Some more on Electricity Market Reform, I’m afraid. Well, it is connected, but I guess it comes more under the ‘why, oh why hasn’t someone done this’ heading. I hope someone might be able to explain to me why it can’t be done.
Bear in mind that Ofgem are now telling us that the total cost of re-equipping energy networks for future low carbon production will come to the order of £200 billion by the early 2020s, and that it will be very difficult to see where £90 billion of that will come from, after the investment capitalization of the main companies that are likely to contribute is taken into account (see the Buchanan evidence 18th Jan DECC select committee). Also bear in mind that the Electricity Market Reform proposals (ah, there they are….) currently envisage a capacity payment regime to secure capacity ready to put power onto the grid, rather than rely just on the half-hour bidding system to underpin marginal power supply as is the case at present. The main reason for this is, of course, the concern that, as the UKs capacity portfolio become more populated by renewables, and in particular by wind, there will need to be a greater degree of capacity in the system to back up the inherent variability of a large part of it.
So capacity payments (or at least some of them) will be paying for energy companies to build new plants which will, pretty much from the word go, be standing idle most of the time, awaiting the call to generate and back the system up, unless and until we have mastered storage, demand management and interconnection to the extent that they won’t be needed. This new capacity will be needed also because large amounts of existing capacity, some of which presently performs the task of standing around waiting to generate will be closed under European Emissions Directives by 2016.
You might think, then, that strenuous efforts would be under way to get additional life out of plants that are already in existence to provide for future stand-by: but you’d be wrong. Plants will close: new plants costing perhaps £3 billion will be built to replace them.
A prime example of plants that will close but conceivably could be reused is provided by the five oil-fired, 1GW plus power stations presently providing a few hours a year of supply at the top of demand peaks. They are not, between them particularly old, and, since they have not been run very hard during their existence, they are like the fabled Austin A35 found in the garage of a little old lady who brought it forty years ago and has only used it to drive to church on Sunday ever since. They are also equipped with ‘black start’ facilities which enable them to provide power for the grid almost instantaneously, unlike most other supply.
Keeping them performing this useful standby role into the 2020s would, obviously save a lot of new investment in new plants – perhaps £15 billion out of the £90bn Alistair Buchanan worries about. But, you will say, they’re oil-fired; terrible for Carbon emissions; just as well they’re being closed (what not to say: ‘keep the oilers burning!’ as a witness expostulated in front of Select Committee the other week).
Setting aside the argument that, since they’re running only a few hours a year their emissions wouldn’t be serious, (because they would, and could be used more extensively, as was coal during the very cold period of a few years ago) they certainly could be refurbished and given much longer life burning biofuel. I believe they could run on biogas, but certainly could on biodiesel. Indeed there have been some experiments in alternative fuel burn conducted recently at Littlebrook D power station, in Kent. Clearly there isn’t enough biodiesel or biogas to go around for a full on programme of power production, but there certainly could be an adequate supply for the production of a few hours power a year as is provided at present.
Despite the fuel trials, I gather that Littlebrook, along with the others, are still scheduled to close in 2016. That seems quite perverse in view of the imperatives that are now ahead of us. Perhaps capacity payment arrangements should include a ‘refurbishment’ element, to allow cheaper stand-by plants like Littlebrook, Fawley and elsewhere to remain standing whilst bringing new clean fuel. That makes sense to me. Is there a good reason why it can’t be done?