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Stagnation is the only thing keeping the lights on

Green campaigners will no doubt be cheering the announcement of the closure of the Aberthaw B coal-fired power station yesterday.  As Jillian Ambrose at the Guardian reports:

“Doug Parr, the chief scientist and policy director at Greenpeace UK, said the shutdown of Aberthaw should encourage more government support for renewables to help meet the UK’s energy needs…

“Parr said ministers should ‘take the brakes off wind and solar power, which will be doing all the heavy lifting in the job of getting the UK to a clean power system’.”

Before you cheer too hard, however, you might want to consider that we just lost 1,500MW of capacity a full five years earlier than planned; and that the UK government – still less the privatised energy companies – is clueless as to where a 1,500MW replacement for Aberthaw is going to come from.  It isn’t going to be nuclear – two of the three proposed nuclear plants are on hold for economic reasons; while the third – Hinkley Point C – is already too expensive for most UK consumers.  Nor, despite the hype, is it going to be easy to replace it with offshore wind.  The world’s second largest offshore windfarm – the Walney Extension off the coast of Cumbria – has a capacity of just 659MW, and cost more than a billion pounds to develop.  An even bigger windfarm in the North Sea came online in June, providing 1,200MW capacity at an annual cost to British households of some £500 million.  Because of intermittency, neither windfarm will generate their full capacity.  And so, in effect, the two largest offshore windfarms on the planet will struggle to replace Aberthaw.  Moreover, Aberthaw has operated almost continuously for the last 49 years whereas the two offshore windfarms have a life expectancy of just 25 years (which may, of course, be extended; but will it be doubled?)

This is not to argue that closing coal power stations is a bad thing.  On the contrary, for the sake of the human habitat, we – as a species – need to stop burning fossil fuels as rapidly as possible (although the closure of Aberthaw B is a drop in the ocean when weighed against the growth of Chinese coal-burning, or even the continued German and Polish dependence upon lignite).  Rather, it is just to point out that the cheering may come to an abrupt halt when you receive your next electricity bill or, indeed, when the lights go out next winter.

It is worth remembering that had it not been for Britain’s excess coal capacity during the cold snap last March, regions of the UK would have been left shivering in the dark.  Indeed, were Britain to face a more usual high pressure cold snap next winter, the absence of coal and wind would result in major power outages.

The worrying aspect of the closure of Aberthaw B is not the loss of capacity so much as the early and unplanned nature of the closure.  As Ambrose documents:

“The shutdown of Aberthaw B comes after SSE said in June it would close the Fiddler’s Ferry coal plant near Warrington in Cheshire by the end of March 2020 because it cannot compete with the economics of gas and renewable energy.

“EDF Energy said in February that it would shutter the Cottam coal plant in September.

“The string of shutdowns means that by next spring just four coal plants will remain in the UK: the West Burton A and Ratcliffe-on-Soar plants in Nottinghamshire, Kilroot in Northern Ireland and two generation units at the Drax site in North Yorkshire, which are earmarked for conversion to burn gas.”

The UK government’s energy plans are based on these coal power stations remaining open until 2025 – by which time a combination of wind, gas and nuclear replacements are supposed to have begun to generate power.  But there is little economic incentive for the owners of fossil fuel power stations to remain in business in an environment in which the owners of non-renewable renewable energy-harvesting plants are permitted to escape the full cost of intermittency.  That is, windfarm owners reap the subsidised proceeds of delivering electricity when the wind is blowing; but are under no obligation to pay the cost of alternative supply when there is no wind.  On the other side of this equation are fossil fuel power stations that are expected to continue maintaining their plants in order to step in when the wind stops blowing.  For coal plants, faced with legal closure in 2025 anyway, there has been little incentive to continue ploughing money into maintenance.  As Ambrose notes:

“The UK used coal for less than 5% of its electricity last year, and went without coal-generated power altogether for over a week earlier this year, which was the longest coal-free period since the Industrial Revolution.

“Coal has been driven out of the electricity system due to rising taxes on carbon emissions, and will be banned by the government from 2025 to help the UK meet its climate targets…

“Roger Miesen, the chief executive of RWE’s generation business, said: ‘This is a difficult time for everyone at Aberthaw power station. However, market conditions made this decision necessary’.”

Fortunately for British energy consumers, the ongoing stagnation in the UK economy has resulted in continuing declines in energy demand.  As UK government statistics show:

“Primary energy consumption was nearly unchanged on 2017 but on a temperature adjusted basis primary energy consumption was down 1.1 per cent continuing the downward trend of the last ten years.”

And:

“Total electricity supply and demand decreased by 5.9 and 6.0 per cent in Q1 2019 on Q1 2018,resulting in total generation decreasing to 86.9 TWh.”

Although not immediately obvious – and seldom used as an economic measure – energy consumption – and particularly energy consumption per capita – is a better measure of the health of an economy than any artificially generated (and very likely rigged) employment, GDP or inflation statistic.  Put simply, everything we do involves consuming energy; as this UK government chart shows:

Falling energy demand simply means that we are collectively doing less of the things on the right hand side of the diagram.  That is, households are cutting back on their consumption, as are industrial, business and transport consumers.  And the big environmental benefit of this economic stagnation is that the UK can – for now – afford to lose all of that coal capacity five years earlier than planned for.

This said, the other problem visible in the chart up in the top left corner, is the 21.3TWh that we import via interconnectors from the continent.  In the short term, leaving the European Union without a trade deal or transitional agreement in place at the end of October will fundamentally alter the market for imported electricity.  As Sarah Clark and James Sweeney at The Chemical Engineer reported in March:

“Under a no deal Brexit the price of gas and electricity for consumers would likely increase because the UK would no longer be part of the IEM. The efficiency-increasing and cost-reducing measures that membership of the IEM provides would no longer be available to the UK.

“The IEM has sought to streamline and optimise the trade of electricity and gas between countries and consumers, reducing the need for reserve generation capacity and resulting in lower costs. According to a report from the European Parliament, leaving the IEM jeopardises the frictionless trade of gas and electricity between the UK and the EU. If the UK can no longer rely on the EU to compensate domestic gas and electricity shortfalls, more costly domestic generation is required in the UK. Price rises may be passed onto consumers…

“Outside the IEM, the UK would be importing gas and electricity under World Trade Organisation terms and conditions; the UK would act merely as a customer to the EU market, buying and selling gas and electricity according to demand. This is vastly different to trade within the IEM, in which (in addition to tariff-free trade) market optimisation measures facilitate complex market optimisation processes, such as enhanced frequency response which enable quick responses to grid frequency fluctuations.

“The effect with perhaps the largest impact on electricity prices for consumers is ‘sub-optimal dispatch’ arising from the UK’s inability to participate in joint optimisation. Other issues include: lower market liquidity, less competitive pressure, and imperfect investment signals. Each of these effects tend to result in higher electricity prices.”

While the potential impact of a no-deal Brexit are steep enough, the UK government’s increasing reliance on imported electricity to bridge the growing shortage of domestic capacity comes with problems of its own.  By 2025 the government expects to be importing 22 percent of Britain’s electricity from the continent.  However, as Will Gardiner, chief executive of Drax Group told the Guardian last year, this effectively means Britain will be importing other countries’ carbon emissions.

More worrying, though, is that states across the European Union are cutting their own domestic electricity generation (as fossil fuel and nuclear plants come to the end of their lives) while failing to replace the lost capacity with wind, solar, nuclear or even new fossil fuel generation.  As a result, like the UK government, most member states are simply assuming that they will be able to import each other’s excess capacity despite total capacity falling.

In microcosm, then, the closure of Aberthaw B is a representation of the calculation the entire world will soon have to make.  We can – like governments across Europe – pretend that there will be some magic external supply of energy that we can call upon as we close our own capacity.  But close our own capacity we will; not least because the economics of ever lower net energy fuels make replacing current capacity unviable; never mind adding the capacity that would be required to bring about the fantasy of the fourth industrial revolution.  In practice, then, we are heading into a future in which the steady 24/7/365 supply of electricity that we have become accustomed to will be going away.  In future we are going to have to get by on a lot less of the energy we have been able to take for granted; and as a consequence, we are going to be doing a lot less, making a lot less and consuming a lot less.  Indeed, our way of life is going to have to change as intermittency causes the simple things of today – like withdrawing cash from an ATM, paying for shopping, using the internet or charging a phone – to become increasingly difficult to sustain.

In the event that Britain does leave the EU without a deal on 31 October 2019 (just in time for winter) with the anticipated impact on electricity imports that that entails; Britain might once again become a world-leader… this time leading the world in the direction of our collective post-industrial future.

As you made it to the end…

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