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Re-engineering the grid

February 25th, 2015
Credit: Dreamstime
Credit: Dreamstime

A new report from the Institution of Engineering and Technology concludes that the complex engineering involved in decarbonizing Britain's electricity system will be best integrated by a 'system architect'. But what would this architect do and how would the UK benefit? Dr Simon Harrison and John Scott explain

The changes needed to decarbonize the UK's energy system are profound and place extraordinary requirements on the electricity system.

Future demands for electricity services will need to continue to be met in a cost-effective and publicly acceptable way, while complying with environmental obligations and maintaining security and quality.

Development of a 'smarter power system' is seen by many commentators to be key to achieving the following objectives, which may at times be in conflict with each other:

Electricity services are the services consumers actually want that are provided by use of electrical energy: for example, illumination; transport; space and water heating or cooling; cooking; electrical energy to allow operation of electronic goods and instruments; and as input to industrial processes.

Environmental obligations include ambitious decarbonization objectives; air quality targets that will close most coal-fired generation within 10 years; statutory objectives for renewable generation; tough controls on nuclear safety and waste management risks; and the protection of biodiversity and landscapes.

Security means more than just having sufficient supply to meet demand. The system must be stable and resilient under stress and function well in the face of changing demands. It must be resistant to malicious disruption. It must be adaptable enough to allow integration of the new technologies and techniques that will drive cost-effective decarbonization, and not create avoidable constraints on the policy choices open to ministers.

Quality means maintaining voltages within acceptable upper and lower bands, avoiding dips and surges that could damage consumer equipment or cause irritating flickering of lights, minimizing power losses, staying within necessarily tight requirements for power system characteristics such as frequency, and maintaining a satisfactory sinusoidal waveform for alternating electric current.

Public acceptability requires that energy delivery is affordable for households and competitive for businesses. The consumer experience must be acceptable and new technologies should not be excessively intrusive or burdensome. Privacy must be respected and data kept secure. Disadvantaged, at-risk or disengaged consumers should be well treated and protected. Extensive infrastructure developments such as major wind farms, barrages or grid enhancements may also challenge public acceptability and must be balanced against societal desire to address climate change and ensure grid adequacy.

Challenges in meeting objectives

The key challenges include ensuring the continuing fitness of the power networks to meet the fundamental changes now taking place, which are anticipated to accelerate over the coming decades. These changes bring new opportunities, but many are disruptive to the power system in that they are not a continuum of the present arrangements. This challenges industry processes and standards, and introduces the requirement to accommodate new third-party players.

The electricity system has evolved over 100 years to provide the reliable, stable and continuous electricity on which normal life in the developed world depends. However, there are fundamental changes underway. These arise from the objectives of harnessing cleaner energy and the ever-growing interdependencies with communications, data and automation while maintaining affordability and security with quality. The changes ahead will bring many societal benefits, but also a series of challenges, such as:

  • Variable output from large-scale generation, for example from offshore wind farms;
  • Locally connected and often intermittent generation that is not dispatched centrally: for example, community energy programmes, large solar photovoltaic (PV) arrays or combined heat and power (CHP) systems serving large buildings or localities;
  • More active consumers changing their pattern of demand through demand side response, smart metering and automatic controls will help to manage the system efficiently, but could also result in unpredictable herding behaviours and feedback effects that become problematic for the network;
  • Substantial and novel demands arising from electrification of transport and space heating - these may have high sustained power demands and may be unevenly distributed and subject to herding behaviours;
  • Increased opportunity for greater use of distributed storage, potentially including electric vehicles;
  • Integration of information technologies into energy supply and the evolution towards a 'smart grid'; and
  • The emergence of cyber attacks on energy infrastructure as a Tier One threat to national security.

These challenges are manageable, and well-managed at present, but they will grow rapidly and may be subject to tipping points. If we are to succeed in decarbonizing the economy, by the 2030s they will be highly significant features of the electricity system. Taken together, they amount to a fundamental challenge to the long-established 'architecture' of the British electricity system.

A new architecture will be needed to meet the challenges, but making changes while maintaining service and responding to the issues above will be technically challenging, potentially risky and require purposeful direction. Architecture in this context refers not only to the 'visible infrastructure' but also to the codes, standards and processes that enable seamless movement of information and operational instructions. In addition, this must be achieved in compliance with new and planned European requirements whilst addressing the specific characteristics of the UK system.

The future is seen to be a far more complex, multi-party world that requires a whole-system approach. Without significant re-engineering into a flexible 'smarter grid', the electricity system is at risk of being unable to support the innovations necessary to deliver efficient and secure decarbonization in a practical and economic way. Furthermore, we will lose the wider benefits of a more intelligent power system that can interact with consumers.

Development of a 'smarter' power system is a key challenge to 21st century power providers
Development of a 'smarter' power system is a key challenge to 21st century power providers
Credit: Dreamstime

Today's institutional landscape

The nature of the challenges and risks is resulting in serious issues that, in many cases, interact across the whole system. However, today's institutional landscape has evolved into a multi-party structure where there is no actor with responsibility for seamless technical functioning of the whole system across its many players and technologies.

The current arrangements will need significant enhancement as distributed generation, demand side management, smart communities and smart metering become more pervasive. The timing of this is uncertain: changes to system characteristics are already becoming observable but tipping points will likely arise from around 2020 depending on carbon reduction trajectories.

The System Architect would take whole-system and long-term responsibility for developing and agreeing the framework of architectures, standards, protocols and guidelines needed to ensure seamless technical integration of the subsystems of the many market players and parties, enabling a seamless response to the challenges arising from policy imperatives as they emerge over the coming decades.

The System Architect will be a single clearly defined entity responsible for management of the complexity of the evolving power system architecture in the public interest, on behalf of the government. However, the System Architect would not be the master system planner, or the national Chief Engineer.

Function and scope

The System Architect would be accountable for the adequacy of the evolving power systems architecture, with the long-term aim of supporting and driving development of a 'smart grid' capable of meeting the challenges of the coming 20 to 30 years.

It would also have an advisory role: providing assurance that the whole system can meet the policy-driven technical challenges of the next two decades. The role would involve standards, interfaces and best practices, and oversee system integration: the system architect would in effect be responsible for ensuring adequate technical specification of an 'intelligent network' or 'smart grid', interpreting the direction established by policymakers and working with the organizations responsible to enable implementation and operation in an effective and coherent way, whilst also enabling innovation.

Those involved will be traditional industry players and, most likely, new third parties. In addition, there should be a role as adviser and risk manager, providing warning of emerging risks to system stability and advising on the feasibility and timescales for policy implementation.

The scope of the role of the System Architect could take a number of forms, two of which are:

  • The System Architect could operate on a 'subsidiarity' model and only consider whole-system issues, leaving other issues to be addressed by existing code panels and other machinery;
  • The System Architect could operate on an 'integration' model that combines many of the existing segmented functions into a single organization with overall responsibility and ultimate accountability to ministers. It could also evolve from one to the other over time, and the existing panel arrangements might be varied to a greater or lesser extent, depending on detailed analysis and consultation.

To supplement the grid and distribution codes, an option for consideration would be to develop a 'Power System Framework' to address whole-system issues that cannot be contained exclusively within any existing code.

Furthermore, the Framework would encompass the interests of new third parties as well as the traditional industry players represented on the today's code panels. The System Architect would own the development of this framework for the UK power system and its alignment with new European requirements, and would be responsible for ensuring its consistent adoption and relevance.

The functionality of System Architect could be delivered as a standalone body or by incorporating it into the responsibilities of an existing body - it is too soon to be prescriptive. Its formation presents an opportunity to bring greater coherence to the existing multi-party institutional landscape.

Participation would be a matter for consultation, but would likely include transmission companies, distribution companies, large energy suppliers and other key stakeholders such as smart communities, vendors and new entrants. Some participants might be subject to industry governance, as with the present code panels, while others might be involved less formally. Addressing whole-system issues on a 'best endeavours' voluntary basis would be an inadequate response in view of the issues and risks that can be foreseen.

Technocratic issues

The System Architect has a vital function, but one that is centred largely on technocratic issues - it is not an alternative source of policymaking or centralized management of the UK power industry.

Ministers and officials have a duty to assess feasibility and value-for-money of policies, and the System Architect should play a role as a trusted adviser, but not decision-maker, in this respect. The System Architect role is about making the UK power system function effectively to meet policy objectives determined by governments and to accommodate the behaviour of markets. It is not intended to make decisions or recommendations on broader aspects of energy and environmental policy.

Its role in this regard is as a 'policy taker' - defining the system architecture choices necessary to deliver the government's energy policy objectives, and to create the resilience and flexibility to incorporate policy and technology innovation. There will be occasions where effective technical integration requires attention to commercial and regulatory frameworks, and the System Architect would be expected to identify these and work with government and other parties to address them.

The variable output from wind farms is a new challenge for grid operators
The variable output from wind farms is a new challenge for grid operators
Credit: SSE

What should happen next?

These proposals are the IET's current thinking and the IET continues to be open to comments, welcoming debate to build consensus on responses to the challenges. We have already been working with different parts of government, energy regulator Ofgem and the industry to explore the issues and achieve a common view that these proposals need to be developed further.

At this stage, what's important is that all relevant issues are surfaced so that real progress can be made in forming a consensus understanding of how to move forward. We expect this work to progress over the period up to the national general election in May.

After the British General Election, we would expect government to undertake or commission a more detailed options appraisal, with consultation. This would build on work conducted by stakeholders before the election, and would be likely to include assessment of:

  • The merits of alternative implementation models;
  • Draft terms of reference defining scope and limits of the role, powers, duties and advisory responsibilities;
  • Accountabilities and assurance mechanisms;
  • Corporate and legal form, scope of existing legislation and any need for new legislation or regulations;
  • Membership and participation of industry bodies and organizations;
  • Estimated scale, costing and cost recovery options;
  • Possible conflicts of interest arising in any of the options;
  • Alignment with the Electricity Market Reform and climate change objectives and policy;
  • European requirements and opportunities;
  • The opportunity to build economic growth via innovation.

The IET is keen to engage the UK industry in this debate, and keen also to know more about what's happening in this area in other countries as they face their own energy transformations.

John Scott is the Director of Chiltern Power. Simon Harrison is Group Strategic Development Manager at Mott MacDonald

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Utilities Unbundled: new perspectives on power and utilities

February 25th, 2015

The power and utilities sector is in a period of immense transformation. Infrastructure investment, big data and analytics, market and policy reforms, evolving regulatory frameworks, new market entrants and empowered customers are changing the way power and utilities think and operate.

Consider, for example, the case for capacity markets in Europe. Energy supply security has long been a delicate balancing act for the region. Now Europe’s power and utilities companies are putting their support behind market arrangements that compensate them for keeping backup generation capacity on tap. In EY’s most recent publication, Utilities Unbundled, EURELECTRIC Markets Committee Chairman, Juan Jose Alba Rios, explains why capacity markets have the potential to enhance competition, attract new entrants to new territories, provide clarity for investment decisions and even bring consumer prices down.
Sun with wind turbines
Whether you’re in favor or against capacity markets, one thing is for sure: the renewables revolution has entered a strong second phase. The issue at hand is no longer how to boost their use, but how to integrate renewables into our energy systems. Fast uptake of wind and solar power in Germany has created a major challenge for the country. Grids built 30 to 55 years ago are struggling to integrate the flood of decentralized power generation from renewable energy systems. In Utilities Unbundled we looked at how one of Germany’s largest network operators, EWE NETZ, is tackling the challenge of integrating renewables. It is putting innovative planning concepts and intelligent technologies into practice and testing the waters for other countries that are likely to find themselves in a similar situation.

We know that big data and analytics is one way companies can unearth new solutions to the challenges facing the sector. But many still struggle with how to turn information into action, and justifying expensive investment in new technology without a guaranteed return is particularly tough for public utilities. South Korean energy giant KEPCO is one company cautiously exploring the possibilities of big data and analytics without taking risks that may violate its mandate as a public entity. KEPCO CIO, Hoi-Chang Lee, outlines how the company’s two pilot programs, tackling customer engagement and grid operations, are a positive start to finding new ways to leverage big data in the public sphere.

The power and utilities sector is evolving at an unprecedented pace. Companies can’t afford to ignore the change underway. Forward-thinking companies are those realigning priorities, rethinking business models and exploring new strategies and value-added service offerings to ensure success in today’s market.

To access Utilities Unbundled, and past issues, visit


Joined-up thinking

February 25th, 2015
The technology of power plant piping is constantly evolving
The technology of power plant piping is constantly evolving
Credit: Victaulic

The reliability of pipe joints cannot be compromised and the selection of pipe-joining methods can have a significant impact on both the initial installation and running costs and the efficient operation of a plant, writes Bill Lowar

Piping systems are an important part of power plant construction because they have a major influence on how efficiently and cost-effectively a plant operates.

When critical systems are down, the entire plant could cease to operate - and a plant that is not generating power is not making money.

Traditionally, pipes required for power plant services have been installed using welded and flanged joints in the medium- to large-diameter range, and threading for small-diameter pipe connections. Yet these methods are not ideal. Each presents risks and drawbacks for owners, engineering consultants, contractors and installers, including concerns about safety, cost, maintenance and long installation times. Alternative technologies such as grooved mechanical pipe joining can overcome many of these issues.

Mechanical joining

A grooved mechanical joint is comprised of four elements: grooved pipe, gasket, coupling housings, and nuts and bolts. The pipe groove is made by cold forming or machining a groove into the end of a pipe. A resilient, pressure-responsive elastomeric gasket enclosed in coupling housings is wrapped around the two ends of the pipe, and the key section of the coupling housing engages the groove. The bolts and nuts are tightened with a socket wrench or impact wrench, which holds the housings together. In the installed state, the coupling housings encase the gasket and engage the groove around the circumference of the pipe to create a leak-tight seal in a self-restrained pipe joint.

Once assembled, the mechanical coupling provides a permanent connection. Yet it can be disassembled if required to give quick and easy access for maintenance, reducing costly plant downtime.

Welding concerns

Welding is a time-consuming process and must be performed to stringent procedures. Welders must cut, bevel and prepare the pipe lengths, align and clamp the joint, then undertake two to three passes using the selected welding method at each joint. On a large-diameter system, this process can take hours for each joint. If a pipe joint needs to be welded at a height, the erection and dismantling of essential scaffolding will significantly add to the time needed.

Welding is also an expensive pipe-joining method. Although material costs are lower, total installed costs will be higher than mechanical joints due to the installation time and the need for highly skilled workers. Non-availability of the necessary skills can cause project delays and potentially lead to heavy financial penalties.

Safety is a major concern during welding. The potential for fire or explosion necessitates a fire watch during and following the work, which slows the construction schedule and adds cost. Welding indoors also requires fume and smoke extraction equipment.

Non-welded benefits

Joining pipe with a mechanical coupling is up to five times faster than welding because the gasket and housings simply need to be positioned on the grooved pipe ends, and the two bolts and nuts tightened with standard hand tools or impact wrenches. Following installation, the joint can be inspected visually: metal-to-metal bolt-pad contact confirms that the coupling has been properly secured into place without the need for x-rays.

No flame is required to install a mechanical coupling, eliminating the safety concerns associated with welding. Fume or smoke extraction equipment is not needed, nor are precautions such as a fire watch.

Grooved pipework can be prefabricated off-site in manageable sections, greatly simplifying transport, handling and erection. A man lift will normally allow quick and safe access for coupling installation at height.

Piping at West Kimberly power plant in Australia
Piping at West Kimberly power plant in Australia
Credit: Victaulic

Flanging shortcomings

Flanges are difficult to work with and are time-consuming to connect, with multiple bolts and nuts that require star-pattern tightening numerous times to complete the joint. Maintaining reliable, leak-free performance of a flanged joint can be the biggest issue.

Flanges are bolted together, compressing a gasket to create a seal. The bolts and nuts of a flanged union and gasket absorb and compensate for system forces and, over time, the bolts and nuts can stretch or yield due to surges, system working pressure, vibration, and expansion and contraction. When these bolts yield, the gasket can 'slip', which can result in a leak. Flange gaskets can take on compression over time, resulting in leakage.

In addition to potential safety issues, flanged unions increase maintenance requirements. To prevent or stop leakage of the flange, routine bolt and nut tightening is required. If this maintenance is not performed on a regular basis, the system is at greater risk of leaks. Gasket replacement may also be required, particularly when the flange is taken apart. Over time, the gasket can bond to the flanged pipe ends. When the joint is disassembled, the gasket will need to be scraped off the flanged pipe end and replaced, again increasing downtime due to maintenance.

Non-flanged benefits

A solution to these common safety and maintenance problems is to use couplings in place of flanges. A gasket contained within the coupling housings is stretched over the two ends of pipe which have been grooved, creating an initial seal, and the key sections of the coupling housings engage the groove on the pipe ends. When tightened, the bolts and nuts pull the housings together, metal to metal, compressing the gasket a precisely controlled amount to form a reliable, secure joint.

Couplings can be used on balance-of-plant piping applications including water and air services and can be installed in a third of the time needed to form a flanged joint. They eliminate the regular maintenance associated with flanges, because they do not require regular retightening throughout the life of the system. Unlike a flange that puts variable stress on the gasket, nuts and bolts, a coupling holds the gasket in precise compression from the outside of the pipe joint and holds the pipe together.

Overhauling piping can bring long-term cost savings
Overhauling piping can bring long-term cost savings
Credit: Victaulic

Threaded joint leakage

One of the most notorious issues in a plant is leaks in instrument air lines. Leaks are a problem because the cost of lost air is huge. Leaks cause pressure drops and machinery runs less efficiently by using more energy to make up for these losses.

Leaks result in a variety of additional problems, including inconsistent equipment performance due to fluctuating system pressure, increased maintenance costs, reduced service life of compressors due to excess load, and even corrosion of the steel piping system caused by moisture in the system.

A widely accepted joining method for small-diameter instrument air systems is threading and many of these air lines with threaded joints experience leakage. Two of the main causes of leaks are improper initial installation and ongoing plant operations that weaken the threaded seal. System vibration, for example, can compromise the thread tape or sealant, resulting in a leak. Poor thread cuts can also cause leaks.

Press-to-connect solutions

One solution to this problem is replacing threaded instrument air systems with a press-to-connect system. These systems allow plain-end ANSI schedule 10 stainless steel pipes to be connected thread- and weld-free. A hand-held pressing tool compresses a fitting, containing O-ring seals on two pipe ends, resulting in a permanent, leak-free, precisely compressed seal. When installed correctly, the elastomeric seal of a press joint dramatically reduces the likelihood of leaks compared to threaded systems.

Although initial material costs are higher, many plants that have replaced galvanized carbon steel threaded systems with stainless steel press-to-connect systems have realized long-term cost savings due to reduced energy costs.

Bill Lowar is vice-president of Victaulic Power Division

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EU energy union to initiate billions in infrastructure spending

February 25th, 2015

Europe is set for EUR40bn in investment in order to build a new power infrastructure and ultimately save the bloc billions of euros each year.

The launch of the Energy Union strategy took place on Wednesday with EU chiefs promising £29bn in annual savings for the bloc’s energy users.

Marie Donnelly of the Commission had indicated the direction of the document at a speech in London on Tuesday and so it proved that initiatives involving heating and cooling, power interconnection and reduced dependency on Russian imports are all to the fore in the document’s stated intentions.
Climate Action and Energy European Commissioner-designate Miguel Arias Canete
The strategy for an energy union seeks to reduce import dependency through better grids and pipelines to improve energy sharing across the 28 member states. The plan would cut costs, the Commission says, by increasing consumer options, integrating renewable energy supplies and reducing the need for expensive imports.

Climate Action and Energy Commissioner Miguel Arias Canete and Maroš Šefcovic, Vice-President of the EC in charge of Energy Union fielded vigorous questioning on one particular detail during the press Q&A: Greater transparency for intergovernmental agreements –the move designed to allow the Commission greater control in energy supply negotiations with outside parties such as Russia.

"Europe is losing up to EUR40bn a year by not having a fully connected energy market," Canete said, citing research carried out for the Commission.

Referring to the strategy as a holistic approach to EU energy management, Canete added he was releasing a "country-by-country plan" to achieve a goal of ensuring cross-border links equate to at least 10 per cent of a nation's power generation capacity by 2020.

The overall amount of investment needed in EU energy infrastructure is around EUR200bn between now and 2020. Of this, the cost of reaching the 10 per cent goal is roughly EUR40bn, the Commission says, meaning it would be swiftly offset by the savings it foresees.

With regard to greater transparency in intergovernmental agreements, Canete said consultation with Brussels in those arrangements is ‘not good enough’, citing the example of the South Stream deal with Russia.

“Our proposal is that the Commission should be part of the negotiating team when such important agreements are being signed. We also want to push it further and increase the transparency of gas contracts in the long term- I am convince we can develop that mechanism while respecting commercial secrets. Without proper transparency on the European side it’s very difficult for us to negotiate with the dominant suppliers.

“When it comes to prices, volumes, delivery points, when you look to the states in central and Eastern Europe it would be very good to have advice from the Commission on what is being negotiated with other countries and partners, so we are not being pushed into disadvantaged negotiations points.”

Canete also emphasised the importance of a robust infringement process to ensure new regulations are properly implemented and also pointed out that the Commission’s place in the front line of negotiations on agreements would be more efficient as there would be less need for European Courts of Justice in the process, with less EU laws being contravened.

“It is much better to consult in advance and make sure agreements are complied with – agreements often contradict community rules- so it is much more efficient to consult, see the experience and approach in a reasonable way instead of going through ECJ process.

The Commission says 12 member states do not have enough connection to the rest of the EU electricity market: Britain, Cyprus, Estonia, Ireland, Italy, Latvia, Lithuania, Malta, Poland, Portugal, Romania and Spain.

Canete told the press briefing, “After decades of delay it is important that we don’t lose the opportunity to create energy union. Energy islands still exist in Europe which threaten our security and make us vulnerable. This is the first concrete union showing country by country how we can get to a 10 per cent interconnection target by 2030 and it marks our independence from external suppliers and our interdependence as Europeans.

There will be positive implications for Europe’s gas infrastructure arising from the strategy and a commitment to forge stronger relationships with neighbours such as Tukey, Algeria and Norway, thereby reducing dependency on any one external arrangement. Canete also added that carbon capture and storage would have to be developed if Europe is to maintain its coal-fired power capacity.


European Commission renewables chief highlights importance of heating ahead of power

February 25th, 2015

The head official at the European Commission’s renewable directorate says the EU’S focus needs to shift away from electricity towards heating and cooling if it is to achieve a balanced and successful energy policy.

Marie Donnelly, Director of Renewables at the DG Energy of the European Commission told a gathering at the Westminster Energy Environment and Transport Forum in London that the priority for the bloc needs to be heating and cooling rather than power.
Marie Donnelly
“Heating and cooling of our buildings consumes 46 per cent of our final energy, with power at just 21 per cent. So often at meetings we debate about electricity when really the key issue we need to address is heating and cooling – at last this is an issue being taken up by the commission.”

Donnelly, who told the forum that there should be an end of year strategy in place for heating and cooling in Europe, reinforced that message through reference to recent headline events in the East.

“The crisis that has been brought about by Russia- is a heat crisis, not an electricity crisis – it is not the lights that will go out, it is the heating. The Energy Union (policy announced Wednesday) is about refocusing what we really need to address in terms of our energy policy.”

In addition, Ms Donnelly took the opportunity at the event, entitled, Next Steps for the UK Renewable Energy Sector, to tell the audience of Brussels plans to increase empowerment of consumers, and help put them in control of their own consumption and costs. She took aim at the accepted system of receiving periodic bills from utilities saying “how happy would you be if you arrived to pay at a supermarket and had no idea what the bill was going to be. We don’t know it is costing us at the point of consumption.”

Ahead of the announced Energy Union policy document, Donnelly indicated how the recent difficulties with Russia had motivated EU policy makers to increase its co-operative effort in the sphere of energy. She said that ultimately better collaboration between the whole of the bloc can save billions of euros.

“Discussions with Russian haven’t gone any better since last year –we cannot operate policy in Europe through 28 energy boxes- we have been cut off twice before and have shown ourselves to be slow learners but this time it should prove to be third time lucky.”

To illustrate the usefulness of regional energy markets and interconnection as key drivers of the EU Energy Union policy, she gave the example of Irish and Danish experiences.

“So much of our renewables are variable and it’s expensive to balance. Take the case of Denmark and Ireland- similar sizes and populations and both pursuing wind power policies. It costs twice as much for Ireland to bring in the same renewable energy as Denmark- but Denmark is interconnected (on mainland Europe) and Ireland does not benefit so much from that.”

The UK, it was pointed out, has some way to go to reach the European standard interconnector target. The target is 10 per cent for the EU for 2020, and that is to be increased to 15 per cent, while the UK’s rate of interconnectivity is currently at 6 per cent.
Donnelly concluded her contribution by saying that Europe needed to value its leadership in renewables energy development, telling delegates, “We need to look at renewables as having a competitive advantage in the energy space.

She also emphasised how renewables could move in and contribute in areas where fossil fuels previously held the upper hand.

“District heating systems in eastern Europe could be more efficient and could be fuelled by renewables instead of gas,” she said.

For UK industry chiefs and attendees alike, one of the biggest grievances aired was the blatant subsidising of fossil fuels at a time when the renewables industries were being attacked for their engagement with government in that respect.

Dr Nina Skorupska, Chief Executive of the Renewable Energy Association said she had recently picked up a 150-page report documenting direct and indirect subsidies afforded to fossil fuels.

“The European Renewable Energy Federation’s Transparency report compared how many subsidies were awarded to all the different industries – renewables gets its fair share but direct and non-direct subsidies to fossil power are almost on a par – in particular with gas.”

“We have challenged (Secretary of State) Ed Davey who goes on about technology neutrality on this –we will only believe him when all those numbers are transparent and on the table.”

Leonie Greene of the Solar Trade Association echoed these sentiments. ”It’s indefensible that fossil gets six times the subsidies that renewables gets – we should preface all of our announcements with that. We see it in the UK with the very generous subsidies the chancellor (of the Exchequer) is paying out to fossil –we should be making more noise about it in the build up to (the UN Climate Change Conference) Paris.”

Greene added that the industry needed to be mindful of not allowing the development of storage technology to be used as an excuse to side-line solar power’s progress, pointing to the growing penetration of solar in the overall energy mix.

German heavy industry chiefs unhappy with EU carbon market decision

February 24th, 2015

The European Parliament’s Environment Committee has backed a reform of the European Union's emissions trading scheme (ETS) through a vote taken on Tuesday.

However the EDI, which represents energy intensive industries in Germany has expressed its dismay at the vote.

The ETS is central to the EU's efforts to tackle climate change, but has been suffering from  chronically low prices that are insufficient to drive low-carbon investments.

To fix the market, the European Commission had  proposed reforms starting in 2021, designed to reduce a surplus of two billion carbon credits on the market which have caused low prices.

Today's parliamentary vote backs earlier implementation of the reforms, starting in 2018, and contains additional measures to tackle surplus allowances.European Parliament

EID chairman Utz Tillman was unequivocal in his criticism of the the Environment Committee of the European Parliament for the introduction of the market stability reserve (MSR) for 2018 in European emission trading.

The commission proposed the MSR to remove surplus credits from the market at set trigger points. This is designed to reduce price volatility and help push market participants onto a more cost-effective decarbonisation pathway.

In an email statement to Power Engineering International, he said the MSR is neither reconcilable with emission trading nor conducive to climate protection.

“The market stability reserve is a setback for the political acceptance of emission trading in Europe and for investments. The MSR is not what its name suggests. This step makes a functioning market for allowances in Europe unpredictable and could cause high costs for energy-intensive companies, which are impacted the most.”

As the MSR brings an increase in allowance prices and, consequently, also in electricity prices, the German EID sectors (construction materials, chemistry, glass, non-ferrous metals, paper and steel) could be faced with extra costs of EUR4.6bn per annum.

According to Tillmann, industry highlighted the cost problem in the discussion but this issue was not given enough attention. He thinks that the Environment Committee’s decision shows compromise but does not solve the cost problem.

EID spokesman Klaus Windhagen (director-general of the German Pulp and Paper Association/VDP) emphasised that the market stability reserve is unnecessary for climate protection.

“The climate goals of the European Union are fully achieved without the MSR. Another market intervention is only meant to drive up allowance prices. We fear an even stronger trend among companies to invest outside Europe, due to the lack of reliability in European energy and climate policy,” he said.

The EID also stated that companies should continue to receive full compensation for higher electricity prices. They maintain that otherwise there is a growing risk of production relocations to sites outside the European Union.

Tillmann pointed out that in its draft paper for the Energy Union, the EU Commission set the course for the future and urged EU institutions to strengthen the competitiveness of energy-intensive industries.

“One day before the Commission wants to present the Energy Union, the Parliament takes measures that put at risk our competitiveness. This simply makes no sense, and the Commission needs to respond to this. 

Analysts say the reforms could see EU carbon prices more than double by 2020, to between €17 and €35 per tonne. Member states must still back any reforms to the ETS, however.

The commission said the reserve should start in 2021. Here's how it would work:

·         If the surplus of credits exceeds a trigger point of 833 million allowances, 12 per cent of the surplus is put into a 'reserve' - basically, a central bank for carbon credits.

·         If the surplus drops below 400 million, the reserve puts 100 million credits back into the market at the next auction.

Pattern Development and Cemex in Mexican renewables JV

February 24th, 2015

US firm Pattern Development, the parent company of Pattern Energy, has signed an agreement with Mexico's Cemex Energía to create a joint venture aimed at building renewable projects in Mexico.  

The two companies' plans focus on solar and wind plants. Together, the firms aim to install 1000 MW of renewable power capacity in Mexico "within the next five years", according to Mike Garland, president of Pattern Energy.

Mexico's recently approved energy reform seeks to generate 35 per cent of the nation's energy mix from renewable sources by 2024.

Nuclear power group Areva announces $5.6bn loss

February 23rd, 2015

Areva, the nuclear reactor builder has announced losses of $5.6bn (EUR4.9bn) for 2014.

The French state-owned company continues to feel the impact of declining demand and write-downs and provisions for a delayed nuclear power plant project in Fennoivoima, Finland.
Areva logo
The European nuclear sector has suffered greatly post-Fukushima and European utilities also cut nuclear plant maintenance spending and offshore wind investment in response to sluggish economic growth in the region. Areva last year had its credit rating cut to non-investment grade by Standard and Poor’s.

The company, which in November abandoned forecasts for 2015 and 2016, said earlier this month that sales last year slumped 8 per cent.

The company also said it may have to cut jobs in France, which accounts for a third of its revenue and more than half of its workforce.

“The group is working on developing a competitiveness plan and a strategic and financial roadmap,” Areva said. It will give an update to investors on March 4.

India’s coal-fired power plants “underperforming”, study finds

February 23rd, 2015

India’s coal-fired power plants are underperforming in a number of key areas, a study released on Saturday has found.

The report, Heat on Power, from the New Delhi-based Centre for Science and Environment (CSE) rated 47 coal-fired power plants around the country in terms of efficiency and compliance with environmental regulations, concluding that together they are among the world’s “most inefficient”, with “immense scope for improvement”.

"The objective of the study was to give a clear picture of the environmental performance of the [power generation] sector. Our finding is that in India, where the demand for power is increasing, power plants are performing way below the global benchmarks", CSE Director General Sunita Narain (pictured, front row, second from left) said in a statement.

The power sector scored “poorly on all parameters”, the report said, receiving an overall score of 23 per cent – compared to the 80 per cent that a plant following all best practices could potentially achieve – and with 40 per cent of the rated plants scoring below 20 per cent.

The average efficiency of the plants in the study was 32.8 per cent, one of the lowest among major coal-based power-producing countries. The average CO2 emissions figure was 1.08 kg/kWh, which the report noted is 14 per cent higher than China’s.

The study found that the plants collectively use around 22bn cubic metres of water, or over half of India's domestic water need. And it noted that 55 per cent of the units were in violation of emissions standards “which are already extremely lax”.

In addition, the plants were found to be operating at an average of 60-70 per cent capacity. If capacity utilization is improved, the report said, the sector will be able to meet additional power requirements without building new plants.

The plants found to be top performers, each scoring between 45 and 50 per cent, were West Bengal-based CESC-Budge Budge, followed by JSEWL-Toranagallu (Karnataka), Tata-Trombay (Maharashtra) and JSW-Ratnagiri (Maharashtra). The Tata-Mundra plant (Gujarat) received an award for highest energy efficiency, while Gujarat Industries Power Company Ltd's (GIPCL) Surat plant won an award for lowest water use.

The performance of NTPC Ltd, India’s largest producer of coal power, was found to be “below par”. Although NTPC did not disclose its data and thus was rated based on a survey and publicly available information, six of its plants received scores of 16-28 per cent.


Hungarian nuclear power plant could be blocked by Brussels

February 23rd, 2015

The proposed plan to build two 1200 MW nuclear reactors at Paks in Hungary has come under scrutiny by the European Commission and may be blocked.

Under anti-trust law, the proposed $12bn development is being investigated after some details of the contracts with Russia’s Rosatom were said to be concealed on grounds of national security provoked suspicion among opponents to the project.
Viktor Orban and Vladimir Putin
The anti-trust issue is being described as a possible case of violation of EU law by officials

A veto or prohibitive fine could be in the offing according to the FT with Euratom, the nuclear watchdog, withholding approval for the plant’s fuel supply on technical and financial grounds, although talks are ongoing. All nuclear fuel supply deals by EU member states must receive the green light from the agency.

There is also concern about overdependence by Hungary on Russia for energy. The country already relies on Russia for 80 per cent of its oil and 60 per cent of its gas imports, but Budapest still awarded contracts to design, build and maintain the reactors in December.

Competition investigators from the European Commission are looking at state subsidies and the legality of contracts awarded to Rosatom and its affiliates without a tender.

Hungary’s government is keen to maintain good relations with Russia despite Europe’s stance on sanctions as a result of the Ukrainian crisis.

On an official visit to Budapest last week, Vladimir Putin confirmed that Moscow would finance 80 per cent of the project’s total costs, saying he attached “great importance” to it.

The Hungarian Prime Minister, Viktor Orban declared last week that energy policy was a sovereign matter, and appears to be readying to oppose Brussels opposition to the project:

“We will have a major problem . . . I expect an escalating conflict,” he said. According to  
Hungarian online news agency Orbán added that nuclear energy remains "necessary" in Europe and said it was time to admit "the especially inconvenient truth" that competitive energy prices could not be created in the region without having Russia as part of Europe's energy market. The most important factor in the energy sector today is price, he said, and "climate is only second."

Paks currently comprises four Russian-supplied VVER-440 pressurized water reactors, which started up between 1982 and 1987.

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