A Valid Claim and a Misleading Claim

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Cheap Energy?

 

Picture source: Wikipedia.

 

 

A recent piece in The Guardian on solar energy [1] made two claims. One was fair comment but the other was very misleading.

First, it said that the present government is unsympathetic to green issues. I think that many people may have deduced that voting Blue does not lead to very Green policies. In the ‘small print’ of this year’s budget, Mr. Osborne covertly abolished a significant subsidy to renewable energy.

Second, it suggested that solar photovoltaics (PV) in the UK can already generate cheap energy. In support of this, it cites a generation cost of 8 pence per kWh (p/kWh). This is, of course less than the price that most domestic electricity consumers pay, which is nearer to 15 p than 10 p/kWh.

But this is incomplete and misleading. The majority of our energy is needed as heat or transport fuel, not as electricity.

In terms of electricity, solar PV produces masses of it on a bright, cold April day, much less on a grey day in November. To produce a stable electricity supply, such a source can only contribute a modest proportion of total electricity consumption; i.e., a few tens of percent. If it is to contribute more, electricity must be stored for use later.

Long-term bulk electricity storage is expensive compared to storing energy as chemical or thermal energy; i.e., as fuel or heat. One can safely say that the more outlandish concepts put forward may never work commercially.

For stability, today’s national grid needs short-term electricity storage in pumped storage plants like Dinorwig. These can be turned on instantly to replace the loss of a large generator elsewhere on the system or to meet a sudden, unexpected load.

The grid also needs spinning reserve. These are fuel-burning generating plants that are kept warm, with the turbine blades rotating in case a capacity shortage develops.

The grid also benefits from having interruptible loads. In return for payments, some large industrial consumers agree to be cut off for up to 20 minutes in emergencies; e.g., if a large generator fails. 20 minutes gives time to start up diesel generators and keep other consumers supplied. Many smaller loads could be made interruptible; e.g., industrial cold stores and even a portion of the lighting load, utilising dimmable ballasts.

The above measures are needed even when 75% of electricity is generated by burning fossil fuel in despatchable plants. For further security after fossil fuels, we would probably need the above plus power-to-gas (PTG) plants which turn surplus wind or solar electricity into fuels such as methane [2]. Such fuels can be piped around, stored cheaply and indefinitely from year to year and reconverted to electricity when needed [3] [4].

The round-trip efficiency of PTG would be lower than that of pumped storage, which is around 70%. But chemical energy is a lot cheaper to store than potential energy; i.e. water in two ponds at a height difference of several hundred metres.

So, 8 p/kWh is good news for PV but it is a desperately incomplete figure. PV electricity produced on a bright day in May could probably be free and still the cost of supplying solar power year-round to consumers to run their lights, domestic appliances, office equipment, electric railways, etc would be higher than the cost of gas-generated electricity today.

If money matters to people, measures costing 3 p/kWh look a considerably higher priority than electricity supply costing 8 p/kWh at the point of generation and more with the national grid’s costs added. My blog of 1 February 2014 set out how the more efficient use of electricity could substantially reduce consumers’ bills.

 

 

Notes:

 

[1] www.theguardian.com/business/economics-blog/2014/mar/20/george-osborn e-budget-kill-renewable-energy-revolution-tax-break?CMP=twt_gu.

[2] http://www.audi.com/content/com/brand/en/vorsprung_durch_technik/content/2013/10/energy-turnaround-in-the-tank.html.

[3] Just as natural gas can be stored. Long-term storage is needed to provide a secure energy supply from a mix of intermittent and variable sources like wind and solar. The output of wind energy is particularly variable between years. Although the round-trip efficiency is significantly lower than pumped storage, once the fuel is produced it can be stored indefinitely without losses.

[4] Or used in road transport. This operates more easily and cheaply on portable fuels than on electricity.

 

 

Busting Myths or Spreading Myths?

Correctly-Plumbed Radiator

 

 

 

 

 

Which uses less fuel:
radiators gently warm
all the time or hot
part of the time…?

 

 

 

I recently received in my inbox a striking e-mail from the Energy Saving Trust, claiming:

We bust popular energy myths this February.’  [1]

As I read on, one alleged myth particularly caught my eye:

‘Top 3 misconceptions … [Half] of all UK householders think it is cheaper to leave their home heating on all day rather than turning the heating on or off and up or down as required. …’

I am gratified that so many householders seem to have some common sense. As dwellings become increasingly well-insulated and draughtproofed, and as we change the methods used to heat them, it does become more sensible to operate a central heating system all the time with suitable controls instead of intermittently with time controls.

Some 85% of all UK dwellings are heated by gas and oil boilers. Since 2005 or 2007 respectively, nearly all new boilers using these fuels have had to be condensing ones [2]. Condensing boilers are significantly more fuel-efficient if they are operated all the time with very cool return water; e.g., 25°C instead of part of the time with high return temperatures, typically 60°C [3].

The seasonal boiler efficiency might be raised this way from the mid 80s% into the mid or even high 90s%. Precise control of room temperatures is easier too if the water entering the radiators is just warm enough to heat the house in that weather.

Since time immemorial, the UK government has exhorted us to add insulation, draughtproofing and double glazing to our buildings. With a steadily lower heat loss, buildings cool more slowly if the heating is turned off. For a given comfort level, the saving from reducing the internal temperature for part of the time is lower than one might expect.

The most energy-efficient buildings that I know or helped design in the last 35 years have continuous heating and very low gas or oil bills. At a low building heat loss, it does not usually make sense to turn the space heating system on, off, on and off again all winter. The theoretical benefit of a lower average internal temperature with time controls is potentially outweighed by the higher boiler efficiency from operating the system on a trickle-charge, weather-compensated basis in winter [4].

A group of UK heating system installers have been trying to spread better knowledge and understanding of condensing boiler controls [5]. They even go to the continent for training courses. On this side of the North Sea and the English Channel, they report relative ignorance and lack of knowledge.

So, could we all please assess whether we have inadvertently been spreading myths in the UK and seek instead to spread a better understanding of the subject? Thanks.

 

 

Notes:

 

[1] http://www.energysavingtrust.org.uk/?utm_medium=email&utm_source=Energy+Saving+Trust+Ltd&utm_campaign=3718033_marketing_fs_energywire_feb14&dm_i=N26,27OUP,4FS2CJ,80DZ6,1

[2] However, it appears that the onus is on the householder, not the installer to comply with this law. Given that most householders do not know this, some of them might have installed non-condensing boilers after these dates, offering scope for a larger fuel saving if the boiler and controls are replaced.

[3] Figures from work at the University of Strathclyde, to be discussed further by the author in a forthcoming book. A retired UK mechanical engineer installed a condensing gas system which incorporates such controls in 2001. He has since measured a seasonal boiler efficiency of 96%.

[4] CHP systems or heat pumps are more sensitive than condensing boilers to the circulating water temperatures. The decrease in heat pump efficiency caused by on-off heating and resulting higher flow and return temperatures is already being recognised as a cause of some of the low COPs measured in the UK.

[5] www.ecotechnicians.co.uk.

 

 

Do We Want Higher or Lower Electricity Bills?

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Figure 1. Domestic electricity bills with and without
major energy efficiency investment.

 

Source: reference [1].

 

Our bills are too high. Please give us lower ones. So say most electricity consumers.

So, how about a 45% cut? Figure 1 shows what an average household’s electricity bill might be for lights, appliances, etc, with and without major investment by utilities in the more efficient use of electricity.

The electricity bill of such a household is £500/year now in 2010 money values. In future, it would be nearer £600/year with business as usual, modest improvements in energy efficiency and large investments in new, expensive power stations.

But it could probably be cut to some £275 per year with major investment in energy efficiency. The £275/year includes an allowance of £75/year for repaying the utility’s investments in energy-efficient lights and appliances on the electricity bill [1].

In 2013, the Green Alliance quoted much the same for the costs of investing in the more efficient use of electricity. See Figure 2.

 

Pic 2 010214

 

 

Figure 2. Green Alliance cost estimates,
‘megawatts’ versus ‘negawatts’.

 

Source: reference [2].

 

 

 

The costs for electricity supply on the left hand side of Figure 2 are generation only. Electricity has to be delivered to consumers as well as generated, and on the way some of it is lost in transmission and distribution. Costs of delivered electricity from wind, nuclear and coal-fired plant with carbon capture and storage/CCS could be 3-4 pence per kWh higher than in Figure 2. That seems to further strengthen the case for investing in ‘negawatts’ and not ‘megawatts’.

Existing policies are not delivering energy efficiency at the rate needed, whether this consists of the more efficient use of gas, electricity or oil. Andrew Warren, Director of the Association for the Conservation of Energy, notes that energy supply companies have been lobbying the government to say that they object to its attempts to reduce energy consumption! [3]

While this behaviour is disappointing, it is hardly surprising. A business exists to make a profit. As long as energy suppliers remain deregulated at retail level, they profit from each extra kWh sold. If the government wishes to incentivise energy companies to act on CO2 emissions, it needs to start considering a return to retail re-regulation as I outlined in my blog of 5 January 2014.

 

 

Notes:

 

[1] The subject is covered in more detail in the report in LESS IS MORE: Energy Security After Oil, report published by the AECB (February 2012).

[2] http://www.green-alliance.org.uk/uploadedFiles/Publications/reports/Creating%20a%20Market%20for%20Electricity%20Savings.pdf.

[3] http://www.businessgreen.com/bg/opinion/2306797/an-appeal-on-behalf-of-eco.

 

 

Regulating Power

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Another ‘Big Six’ Row

 

Another winter, another ongoing row between the Government, the Opposition and the ‘Big Six’ over the rising price of energy. Five suppliers have raised the price of gas and electricity by almost 10%, minus a ‘saving’ from moving ‘social charges’ onto general taxation. Consumers are displeased, to put it mildly.

Two questions seem to arise:

  • Who is to blame;
  • What can be done about it?

Agreed, we cannot really blame the Government or the Opposition for rising world energy prices. Arguably, the Conservatives began the damage by privatising the utilities when they were in office from 1979-97. But the initial privatisation gave us 12 regional electricity suppliers which were subject to retail price regulation and had the same boundaries as the previous Area Boards.

The present structure, featuring the Big Six, was left to develop between 1995 and 2002. It provides neither effective competition nor effective regulation [1]. Given that the Conservatives were in power from 1995-97 and Labour from 1997-2002, maybe we should blame both of them? [2]

 

Reform

 

But what can we do about it? To make things better – or less bad – I have a boring, unexciting suggestion. This is to revert to the retail price regulation and structure that we had for 12-15 years after privatisation.

England and Wales still have retail price regulation for water. In each region, there is one privately-owned, vertically-integrated supplier, one tariff and retail prices are controlled. Can somebody explain why it was such a bright idea to move away from this with energy?

Re-regulation would cost nothing. Margins and prices would almost certainly fall from current levels [3]. Better still, if companies again have defined supply areas, the regulator can require each one to invest in ‘negawatts’ on consumers’ premises and to meet specific energy efficiency and CO2 reduction targets. This leads to large savings on bills and large reductions in emissions [4].

 

‘Foreign’ Utility Regulation

 

This more interventionist approach typifies utility regulation in California. The most successful tactic that its utility regulator ever devised was to allow private utilities to keep 15% of the extra net profits which they made by investing in ‘negawatts’ instead of in costly new power stations. If such an electricity supplier meets its energy efficiency target, everyone wins in the form of:

  • Lower CO2 emissions for the planet;
  • Higher dividends for shareholders;
  • Lower bills for consumers than if the utility had not invested in energy efficiency [5].

 

Laissez Faire

 

Under our laissez faire approach, no energy supplier has a financial incentive to invest in measures which reduce consumption. To meet its legal duty to its shareholders, the only way for an investor-owned, deregulated supplier to behave rationally is to sell more kilowatt-hours [6]. The more that its sales grow, the more CO2 it is set to emit.

More CO2, anyone?

 

 

Notes:

 

[1] The structure of the industry in the years between privatisation and 1995 reflected an attempt to reduce the scope for market manipulation. The suspected result of the present structure which developed after 1995 is ‘transfer pricing’ within subsidiaries of vertically-integrated companies which seek to understate profits and neutralise outside criticism. See http://blog.abundancegeneration.com/2014/01/the-secret-self-supply-of-britains-big-six-energy-giants/.

There is nothing wrong per se with vertical integration if a system is effectively regulated and/or publicly-owned. Under public ownership, Scotland was vertically-integrated but England and Wales were not. A vertically-integrated utility which succeeds with energy efficiency programmes can delay construction of its own power station(s) rather than incur the cost of re-negotiating contracts with separate generating companies.

[2] The companies which own the gas and electricity transmission and distribution networks are still regulated. But given the pattern of ownership that developed, one doubts whether this is as effective as regulation of the pre-1995 structure.

[3] Generation margins, especially, would be lowered. A more regulated situation tends to reduce business risk, lower the rate of return needed on assets and increase the time horizon over which investments can be paid for.

[4] The author suggested this initiative in LESS IS MORE: Energy Security After Oil, report published by the AECB (February 2012).

[5] Investment in more energy-efficient lighting systems may cost, say 1 to 5 pence per kWh saved. This is less than delivered electricity from new power stations, which may cost 10-15 p/kWh. If the first technology displaces the second, consumers’ bills fall.

[6] No matter what assurances it has given to the government. The Secretary of State for Energy recently pleaded with the big Six to behave differently but seemed unaware that a UK company’s primary legal duty is to its shareholders, not its customers.