The Triple Challenges of Carbon Reduction, Energy Security and Cost of our Future Energy Supplies Some of the Key issues

Transcription

1 The Energy Trilema: The Challenges of Energy Security and Affordability of our Future Energy Supplies Institution of Civil Engineers Leeds: October 14 th 2014 Recipient of James Watt Gold Medal Keith Tovey ( 杜伟贤 ) MA, PhD, CEng, MICE, CEnv : Reader Emeritus in Environmental Engineering, Norwich Business School, University of East Anglia, Norwich 1

2 The Triple Challenges of Carbon Reduction, Energy Security and Cost of our Future Energy Supplies Some of the Key issues What are key issues of Energy Security, particularly in the next few years with older stations closing and UK now dependent on over 50% of its gas from imported sources and also two thirds of its coal? What might the future electricity generation mix look like? How does UK energy mix compare with that of other countries? What contribution might Fracking provide for security for electricity generation? To what extent would variable renewables such as wind cause issues on the secure supply of electricity? What are the cost implications of the options available? What is the impact of support for renewables on the price of electricity? 2 Are the lights likely to go out over the next few years?

3 p/kwh Wholesale Cost of Electricity UK no longer self sufficient in gas Wholesale Electricity Prices Oil reaches $130 a barrel Langeled Line to Norway Severe Cold Spells UK Government Projection in 2003 for wholesale prices updated to 16 th September 2014 Weekly volume weighted average Wholesale Prices Wholesale prices are 2.5 times what they were in

4 Variation in Wholesale and Retail Electriity Prices wholesale retail Electricity Price Indices (2001 = 100) In recent years, electricity retail prices have varied much less than wholesale prices. However in recent months retail prices have risen above long term wholesale trends. 4

5 What are causes of price rises in recent years? In period , Electricity Bills for average household have risen from ~ 288 to around ~ 577 or ~100% * How much can be attributed to support for Renewables under the Renewable obligation? Support for All Renewables in was 1.99 billion **. However 313,569,728 MWh was supplied representing an increase of 0.69 p/kwh in retail price of electricity At typical domestic unit prices of 13 14p per kwh this represents and increase of just 4.9%. Of this the impact of onshore wind on bills in was 0.22p per kwh or ~ 1.7%. For offshore the figures are 0.16p and 1.2% respectively. Wholesale prices had risen from 2p in 2004 to 4.5p per kwh by end of * Data from Quarterly Energy Prices from DECC Website ** OFGEM Annual Report 5

6 Switzerland Norway Sweden Brazil France Austria Belgium Spain Russia Qatar Italy Japan UAE UK Netherlands Germany USA Mexico Denmark Saudi Arabia Libya China Australia India Poland CO 2 Emissions and Electricity (kg/kwh) EU OECD Developing Oil Producing World Average UK 0.4 France Overall: UK ~500 gm/kwh: France ~80 gm/kwh Saudi Arabia ~700 gm/kwh * Extracted from IEA Statistics in Jan 2014 data relate to

7 Electricity Generation Mix in selected Countries 2010 UK France Germany Sweden Poland Switzerland Norway Japan USA Saudi Arabia Russia Brazil China India UK-2013 Coal Oil Gas Nuclear Hydro/ Tidal/Wave Other Renewables Biofuels/Waste 7

8 Approximate Carbon Emission factors during electricity generation including fuel extraction, fabrication and transport. Fuel Impact of Electricity Generation on Carbon Emissions. Approximate emission factor per kwh Comments Coal ~ g Depending on grade and efficiency of power station Oil ~ Depending on grade and efficiency of power station Gas (Steam) ~600g Conventional Steam Station Gas (CCGT) ~400g Most modern stations may be as low as 380g Nuclear 5 10g Depending on reactor type Renewables ~ 0 For wind, PV, hydro Overall UK including transmission ~541g* Varies on hour by hour basis depending on generation mix Transmission/Distribution losses UK ~ 8%: India ~ 24% * DECC Guidance for reporting July

9 Billion Cubic Metres Options for Electricity Generation in Non-Renewable Methods Generation Type Gas CCGT Potential contribution to electricity supply in 2020 and drivers/barriers 0-70% (at present 25-35%) Available now (but gas is running out) Predicted Cost in (*) Dec 2013 (*) 8.0p [5-11]/kWh 8.5p/kWh Actual UK production Actual UK demand Projected production Projected demand Actual Production Actual Demand Impact of temporary switch to coal generation Import Gap Gas supply has become critical at times e.g. at end of March 2013 down to 6 hours supply following technical problems on Norwegian Pipeline. 9

10 Installed Capacity (MW) Options for Electricity Generation in Non-Renewable Methods Generation Type Gas CCGT nuclear fission Nuclear New Build assumes one new station is completed each year after Potential contribution to electricity supply in 2020 and drivers/barriers 0-70% (at present 25-35%) 5-10% (France 75-80%) - (currently 18-20% and falling) New Build? Projected Actual Available now (but gas is running out) Long construction times (capital cost for Hinkley increased from 16 billion to 24.5 billion Predicted Cost in (*) Dec 2013 (*) 8.0p [5-11] 8.5p/kWh 7.75p [5.5-10] /kwh 9.25p (Hinkley)/ kwh 0 * Energy Review 2011 Climate Change Committee May 2011 * Energy Generation Costs: DECC 2013 Central Projection

11 Options for Electricity Generation in Non-Renewable Methods Generation Type Gas CCGT Potential contribution to electricity supply in 2020 and drivers/barriers 0-70% (at present 25-35%) Available now (but gas is running out) Predicted Cost in (*) Dec 2013 (*) 8.0p [5-11] 8.5p/kWh Long construction 5-10% (France 75 - nuclear times (capital cost for 7.75p 9.25p 80%) - (currently 18- Hinkley increased [5.5-10] (Hinkley)/ fission 20% and falling) from 16 billion to /kwh kwh 24.5 billion nuclear not available until 2040 at earliest not until Nuclear New Build unavailable fusion assumes one new station is 2050 completed for significant each year impact after "Clean Coal" Coal currently ~40% but scheduled to fall Available now: Not viable without Carbon Capture & Sequestration [7.5 15p] - unlikely before p/ kwh * Energy Review 2011 Climate Change Committee May 2011 * Energy Generation Costs: DECC 2013 Central Projection 11

12 Generation Type On Shore Wind Options for Electricity Generation in Renewable Predicted Cost in 2020 Potential contribution to electricity supply in 2020 and drivers/barriers ~20% [~15000 x 3 MW turbines] available now for commercial exploitation 2011 (*) Gas 8p ~8.2p +/- 0.8p Dec 2013 (*) Gas 8.5p p / kwh 1.5MW Turbine At peak output provides sufficient electricity for 3000 homes operating for 12 years On average has provided electricity for homes depending on year * Energy Review 2011 Climate Change Committee May 2011 * Energy Generation Costs: DECC 2013 Central Projection 12

13 Generation Type On Shore Wind Off Shore Wind Options for Electricity Generation in Renewable Potential contribution to electricity supply in 2020 and drivers/barriers ~20% [~15000 x 3 MW turbines] 20-40% available now for commercial exploitation some technical development needed to reduce costs. Predicted Cost in 2020 May 2011 (*) Dec 2013 (*) Gas 8p Gas 8.5p ~8.2p +/- 0.8p 12.5p +/- 2.5p p/ kwh p/ kwh * Energy Review 2011 Climate Change Committee May 2011 * Energy Generation Costs: DECC 2013 Central Projection Scroby Sands has a Load factor of 28.8% - 30% but nevertheless produced sufficient electricity on average for 2/3rds of demand of houses in Norwich. At Peak time sufficient for all houses in Norwich and 13 Ipswich

14 Generation Type Options for Electricity Generation in Renewable Potential contribution to electricity supply in 2020 and drivers/barriers Predicted Cost in 2020 May 2011 (*) Dec 2013 Gas 8p (*) Gas 8.5p Micro Hydro Scheme operating on Siphon Principle installed at Itteringham Mill, Norfolk. Rated capacity 5.5 kw Hydro (inc. mini - micro) 5% technically mature, but limited potential 11p for <2MW projects * Energy Review 2011 Climate Change Committee May * Energy Generation Costs: DECC 2013 Central Projection Not Costed

15 Generation Type Options for Electricity Generation in Renewable Potential contribution to electricity supply in 2020 and drivers/barriers Climate Change Report 2011 suggests that 1.6 TWh (0.4%) in ~ 2.0 GW. But 2.1 GW already installed (Oct. 2014) Predicted Cost in 2020 May 2011 (*) Dec 2013 Gas 8p (*) Gas 8.5p Photovoltaic <5% even assuming 10 GW of installation available, and costs are coming down but low load factors * Energy Review 2011 Climate Change Committee May 2011 * Energy Generation Costs: DECC 2013 Central Projection 25p +/ p (2012 projection) 12.3p/ kwh 15

16 Generation Type Options for Electricity Generation in Renewable Potential contribution to electricity supply in 2020 and drivers/barriers To provide 5% of UK electricity needs will require an area the size of Norfolk and Suffolk devoted solely to biomass Predicted Cost in 2020 May 2011 (*) Dec 2013 Gas 8p (*) Gas 8.5p Sewage, Landfill, Energy Crops/ Biomass/Biogas??5% but could be larger with significant imports available, but research needed in some areas e.g. advanced gasification. Questions over sustainability 9-13p depending on technology Not Costed * Energy Review 2011 Climate Change Committee May 2011 * Energy Generation Costs: DECC 2013 Central Projection 16

17 Generation Type Options for Electricity Generation in Renewable Potential contribution to electricity supply in 2020 and drivers/barriers Predicted Cost in 2020 May 2011 (*) Dec 2013 Gas 8p (*) Gas 8.5p Wave/Tidal Stream currently < 20 MW?? MW (~0.1%) technology limited - major development not before p Tidal 26.5p Wave Not Costed * Energy Review 2011 Climate Change Committee May 2011 * Energy Generation Costs: DECC 2013 Central Projection 17

18 Generation Type Options for Electricity Generation in Renewable Potential contribution to electricity supply in 2020 and drivers/barriers Predicted Cost in 2020 May 2011 (*) Dec 2013 Gas 8p (*) Gas 8.5p Open Hydro commissioned off Eday Sept 2007 Alstom Device seen at Hatston April 2013 Wave/Tidal Stream currently < 20 MW?? MW (~0.1%) technology limited - major development not before 2020 * Energy Review 2011 Climate Change Committee May 2011 * Energy Generation Costs: DECC 2013 Central Projection 19p Tidal 26.5p Wave Not Costed 18

19 Generation Type Options for Electricity Generation in Renewable Potential contribution to electricity supply in 2020 and drivers/barriers Predicted Cost in 2020 May 2011 (*) Dec 2013 Gas 8p (*) Gas 8.5p Wave/Tidal Stream currently < 20 MW?? MW (~0.1%) technology limited - major development not before 2020 * Energy Review 2011 Climate Change Committee May 2011 * Energy Generation Costs: DECC 2013 Central Projection 19p Tidal 26.5p Wave Not Costed 19

20 Generation Type Options for Electricity Generation in Renewable Potential contribution to electricity supply in 2020 and drivers/barriers The Royal Oak was sunk 75 years ago this evening (14 th October) with the loss of 800 lives. Predicted Cost in 2020 May 2011 (*) Dec 2013 Gas 8p (*) Gas 8.5p Severn Barrage/ Mersey Barrages have been considered frequently e.g. pre war 1970s, 2009 Severn Barrage could provide 5-8% of UK electricity needs In Orkney Churchill Barriers Output ~ GWh per annum - Sufficient for houses in Orkney but there are only 4000 in Orkney. Controversy in bringing cables south. Would save tonnes of CO 2 Tidal Barrages / Lagoons 5-15% technology available but unlikely for 2020.?? Swansea Bay Lagoon 26p +/-5 Not Costed * Energy Review 2011 Climate Change Committee May 2011 * Energy Generation Costs: DECC 2013 Central Projection 20

21 Generation Type Options for Electricity Generation in Renewable Potential contribution to electricity supply in 2020 and drivers/barriers Predicted Cost in 2020 May 2011 (*) Dec 2013 Gas 8p (*) Gas 8.5p Geothermal unlikely for electricity generation before 2050 if then -not to be confused with ground sourced heat pumps which consume electricity * Energy Review 2011 Climate Change Committee May 2011 * Energy Generation Costs: DECC 2013 Central Projection 21

22 Generation Type On Shore Wind Off Shore Wind Hydro (mini - micro) Photovoltaic Tidal Barrages / Lagoons Geothermal Options for Electricity Generation in Renewable ~20% [~15000 x 3 MW turbines] 20-40% 5% <<5% even assuming 10 GW of installation 5-15% available now for commercial exploitation development needed to reduce costs. technically mature, but limited potential further research needed to bring down costs significantly technology available but unlikely for 2020 May 2011 (*) Gas 8p ~8.2p +/- 0.8p 12.5p +/- 2.5p 11p for <2MW projects 25p +/-8 (13-15p) BIOMASS??5% Questions over sustainability 9 13p Wave/Tidal Stream Potential contribution to electricity supply in 2020 and drivers/barriers currently < 20 MW?? MW (~0.1%) Predicted Cost in 2020 Dec p +/-5 (*) Gas 8.5p p/ kwh p/ kwh Not Costed 12.3p /kwh Not Costed Not Costed unlikely for electricity generation before 2050 if then -not to be confused with ground sourced heat pumps which consume electricity * Energy Review 2011 Climate Change Committee May 2011 * Energy Generation Costs: DECC 2013 Central Projection technology limited - major development not before p Tidal 26.5p Wave Not Costed 22

23 Do we want to exploit available renewables i.e onshore/offshore wind and biomass?. Offshore Wind much more expensive. Solar PV is now mature but also more expensive than on shore wind. Tidal and wave are not options for next years except as demonstration projects. [technically immature ] If our answer is NO Do we want to see a renewal of nuclear power? If our answer is NO Are we happy with this and the other attendant risks? Do we want to return to using coal? then carbon dioxide emissions will rise significantly unless we can develop significant carbon sequestration within 10 years UNLIKELY confirmed by Climate Change Committee [9 th May 2011] If our answer to coal is NO Our Choices: They are difficult Do we want to leave things are they are and see continued exploitation of gas for both heating and electricity generation? >>>>>> 23

24 Our Choices: They are difficult If our answer is YES By 2020 the UK will be dependent on GAS for around 70% of our heating and electricity The majority of which will be imported at volatile prices from countries such as Norway, Russia, Middle East Are we happy with this prospect? >>>>>> If not: We need even more substantial cuts in energy use. Or are we prepared to sacrifice our future to effects of Global Warming? - the North Norfolk Coal Field? Do we wish to reconsider our stance on renewables? Inaction or delays in decision making will lead us down the GAS option route and all the attendant Security issues that raises. We must take a coherent integrated approach in our decision making not merely be against one technology or another 24

25 GWh/ Year Impact of Fracking on Electricity Supply to Haynesville Eagle Ford Woodford Marcellus Fayetteville Years of Operation Output declines by 95% over first 3-4 years Total output from Fracking Well over 20 years is equivalent to two 3 MW wind turbines 25

26 bcm Estimates of Total UK Production of Fracked Gas DECC EIA Cuadrilla The most optimistic scenario data from above are used Electricity Scenario assumes similar split of gas use for electricity / non-electricity demand 5% improvement in efficiency for CCGT generation plant Maximum generation from Fracked gas = ~36.5 TWh by 2030 Based on Figure 3.1 in Tyndall (2011b) Report 26

27 Future Scenarios for Electricity Generation up to 2030 Assume Highest Projection for Fracked Gas Future Demand Climate Change Committee (2011) estimates Assuming significant growth in electricity for electric vehicles and heat pumps Alternative demand limited growth in electric vehicles and heat pumps. Renewable Generation Current Projections for Onshore and Offshore wind 1 million homes/year fitted with PV ~ 40% fitted by 2030 Severn Tidal Barrage or equivalent completed by 2025 Fossil Fuel/Nuclear Generation Existing Nuclear / Coal Stations close as published 09/09/2013 New Nuclear completions at one reactor per year from New Coal with CCS as demonstration 300 MW per annum from 2020 & 1000 MW per annum from mid 2020s Gas including Fracked Gas will cover any shortfall between DEMAND and COAL + NUCLEAR + RENEWABLE GENERATION 27

28 TWH (billions of units (kwh)) Our looming over-dependence on gas for electricity generation Limited electric cars or heat pumps Oil Oil Existing Coal UK Gas Existing Coal Existing Nuclear Imported Gas Data for modelling derived from DECC & Climate Change Committee (2011) - allowing for significant deployment of electric vehicles and heat pumps by Existing Nuclear Data for modelling derived from DECC & Climate Change Committee (2011) - allowing for significant deployment of electric vehicles and heat pumps by Data for demand derived from DECC & Climate Change Committee (2011) - allowing for significant deployment of electric vehicles and heat pumps 28 by Fracked Gas Offshore Wind Onshore Wind Other Renewables New Coal? New Nuclear?

29 Predictability of UK Wind Generation To what extent would variable renewables such as wind cause issues on the secure supply of electricity? MW hr prediction 24 hr prediction Actual Actual th Sep 27th Sep 28th Sep 29th Sep 30th Sep Graph shows Wind Energy Prediction 48 and 24 hours in advance and also actual output. Predictions are now very good Data abstracted from BMReports Website 29

30 Actual Output (MW) How Predictable is Wind Energy? Actual Output (MW) Projections made on Day Predictions made for each hour in 2013 had a correlation of 96.48% Projected output (MW) 7000 Projections made on Day -1 Predictions made for each hour in 2014 have had a correlation of 97.06% up to 5 th October Data abstracted daily from BMReports Website. Last occurrence at 08:30 on 6th October Projected output (MW)

31 Does Wind Variability cause problems with other generation? Demand (MW) Interconnector Flows (MW) GB Electricity Demand and Interconnector Flows GB Demand 06 th October 2014 To GB From GB Interconnector Flows Time (24 hr Clock) Data abstracted from BMReports Website at 21:30 on 6th October Net Generation in GB rises from 18941MW at 0500 to 38195MW at 0800 an increase of 19254MW in 3 hours. Maximum change in Wind Output in a 3 hour period on day was 2460 MW (on this occasion it reduced the net generation demand change). 31

32 % Variation of Load Factors over last 15 years Load Factors for different modes of Generation CCGT Nuclear Coal Onshore Wind Offshore Wind Wave/Tidal Solar PV Hydro Bioenergy Since 2012 load factors of Gas, Hydro, Onshore Wind, Offshore Wind and Bioenergy have been comparable close to 30% Load Factor Data abstracted from DUKES (2014) Tables 5.9 &

33 Annual Wind Variations are in phase with Demand TWh Load Factor Annual GB Demand Variation and Load Factor Variation Demand (TWh) Onshore (load factor) Offshore (load factor) Solar (load factor) 45% 40% 35% 30 30% 25 25% 20 20% 15 15% 10 10% 5 5% 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0% Wind Load Factor Variations follow general demand trend. Solar Load Factor trend is complementary to that of wind Data for 2013 abstracted from DECC, Elexon and BMReports Websites Oct 1 st 5 th

34 kwh per day Average Daily Output (kwh) Generation at the Domestic Level Energy Generation Solar thermal - providing hot water - most suitable for domestic installations, hotels generally less suitable for other businesses Example Output for 2 a panel 1.25kW ( 2.6 PV sqm Array ) in 6 Norwich 2011 generates 826kWh/year 5 (average 2012 over 7 years). The 2014 more hot water you use the 3 more solar heat you get! Renewable Heat Incentive available 1 from 2014 Solar PV providing electricity - suitable for all sizes of installation 5 4 Area required for 1 kw peak varies from ~ 5.5 to 8.5 sqm depending on technology and manufacturer 3 Approximate 2 annual estimate of generation 1 = installed capacity * 8760 * Overall Solar Energy Gain Jan Mar May Jul Sep Nov hours in year load/capacity factor of 10% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

35 Current and Future Generation Costs 14 p 12 p 10 p 8 p 6 p 4 p Effective Renewable Costs ROC banding introduced 2 p wholesale price gas nuclear coal All Renewables Onshore Wind Offshore Wind Solar PV Tidal Stream/Wave 0 p Volume Weighted Average wholesale prices over year Effective Renewable Costs = Wholesale Price + ROC Value 35

36 The future is our Responsibility In the Next 10 Years Energy Security and Cost issues in the UK will become just as important as Carbon reduction and at times supply could become critical. New nuclear and coal will not be available until after 2020 and there will be an increasing dependance on imported gas at volatile prices. Renewables such as Wind are now very predictable at the 24 hour time scale and can be used strategically with gas generation for a supply which is secure and can respond to demand. Currently support for renewables is less than 10% of retail prices. The UK needs a diverse mix of nuclear, renewables and fossil fuels to provide the resources to tackle the Trilema of Climatye Change, Energy Security and the Cost of Future Energy 36

37 Are there likely to be issues on security in next few years? Closure of Nuclear Stations Station Type Capacity Started Closure* Wylfa Magnox Heysham 1 AGR 2 x / Dungeness B AGR 2 x / Heysham 2 AGR 2 x Hartlepool AGR 2 x / Hinkley Point B AGR 2 x 610 (430) Hunterston B AGR 2 x 610 (430) 1976/ Torness AGR 2 x / Sizewell B PWR Hinkley Point B and Hunterston are down rated at 70%. Heysham 1, Hinkley Point B, Hartlepool, and Hunterston have all been affected by cracking which may mean up to 4 units out of action until end of December pose questions on extended lives indicated above. * World Nuclear Association September

38 Are there likely to be issues on security in next few years? Closure of Coal/Oil Stations Coal Capacity (GW) Cockenzie 1.2 Scheduled Closure Actual Closure March 2013 Didcot A 2 March 2013 Ironbridge 1.0 End 2015 Kingsnorth 2 By end of 2015 March 2013 Tilbury 1.1 or before if October 2013 Oil hours running since 1 st Jan 2008 has been Fawley 1 exceeded March 2013 Grain 1.4 December 2012 Littlebrook D 1.1 March 2015 Above stations opted out of the Large Combustion Plant Directive and must close by end of 2015 at latest. On October 6 th 2014 an announced was made that Longannet (2.23 GW) may also close in 2017 even though it complies with the LCPD 38

39 Are there likely to be issues on security in next few years? Strategies being taken by National Grid Demand Side Balancing Reserve (DSBR) Providing opportunity for large industrial consumers to shed load between period 32 (i.e. 16:00hrs) and period 40 (20:00 hours) over the Triad Period November to February. Consumers will be paid for such action. Planned reduction of 570MW for 2014/15 (or ~ 1% of peak demand) And 1140MW for 2015/16 Modelling of impact has been done on the basis of the Value of Lost Load payments at 17 per kwh implying total payments of up to 1.15 M per day over the Triad Period Supplementary Balancing Reserve (SBR) provision is also planned i.e having plant which have been mothballed or closed available for providing capacity. 39

40 The future is our Responsibility We must take a coherent integrated approach in our decision making on energy both on supply and demand. We must promote Energy Conservation and develop a coherent generation mix to provide a low carbon, energy secure and affordable future, not only for electricity but also for heat and transport. And Finally Keith Tovey ( 杜伟贤 ) If you do not change direction, you may end up where you are heading. Lao Tzu ( BC) Chinese Artist and Taoist philosopher 40