Wind Industry Admits Wind Energy Costs Money

But claim only as little as €1 per person

A recent Irish Wind Energy Association report has stated that the total net cost of wind energy to the consumer has been one euro per person per year since 2000. It is an interesting report for a number of reasons, not least, that this is the first time the wind industry in Ireland have admitted that wind energy costs money. 

The total cost calculated was €0.1bn, but this includes savings from not having to pay EU fines of € 0.7bn. Since it now looks like we will miss our targets regardless of how much more Ireland invests in wind (and unlikely in any event that the EU will impose fines on Member States), the actual cost then of wind energy according to the report was €0.8bn , eight times the cost claimed.  

Their calculations were based on wholesale price and capacity payments savings of €2.5bn  on one side and costs of €3.3bn on the other side arising from the PSO Levy, DS3, grid investment and constraint costs. This is the first time that the wind industry have acknowledged that these last three costs are directly related to increased levels of wind. This blog has argued that they should be included as wind related costs for many years now. 

I have shown before that the link between higher levels of wind and lower wholesale prices is tenuous. Wholesale prices are actually rising as investment in wind is at it's peak. The wind industry report used models to calculate their wholesale price savings rather than real data. I can no longer find any real time pricing data on the new SEMO website.  But if it is really the case that wind has led to €2.3bn in wholesale price savings plus €200m in capacity payments savings, then that means that power stations have taken a hit of €2.5bn over the 20 year period, with some additional revenue of €0.5bn from additional constraint payments. So about €2bn in lost revenue, the equivalent of about one whole year of wholesale payments lost to fossil fuel generators.  There is some evidence that has come out in recent days that shows that power stations are now losing money. Last year, ESB were forced to write down the value of two of their power stations. 

Finally, the report admits what I've been writing about for years, that only 10-11% of wind energy can be relied on as equivalent conventional capacity (capacity credit) :

The rate at which wind capacity reduces the capacity requirement is defined by the wind capacity credit, which is around 11% of installed wind capacity.

Under the I-SEM capacity market rules, wind receives a capacity credit of about 10% and OCGTs a capacity credit of about 92%. This means that 1 GW of wind is replaced by 109 MW (= 1 GW * (10% / 92%) of OCGTs.

The Wind Aware Ireland report goes into detail on the various wind related costs (they calculated a cost of € 1.2bn per year). I do not want to rehash all of those points, for those interested you can read the report here. But for further proof that costs across the board are increasing every year as more wind is added, one need look no further than the recent Ancillary Systems Services Report released by Eirgrid. When compared with the same report from three years ago, the costs to maintain back up reserves has more than doubled :

The full IWEA report can be read here.

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 : http://irishenergyblog.blogspot.com/2014/12/seais-quantifying-savings-from.html

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.

Battery Storage Project Doesn't Live Up to Hype

A new 200MW battery storage project in Co. Offaly has been hyped up in the media as a project that will "boost use of renewable energy and reduce dependence on fossil fuel-fired power plants."

From the Independent :

BESS (Battery Energy Storage Solutions) involves the storage of power from the grid which is then resupplied on demand. It will allow renewable energy generated at night to be stored, which would otherwise have to be curtailed due to a lack of demand.

The power can then be released back into the grid, avoiding the use of conventional oil or gas-fired power stations to generate electricity.

The 200MW proposed by Lumcloon could provide power for the equivalent of 170,000 homes.

In reality, the storage facility will not generate any electricity. It will not provide power for any home nor will it reduce dependence on fossil fuel power stations. In fact, it will increase dependence on fossil fuels during periods of low wind. 

According to the planning application, the main purpose of the storage unit is to provide a quick injection of power to restore balance to the grid when there is a fall in system frequency. A fall in system frequency could occur when there is too much wind generation in the system and not enough conventional. According to the Lumcloon Energy website, the facility will need to respond within 5 seconds.

The storage unit is an appliance, like a washing machine, in that it will be a consumer of electricity. It could be called on at any time to inject power, so it will need to be fully charged at all times. So while it will be able to charge at night when there is surplus wind energy, it will also need to charge during periods of low wind thereby increasing dependence on fossil fuel. Therefore, it will be useful during periods of high wind, but a drain on the grid when there is no wind.  

Ireland's only pumped storage facility, Turlough Hill, is also a net consumer of electricity. It has a fixed regime, where it stores electricity at night when it is cheap to do so and exports electricity during the day when prices are higher. Lumcloon is similar but different. Turlough Hill trades in the single market like any other generator. Lumcloon, on the other hand will be paid for providing "system services".

These services must be provided to the grid when requested by the grid operator at short notice , unlike electricity which is bid into the market in a competitive pricing system in advance. They are high quality sophisticated high voltage and frequency services.

A grid run on low levels of renewable energy and supplied mostly by conventional generation plant [i.e coal , gas, hydro, nuclear etc] , does not need to provide such services as they are embedded in the product conventional generators provide.

The storage unit will not sell electricity back to the system ( and receive a price for this product the same as an hydro or wind plant would ) , instead it will receive special remuneration set by the regulator and this remuneration is an additional cost to the system and will have to be recovered from the consumer. 

So the net result from this project will be additional costs to the consumer and it will have little impact (or even none) on the reduction of fossil fuels. A long way from the hype in the media.

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.