Sunday 23 September 2018

Carbon Emissions and Country of Origin

An interesting point made about country of origin by Val Martin that was published this week in farming newspaper, The Farmers Journal.

Having studied the subject for many years, I believe that the theory that burning fossil fuel 
can change the climate is deeply flawed. Farmers are coming under attack to change tried 
and trusted production practices which is not in their best interests or the interest of our environment.

The Paris Climate Accord had no provision to cut the concentration of carbon in the air. 
Instead it forces developed countries with high wealth to population ratios to severely 
cut manufacturing and agricultural output. It allows countries with low wealth to population 
ratios to continue with and grow their fossil fuel based industries the products of which 
they can export. There are notable parallels between this policy and that of globalists, 
communists, socialists and greens.

Fuel from the ground of producing countries such as Saudi Arabia bears no restrictions until 
it arrives in Ireland where it is counted as part of out carbon emissions. Beef, lamb and 
dairy products from the ground of Ireland is counted as part of Ireland's carbon footprint and 
it is now proposed to restrict, tax and drive out production. Why is the same standard 
not applied to the country of origin everywhere? The answer is that some governments 
would not accept it, while others like ours do.

When this all started, we were told wind farms would replace fossil fuel which would 
end production of coal, oil and gas in producing counties. The idea was to use the weather 
to change the weather. With 3,000 MW of wind already installed, its not working. 
The financial accounts of most wind companies show the wind does not blow as expected
and some are struggling to pay back their capital loans. Meanwhile the German 
Chancellor Angela Merkel who was one of the main drivers behind all this, has just signed
a 9 billion euro deal with Russia for a new gas pipeline on top of those already in place.

If this carry on were properly exposed on radio or television it would not last a week, but 
the media are in on it and will not allow any debate. It would pay farmers to take a little 
time to study it and if they do, they will see their interests are about to be hit very hard.

Friday 21 September 2018

How Greencoat Renewables Were Able to Pay a Dividend

In theory, dividends should only be paid to shareholders from profits generated during a trading year. Profits arise from excess trading income over expenses. On the other side of a set of accounts are capital items like assets and shareholdings in the company. 

According to the new book "Bean Counters" by Richard Brooks, historically speaking, English common law allowed companies to pay dividends only out of profits. The books goes on to describe how some of the large and badly managed railway and shipping companies of the 18th and 19th centuries were found to have paid dividends from shareholders funds (capital) converted into income, which allowed them to boost their share price further. These companies eventually needed Government bailouts when the bubble burst.

Both Irish and UK law presently allows companies to reduce their share capital and use the funds for distribution i.e. paying dividends, once certain procedures have been followed. This is known as "Capital Reduction". As part of the process, the company must apply to the High Court for approval.  Alternatively, the directors must sign a statement of solvency for which they could be held liable if it turns out to be false.

Greencoat Renewables, which owns around 300MW of Irish wind farms, made a loss last year, yet were still able to declare a dividend. They did this though a capital reduction where the share premium account of €267,000 was converted to Distributable Reserves of € 250,000. It was from this that dividends of € 11 million were paid to shareholders. In effect, shareholders were paid a dividend out of their own money (to which the shareholders would have agreed to). Greencoat obtained High Court approval for this capital reduction.

Greencoat are not alone in this. Other Irish companies have also applied to the High Court for a capital reduction - Bank of Ireland in 2012 and AIB in 2017 both were successful in their applications. Irish News and Media applied to the High Court in 2017 but the outcome I have been unable to ascertain.

Sunday 16 September 2018

Eirgrid Increase Spinning Reserves - Irish Energy Blog Vindicated

To maintain a stable grid, Eirgrid have always ensured that there is enough "spinning reserve" (or back up generation) running or available to provide power at short notice in the event that a power station trips (i.e. suddenly has an outage) or there is a sudden change in demand. 

For many years, the minimum for this reserve requirement was set at 440MW, made up of four different types of reserve with different reaction times, of 110MW each. The quickest can deliver in less than five seconds, the slowest in less than five minutes, with the latter capable of lasting much longer than the former. The remaining reserves can react within 15 and 90 seconds. 

The two fastest reacting reserves are called Primary and Secondary Operating Reserve and are provided by units already running on the system that can change their output quickly to deal with unexpected events. The two slower reacting reserves are called Tertiary Operating Reserves and are provided by units both already on the system and that can start quickly at short notice. For additional security, there are also replacement reserves that can start from 20 minutes to four hours and are provided by fast acting offline generators such as open gas cycle turbines (basically jet engines).

The question then arises - if wind energy is inherently variable, just as demand is, or unpredictable just as a generator outage is, what impact does it have on reserve requirements in the event that it unexpectedly rises or falls ? In otherwords, does it contribute to an increase in unexpected events that can't be forecast by the grid operators ? If the answer is yes, then more reserves will be required, likely in the form of fast acting fossil fuel generators (and with a consequence increase in emissions.) Consider that the single largest generator that can fail in the system at any one time is about 500MW compared to combined wind energy capacity of 3,000MW which if acting in unison (as it usually does) is six times the size.

In 2014, the SEAI issued their  "Quantifying Ireland's Fuel and CO2 Savings from Renewables" report based on the contribution from wind energy during 2012. 

This is what they concluded in relation to the potential impact of wind generation on reserve requirements :

Future planned increases in wind capacity will influence the reserve requirements, particularly tertiary reserve requirements. The All-Island grid study showed that additional reserve requirement in hypothetical 2020 scenarios is related to the amount of wind installed but that the largest contributing factor remains the loss of the largest conventional unit. Wind power does not necessarily require larger amounts of primary and secondary reserve, when the characteristics of the wind are taken into account in the calculation of reserve requirements. The relative electrical isolation of the All-Island system means that the reserve levels consider the need for a high degree of generator flexibility, while additional rules ensure a sufficient number of units remain online to ensure frequency and voltage stability. Reserves allow the electricity system to respond to unexpected events but the ability of the system to incorporate variability and uncertainty due to renewable electricity generation is primarily determined by system flexibility. 

At present, renewable electricity generation on the All-Island system does not influence the quantity of reserve required.
In essence, the SEAI are claiming there will be little impact on reserves from wind power but with caveats thrown in about it impacting mainly tertiary reserve and careful use of words like "at present" which would indicate that future levels of wind energy are not being examined in their report anyway. 

In the same year, I wrote an article for this blog challenging the SEAI's report and in particular their omission of the impact of wind energy on reserves. I argued that higher levels of wind energy would indeed lead to an increase in reserves and based my argument on research done by both Danish and UCD researchers (in 2007 and 2005) : 

There should be enough spinning reserves to cover an outage of the largest unit in combination with a fast decrease of the current wind power production. However, the capacity of the largest online unit changes dynamically. (Doherty and O’Malley 2005) further demonstrate the dependency of the demand for TR1 [Reserve Type 1] from the installed wind power capacity. 
"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 happen simultaneously to relatively high wind power or load forecast errors. The value of these peaks tends to increase with increasing wind power capacity installed."  - Wind Variability Management Studies (P.Meibom et al)"

My article has now been vindicated four years later as a recent Eirgrid document shows that they have increased the minimum levels of spinning reserve required for the Irish grid.

Previous Operating Reserve Requirements
New Operating Reserve Requirements, Summer 2018

This means the minimum reserve now is 540MW (135 * 4), up 100MW, with at least half of that coming from units already running on the system. The reason for this increase is due to DS3 System Services Contracts. DS3 services, as explained before on this blog, are services required by conventional and other generators to facilitate high levels of wind energy. 

From the onset, the integration of wind generation presented a range of challenges previously unseen in the power sector. Through collaboration with the Regulatory Authorities and the wider electricity industry, DS3 has developed a number of innovative and progressive solutions. 

The cost of which may well become significant :

This means that some types of service providers could be available and eligible for payments for every hour of the year assuming they are not forced out or scheduled out for maintenance, even if the service is not required from those providers for all of these hours. The scale of overall payments will therefore increasingly depend on the portfolio of service providers and the expected availability of individual service providers.

2014 Irish Energy Blog article :