The political tipping point is coming. The falling costs of renewables are driving a political tipping point where politicians move from expensive support for renewables to embrace the sector and to tax fossil fuel externalities. This is a key driver of the Inevitable Policy Response showcased by the UN PRI. The old thinking. Renewables are expensive, hard to deploy, and need subsidy. Only rich countries can afford to think about the pollution and global warming externalities. What changed. New energy technologies are cheaper than fossil fuels for electricity and will soon be cheaper for transport. Engineers have increased the feasibility ceiling of renewables to far above the current penetration levels in most countries. Meanwhile, there is rising global concern about local pollution and global warming. The new reality. Renewables solve the energy trilemma because they are cheaper than fossils, cleaner than fossils, and enhance energy security. They provide local jobs and improve the balance of payments. They reduce local pollution and are popular with voters. They enable technology leadership and enhance energy independence and global power. The window of opportunity. This opens up a political window of opportunity as it is now possible to legislate in favour of renewables and to go with the grain of economics. Politicians can simultaneously reduce pollution, reduce costs, gain votes, and enhance national influence. What is stopping change. The main impediments to change are now inertia and fossil fuel lobbying. Given that fossil fuels are still 80% of primary energy supply and generate rents of 3% of global GDP, this is still a powerful force. What will politicians do. In those countries where they are able to escape the influence of the lobbyists, they will pursue two routes. On the one hand, they will stop subsidising renewable energy sources directly, and focus on establishing a system in which these can flourish. On the other hand, they will start to tax the fossil fuel sector for the externalities that it imposes on the rest of society. Who will lead. The political pressures vary widely by country and sector. Leaders will be those that have large fossil fuel imports, major pollution issues, excellent renewable resources, limited corruption, low costs of capital and rising demand. And laggards will be those with large fossil fuel exports, limited pollution problems, electricity sectors fuelled by domestic sources, high levels of corruption, high costs of capital and stagnant demand.
Carbon Tracker (accessed) 23rd Jan 2019 read more »
Dave Toke: Now that UK nuclear power plans are in tatters, it’s vital to double down on wind and solar. Now that Japanese giants Toshiba and Hitachi have walked away from UK nuclear power projects that had previously been abandoned by others, it has forced the government to reassess the pro-nuclear bias of its energy policy. Greg Clark, the UK business secretary, has recognised that nuclear power is no longer cost competitive with renewable energy, but don’t expect any extra push into the cheaper technology. There is easily enough solar and wind energy available to make up for the cancellation of the nuclear projects and to produce the low-carbon electricity required to make the UK’s 2030 carbon emissions targets achievable. Instead, however, the country’s incentives and regulations favour developing more power plants driven by natural gas. Having hacked back emissions from power by over two-thirds since 1990, progress with decarbonising the grid risks coming to an end. According to the UK parliament’s Committee on Climate Change, the UK needs to cut power emissions from about 265g of carbon dioxide per kilowatt hour in 2017 to under 100g by 2030. The government had been substantially relying on nuclear power to do this, having originally identified eight sites as viable for new plants. Six projects were taken forward, including Hitachi and Toshiba plants in Wales and Cumbria respectively. Yet despite much larger government incentives than those available for renewables, most private nuclear builders are now steering clear, having seen the problems with new plants in the likes of the US and France. The only two projects still on the slate are a joint venture by EDF of France and CGN of China – both foreign state-owned companies. They are building the UK’s first new plant in over two decades, Hinkley C in south-west England; while also planning a second, Bradwell B, in the south east.
Dave Toke 23rd Jan 2019 read more »
The Hitachi decision has been a long time coming and is not at all surprising. It comes at a crossroads for the energy sector. Government has decided (rightly) to exit coal. It has tried and so far failed to back gas as an interim replacement. Now its plans for 13GWs of new nuclear by around 2030 are in tatters. A large capacity gap is opening up in the next decade, and so far the government does not have much idea how to fill it. But why should it know? Why should it decide which technologies are going to be the winners? At anytime this sort of determinism is a hazardous task. Now, with technical progress coming faster than at any time for perhaps a century in the energy sector, it is likely to be pretty hopeless. Recent history of British energy policy provides all the caution that a minister should need. We have had an attempt to resurrect coal, to resurrect nuclear, to resurrect gas, and to pick which renewables are best. It is worth looking at this sorry history, before setting out how to both ensure security of supply and meet the carbon budgets without picking winners – or rather losers.
Dieter Helm 23rd Jan 2019 read more »
The challenges currently afflicting the UK’s nuclear strategy has left many in the energy sector fretting – not least the government officials who had staked the country’s decarbonisation trajectory on the deployment of a combination of large-scale offshore wind and new nuclear plants. But it seems the high-profile collapse of deals between the UK government and developers such as Hitachi and Toshiba in recent months has left some in the energy sector cheering – renewables developers. Speaking to reporters in London yesterday, Innogy SE’s chief operating officer Hans Bünting said Hitachi’s decision last week to shelve work on nuclear development in the UK was “exciting news” for the green power sector. “I’m not anti-nuclear, but I am trying to deliver carbon-free electricity at the lowest price possible,” he said. “Comparing the cost of nuclear with cost of the proposed offshore projects and optimised onshore projects and solar, it comes down to half the cost in some cases.” “Personally I think the energy policy of the Great Britain needs to be re-written in a way that can only support renewables,” he added. “We are standing here to deliver.”
Business Green 24th Jan 2019 read more »
Following the recent news that Hitachi has pulled out of the Wylfa project in North Wales, the SSE Chief Executive writes that “It is time to aim higher and seize the opportunity that offshore wind brings”. At a time when solutions to the many problems facing the country seem few and far between, we should be grateful that in offshore wind we have got an ‘off the shelf’ answer to the problem of how the country can decarbonise energy cost effectively whilst securing new jobs and growth for the UK economy. Later this year our Beatrice Offshore Wind Farm, the largest project in Scotland will be completed, and fully exporting low carbon electricity to the grid. It is one of many projects delivered to time and budget, which have helped bring the costs down substantially. Last year the Energy Minister Claire Perry set out an ambition of an additional 1-2GWs of offshore wind per year during the 2020s taking the UK to a total of between 20 and 30GW, meaning it could be the generation technology with the largest installed capacity in the UK. The sector has responded, and an Offshore Wind Sector Deal will be finalised later this year setting out the industry’s substantial commitments to the Industrial Strategy. The question now is whether 30GW by 2030 is ambitious enough. We should be aiming to build as many offshore wind projects as needed to help deliver decarbonisation targets in power, heat and transport, rather than going down the route of Government’s recently imposed cap on low carbon contracts regardless of how competitively projects can bid. We have a technology that brings cheap, low carbon electricity. The North Sea is a perfect deployment area for it, with great wind speeds, over such a large area that offshore wind can contribute strongly to energy security. It is supported by the public and the jobs and opportunities from development and operations are in communities that really need them. It is time to aim higher and seize the opportunity that offshore wind brings.
Politics Homes 24th Jan 2019 read more »
Hitachi has scrapped plans to build a nuclear power station in Wales, while Rolls-Royce is reportedly in talks to supply one in Essex. Questions over the future of nuclear-based power continue to be raised.
The Manufacturer 23rd Jan 2019 read more »