gas probably originates in eastern Europe or beyond.

Eamon Ryan (Dublin Bay South, Green Party)
It works the other way. The Corrib gas field is connected to the east and some of our gas is probably consumed in Vladivostok. Following the Russian gas dispute in 2008-09, the entire European gas system was changed to a two-way flow system and, similar to the oil market, a fungible market. Ultimately, the argument being made by Dr. Walker is based on security. However, as it is unlikely that an indigenous gas field will be found, relying on it for security is an incredibly risky strategy. To a certain extent, our only option is to rely on the United Kingdom and European system for gas. I have not heard anything to suggest that we will not be able to continue to rely on it. The senior British Brexit negotiators have stated that they wish to maintain energy co-operation no matter what happens. Does Dr. Walker have reason to doubt that? How do we get greater security by looking for gas that is unlikely to be found and saying the other routes are insecure? If they are not secure, they are not secure.

Dr. Neil Walker:
I am talking about physical or contractual insecurity. We hope that Brexit will be orderly and that mutual co-operation will survive but if not, we will be relying on a treaty. We do not know if Britain will stand over treaties which predate the Single Market rules. A significant amount of money is being spent twinning the pipes from Scotland but the gas comes off the Transco system at one point: Moffat. If something were to happen there - God forbid - we would be in serious trouble because that is the route which currently supplies 60% of our gas and will supply 100% of it in the future.

Eamon Ryan (Dublin Bay South, Green Party)
That argument suggests we need another connection to the United Kingdom rather than betting everything on a gas field being found 200 miles out in the Atlantic.

Dr. Neil Walker:

If one does not think it will ever come ashore, one need not ban it.

It was at this point that climate change extremist Professor John Sweeney was called on who accused Dr Walker of being disingenuous, before eventually backtracking :

Hildegarde Naughton (Galway West, Fine Gael)
I call Professor Sweeney, to be followed by Dr. Slevin.

Professor John Sweeney:
I wish to return to the University College Cork, UCC, modelling which has been advanced as - and is - an excellent least cost model. I very much admire the work of Professor Ó Gallachóir. However, Dr. Walker made a couple of points regarding outputs which I wish to address. The two scenarios chosen by IBEC, one of which is based on the research of Dr. Alessandro Chiodi and others, are non-Paris-compliant scenarios. However, the model is very sensitive to the input assumptions which are made. As Dr. Walker stated, one will get different answers depending on the weapons one chooses as inputs. Under those scenarios, Ireland's CO2 emissions would have to be reduced by 16% by 2020 and 44% by 2030 in order to comply with the model pathway which is required. I note Dr. Walker is not very keen on the 20% target for 2020 and I suspect he would not be very happy about a 44% target for 2030. However, a reference which is not included the IBEC submission and is a Paris-compliant scenario confirms Ireland would exceed its Paris requirements in terms of the quota referenced elsewhere of 766 million tonnes of CO2 by 2033. It is disingenuous to begin picking solutions without looking closely at the assumptions concerned.

Hildegarde Naughton (Galway West, Fine Gael)
Dr. Walker may respond later.

Dr. Neil Walker:
I refute the accusation that I have acted disingenuously. We cut and pasted tables from the summary report. We do not have a target for 2033. In fact, we do not yet have a confirmed target for 2030, although it is moving towards agreement. I would be very happy for Professor Sweeney to withdraw the suggestion that IBEC has tried to be disingenuous.

Professor John Sweeney:
In various parts of the ECC literature, a fair Paris requirement of 766 million tonnes of CO2 is specified. If one looks at the projections for Paris compliance in the recent publication, "Technical support on developing low-carbon energy roadmaps for Ireland", which deals with zero carbon energy pathways for Ireland consistent with the Paris Agreement climate policy, it is confirmed at pages 1 to 13 that they are producing a scenario which would exceed the Paris fair requirement by 2033. I am not talking about targets.

Dr. Neil Walker:
Does Dr. Sweeney withdraw his suggestion that I have been disingenuous; yes or no?

Professor John Sweeney:
I say Dr. Walker has been selective in choosing the literature. I think that is fine.

Hildegarde Naughton (Galway West, Fine Gael)
We will let Dr. Sweeney continue.

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.