A fantastic evening last Thursday – so much detail, expertise and debate plugged into less than 2 hours for our seminar The Future of Road Transport. Special thanks again to all our speakers and to A&O for hosting the event. No wonder then that a lot of people have asked me since to see the slides of our four contributors. All have agreed to share them with you online for which we are most grateful.
So here they are;
Professor Stephen Glaister CBE
A very insightful piece here in the Belfast Telegraph shows how even in small population areas like Northern Ireland – all of 1.8 million – increasing competition is seen as possible and the key to keeping consumer bills under control. So you might say, why can’t OFGEM deliver more of it in Britain, the other 60 million?
Actually, I don’t blame OFGEM very much. In the circumstances there’s just not that much that they can do. They are at the mercy of the vast over and misdirected investment programme driven by carbon-reducing and renewables-enhancing legislation stipulated by our well-meaning politicians. But sometimes, I do think that OFGEM has lost its key raison d’etre – to put the consumer first – rather than to regulate the status quo of the utilities and every few years announce a new competition inquiry to stave off public opprobrium.
At our next seminar, we will be examining a number of ideas on how to increase competition like;
Even so, Power NI have just announced an eye-watering 18.6% increase for homes and businesses and the Republic’s Airtricity is moving in. A small victory then, in a small corner of the UK, in what will be a long war.
This article on Reuters http://www.reuters.com/article/2011/06/24/idUS24604452520110624 would suggest so. They have focussed on a startup called Nuvve which, based in Denmark which has a lot of intermittent, renewable power. They actually need a serious amount of storage innovation to use all of it – rather than export usually most of it to Norway and Germany as they currently do. According to another piece from Greentech Media;
http://www.greentechmedia.com/articles/read/can-nuvve-make-v2g-work-in-the-real-world/
Nuvve’s innovation is in the server connecting the EVs to the grid operator and in sharing revenue with the EV owners, potentially reducing the overall cost of the EVs. Nuvve’s server is the arbiter between the EV batteries and the power market through the system operator.
Energy storage is a non-intuitive and tricky market to crack. The seemingly obvious energy arbitration market — buying low at off-peak and selling high at peak — is the least rewarding revenue stream in the current regulatory scheme. Ancillary services like frequency regulation might be the lower-hanging fruit in the V2G application. The world market for frequency regulation is large, currently around $6 billion, and estimated to grow to $12 billion by 2020, according to Nuvve.
The last point fascinates me. Frequency regulation is deemed to be a better market for V2G power than arbitraging peak and off-peak electricity.
This is in all likelihood to do with the forthcoming – highly complex and demanding – roll out of smart grids on the distribution network, i.e. the level below big industrial power stations.
This is all interesting but runs the risk of building further complexity on complexity – hardly a recipe for low cost, consumer gain outcomes. So why can’t someone go for the plain on vehicle to home grid solution?
Straightforward arbitrage of offpeak to peak load power would suit me fine. Or even buying corporate rate electricity from the workplace and transporting back home in your electric car !
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Good interview and interesting piece in today’s Independent with Tony Wray, CEO of Severn Trent.
Sarah Arnott usefully sizes up the water industry conundrum;
Water is a surprisingly complex business. It is the most visceral of the utilities, and has massive capital investment requirements alongside no less than three sets of regulation – economic, environmental and public health.
I was also very taken with Tony Wray’s comment on the existing regulatory framework
At the moment, given the choice between sourcing low-cost water elsewhere or building a new reservoir, you build the reservoir,” Mr Wray says. “That way it goes on your ‘regulated asset base’ and you get to put your prices up and get a regulated rate of return on it. It’s a solution, but it’s not sustainable.
I’m sure there’s lots more scope for thinking like that right across the utilities, especially National Grid.
We had an incredible event last night “Shale Gas in Europe”. Huge thanks to;
Telegraph TV turned up as well. I’ll post a link up when they go live.
According to a report covered by Rigzone, the UK has just set a new monthly record for the import of LNG of 73 Bcf for November 2010. Can’t wait to see December which I suspect will be a new record again. It was 378 Bcf for the whole of 2009 and is expected to be close to 700 Bcf for 2010, so roughly double.
What”s interesting as well is the source of the LNG – predominantly Quatar, followed by Algeria and Nigeria.
I can’t see these trends not driving EU governments to push harder on shale gas exploration in the years to come.
A concise and fascinating piece – with a useful graphic on unconventional gas risk factors – just published in Petroleum Economist (behind a paywall but free for 48 hours, post-registration) by three Schlumberger business consultants – Herve Wilczynski, Muqsit Ashraf and Mohammed Saadat, the opening paragraph of which I’ve appended below;
Shale gas: a risk worth taking
“UNCONVENTIONAL gas accounts for half of North American production, with investment exceeding $25bn a year. Although this has changed the continent’s energy outlook, there may be a bigger prize: nearly 75% of the world’s shale-gas resources lie outside the region.”
Not least I might add, in Europe – to find out more about Europe’s shale gas prospects, attend our event in London on the 20th January, Shale Gas in Europe.
My gut feeling is that Shale gas in Europe is going to move a lot faster than anticipated. And not just because the extreme winter is driving up gas prices to 2 year record highs prompting gas balancing alerts.
Do not underestimate the technical progress that could be made in just a few years in lowering the cost and increasing the quantity of shale gas extraction.
A very disappointingly CO2-sided couple of articles in this week’s Economist – Highly charged motoring. It trots out all the usual stuff about the shortcoming of electric cars – range, load demand on the grid and much lower reduction in CO2 emissions. But what about the non-CO2 emissions like carbon monoxide, NOxs and above all, particulates?
Unfortunately, in the rush to reduce CO2, diesel has been the preferred choice and this has led to an increase in asthma suffering and many, many premature deaths. This is why Swiss transport scientists are just flat wrong to argue that diesel is cleaner than battery electric cars. So it’s good news that Volvo have launced an app that gives some proper weighting to this. I for one, when I look at the grey/black mucus on a handkerchief after blowing my nose in Central London, always resolve never to own a diesel.
So that’s one very good reason to switch to electric or petrol/natural gas hybrid transport.
Quite another is to understand is that vehicle mileage in the UK is so low – just look at table 9.17 in this Department for Transport pdf. In 2008, the annual mileage of all 4-wheeled cars was 8,690 or a grand total of 23.81 miles per day with many people doing a lot less than that. Now you could do this with some margin to spare with an electric car. But I think it’s probably correct that most would rather not suffer the fear of running out of juice so the plug-in hybrid beckons. Fine, you say, but what about the electricity demand?
Nothing like as high as is made out. There are real advantages of cost and cleaner electricity to charging off-peak at weekends or at night. If you doubt me, just look at these charts. Our low carbon electricity generators (principally nuclear) actually peaks as a percentage of the whole at night (when demand drops in half) and at the weekends when it is also cheaper. It only really becomes an issue if you want to fast charge your vehicle with much higher voltages so that it takes minutes rather than hours as with the Lightning. But unless you can afford a £120,000 Lightning, it seems highly likely most people would opt for a mix of off-peak electricity and the occasional petrol station.
This last point fascinates me. Petrol stations have been closing at quite a rate for some years, not least because of the increase in vehicle efficiency as well as onerous EU regulations and intense competition for the Independent Operators. The plug-in hybrid will accelerate that trend massively.
So, if a trip to the local petrol station becomes as rare as a trip to a quaint village shop, has government realised what that is going to do to their tax revenue?
Fuel duties already raise £26 billion and are forecast to raise £34.7 billion in 2015/16 (see table C11, page 109). I wouldn’t want to bet on that. And there then just might be scope for plugging in spare electric vehicle capacity to be used on the sub-distribution network, definitely not the grid, but in your own home or business, a bit like the electronics – the most interesting part – of the late Windsave, which produced electricity for you own home only, from your personal plug in micro wind turbine.
NEWS:
The Utility Strategy Group and FES are to join forces and look forward to holding a series of events in 2010/2011.
Dan Lewis, Chief Executive of FES says;
“FES is very excited to be working together with USG. A highly-respected independent group of industry professionals, over the years, USG have brought together leading thinkers in the energy and utilities sphere and have produced many sterling top quality, thought-provoking events”.
Edward Hyams, Chair of USG says;
“We are delighted that Dan Lewis who has done so much interesting work on energy and organised many high profile think tank events over the last few years has agreed to take on the name of USG together with Future Energy Strategies. FES also brings new capabilities to our evening events. Not least an extensive mailing list, an excellent Advisory Board and a scaleable, integrated IT system.”
Today I saw a piece in the Guardian by John Vidal – Engineers race to design the world’s biggest offshore wind turbines, with some nice graphics of a Horizontal Axis Wind Turbine, reproduced below here;
This looks awfully similar to another company I came across 5 years ago in 2005, Theodore Bird’s Aerogenerator from Windpower Ltd. – also published in the Guardian in 2008 and reproduced here;
And that’s because it’s the same company but the first image suggests a much simpler design with fewer components which makes sense in these straitened times.
Offshore wind really has a lot of problems like;
Now back to the theme of the post. I’ve just been reading an excellent book, False Economy by Alan Beattie. The phrase that sticks in my mind is path dependence. Path dependence, you should understand, is a series of choices made by a species or a company or a person, that can ultimately leads to a dead end. That argues Beattie is what happened to that poster image of the WWF, the Giant Panda. A bear that is incompetent at consuming and reproducing unless in a very narrow environment where it chews bamboo, a low nutrient plant for up to 16 hours a day. Pandas says Beattie, are useless. No wonder they need protection.
Arguably, worldwide, wind turbine manufacturers are stuck on their own Panda-like, subsidy-rich path dependence, the Horizontal Axis wind turbine, classically understood as this;
There’s actually been no serious attempt to build them any bigger than 5 MW in scale since 2005 and most investors plump for 3 MW turbines. They have reached an evolutionary dead-end. So what’s the alternative?
The case for horizontal axis wind turbines is that they potentially offer;
i) Longer lifespans – up to 40 years rather than 15-25
ii) Higher load factor
iii) Quite low cut-in speeds and much higher cut-out speeds
iv) And much lower financing costs
The proof though is in the pudding – I want to see a big one in action delivering the goods. Let’s not forget that the learning curves of offshore wind 7 years ago were meant to be costs coming down, not doubling as they have done.
And whatever the industry, always be suspicious and ask many questions of someone confidently forecasting falling costs over time thanks to an increase in production – but for the computer and auto industry, it usually doesn’t happen.
