Coal and Oil to the Rescue During Cold Weather

Last week was one of the coldest spells of weather here in Ireland of recent years. As usual with very cold periods, wind generation was low. The grid operators struggled to keep the lights on and many amber alerts were issued.

Wind energy contributed about 20% of the power on average. 

Whitegate Gas power station was and still is out of action which is surprising for a modern ten year old power station. Gas power still provided the majority of the power in the grid mix -  around 50%. 

Wind energy last week - only a small portion of the total installed wind capacity of 4,000MW was available at times

 

Coal provided 12% despite only two out of the three generators at Moneypoint functioning.

An internal ESB memo shows that national grid operator, Eirgrid, asked the company to start up one of its three generators at Moneypoint in Co Clare, which had been shut down, to avoid any possible risk of blackouts [Eirgrid].

Starting up a coal generator takes at least 16 hours to start up from scratch (cold start) so presumably this unit was kept ticking over (warm start). This is what many wind advocates do not understand - you simply cannot switch off a large power station and expect to turn it back on again at short notice. 

Imports were only 1% presumably because UK had no surplus electricity of their own.

This then leaves "Other" at 10%. 

There are only two possibilities for what this comprises now that all but one of the three peat power stations have been discontinued - waste to energy and oil/diesel. Only one waste to energy plant is currently in operation at 62MW. So assuming it was running at max output it was providing about 1.5% of the total fuel mix. Edenderry peat power station now operates at about 60MW also (the other half of it's fuel source is biomass) so likewise about 1.5%. Therefore, unless I'm missing something, about 7% of the fuel mix came from oil and diesel generators. 

Which is roughly the portion of fuel mix from the two peat power stations that were closed down. Oil generation has not contributed this much since the 2000s. This amounts to an indictment of the renewable energy program, in that 4,000MW of new wind energy installed cannot replace 230MW of peat.

Based on that, the expectation that Moneypoint coal power station will close down by 2025 is now looking very unlikely.

Amber Alert With More Generation ?

 Eirgrid warned this week of an Amber Alert due to high peak demand, a loss of a number of generators and low wind generation :

“There were a number of reasons that gave rise to Wednesday’s alert. Firstly, two of the three units at Moneypoint, the country’s largest power station, suffered technical failures and were not available. This resulted in the loss of 570 megawatts of electricity.

“Generation at Whitegate power station in Cork totalling 450 megawatts was also unavailable due to technical issues. A 243 megawatt generator at Tarbert power station was called up but could not respond due to technical problems. 

“The electricity market was set up for Ireland to export renewable energy via the two interconnectors (EWIC in the South and Moyle in the North) linking Ireland and GB.

“Following the issuing of the amber alert we were able to reverse the flows on the Moyle Interconnector and on EWIC shortly after that. There was also a drop in wind generation greater than was forecast prior to the alert being issued.

“There was no loss of electricity during the alert which ended by 6.20pm on [Wednesday],” the spokesman explained.

 Apparently the last time we hit such a demand was back in 2010 but there was no mention of an alert back then. In 2010 there was 1,405MW of wind installed on the grid. In 2019 this reached 4,235MW (+2.8 GW). The 500MW EWIC interconnector was commissioned in 2012. 

So the question has to be asked, how is it that with 3.3GW of additional generation equipment, we are now struggling to meet demand? 

 

Higher Levels of Back-Up for Ireland's Renewables Based Grid

The grid operator in Ireland has always required back up generation, known as operating reserves, in the event that a power station fails which could cause a widespread blackout. Usually, these are powered by fast acting fossil fuel plant which can be switched on in an instant. But Ireland's transition to a wind powered based grid has not resulted in less back-up, but more back-up generation which obviously has an impact on the ability of wind to reduce emissions.

The first table below is from a few years ago and shows four different types of operating reserve with a minimum requirement of 110MW during the day and 75MW during the night.

The next table is from 2020 and shows that Reserves have increased to 155MW during the day and 150MW during the night - a 40% increase during the day and a doubling during the night.

 In a 2007 report, prepared for Eirgrid, titled "Wind Variability Management Studies (P.Meibom et al)" , Danish scientists and University researchers concluded that:

 "Generally, the demand for replacement reserves increases with
increasing wind power capacity installed.

The occurrence of high demands for replacement reserves is
mainly driven by a high number of simultaneous forced outages that happens
simultaneously to relatively high wind power. The value of these peaks tends to increase with increasing wind power capacity installed."

In another 2005 study by R. Doherty and M. O’Malley of UCD Dept of Electronic and Electrical Engineering, titled “A new approach to quantify reserve demand in systems with significant installed wind capacity” it was stated that :

The methodology is applied to a model of the all Ireland electricity system, and results show that as wind power capacity increases, the system must increase the amount of reserve carried or face a measurable decrease in reliability [i.e. increase the risks of a blackout - blog note].

So this was well known, that as you increase wind energy, the grid becomes more unstable, and more back-up reserves are needed. It's becoming increasingly clear that Ireland has already reached it's limit on wind generation, where the benefits are more than offset by the costs.

Wasteful Spending Must be Cut in Wake of Coronavirus

Now that Ireland is entering a period of extended lockdown, which the people are complying with, people are asking what will the future hold.  Money will of course be tight in the future,  so wasteful spending will need to be curtailed.

The virus will simply not go away post lockdown but will be around in our environment for some considerable period of time. Quite considerable sums will have to be spent recalibrating the health service. In this context we have the European Investment Bank, the Commission's Bank, providing €530 million to fund the Celtic Interconnector to France:

https://www.dccae.gov.ie/en-ie/news-and-media/press-releases/Pages/Press-Release-Government-Secures-%E2%82%AC530m-EU-grant-for-Celtic-Interconnector.aspx   

We already have so much wind on the Irish grid, that huge surges occur whenever a low pressure system passes through. Not only are conventional plants being curtailed, but so to are the two Waste to Energy plants in Ireland, 50% of whose electrical output is renewable as that is the fraction of biomass in the incoming municipal waste. Their furnaces have to be maintained at a minimum of 850 C, to combust the incoming waste, so the steam is diverted away from the generators and into the cooling system. in 2018 these two plants curtailed the equivalent renewable electricity of 1.5 times what the Dart used that year, dumping instead the energy (in the case of Dublin Waste to Energy into Dublin Bay). As we know the whole programme is a mess.

If we consider the East West Interconnector built a few years ago from Malahide in Dublin to North Wales, this was a completely uneconomic project, as the Irish Academy of Engineers pointed out several times, neither was there any justification other than to facilitate more wind energy. Hence no commercial bank would have provided the funding. The EIB stepped in with a €300 million loan, the EU Commission gave direct funding of €100 and suddenly the €600 million project was viable. The UK paid not a penny for the infrastructure and our network charges on our electricity bill, which is around 30% of it, went up by about 5% to pay these loans back. We don't have those hundreds of millions to be just wasted in this manner in the months ahead, there is after all resonance in that we need ventilators not wind turbines. 


The millions to be spent on the North south Interconnector now also looks questionable. What of the billions being spent every year on NGOs ? In the wake of the coronavirus pandemic, difficult financial decisions will have to be made to ensure essential services such as health and social welfare are maintained. Priorities will have to change.

Does Wind Energy Reduce CO2 Emissions ?

There has been a lot of coverage recently about how much wind energy is contributing to the electricity grid, but how much CO2 is it really saving ?

The graphs below, based on data from eirgrid dashboard, show that on some days there is absolutely no savings at all.

The two days being compared are 23rd January 2020 and 29th of November 2019. Note that wind generation (blue) on 29th November is over 7 times that of 23rd January 2020 but CO2 emissions (in yellow) are virtually identical.

East West interconnector (in green) minus figures are exports, pluses are imports. At 329 grams CO2 on both days EWIC imports are very close 84 and 81 MW on the 23rd January 2020 and 76 and 1 MW 29th of November 2019 (circled). However, even though wind output is over 5 times higher on the 29th November, CO2 emissions remain static at 329. 

This raises serious questions about the effectiveness of wind energy in the irish grid. 

Thanks to John Dooley for providing the graphs. 

ESB Profits show that Wind Energy has not Reduced Reliance on Fossil Fuels

ESB operate most of the fossil fuel powered generators in Ireland. Their gas, peat and coal generating plants amount to about 3,400 MW. Hydro about 400MW and wind about 450MW. So about 80% of their generation is from fossil fuel sources.

Given that Ireland now has in total about 3,500MW of wind, we should, if the wind energy supporters are right, see wind energy eroding profits in ESB generation.

But their latest results show that their Generation and Trading business has increased it's profits by    € 26 million to € 70 million. Although there was lower running in Moneypoint, this was more than offset by a higher margin in gas plants. 

A breakdown of this profit is not given, but we can safely assume that most of it came from fossil fuel generation since that comprises 80% of their business as I have shown above. It is indicative that during the same period, there was an impairment charge (i.e. a write down) of €1.8 million for a wind farm.

So almost a decade on from Ireland's Renewable Energy Action Plan which stated that :

Renewable energy reduces dependence on fossil fuels, improves security of supply, and reduces greenhouse gas emissions creating environmental benefits while delivering green jobs to the economy, thus contributing to national competitiveness. 

 we can now see that wind energy does not reduce dependence on fossil fuels, rather, it maintains dependence on it.

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. 

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. 

Year	2014	2015	2016	2017
Average wind speed (knots)	9.6	10.4	9.3	9.7
Capacity Factor Wind	27%	32%	27%	27%
Max wind penetration (SNSP)	50%	55% Trial from Oct	55% Perm from Mar	60% 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. 

Sources

Eirgrid Constraint Report 2017

http://www.eirgridgroup.com/site-files/library/EirGrid/Annual-Renewable-Constraint-and-Curtailment-Report-2017-V1.pdf

Wind speeds from Met Eireann website (in knots)

https://www.met.ie/climate/available-data/historical-data

	2014	2015	2016	2017
Cavan	6.3	6.8	5.9	6.3
Kerry	9.5	10.3	9.1	9.3
Donegal	14.4	15.3	14.3	15.1
Cork	12.2	13.1	11.8	12
Tipperary	8.3	8.8	7.9	8.2
Carlow	7.3	8.2	7	7.3

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.

Wind Energy, Diseconomies of Scale and Market Cannibalization

How the Irish Wind Industry is Becoming a Loss Making Industry

by Owen Martin

This blog's recent analysis of the financial statements of wind companies showed that most of the newer wind farms around Ireland were making losses. One possible explanation for this is that the wind industry suffers from the opposite of economies of scale - diseconomies of scale. Economies of scale are defined as the cost advantages that an organization can achieve by expanding it's production in the long run. Diseconomies of scale occur when the long run average costs of the organization increases. It may happen when an organization grows excessively large. In other words, the diseconomies of scale cause larger organizations to produce goods and services at increased costs. 

There are a number of causes of this but the most relevant to the wind industry is Market Cannibalization. 

Implies a situation when an organization faces competition from its own product. A small organization faces competition from products of other organizations, whereas sometimes large organizations find that their own products are competing with each other.

If we take the wind industry as a whole, each wind farm is competing in the same market and their product is the same (wind energy). Therefore each wind farm unit is competing with each other. This is a particular problem during periods of high wind and low demand, when only a certain percentage of wind can be allowed into the grid. Eirgrid must then decide which wind farms need to shut down or curtail output. It is also a problem at the micro level when turbines are located too close together and each turbine is competing for the same but limited local wind resource (wind wake). 

As more wind farms are built, cannibalization increases at the macro and micro level (among wind farms and individual wind turbines). There must then be an ideal amount of wind capacity, say for example half of average demand which would be around 2,000MW, where cannibalization is very small.  At this point, most if not all wind farms are profitable. Cannibalization increases with each additional wind farm built beyond this point. As all the good locations get used, bigger and more expensive wind turbines are deployed in an effort to increase output, as well as increased numbers of turbines resulting in them being placed ever closer together . However, this increases costs per unit as both the local wind resource and electricity demand remains the same while the cost per turbine increases.  We are now at around 3,000MW of wind and there is evidence that wind farms built since 2010 are making losses so probably the ideal amount of wind is somewhere around that 2,000MW mark. 

http://www.economicsonline.co.uk/

In the case of, for example IT companies, market cannibalization can be planned or unplanned. Apple plan their market cannibalization so that their latest iPhone out-competes the older versions. In this way, they attract both existing customers looking to upgrade their phone and new customers who are looking for a new phone. The sales of the older models decline but the sales of the newer model outstrip past sales of the older models. However, in the case of wind energy in Ireland, the cannibalization is unplanned. It is as a result of over-saturation in a market with limited market share available for each new wind farm unit. 

This is a problem which nobody has really examined and is most peculiar to Ireland since it has a very small grid. Therefore, it really makes no sense to pursue wind energy any further until a full assessment has been carried out and possible solutions like battery storage are trialled. 

ESB - A Financial Perspective

This post will be a longer examination into the financials of electricity generation plant around the country (mainly wind). It will get a bit technical in places but I will do my best to explain terms used. 

ESB is the largest energy company in Ireland and is 95% owned by the Irish State. Last year, it recorded a loss of €31 million after writing down the value of their generating assets by € 276 million. The operating profit before the impairment was € 490m, the lowest profit in the past five years.

Following impairment reviews of the generation assets ESB recognised an exceptional impairment charge of €276 million in relation to Moneypoint (€142 million), Aghada Unit 2 (€69 million), Synergen (€30 million), Poolbeg (€21 million), Marina (€1 million) power stations and €13 million across five wind farms

Moneypoint is a critical piece of infrastructure. Without it, the 400kv lines in the west of Ireland will have insufficient voltage to carry the power eastwards.  The impairment now means that Moneypoint coal power station is practically worthless. However, it must be noted that Moneypoint has been around since the 1980s.

Two of their power stations are to close altogether - Marina and Aghada (steam unit)

Capacity contracts were not accepted for ESB’s open-cycle gas unit at Marina and the conventional steam unit at Aghada and, after many years of excellent performance and service to electricity customers, once I-SEM starts in May, there will be no commercial basis for the continued operation of these units. 

The loss of the steam unit at Aghada will increase emissions from the site as this generator would be more efficient than the open gas cycle turbines built there around the same time in the 1980s (there still remains a separate and very efficient CCGT at Aghada built in 2010).

The published accounts do not show a breakdown of operating profit into fossil fuel / renewables (which seems to be a trend among the large energy companies), which would have been very useful.  But there are indications that the renewables part of their business is not performing as might have been as expected. 

Return on Capital Employed (ROCE) 

The Return on Capital Employed (ROCE) is used as an indicator for the Return on an Investment i.e. how much one pound spent on assets generates in profits. I have calculated it by taking the Operating Profit (profit before interest and tax) and divided by total assets less current liabilities.  The sweet spot seems to be in the 14-17% range and this crops up in successful companies from across different industries. Successful Irish companies like Ryanair, Kingspan, Glanbia and Kerry Gold have ROCEs in the region of 14 - 17%. In the UK, Marks and Spencer's recent report shows an ROCE of 14%. 


The ROCE for ESB seems to be around 6% historically. The highest I can find was 10% in 2007 when the prices of fossil fuels peaked. It now stands at 4.6% for 2017, which is historically low.  It has dropped every year for the past three years from 6.5% to 6.1% to 4.6%. Low wholesale prices are of course a contributing factor. However, the average wholesale price rose from €41.82 in 2016 to € 47.48 in 2017 so we should have in theory have seen an improved ROCE ratio.

Comparable companies like SSE and E.ON have recently reported ROCE ratios in the region of 10% so ESB's ratio is comparatively low.

Interest Cover

A company needs to have enough profit left over from paying normal business expenses to cover interest payments on their loans. From Investopedia:

The interest coverage ratio is used to determine how easily a company can pay their interest expenses on outstanding debt. The ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by the company's interest expenses for the same period. The lower the ratio, the more the company is burdened by debt expense. When a company's interest coverage ratio is only 1.5 or lower, its ability to meet interest expenses may be questionable.

ESB in 2016 had a healthy interest cover of 3.5. However, this has dropped below the safety threshold to 1.1 in 2017.


Financial Statements

I will only be taking a look at the Generation part of ESB's business. ESB also have a retail and grid development business. The financial statements for the gas power station and wind farms are published on the CRO website. Only financial reports for 2016 and 2015 are currently available. There was a deterioration in profits in 2016.  Presumably, things got even worse for the company in 2017. 


Gas power

A look at the most recent accounts (2016) of ESB's gas power station in Dublin shows that it was still making good profits despite the low gas prices. Dublin Bay (400MW) made net profits of €28m and €43m in 2016 / 2015. The drop in profits was presumably due to a drop in wholesale prices of 18%. It had very healthy ROCEs of 19% and 29%.  With accumulated profits of €41m by the end of 2016, the power station was doing very well. In 2015, a dividend had been paid out of € 37 million. It proves that the business model for gas generation is still very strong. The power station was built in 2002 so a very strong performance after 13-14 years of operation. 

Of course, it is based in a high demand centre and is generating power to the grid most of the time. I was unable to find financial statements for any other power stations. I presume most of the other ones wouldn't have been as profitable.

Wind power

I looked at the financial statements of nine of ESB's wind farms in the South of Ireland. A total of 175MW of wind generation. 2015 is a good year to begin with as most of the farms had high load factors, equal to or above the national average of 33% (except for one - Derrybrien). All wind farms made an operating profit, however two made net losses, most notably Garvagh Glebe, a 26MW wind farm in Leitrim which made a loss of € 480,000 despite having the highest load factor at 42%. This was because of very high interest payments - which were about 45% of turnover. 

The average ROCE was 6%, in line with the overall average for ESB Group. Another Leitrim wind farm, Blackbanks, had the highest ROCE at 11%. Blackbanks has a smaller 10MW output and interestingly has smaller (0.85kw) turbines than nearby Garvagh which has 2MW turbines, yet the smaller wind farm had double the ROCE of the larger one (remember that ROCE is based on profit before interest). This seems to fly in the face of conventional wisdom that says the bigger the turbine, the bigger the return.

Combined operating profits in 2015 for the nine wind farms was € 9.2m and net profits was € 2.1m. Depending on how you measure it, this gives an operating profit of €52,000 per MW and net profit of €12,000 per MW for 2015. Compare this with the gas power station in Dublin which had an operating profit of € 127,000 per MW and a net profit of € 107,000 per MW in the same year. Gas power was 2.5 times more profitable in 2015 than wind before interest and and nine times more profitable after. Operating profit, however, is the best way to compare the two generation sources as the gas power station had paid off most it's loans by 2016 and so had very low interest payments. Therefore, gas, which has fuel input costs, is two and half times more profitable than wind, which has no fuel input costs (and wind gets priority on the grid). This fact deserves a separate article on it's own but presumably the much higher load factor for gas has a lot to do with it.

By the end of 2015, accumulated profits from all these wind farms was € 14 million. One dividend of € 1.5m was paid out by Mount Eagle wind farm in Kerry. Again, this wind farm has the smaller older style wind turbine. 

In 2016, the average load factor was still decent at 31% but the ROCE had switched to negative. All wind farms made a net loss apart from two. Combined losses for the year were € 5m. Over the two years, combined losses were € 3m. 

In 2016, interest cover went from positive to negative. Average interest cover over the two years was 1.09, which falls short of the recommended baseline of 1.5. The ROCE would need to rise to at least 10% to reach a safe interest cover and to 15-16% to reach an ideal one.

The worse performing wind farms were the larger ones built in 2010 and 2011. The larger 2MW turbines on average cost 4.5 times more than the smaller older models for 2.3 times the capacity.  In fact, these newer wind farms had high accumulated losses by the end of 2016 of € 6m and some had notes in their accounts stating that they were dependent on financial support from ESB group, which indicates that the higher output from their bigger turbines was not enough to compensate for the additional associated costs.

Two dividends were paid out, € 1m from Mount Eagle and € 1.5m from Blackbanks, both older wind farms with smaller 0.850KW turbines. They were both in good financial health by the end of 2016. 

In total, ESB group had loans outstanding of €170 million to all nine wind farms by the end of the year. 

In 2017, total impairments for wind farms was € 13 million. In Northern Ireland, the value of a wind farm in Tyrone had been written down by nearly €5m :

A review of the Hunters Hill 20 MW wind farm in Co. Tyrone, Northern Ireland was undertaken at year end. An impairment loss of €4.9 million has been recognised in the income statement in respect of this wind farm. This impairment has arisen as a result of a reduction in load factor.

ESB Networks division were also investing heavily in the grid infrastructure required to support renewables :

The focus of the 2017 investment in the transmission network was on continuing the reinforcement of the system to facilitate the connection of new renewable electricity generation. 

Capital investment in the networks businesses continued in 2017 with €644 million (74% of total capital investment) invested in the networks infrastructure in ROI and Northern Ireland (NI)

Conclusion

ESB's traditional generation model in Ireland has changed from investment in reliable power generation to renewables. However, there are signs that things have not turned out quite as planned with wind energy, in particular the newer and more costly wind farms have built up considerable losses. In essence, the older profit making gas generation fleet is subsidizing the newer loss making renewable generation. The older and smaller wind farms may well be benefiting from better sites, but it could also be the case that the smaller 1MW technology is more efficient. These smaller wind farms have by and large turned out to be good investments.  The same cannot be said for the more recent wind investments.

There are still gains to be made from conventional baseload generation. As the grid becomes increasingly unstable in the future, there will be gains to be made for ESB in building fast acting fossil fuel generators that can be switched on quickly. If Moneypoint is converted to gas, it will certainly be profitable like Dublin Bay, but will leave ESB (and Ireland) increasingly dependent on gas lines from the UK which may not be as dependable in the future. 

Wholesale prices are recovering so we should be seeing better profits for ESB. Investing in large loss making wind farms may be negating some of the benefits from higher wholesale prices. Other benefits from investing in wind farms such as carbon credits are no longer financially lucrative as the carbon price has fallen too low. ESB's investment in wind energy should be reviewed.

ESB Financial Report for 2017 : https://esb.ie/docs/default-source/investor-relations-documents/annual-report-and-financial-statements-2017-single-pages.pdf?sfvrsn=dae93bf0_2

Storms Linked to Power Station Trips

Eirgrid published this list of power station trips from the past few months:




I couldnt help but notice that most of these dates coincided with storms or very windy conditions:

5th october - Cyclone Xavier
12th october - Hurricane Ophelia
16th october - Hurricane Ophelia
21st october - Storm Brian
27th November - gale force winds
24th December - record wind penetration on the grid
3rd January - Storm Eleanor
17th January - Storm Fionn

It appears that as very high amounts of wind generation is allowed into the grid, the frequency can drop to a dangerously low level.

One of our key tasks is to maintain balance between electricity supply and electricity demand. Electrical frequency is the measure of balance between supply and demand. When supply and demand are balanced, the electrical frequency is at 50 Hz. We must maintain this balance on the system all day, every day. The normal operational frequency range is 49.8 Hz to 50.2 Hz [Eirgrid].

You can see from the above diagram that the frequency has dropped below 49.8Hz on a few occasions over this period.  As a result, the power station tripped and went offline. This then results in the frequency falling even further. At this stage, cutting demand is one of the few options open to the grid operator. This may explain some of the blackouts on these days.

The Energy Bubble is Clearly Unsustainable

by Owen Martin

The Energy Regulator has reported that there is currently a backlog of 36,000MW of renewable and conventional generation connection applications (See above graph). This would increase the current capacity of 10,500MW to a staggering 46,500MW if all of these applications were accepted. As the regulator points out we only have an electricity demand for about 7,000MW. 

Under normal circumstances, only capacity that replaced existing capacity or was required to meet additional demand or reserve requirements would be accepted. Now, because of the rush to meet EU targets, thousands of megawatts of inefficient and intermittent renewable generation are being added. Renewable generation, mostly wind and solar, make up about 70% of the planned generation figure. 

This will lead to a low capacity factor across the board, with all generators operating inefficiently and intermittently. As this blog reported recently, many wind farm companies are making losses. As more generation is added, the market share for all generators will be eroded and we will see more loss making generators. Which will require yet more government intervention to keep the lights on (and possibly another NAMA to be set up).

And it gets worse. The Grid will require a large upgrade as most of these solar and wind farms will be in remote and dispersed regions far away from centres of demand. The costs will simply keep rising exponentially. 

In particular, the CRU notes that the existing backlog of connection applications amounting to 36,000MW is already significantly in excess of the all-island total electricity requirement. Keeping the non-GPA process open to further applications during the consultation period would only increase this volume. This would potentially add to consumer costs with no discernible benefit. 

 For example, with this much renewable generation, it will become increasingly difficult to stabilize and manage the grid frequency. That is why more conventional generation is required to maintain stability and of course this adds to the costs. The Regulator refers to these generators as DS3 providers and has proposed giving them priority over renewable generation :

DS3 system services are required by the system in order to accommodate increasing volumes of non-synchronous renewable generation. The CRU decided in CER/16/284 that providers of those services will be prioritised for a connection offer under the non-GPA process, and requested the system operators to develop a process for this prioritisation. 

The regulator also plans on suspending some of the renewable generation which would of course be a wise decision and be in the interests of all consumers.  Naturally, the renewable lobby groups are not happy and have somehow managed to spin this as a decision that will "result in higher electricity prices." It's difficult to understand why they are lobbying for more supply in an already over-saturated market which will erode the market share of existing renewable generators. 

The energy regulator should stick to the facts and figures as presented in her document. That way she can defend her actions later. It could be the first time an energy regulator has stood up to the green lobby and protected consumer's rights. The Energy Bubble is clearly unsustainable. I for one am hoping that for the first time in recent Irish history, an Irish regulator does the right thing before it's too late.