On Tuesday 22nd May, Edward Davey, the Secretary of State for Energy and Climate Change published the first draft of the Energy Bill that could define the electricity production market place for many years to come. In the following post we have provided an overview of the bill, however it can be found in full here.

Introduction

• Over the next decade 20% of our existing power stations are due to close
• The investment to replace this lost power generation will require an estimated £110bn investment
• This investment also needs to be aligned to our climate change goals, with one of the principal aims targeting decarbonising Britain’s electricity generation.
• There are 3 families of low carbon energy generation technology
  1. Renewables
  2. Fossil Fuels with associated CCS technology
  3. Nuclear.
• To make this a viable option, we need fundamental electricity market reform.
• This also creates opportunity for the UK to become market leaders in cleantech, it is estimated that the UK CCS (carbon capture & Storage) could be worth £6.5bn to the UK by the end of the next decade.
• By 2020, the Government is committed to making a 34% reduction in CO₂ (relative to 1990 levels), as part of the Kyoto agreement and ensuring that by the same time 15% of our electricity is from renewable energy sources
• The plants that are due to be decommissioned over the coming decades will be replaced with intermittent power sources (Wind and Solar) and less flexible sources (Nuclear).
• This newly envisaged electricity market will require a lot of investment, as we need infrastructure that can service a much more flexible energy mix.
• Demand is due to increase; this is despite home efficiency improvements (The Green Deal), and more efficient use of the grid (smart meter roll out). By 2050, it is thought electricity demand might even double from today’s levels.
• The price of electricity is due to increase, as fossil fuel prices increase and environmental policies come into play, and this is without factoring in the price of the new infrastructure.

The Key Elements of the Energy Bill 2012

There are several key elements to the Energy Bill.

• Implementation of Electricity Market Reforms (EMR)
• Clarify the role of the regulator Ofgem
• Establish an office for Nuclear Regulation (ONR)
• Changes to the offshore transmission regulatory framework
• Provisions made for the potential sale of Government Pipeline and Storage Systems.

EMR – In July 2011, the Government set out plans to legislate for structural reforms of the energy market, thereby ensuring future electricity is affordable, secure and adheres with the government’s climate change commitments. This will be done in several ways:

– Introduction on Long terms contracts (such as the Feed-in Tariff with Contracts for differences) to provide stable financial incentives to invest in all forms of low carbon electricity generation. This essentially means that to help stabilise the revenues of an electricity generator over the long term, payments to be made to the generator when a nominal electricity market price falls below a price agreed in the contract. If the nominal electricity market price goes above that in the contract, the generator then pays back the difference.

– A carbon floor price (a tax to underpin the carbon price in the Emissions Trading Scheme)  to reduce investor uncertainty, hopefully thereby increasing the attractiveness of investing in low carbon technologies.

– A capacity mechanism for electricity production to ensure future security of the energy supply

– An Emissions Performance standard set at 450g CO₂/kWh to reinforce the requirement that any future coal power plants will need to be built with associated CCS technology, but also at this level gas can be used so these plants can be built in the near future (which potentially will plug the energy gap).

Clarify the role of the regulator Ofgem – The new statutory Strategy and Policy Statement will set out the Government’s strategic priorities for energy policy; describe the roles and responsibilities of Government, Ofgem, and possibly other relevant bodies; and define policy outcomes that Government considers Ofgem to have a particularly important role in delivering.

Office for Nuclear Regulation (ONR) – In 2011, the government announced it was going to create a new independent statutory body to regulate the Nuclear Industry. The ONR will work like other regulatory bodies, but there will be added emphasis on five key areas: nuclear safety; nuclear security; nuclear safeguards; the transport of radioactive material by road, rail and inland waterway; and health and safety on nuclear sites.

Offshore Transmission – Offshore windfarm developers will now be able to install their own transmission infrastructure for bringing their electricity onto land. Previously this has not been allowed under the 1989 Electricity act. Relaxing the rules around this will ensure there is no barrier to entry for infrastructure investment.

Government Pipeline & Storage System – The MoD has concluded that pipeline and storage associated with transferring aviation fuel to MoD, US and civilian airports no longer needs to be owned by the government, so legislation is required to enable the sale of this infrastructure.

Imagine life without electricity

Well, first off you wouldn’t be reading this; in fact the internet wouldn’t exist at all. Business systems would fail, emergency services would become futile, there would be limited transport, limited communication, and most of the modern conveniences that you take for granted would simply disappear.

Everything that makes life so straightforward (relatively!!) would simply not exist.

Fortunately as of May 2012, I have not really suffered from this problem; the odd power cut has resulted in reading by candlelight, but even that had a romantic charm to it.

With demand continuing to increase and supply not reacting fast enough to plug this energy gap the world is coming up with an ingenious way to help.

Development of the Electric Grid We Use Today

The electricity grid that we know and rely on today was first created in the 1890’s, when Nikola Tesla highlighted the advantages of using alternating current to transport electricity. Initially, in the early 20th century, the grid started out as lots of local grids but by the 1960’s these local grids had developed and become so interlinked that it appeared as if there was one massive grid in the UK, with thousands of power generating plants to produce the electricity needed.

At this time, the majority of power stations were gas, oil and coal powered, but as time went on and demand increased, nuclear power plants began to be built (near large sources of water required for cooling) along with large hydroelectric developments.

It was not until the end of the 20th Century that electricity demand patterns were established.

Electricity currently cannot be stored effectively unfortunately, and each type of power station takes time to switch on and off. Nuclear power is the slowest to turn on and off, so nowadays this provides a large percentage of the base electricity in the grid. However, electricity derived from gas turbines can be turned on and off relatively quickly, so this type of power generation was initially used to help mirror electricity demand.

Forward wind another 20 years or so to 2012

Admittedly we still rely on coal, gas and nuclear electricity to power most of the country, but there a number of other electricity sources that have since been added to the electricity mix (although these produce intermittent power when the sun is shining, when the wind is blowing etc). Demand in the UK has also continued to increase, and pressure is forever mounting to drive us get our electricity from cleaner sources. The final issue though, is that demand for electricity is due to outstrip supply as nuclear plants are decommissioned over the coming years and there is nothing (currently) in the pipeline to take up the slack.

So where does that leave us? Well not in great shape admittedly!! However all is not lost. We are holding an ace card, we have information. Lots of it. At the tip of our fingertips.

If I am out and about, I can now see how far my bus is from the bus stop. If I see a product in a shop, I can scan the barcode and check where in my local area I can get the same product at a cheaper price. I can use the internet to book a flight, do all of my shopping, video call my friends across the world. The internet has transformed the way we live, and it has only been about for the last 15 years or so (in the form that we know it now).

The Smart Grid

So we have increasing electricity demand as populations grow, business expands and people are living more energy intensive lives. There is also now more risk to the electric grid than ever before, it is getting old, it is more difficult to continue scaling it up, and it is under constant threat from terrorists.

The smart grid is the term used to describe the overhaul of the electric grid. Governments and businesses are investing lots of capital to make the grid more reactive to supply and demand, and this is being driven by 4 interrelated functions.

• Power Generation
• Monitoring
• Control
• Applications

As I have mentioned previously we are moving away from the large centralized energy generating power plants to smaller distributed sources of renewable energy. This has both benefits and drawbacks. The major drawback is that the electricity from these sources tends to be made intermittently, so for solar PV, only when the sun shines, or for wind turbines when the wind blows. However, you can build these smaller power sources closer to where the electricity is needed, reducing the transmission losses associated with the older centralised plants, in fact houses across the globe are now creating their own electricity and selling it back to the grid (effectively acting as tiny power stations). In addition, the electricity produced from these sources is less polluting, which may help in some way our fight against global warming.

Monitoring has increased dramatically; it is not simply now that once a quarter your energy company reads your meter, sees that it has has clocked an additional 1000 kWh and sends out the bil. If advanced metering infrastructure is installed, these utility companies can get an instantaneous view of information including voltage profile (both maximum and minimum), instantaneous current, kWh used per day, the load profile etc. In addition the utility companies can get instant feedback on the health of their electricity transmission gear, for example transformers in sub-stations, so problems can be identified and rectified quicker than ever before.

In the early 1900’s, the energy grid appeared to be a series of local grids, and actually it appears that we may once again be headed back to that situation. It seems that our end goal is to see an increase in smaller electricity producing power plants that adapt to meet the needs to small local communities, and therefore we need better control than ever to match the supply and demand, known as micro grid control. It is almost as if the grid is now alive, underutilized components can be put to work, easing the stress of overworked parts of the grid, while it can easily adapt to incoming power fluctuations, outages and so forth.

Finally, we need standardised intelligent applications across all of these micro grids. With more information being delivered across the internet to suppliers, they have the ability to use this information to become more efficient in the way they supply electricity.

What Is Holding Mass Adoption Of The Smart Grid Back

As I mentioned previously at the beginning of this post, it is almost unthinkable to get by without electricity. The smart grid, despite working well on small scale tests areas is yet to be tested on a really grand scale, and unfortunately the people at the top are unwilling to work with ‘potentially’ life changing technology. Keeping the lights on is the key priority of all leaders in Government, and while at the moment that is the case, it may not be for that much longer.

Utility companies have based their revenue models on dated regulatory and rate-making frameworks, so they are in no way incentivised to adopt smart grid technologies.

The equipment to produce a large scale Smart grid is expensive; there are high upfront capital costs associated with building a smart grid, and despite there being massive potential efficiency savings so the technology would pay back quickly, companies are unwilling in this turbulent world economy to stick their neck out.

The final factor that I think holds back mass adoption of the smart grid is security. It is correct to assume that by implementing this technology we potentially could adapt to power outages resulting from terrorist action, by rerouting electricity from other areas. The security issue here is actually to do with the data; as we have seen over the last 10 years or so, the internet is a haven for worms and viruses that can bring down computer systems. Security needs to be at a sufficient level to ensure that the electric grid is not at risk, or at least the risk is managed, because as I have suggested earlier, I’d imagine the romance of reading by candle light would quickly fade!!

Why I Would Love To See the Implementation of The Smart Grid

1. A smart grid would act as an intelligent, self-healing grid that anticipates and prevents disruptions and dramatically reduces costly blackouts and power disturbances.

2. The smart Grid would also be much more economical, ensuring that supply accurately met demand, so no electricity is wasted (expensive), but there would always be a sufficient volume (to prevent outages). In addition the potential that the electricity you are using is being produced on your neighbour’s house means that transmission wastage will be limited.

3. Finally the smart grid would be cleaner, and it would be easy to bring on line more renewable energy sources that simply plugged into the grid. It would be a psyche change from big centralised polluting power stations, to small cleaner tech generating stations.

What is Fracking?

I came across the term Fracking only fairly recently, in someone’s tweet on Twitter. I had no idea what it meant at the time, but have since learnt that the US are lapping it up, with the UK expected to follow sharpish.

So what is it? And should the Brits be quite so quick to follow yet another trend from across the pond?

Fracking is short for Hydraulic Fracturing, and is the term used to describe the extraction of gas from shale rock formations. The richest shale deposits tend to be at a depth of 1.5 – 6km underground and at these depths, the high pressure reduces the number of naturally occurring fractures.

These are the beds targeted by fracking; bore holes are drilled vertically down to reach the shale beds (which tend to be less than 100m thick), and then the bore holes turn 90⁰, aligned horizontally along the length of the shale bed, which can go on for kilometres.

Once the bore hole has been drilled, very high pressure water is then forced down into the shale rock which causes lots of miniature explosions, cracking the shale and releasing the gas trapped inside the bed. To prevent the cracks settling back down, sand is then pumped down which props up these artificial fractures.

What are the (potential) problems with Fracking?

Well, while I mentioned that it was water that was fired down the bore hole, that does make the vast majority (98.5% of the fracking fluid), but other chemicals are also sent down such as lubricants and anti corrosion chemicals. When the sand is fired down to act as the propping agent, chemicals are needed to ensure that the sand finds its ways into all the fractures, and this process is fulfilled by lubricants and suspension agents. In addition anti corrosion chemicals are also sent down to stop the bore hole pipes corroding.

This in itself wouldn’t be an issue if 100% the fracking fluid was collected, however there have been some suggestions that this fracking liquid finds its way into water that we eventually drink, which obviously wouldn’t be ideal. Even on a simpler level, if the water were to find its way into the oceans and sea it could be detrimental to the local environment, causing adverse affects on wildlife.

There are also dramatic reports (I have no scientific proof to shape my view on this) of water coming out of the tap with a high volume methane, so if you were to have a open flame in the vicinity, the gas would burst into flames, giving the appearance of burning water.

In the UK, during April and May 2011, two small earthquakes hit the Blackpool area (these were literally tiny – 1.5 & 2.2 magnitude) which were confirmed to be the direct result of fracking activity in theUK. Now anything less than 2 on the Richter scale is described as a Micro earthquake, and therefore not felt. It appears though that Blackpool residents are light sleepers as 10 people called the police station regarding the earthquake when the felt the ‘tremors’ in the very early hours.

I guess for me, it is the last potential issue with fracking that causes me the biggest problem. Fracking produces natural gas, which despite being the cleanest of the fossil fuel family, when burnt produces CO₂ and other greenhouse gases. Relying on natural gas is essentially taking a backward step in trying to cut emissions, and make our society greener.

In the USA recently, fracking has led to an abundance of cheap fossil fuel gas and this has made Renewables battling to make headway amongst more established fossil fuel competitors more uneconomical and unattractive as investment potential.

Also on a slight aside, a further factor making fracking such a popular activity in the USA is that unlike the UK, where any gas found on your property belongs to the crown, any reserves found on properties in the USA belongs to the property owner, potentially creating overnight millionaires.

Barack Obama, in his state to union address said ‘the development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy.’ Well Mr Obama, I disagree. It is another sticky plaster that may help us through the next 50 years or so. Agreed that it might not matter to you or I, but surely that is pretty selfish with regard to future generations.

So coming back to the UK, where the practise of fracking is still in its infancy, a report came out on 16^th April 2012, highlighting the promise of fracking to bridge our electricity generating needs to the Government, and with very large deposits thought to exist under Wales, it surely is a matter of time until sadly this becomes common practise in the UK too.

What do you think? Do you think we should focus on fracking to power the UK?

For more insight into fracking – visit https://www.dangersoffracking.com/

In my youth I remember walking the streets of Amsterdam and being distracted by some peculiar sites. When I was on my way to the Van Gogh museum, honest m’lud, I was almost run over by cyclists. It was a bit scary, they were everywhere, and it was a bit like Hitchcock’s ‘The Birds’. I dismissed it as something continentals did and never expected to see the like in England then the Boris Bikes came along.

There is some conjecture over whether or not they were actually his idea or whether or not they were already in their embryonic form under Ken Livingstone. This is only relevant to ardent politicos. What is relevant is the impact that they have had. With the London 2012 Mayoral Elections coming up, the environmental credentials of both candidates are being dredged up, amongst other things. But my question is, is it up to politicians to set the green agenda or should they follow it. Is it a case that we should be doing more? What about personal responsibility and or collective action.

Boris Johnson has been criticised for reactive rather than pro active environmental policy in his four years as mayor. An example of this was his policy on trapping fumes in pollution ‘hotspots’ with adhesive spray. However, aren’t politicians merely just responding to demand? Has Boris Johnson been inert on environmental policy because we have let him? Are environmental policies as much of a priority as we’d like to think? Issues, like crime, tax, hospitals, transport and schools are all seen as more important. Given this, is it any wonder that environmental issues are not top of the agenda? It’s the same with national politics. Tony Blair came in with a strong environmental agenda but failed to live up to those expectations (Friends of The Earth). The same could be said about the coalition government, although, in fairness, they have only been in power for 23 months.

So how does this change? It takes a genuine ground swell of public opinion and concerted effort. The government recently watered down its health bill, whether it should have is irrelevant. The point is, it did it because of both professional and public disquiet. The same can’t really be said about environmental issues, unless it’s environmental in a loose sense. People will complain about wind turbines or airports being built in their area but there’s not a mass riot in the street over the sidelining of renewable energy or the over reliance on gas. At the moment it’s just not seen as a priority amongst the general populous. It has grown in importance, but the hope is that with issues like the drought in the South of England, it will grow further and be an issue as important as health and education.

Politicians get a lot of stick, sometimes rightly so, but we have to take some responsibility. If the environment is an important issue for us then let’s make some noise. The tides turning but let’s make it turn a bit quicker.

With oil tanker strikes looming on the horizon which could have a detrimental impact on the UK, we take a look at what it means to the UK and a potential longer term preventative cure….

Earlier this month (March 2012), the UK’s largest trade union, called Unite, balloted 2,000 tanker drivers in relation to ‘fixing a broken operation of an industry which is fragmented, unstable and too important to the nation to leave to pure market forces’.

The 2,000 balloted members supply 90% of the UK fuel to the nation’s garages via seven haulage companies. Of the 7 haulage companies, 5 voted in favour of the strike, and of those 5 the vote in favour averaged 69%. So what does this mean for the country in the short term and the longer term?

The strike is planned over Easter weekend, to maximise disruption to commuters as they usually try to travel the length and breadth of the country over the extended weekend. The strike action by the tanker drivers will stop any fuel being delivered to petrol forecourts, so drivers will need to either take preventative measures and fill up prior to the Easter break (hoping their travel plans don’t stretch beyond the range of their fuel tanks!!) or look to use other methods of transport to get to their preferred destination.

In the year 2000, a similar incident happened when trucks blocked the tanker drivers leaving the depots to deliver the fuel in a protest over fuel duties. The disruption of the energy sector bought the country to a virtual standstill, with businesses bought to their knees and panic buying seen amongst consumers. Estimates put the financial implication of the week-long disruption at £1bn.

So, can we expect similar disruption this time? Well we hope not and Ed Davey (the Energy Secretary) has asked ACAS to open up negotiations between Unite and the oil companies in an attempt to bring into place some sort of agreement to prevent the strikes actually going ahead. The Government are also putting in place contingency plans such as training the RAF to deliver the fuel to the forecourts, although there is not the capacity to cover the entire fuel distribution network. They have also suggested that the general public and business have contingency plans in operation to allow them to avoid the impacts if the talks fail and strike action does go ahead.

What are the longer term implications for the UK? Well, shortly we are hosting the Olympic Games here, and this would be a disaster if we found ourselves in a similar situation then.

The fuel network operates on a just-in-time basis (i.e. large reserves aren’t kept in forecourts, supply matches demand but on a very short term basis), and I think this vastly increases the impact of such action. However in the UK and everywhere in developed countries we are addicted to petrochemical fuel and we can’t seem to get away from using it.

We need fuel for everything, to do business, to see friends, to go out and buy our food (which requires fuel itself for delivery to supermarkets). This is an internal UK based issue at the moment. But what would happen if oil imports into the UK were restricted or stopped all together? Well the country would face the exact same problems but it would probably be magnified. And this wouldn’t just be the case for the UK, this would affect most countries across the world who are net oil importers (barring the Middle East and Venezuela).  Our reliance is like an addiction, and we do not currently have the substitutes in place to go cold turkey.

So how do we go about putting in place this support? It is certainly not going to happen overnight, but on the plus side we have some of the technologies already in play today. We have new fuel systems, hydrogen cells, electric cars (even hybrids make us less reliant) and also biofuels that are already blended with petrol and diesel. These substitutes at the moment are currently expensive and some of the technologies are unproven so we need to make further investments to bring the cost down.

Imagine though having a solar PV charging station for your electric car? You wouldn’t even need to give next’s weeks planned strikes a second thought. We are certainly not there yet, but now is the time to start reducing our reliance on fuels. Companies are recognising this, investing billions of pounds trying to find the best ways to do it, so let’s hope the transformation happens sooner rather than later and then the only thing we need worry about over Easter is the number of chocolate eggs I have in my basket…