February 6, 2018
THIS WEEK:
China: “Detroit of electric cars”; Norway: only electric planes; California: 5 million EVs
Chinese CATL soon biggest battery maker, Europe far behind, can grid cope with EVs?
BP hopes gas will make it big, market for gas turbine collapses, Ukraine has one last chance to stop Nord Stream 2
Nuclear as flexible as gas, says EDF, and Netherlands has remarkable plan for long-term storage of nuclear waste
ENERGY WATCH #1 by Karel Beckman
China: “Detroit of electric cars”; Norway: only electric planes; California: 5 million EVs
February 6, 2018
While European countries, with some exceptions (notably Norway), are still pondering whether they should perhaps start promoting electric vehicles, and, who knows, start building some battery production capacity, China is racing ahead on both fronts.
“China, unabashedly, wants to be the Detroit of electric vehicles,” Anthony Milewski, managing director at Pala Investments, a Swiss-based investment fund, recently noted. “There is no question in my mind that they are going to lead the world in capacity and, eventually, in the technology.”
Last year China produced 47% of the 1.2 million PEVs (plug-in electric vehicles, including hybrids) sold worldwide. The Chinese market also bought around half of the total of PEVs produced, reports Jose Pontes on Cleantechnica.
The reason why most people here appear not too yet about China’s huge market share is probably because the Chinese mostly produce for themselves at this moment. Exports are negligible. So are imports, as the market is heavily protected. Just 4% of PEV sales are foreign brands, notes Pontes.
But of course with a domestic market like that, it is only a matter of time before the Chinese turn to exports.
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In case you were wondering what are the most popular EV brands in China, Cleantechnica has a table:
Total sales (over 600,000) rose 71% over 2016. EVs now represent 2.1% of all cars sold.
Despite this impressive growth, the EV market is obviously still niche compared to conventional car sales. Which means Europe and the U.S. still have a chance to catch up!
For let’s not forget: it was only in 2015 that China surpassed the U.S. as the world’s biggest market for electric cars, as news agency Bloomberg noted recently. “Sales of new-energy vehicles—including battery-powered, plug-in hybrid and fuel-cell vehicles—reached 777,000 units last year and could surpass 1 million this year, the China Association of Automobile Manufacturers estimated.”
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One European country that is in the vanguard of the global EV race is Norway. “While the EU is slowly undertaking first legislative steps towards decarbonisation of heavy duty transport, the progress is already well underway in Norway”, notes a recent article on the website of the Norwegian Bellona Foundation, an energy and climate NGO.
“Norway enjoys the world’s largest penetration of electric vehicles (EVs) per capita in the world”, it says. “Last year, pure battery EVs accounted for 20.9% of all new vehicles sold in the whole of Norway, including Arctic areas. Moreover, 52% when including hybrids.”
That’s a lot higher percentage than China!
But Norway’s ambitions don’t stop there. The country also has ambitious plans in electric trucks – and electric airplanes!
Norway does not itself produce trucks, but Norwegian companies are among the first customers of Tesla’s electric semi-trailer, which it announced last year. For example, food delivery company Asko has ordered 10 electric semi-trailers, notes Bellona. “The company was the first to procure a fully electric truck, which has already been in use for two years.”
Another company, Stena Recycling, “is procuring two electric trucks, the first of this size, above 5 tonnes. The trucks will circulate between the cities of Oslo and Moss, and drive 260 000 km per year. This is equivalent to 320 tonnes of CO2 per year, or approximately 200 flights between Norway and Thailand per year – if driven with conventional fossil fuels. Put in this perspective, there are enormous potential for cutting emissions in this sector by going electric.”
Bellona notes that “truck manufacturing companies like Scania, Volvo, MAN and BYD have all announced plans to deliver electric and hybrid trucks to the market within the upcoming two to three years. Until recently, availability of electric trucks has been extremely limited. Now, lowered costs, better performance and less charging time makes such vehicles significantly more interesting.”
The Norwegian transport companies are helped by a state-funded support program called Enova aimed at the professional market.
According to Bellona, to improve the prospects of electric road transport, the EU should follow the example of countries like China, Japan, the US and Canada in adopting more stringent fuel economy standards for heavy duty vehicles. It notes that “Last year, the EU Commission announced first steps towards curbing CO2 emissions from this sector. The proposals include a tool for the monitoring and reporting of CO2 emissions and fuel consumption of new heavy-duty vehicles, as well as development of Vehicle Energy Consumption Calculation Tool (VECTO) to measure CO2 emissions from new trucks above 7.5 tonnes.”
“The ongoing revision of the so-called Eurovignette directive, the EU electronic toll legislation, also holds promise in internalising the sector’s heavy carbon footprint. And last but not least, a legislative proposal for CO2 standards for heavy duty vehicles is expected in the first half of this year. Such standards are key to accelerating the transition to electric road freight.”
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This isn’t all that Norway is doing, however. The country is actually aiming to “fly full electric by 2040”, according to another report from Bellona.
The Norwegian government has made a pledge “to electrify all planes in the next 20 years”.
This sounds pretty incredible, but there are circumstances that make this idea a bit more plausible than you might think at first. As Bellona notes, “Due to Norwegian topography and physical barriers like fjords and mountains, there are many small airports scattered around, often within short distances. Flying has become the preferred mode of transport for many Norwegians, and the most efficient way to reach remote places.”
“Many of our airports are less than 130 km away from each other”, explains Olav Mosvold Larsen, advisor at Avinor, the Norwegian airport operator and air navigation service provider. “For example, from Bodø airport in Northern Norway, there is only 100 km to four other Avinor airports. Technically, this small network could already operate on today’s technology, and could be replicated along the entire Norwegian coast.”
Avinor is now looking into electrifying all local flights in Norway and has a strong ambition of making all the planes electric by 2040, writes Bellona. Dag Falk-Petersen, Director of Avinor, “believes that all flights lasting up to 1.5 hours can operate with pure battery electric aircrafts, which would cover all domestic flights and those to neighbouring Scandinavian capitals.”
To be sure, there still is a lot of work to do before electric flying becomes the norm in Norway. “Currently there is no infrastructure for electric aircrafts in Norway. Alpha Electro G2 is the first electric two-seat plane to be produced on a commercial basis. It has a range of 130 km and can fly one hour per charge. According to the contract, the plane will be delivered to Avinor in May this year, mainly for demonstration purposes. Avinor plans to launch a tender to test a commercial route flown with a small electric plane of 19 seats, starting in 2025.”
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Another state that’s in the EV race with China is California. On 26 January, Governor Jerry Brown “signed an executive order that commits the state to a goal of having 5 million zero-emissions cars on its roads by 2030”, writes Steve Hanley on Cleantechnica. “The previous goal was 1.5 million ZEVs by 2025.”
Zero-emission cars could also be hydrogen fuel cell cars and certain plug-in hybrids, but most will be pure BEVs (battery electric vehicles). “To reach the goal, California will spend $2.5 billion between now and 2025 to install more charging stations and hydrogen fueling stations throughout the state. It will also beef up its incentives and rebate programs for people who buy zero emissions cars. Right now, there are about 350,000 zero-emissions vehicles on the road in California. Increasing the number 15 fold in 12 years will be a daunting task.”
The plan calls for expanding the number of EV charging stations in the state from 14,000 today to 250,000, writes Hanley. “Fast charging stations will increase from 1,500 to 10,000 and hydrogen refueling stations will jump from 31 today to 200. Some of the cost of expanding the charging infrastructure will be paid for money Volkswagen has agreed to pay to settle claims connected to its diesel cheating scandal. Proceeds from California’s cap and trade carbon emissions scheme will also pay part of the cost.”
To meet the target Brown has set, 40% of the cars sold in the state by 2030 will need to be ZEVs. Today that is around 5%.
It should be noted that California is unique among U.S. states in that it is allowed to set its own car emission standards because of a waiver granted by the Environmental Protection Agency (EPA) decades ago. Under Donald Trump’s government, that waiver could be revoked at any time, writes CleanTechnica.
ENERGY WATCH #2 by Karel Beckman
Chinese CATL soon biggest battery maker, Europe far behind, can grid cope with EVs?
February 6, 2018
Obviously the expansion of EV production will require a lot of batteries to be produced. In this area China too is about to take the lead, according to a fascinating recent report from news agency Bloomberg.
The article tells the story of a company called Contemporary Amperex Technology Ltd, or CATL, which is poised to become the biggest battery maker in the world.
CATL is already market leader in China, but now wants to conquer the rest of the world as well. The company is investing $2 billion in a new factory, called Huxi, in the city of Ningde, that would quintuple its existing production and catapult it into world leadership, ahead of companies like Tesla, BYD and LG Chem.
Already, CATL is supplying the lithium-ion batteries for domestic Chinese auto manufacturers, including BAIC, the biggest EV seller, and Zhengzhou Yutong Group, the world’s biggest bus maker. It will also sell to the EVs from Volkswagen, BMW, Hyundai and Toyota being produced in China.
And it will turn to exports. In fact, it is already doing that. “Last year, it spent €30 million to acquire 22 percent of Finland’s Valmet Automotive Oy, a contract manufacturer for Daimler AG’s Mercedes-Benz and supplier to Porsche AG and Volkswagen’s Lamborghini. CATL also added offices in Paris to existing facilities across Germany. The company has a partnership with BMW’s motorsport teams for races in Europe and Macau, splashing its blue logo across the carmaker’s M6 GT3.”
CATL is also looking to build batteries in the Detroit area. “Their intentions are very clear,” said Simon Moores, London-based managing director of battery sector consultant Benchmark Mineral Intelligence. “To not just be China’s biggest battery producer but the world’s largest.”
CATL’s ramp-up will “extend China’s grip on global battery production to about 70 percent of the market by 2021, up from 54 percent last year”, according to figures from BNEF.
Incidentally, the origins of the company are also a fascinating story. It was founded by Zeng Yuqun, a now 49-year old engineer born in a mountain village, who learned a lot from Japanese and German technology. BMW is their partner in China.
“We have learned a lot from BMW, and now we have become one of the top battery manufacturers globally,” Zeng said at a recent event in China co-hosted with BMW. “The high standards and demands from BMW have helped us to grow fast.”
But CATL is not resting on its laurels: last year it spent 11% of its revenue on R&D. The company, which has ties to German research institutes, plans to use 4.2 billion yuan ($600 million) from the IPO to develop next-generation batteries.
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As the figures from Bloomberg make clear, Europe is lagging far behind when it comes to battery production, with not a single large-scale plant.
However, there are plans for new factories, including at least one “giga-factory”, in Sweden. This is a project by a company called Northvolt, led by Peter Carlsson, who used to work for Tesla. We have reported on this before.
Northvolt’s plan appears to be progressing, though it is far from certain to happen yet. Reuters reports that truckmaker Scania, owned by Volkswagen, has committed to invest €10 million in the €4 billion project.
Northvolt and Scania told Reuters they had “agreed to develop and commercialize battery cell technology for heavy commercial vehicles; Scania’s investment will go toward building a demonstration production line and research facility for Northvolt in Skelleftea, northern Sweden.”
The firms have also struck a deal for future purchases of battery cells, their joint statement said.
Northvolt’s Carlsson wants the Skelleftea plant to rival U.S. electric carmaker Tesla’s Gigafactory in the Nevada desert, and aims to produce a total battery storage capacity of 32 gigawatt-hours a year by 2023, according to Reuters.
Northvolt’s immediate aim is to build a separate demonstration line in the Swedish town of Vasteras.
Carlsson told Reuters he expected to secure initial financing of €80-100 million for that project during the first quarter before embarking on the far larger fund-raising for the Skelleftea plant.
Last year, Northvolt signed partnership deals with Swiss engineering group ABB and Danish wind turbine maker Vestas, but it still needs to raise the vast bulk of the financing required for the Skelleftea plant.
“We are involved in a number of processes. It has taken slightly more time than we expected and that is due to the fact that these are pretty big strategic decisions,” Carlsson said.
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But there are other plans for European battery plants. South Korean battery maker SK Innovation has teamed up with Mercedes and will be building a 7.5 GWh factory in Hungary that will cost €700 million. Production there is expected to start in 2020.
At the same, LG Chem, which supplies batteries for the EVs of Renault, Volkswagen, Volvo, Ford, Audi, Chevrolet and others, has announced expansion plans in Europe with a new factory in Poland, where it’s already operating Europe’s biggest battery production facility. The capacity of the new plant has not been announced, but some $387 million will be invested in it.
Volkswagen, which currently buys its batteries in South Korea, last year also announced plans to build its own battery production facilities, but no concrete decisions appear to have been made yet.
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When all these new EVs will be out on the road, will the electricity network be able to cope? Well, not without measures being taken, experts agree.
In Germany consultancy Oliver Wyman in January published findings of a new study (in German) that concludes rather alarmingly that “e-mobility threatens a stable electricity supply”.
In certain regions, the German network won’t be able to cope with the growing number of EVs already five to ten years from now, says Oliver Wyman. From 2032 on, large-scale blackouts will occur if nothing is done.
The consultancy says that some €11 billion must be invested in the networks – or, the network must be made much flexible. The report assumes that one in three cars in Germany will be electric in 2035.
“Charging one car requires a similar amount of power as a typical household uses in three days, so networks could be damaged even if relatively small numbers of e-cars are being charged within one neighborhood at the same time”, writes newspaper Handelsblatt about the report on its English-language pages. “That spike in power demand would be especially pronounced with so-called superchargers that consume large amounts of electricity to load batteries in just half an hour.”
According to the article, “Research shows that 80 percent of e-cars are charged at home or at work in Germany. ‘If everyone wants to charge up their car at the same time at 8 p.m., the grid will go bang’, warns Thomas Fritz, an energy analyst at Oliver Wyman.”
“Even from an e-car proportion of 30 percent, there will be large-scale power outages unless countermeasures are taken,” Oliver Wyman warns. “Electric cars will pose a risk of blackouts, first in affluent exurbs of cities like Munich, Frankfurt or Berlin and then later nationwide. It’s cold comfort that other countries face the same problem. Green Alliance, a British think tank, last year warned that Britain’s energy networks weren’t ready either for the surge in electric cars coming within the next few years.”
Germany’s electricity grid is outdated in many parts of the country, notes Handelsblatt. “Some of the lines are more than 80 years old and must be replaced. This will take time, especially in a country so notoriously bureaucratic. Projects have to be approved before streets can be torn up for thicker cables to be laid.”
“We face a mammoth task,” says Hildegard Müller, who heads the network and infrastructure division at German renewable utility Innogy, a unit of RWE. “The expansion of electric mobility is manageable but we must lay the groundwork now.”
Experts agree that the power system must be made more flexible to cope with the growing number of EVs. “If 30 percent of electric car owners in the future high-density e-car districts were to use […] a smart-charging system, strain on the grid could be lessened significantly”, according to the study by Oliver Wyman, which it made together with Munich’s Technical University.
If network operators managed to get 92.5 percent or more e-car owners on board for deferred charging, the grid won’t even have to be expanded at all.
Handelsblatt notes that “Some 60 companies including leading European manufacturers are developing the open EEBUS standard, a world language of energy for the era of the Internet of Things allowing the smart interaction of solar panels, heatings, household appliances and e-car charging points. It’s close to being ready for the mass market, and it will give rise to new business models.”
“Customers who are prepared to store excess power in the batteries of their electric cars to relieve the power grid will in the future be able to earn money or at least save money with their car,” said Gunnar Bärwaldt, Group Development Coordinator for Charging at the Volkswagen Group. “The vehicle should be able to decide itself of the battery has enough power and judge by pricing tables whether it makes economic sense to store power at a particular time or to release it into the grid.”
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In the U.S. the same discussion is taking place.
Thus, the Institute for Energy Research warned that simultaneous charging of just 60,000 electric vehicles could threaten the Texas grid: “Based on a 100-kilowatt EV battery with a five-minute charge time, which could potentially be the standard for EVs in three or four years according to Wood Mackenzie, demand from 60,000 cars charging at once would equate to 70 gigawatts; this is equal to the current peak demand of the Electric Reliability Council of Texas (ERCOT).”
However, Jim Lazar, senior advisor at international consultancy Regulatory Assistance Project (RAP), argues that this doom scenario need not come true. “The report [from Wood Mackenzie] assumes 60,000 vehicles simultaneously charging on ultra-high-capacity chargers designed to provide 300 miles of range in a five-minute charging session”, Lazard notes. “This would require a charger with 1.1 MW of capacity. This type of charger does not yet exist, nor are there EV industry plans to install them in the near future.”
The second problem, he says: “The EV industry and utilities are aware of the capacity demands of high-capacity fast-chargers. But these are likely to be needed only in modest numbers along major highways, to enable long-distance travel by EV. They are not expected to account for a significant percentage of total EV charging.”
The more likely scenario, according to Lazar, “will be the use of Level 2 chargers overnight, at home, or at work during the day (6.6 kWs, not 1,100 kWs as IER claims). Even if this were to happen all at once, which is IER’s assumption, that would create 396 MWs of demand, amounting to 0.57 percent of ERCOT’s load …. The average commuter drives about 40 miles per day; this would require 10 kWh per day of charging, or about two hours per day on a standard Level 2 charger. If they only need to be plugged in eight percent of the time, it’s highly unlikely they would all be charging at once.”
Lazar points out that currently in the U.S. states like Texas, which have a lot of wind power, power output is regularly curtailed by utilities. In 2016, ERCOT in Texas cut off 846 GWh of wind power which could not be absorbed on the grid.
This was 1.6% of total wind generation. By controlling EV charging when wind is plentiful, “we could charge about a half-million electric vehicles with wind energy now being wasted.”
“Imagine the future owners of those half-million EVs, given the incentive of well-designed rates, plugging into time-controlled home chargers at night to power their cars with the wind that system operators otherwise wouldn’t be able to use”, writes Lazar. “At 6 cents per kWh, about half the current day-time rate, they would be buying fuel at the equivalent of 60 cents per gallon of gasoline—and helping pay for the wind power and distribution system as well.”
ENERGY WATCH #3 by Karel Beckman
BP hopes gas will make it big, market for gas turbine collapses, Ukraine has one last chance to stop Nord Stream 2
February 6, 2018
The future of gas remains one of the biggest question marks hanging over energy markets. There may not be one future of course – prospects differ greatly among regions.
BP, which on 20 February will release its annual Energy Outlook, appears to be taking a more positive view on gas than before. At a conference in Vienna, Dominic Emery, BP’s vice-president for strategic planning, said that the company expects “gas to overtake oil as the world’s primary energy source in around 2040”, according to Reuters.
One reason is rising demand from China, which appears to have used 15% more gas last year. Emery said BP expects overall gas demand to grow around 1.6 percent a year for years to come, compared with 0.8 percent for oil. BP’s previous forecast to 2035 forecast oil’s share shrinking from around 33 percent to around 30 percent and gas’ share grow from the low 20s to the mid 20-percentage range.
In terms of sectors, Emery “singled out industry as especially resilient and transport as fast-growing, albeit from a low base, at annual rates of three to four percent.”
Emery did acknowledge that methane leakage was one of the biggest challenges for the gas industry. Methane leakage from pipelines is estimated at 1.3 to 1.4 percent. “Once (methane leakage) exceeds 3 percent it means that gas, certainly in the nearer term, over a few decades, is actually worse than coal from a (greenhouse gas) perspective,” he said.
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Despite Emery’s optimism, there are signs that the demand for gas is increasingly suffering from the competition of low-cost renewables, especially in the electricity sector, still the most important market for gas.
One telltale sign is the market for gas turbines, which suddenly collapsed last year. Well-known energy expert Chris Goodall wrote a fascinating article on his blog Carbon Commentary about the turbine bust, which nobody in the industry saw coming.
“Installing and servicing gas turbines in power stations to make electricity was a $50bn global industry”, writes Goodall. “Until a few months ago, the three international conglomerates that dominate this business said they were confident of continued demand. Although recognizing that the world is switching to renewable energy, they thought that gas will always be needed as a backup fuel for generating electricity. In the conventional view, the market will also be buoyed by utilities switching from coal to much cleaner natural gas.”
“So even as late as July 2017, Mitsubishi Heavy Industries (MHI) was predicting that orders in its gas turbine division would be up 15% in the current financial year. Operating profit would rise 31%. GE reported that revenues from its turbine activities were up 5%, surmising that it was gaining share because of its advanced technology. Its published forecasts for 2017 remained unchanged. And although the more cautious Siemens had begun to notice significant falls in orders by mid-year, as late as April it recorded a 4% increase in quarterly sales.”
Reality, however, turned out to be rather different. By the end of September 2017, a sharp fall set in “and the earlier optimism suddenly disappeared…. Over a period of a few weeks in October and November a slew of announcements from all three companies came out, admitting to serious deteriorations in financial performance. Janina Kugel, a Siemens management board member, said ‘the market is burning to the ground’ and that the world was switching ‘extremely quickly from conventional to renewable energies’. In another comment, her senior colleague Lisa Davis said that ‘the power generation industry is experiencing disruption of unprecedented scope and speed’. The company indicated that it would close factories and reduce its staff by about 6,100 people.”
“GE went further and fired 12,000 people around the world, almost 20% of the staff in its turbine business…. Forecasts for turbine sales in 2018 were reduced by 35% below the already shrunken number for 2017. Expectations for revenues from maintaining and upgrading power stations were also sharply cut. Both the CEO of the division and the chief financial officer of the holding company were replaced.”
A dramatic reversal of fortunes. Goodall writes that “in early November Siemens published estimates showing that the total number of large gas turbines installed in all power stations will fall from 180 in 2016 to a projected 110 this year, a cut of almost 40% in two years.”
Not just the number of turbines sold collapsed – ancillary revenues went down almost as sharply, notes Goodall. “No-one had predicted this. Existing gas-fired power stations around the world are working for fewer hours each year as renewables ramp up. This is reducing the need for emergency repairs and increasing the interval between regular services. The owners of barely profitable power stations face harsher financial times as wind and solar offer ever-cheaper electricity. So upgrades to the performance of existing gas turbines have been delayed or abandoned.”
Finally, “Perhaps most surprisingly, the sale of smaller gas turbines, designed to respond quickly at those times when big power stations cannot cope with demand, also collapsed. Sales forecasts for 2017 were cut to half the number GE projected just a few months earlier. In the most recent quarter (ending December 2017), it shipped just 3 small turbines, down 90% on a year earlier.”
Why? Because, as Goodall puts it, “Peaks in demand are increasingly being met by ‘demand response’, or the managed reduction in electricity use at times of scarce supply. In times to come, large batteries will also help match electricity demand to the amount available. Electricity companies are aware of this and are reducing purchases of smaller turbines.”
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If all this is a sign of times to come, BP’s predictions may turn out to be a historic case of tunnel vision.
Going by the latest news from Australia, as reported by Giles Parkinson on Reneweconomy.com, this certainly can’t be ruled out.
Parkinson writes that “the ambitious renewable energy-focused power retailer Powershop Australia has signed a huge deal for the output of a 200MW solar farm and two big wind farms, after being ‘stunned’ by the low prices offered after it went to market for proposals last year.”
The deal will enable Victoria’s biggest solar project, the 200MW Kiamal Solar Farm near Ouyen, to be built by Total Eren, the first investment in Australia from a joint venture that combines the French oil giant and a renewable energy developer, notes Parkinson.
Powershop CEO Ed McManus said his company was stunned by the results of a request for proposals (RFP) that it began some six months ago. “We have gotten an overwhelming response from the market,” McManus told RenewEconomy. “I can’t disclose the price but I am happy to tell you that prices we are getting these PPAs at is well below wholesale price of energy. There are many non believers out there … but we were surprised at the prices we saw for wind, and shocked at the prices we saw for solar.”
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In the UK the uncertainty over the demand for gas-fired power is so large that utilities depend almost entirely on the country’s capacity market to justify any kind of new construction.
“Nuclear, renewables and energy imported from European markets could change British energy provision within two decades”, Tom Glover, UK chair of German energy group RWE, told the Guardian.
Glover said the outlook for new gas plants – quicker and cheaper to build than atomic sites or offshore windfarms – remained unclear. “It’s uncertain, when you look across 15 years. You’ve got to look at how interconnectors [power cables to other countries], how new nuclear, renewables will develop. It’s very uncertain,” he said.
According to the Guardian, “The Department for Business, Energy and Industrial Strategy (BEIS) this month revised the amount of new gas plants it expects to be built by 2035 to 6 GW, down from the 14 GW it predicted last year. In comparison, its forecast for new renewables, which it expects to generate more power than gas by 2020, remained largely the same.”
“The economics of gas-fired power stations today largely hinge on the capacity market”, observes The Guardian.
Peter Atherton, energy analyst at Cornwall Insight, said: “[Large gas plants] are entirely dependent on the capacity market really, it needs to cover something like 60-80% of the economics of those plants. That leaves maybe only 20% of the economics to the wholesale market.”
But gas plant owners “are concerned by competition in auctions for capacity market contracts next month from new interconnectors – long-distance power cables – being planned for the early 2020s to Belgium and France. Gas supporters argue those interconnectors can compete for a lower price because they do not have to pay the same costs as gas operators in the UK, such as the carbon tax.”
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None of this seems to be deterring Gazprom, which is plugging ahead with the Nord Stream 2 pipeline. On 31 January, the company announced that it has received the first construction permit for the offshore gas pipeline from Russia to Germany through the Baltic Sea.
The permit is for “the construction and operation … for the planned pipeline in German territorial waters and the landfall area in Lubmin, near Greifswald. The Stralsund Mining Authority issued the official approval for this approximately 55-kilometre-long section of the pipeline in accordance with the Energy Industry Act (EnWG)”, the company says in a press release.
“The national permitting procedures in the other four countries along the route – Russia, Finland, Sweden and Denmark – are also proceeding as planned”, Nord Stream 2 notes. “Nord Stream 2 has fulfilled all requirements and expects the permits to be issued in time for the scheduled start of construction in 2018.”
The awarded permit underscores the point that Georg Zachmann, a senior analyst at Belgian think tank Bruegel, makes in a new article on the Bruegel website: for opponents of the pipeline, such as Ukraine, “the clock is ticking”. They have “one last chance” to stop Nord Stream 2 before it’s too late, writes Zachmann.
Zachmann, who has worked as advisor for Naftogaz, frankly states that “Ukraine is not doing enough to prevent Nord Stream 2 from happening. True, Naftogaz and some policy makers are trying to lobby in Washington and Brussels to prevent the pipeline from being built. But they do not have good arguments to convince influential European gas consumers.”
Zachmann, who has been a vocal critic of Nord Stream 2, acknowledges that Ukraine at least partially has itself to blame. “The gas transit tariffs through Ukraine are currently more expensive than the expected tariffs for Nord Stream 2, and the Ukrainian tariff policy is neither transparent nor predictable. European gas consumers simply do not trust that Ukraine will be an inexpensive, reliable gas transit route for the next decade.”
A note of frustration seems to be coming through here. “Instead of developing an attractive offer for gas transit customers, Ukraine´s government has been sitting on its hands for two years”, Zachmann complains. “The energy regulator is politicised and dysfunctional. The gas transit system remains largely unreformed and integrated into Naftogaz. And discussions in Kyiv remain centred on who controls the transit income. And with every day, Nord Stream 2 inches closer to completion.”
The Ukrainians have a last window of opportunity left, according to Zachmann: “At this point, it is not about political statements of good will or timid reform plans stretching to 2020, it is about action in the first half of this year. The transit system operator (TSO) should be immediately unbundled and a fair tender for the operation of the system should allow western system operators to take over the management of the new TSO.”
“This could provide western gas consumers with the necessary trust to abandon the Nord Stream 2 project. Without quick and decisive steps, however, there will be almost no chance to prevent the fulfilment of the project and its potentially disastrous consequences for Ukraine. And make no mistake, it will not be the fault of others acting in their own interest. It will be the fault of Ukraine, if it does not manage to offer a trustworthy, economically sound alternative to Nord Stream 2.”
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True, there still is the attempt by the European Commission to change the EU Gas Directive, to make it apply to offshore pipelines. But even if the Commission manages to get the EU Member States to sign on to this controversial proposal, it most likely would not stop the project, experts agree. It would merely put the EU in a better position to negotiate the terms under which the pipeline could be used.
Could U.S. sanctions against Russia make a difference? The Hungarian think tank REKK, which is critical of Nord Strream 2, has recently published a policy brief about the effect of U.S. sanctions on the Central and Eastern European energy sector.
The title of the paper sums up its central message quite well: “Constant threat but limited actions towards Russia”.
The authors note that the U.S. sanctions law, which was drafted and overwhelmingly supported by Congress, does target new energy export pipelines such as Nord Stream 2. However, it is the Administration which has to implement the law. It has issued “implementation guidance” which show the Administration is “reluctant to implement” the sanctions.
“The public guidance announcements and the list10 of targeted individuals illustrated the administration’s restraint from escalating US-Russia tensions by actively targeting Russian pipeline projects”, notes the paper.
It adds that “The applicability of the act on specific pipeline projects is also not obvious based on the guidance.”
Nevertheless, REKK’s policy brief stresses that “Congress remains unified in its goal to punish the Russian government”. Moreover, implementation of the sanctions is “discretionary”, meaning that the U.S. government could still decide to make them applicable to Nord Stream 2, if it wanted to.
ENERGY WATCH #4 by Karel Beckman
Nuclear as flexible as gas, says EDF, and Netherlands has remarkable plan for long-term storage of nuclear waste
February 6, 2018
Gas is often seen as complementary to renewables, but could nuclear power not play this role instead? Nuclear is after all not a fossil fuel.
One drawback of nuclear power is that it’s supposed to be inflexible. Nuclear power stations were not designed to ramp up or down quickly – they are built to deliver “baseload power”. That, at any rate, is what most technical experts will tell you.
However, French state-owned utility EDF, which has a large nuclear feet, does not agree with this verdict.
According to a report by Bloomberg, the French state-owned utility says its fleet of nuclear reactors “aren’t just able to provide a steady stream of power, they’re flexible enough to complement a large fluctuating supply of renewable energy.”
“Combined with a €25 billion solar plan and potential investments in huge batteries, the utility says it can ride out the energy upheaval, while also helping the French government fulfill its goal of cutting reliance on nuclear power”, notes Bloomberg.
“Our nuclear is flexible, it’s variable,” maintains EDF Chief Executive Officer Jean-Bernard Levy. “Renewable energies are totally complementary.”
How does this work? EDF says its reactors “can vary output by as much as 80 percent twice a day. All 58 of them are equipped with control rods, which can be inserted into the core and slow the rate of fission that generates energy. The mechanism is usually used for emergency shutdowns by automatically falling in between nuclear fuel assemblies, but EDF says the equipment can be easily maneuvered to accelerate or slow the rate of power generation. It says it can also fine-tune output by changing the concentration of a chemical in the reactor.”
“The utility is already capable of offsetting a change in power flows as large as 21 gigawatts in less than 30 minutes — equivalent to more than 10,000 turbines falling still due to lack of wind — said Dominique Miniere, the company’s head of nuclear and thermal power generation.”
That matches France’s total wind and solar capacity today, although President Emmanuel Macron wants to at least double that by 2022.
Bloomberg notes that “it’s unclear whether EDF’s proposals would increase maintenance costs or erode profitability,”, citing Nicolas Goldberg, an energy expert at Paris-based Colombus Consulting.
“EDF still has things to prove regarding the flexibility of nuclear,” Goldberg said. “It remains to be seen whether there’s no problem when it’s done every day, when the wind starts blowing and renewable penetration reaches 40 percent.”
The report refers to Germany, which “has for several years forced power generators to adjust their nuclear output, hurting profitability. RWE, the largest electricity producer, expects profit from the unit that operates lignite-burning plants and reactors to fall significantly for 2017, following similar declines the previous two years.”
However, according to Miniere, EDF “can adapt with the increase in renewable energy until 2030 without much impact on the cost of its nuclear power production because of its 30 years of experience with flexible reactors.”
Not that this will solve all of EDF’s problems. “European electricity prices are currently too low to cover the investments required to renovate EDF’s reactor fleet and build new facilities to replace the oldest plants”, notes Bloomberg. “The utility will need some regulatory support from the government to foot the bill, said CEO Levy. In the U.K., the government guaranteed power prices for 35 years to encourage the company to build a new 19.6 billion-pound ($27.7 billion) nuclear plant.”
“I’ve always said that we need to find the way to regulated prices the British way,” said Levy. “There won’t be investments without it.”
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I confess that personally I often waver between support and rejection of nuclear power – which is probably a good position to be in as editor. When I hear the arguments for CO2-free, reliable electricity I am inclined to favour nuclear. Then, when the issue of nuclear waste comes up, I think we’re better off without it.
As it happens, in my home country, the Netherlands, COVRA (the government-owned Central Organisation for Radioactive Waste) on 29 January published a report – or rather, a number of reports – outlining a plan for the long-term geological disposal of radioactive waste.
It is the result of a 7-year study, under the name of OPERA, that is meant to present a definitive solution for the storage of all highly active radioactive waste from the nuclear power stations at Dodewaard (now closed) and Borssele as well as the small research reactor in Petten – the only three nuclear power plants the Netherlands has had.
Remarkably, the study got virtually no international press coverage. In the Netherlands itself the news was also hardly noticed. This is surprising, since after all the storage problem is probably the most important reason why so many people oppose nuclear power. The only country in the world that is close to building a long-term storage site is Finland. In the rest of the world, the problem is still unsolved.
So how does COVRA want to deal with this? For the details you will have to consult the website of COVRA, but in summary, the idea is to build an underground storage facility at a depth of about 500 metres in the so-called Bloom Clay Foundation (named in the 19th Century after a small town near Antwerp, Belgium). The formation also occurs in the northwest and southeast of the Netherlands.
“A thickness of about 100 metres of Boom Clay is considered sufficient both to facilitate excavation of the GDF and to provide an adequate barrier function, although smaller thicknesses might also be feasible”, notes the report.
It is mind-boggling to read that the disposal will be safe for up to a million years, according to the researchers. I have no way to check this, I confess. I have recently visited COVRA and have no doubt that they are serious and responsible people, but I find it a bit disconcerting to read things like: “Even up to the million years, the clay host rock itself will show look little different from its original state. However, it can be assumed that both the physical strength and chemical containment functions of the concrete will have broken down completely by the end of this period. This will be a progressive process over the 100,000 to one million year timescale, with the mechanical and corrosion failure times of overpacks and inner canisters being staggered over many tens of thousands of years, so that the access of pore waters to the spent fuel and the start of release of radionuclides would be spread over long periods of time.”
Equally disconcerting is that the report recommends for construction of the GDF (geological disposal facility) to start in the year 2120 – yes, that’s 2120 – one hundred years from now.
The facility should then be ready ten years later, in 2130.
By that time, the Netherlands will have produced 170,000 barrels of radioactive waste, of which 1,200 will be highly radioactive. Needless to say, countries like France, with a much bigger nuclear industry, will have much more waste than this.
The estimated cost is €2.05 billion in 2017 euros, which Dutch waste producing facilities (radioactive waste is also produced in places like hospitals and even in industry) will have to pay for.
But the cost is not the problem, it seems to me. It rather seems to me that if we have to choose between having to bury hundreds of thousands of barrels of radioactive waste in Europe or not having to bury them, the choice is obvious. In other words, if we can manage without nuclear power, and still have a reliable, low-emission power supply, perhaps we should.
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In Sweden, a big debate has also broken out over long-term storage of nuclear waste recently.
On 23 January 2018, “both the Swedish Land and Environmental Court (MMD) and the regulatory agency dealing with the nuclear industry, the Nuclear Safety Authority (SSM), submitted their reports to the government regarding the Swedish Nuclear Fuel and Waste Management Company’s (SKB’s) application to build a ‘final’ storage facility for spent fuel”.
Nuclear Monitor, a monthly publication from the nuclear-critical World Information Service on Energy (WISE) and the Nuclear Information & Resource Service (NIRS), concludes in a nutshell that “SSM said yes to the industry proposal, MMD said no.”
However, it adds that “the industry application is multifaceted” and both the “yes” and the “no” are qualified.
Both organisations, moreover, have asked for further research to be carried out.
The issue is now in the hands of the Swedish government, notes Nuclear Monitor, and won’t be decided before the national elections in September of this year.