danieldwilliam | Entries tagged with energy

I realised when I was writing this that I didn't know nearly enough about energy in India. Which is a bit of an oversight because India is one of the largest countries in the world, is industrialising and getting richer very quickly and is already in the top 3 or 4 for population, energy use, renewable energy deployment etc. So I hit up Wikipedia and google to try and find out a bit more.

Power demand expected to triple by 2040.

India currently behind the USA and China in energy demand. India's energy and electricity demand is growing rapidly. It imports half it's primary energy. Overall energy demand is growing faster than domestic supply is growing so imports are rising.

Prime energy demand is increasing, energy production is increasing but more slowly, electrification is happening

More than half of prime energy is coal, about a quarter is oil, 1/10th natural gas, 1/10th hydro, 1/20th other renewables

I think it's an interesting situation and I'm not surprised by it. If you had asked me on Wednesday to describe India's energy situation I'd have said, lots of coal, but lots of interest in renewables. And I was right.

Lots of coal.

80% of electricity historically comes from coal. Coal is largely nationalised and large source of national and state income as well as employment.

India has and uses lots of coal. Lots of people work in coal mines. India is building 50 GW of new coal - then the current energy plans say no more coal. Coal is currently about 56% of total capacity and about 70% of generation. Expected to fall in relative terms but increase in absolute terms as energy demand increases. Recent auctions for new coal mines attracted not many bids - 2/5ths of the opportunities got zero bids and zero foreign firms participated.

Other Fossil Fuels.

India doesn't seem to have much in the way of native gas.

Lots of LNG for cooking, mostly in cannisters, not piped. Lots of biomass and charcoal but being replaced by LNG. Biomass and charcoal for cooking are not good for air quality or health.

Trying to replace imported oil with bioethanol - 20% target by 2025, currently achieving about 3%. (I wonder if electrification of transport will happen sooner or later than increases in biofuels for ICE vehicles.)

Renewables are also growing and quite quickly.
The 2030 renewable energy target is 450 GW (but this does include nuclear, and there is a bit of confusion in the way India energy plans talk about clean energy - including nuclear and renewables).

Electricity - renewables 136 GW of installed capacity - target by 2025 of 175 GW, 100 GW of solar, 60 GW wind 10 GW biopower and 5 GW small hydro. Current installed capacity is 38% of total capacity. Actually expected to hit 220GW of clean energy (possibly therefore including nuclear)

90 GW of solar operational, 48 GW in implementation and 26GW in bidding - looking to double solar capacity over the next few years.

India exports wind turbines so has a healthy domestic industry - which implies employment opportunities.

Up to 150 GW of total hydro potential. 56 sites for about 94 GW of pumped hydro storage. Dams also have a role to play in addressing water scarcity issues - so there is perhaps a double win here.

Targeting solar grid parity on cost by 2022. Current record lowest bid for industrial solar PV was US$27 per MWH.

Solar PV can be used to replace the estimated 4-5m diesel generators used for pumping water. Solar PV also seen as helpful for water security and air pollution. Water security appears to be a big problem for coal plants.

An area in the Thar desert capable of producing between 70-100 GW of solar has been put aside for that use.

16GW of biomass potential and some untapped potential for biogas from sewage.

39 GW of wind installed in India. Currently selling at record lows - including solar-wind hybrid projects at US$32 / MWH

India is ranked 4th most attractive in the world as a potential for renewable energy. Renewables have a must-run mandate except for grid stability reasons.

Storage seems to be underdeveloped.

Nuclear

India has an odd international situation with nuclear technology but appears to be able to buy civilian nuclear technology despite its nuclear weapons status.

Currently building 10 nuclear reactors - planning more, bit uncertain if those will actually happen.

Solar PV is the cheapest form of electricity on the grid and this is causing some issues for coal but as demand overall increases coal capacity factors are expected to go back up. Predictions are that by 2030 solar PV plus storage will be cheaper than coal overnight by 2030.
Overall the situation appears to be that India needs more of everything and is building more of everything and that renewables seem to be edging a little ahead of other technologies.

Some sources

https://en.wikipedia.org/wiki/Energy_in_India

https://en.wikipedia.org/wiki/Renewable_energy_in_India#Global_comparison

https://en.wikipedia.org/wiki/Wind_power_in_India

https://en.wikipedia.org/wiki/Nuclear_power_in_India#Nuclear_agreements_with_other_nations

https://en.wikipedia.org/wiki/Hydroelectric_power_in_India#Pumped_storage_units

https://www.greentechmedia.com/articles/read/india-solar-energy-transition-pandemic-2020

https://www.greentechmedia.com/articles/read/cleantech-startup-ecosystem-india

https://www.greentechmedia.com/articles/read/coal-king-india

I currently have three thoughts going round and round and round in my head about renewable energy policy.

The first is whether we've reached the Sutton Gas Inflection Point yet, or not. The Sutton Gas Inflection Point is the point where forms of non-despatchable renewable generation (on-shore wind or solar PV in practice) are cheaper than the cost of the gas that is burnt in a Combined Cycle Gas Turbine. The capital and maintenance costs of the the solar panels is less than the cost of the gas. The reason this is important is that once you reach this point if you are building a CCGT it is cheaper to build some renewables too and avoid fuel costs in the future.

This I think has the following implications. Good times for renewables, they continue to be built and can be built a bit more until they start to bump up against system contraints. Bad times for coal and nuclear plants who will stuggle to compete on a combination of price and flexibility. Bad times for batteries who are being competed with on price by idle CCGT's. Good times for electricity users. Not sure if that's good news on climate change.

There is a second inflection point where renewables plus a small amount of storage are able to reliably supply day time power needs at a price cheaper than the cost of the burnt gas. Which would leave CCGT's supplying night time and emergancy power. Roughly 6 GW of installed solar PV to every 1 GW of CCGT back up.

Second thing is what happens to industy as it responds to changes in electricity prices. My expectation is that as solar PV builds out and continues to fall in cost then the price of electicity begins to fall in places that are good for solar PV. Dry, sunny equatorial regions. Preferably deserts. These places are good for solar PV because they gets lots of sun (being dry and sunny). They don't have big seasonal shifts in demand or supply because the climate is similar throughout the year and so both demand and supply are similar. Demand for cooling is matched to supply. This means that the need for long-terms storage is considerably less than in places like Europe. It's not hugely expensive to build some cables west and east.

All other things being equal this implies a differential in the cost of electricity between the equatorial areas and the temperate zones. Industries that are energy intense will be incentivised to locate toward the equator and to run their plants or processes only during the day. And they will take jobs with them. Good times if you live near the equator or own land there. Buy desest property in Africa or Mexico. Good times for Mexico. (Mexico will build an interconnector and America will pay.)

The third thing I'm chewing over is how much existing nuclear and existing and potential hydro, pumped hydro-storage capacity can be shared across grids and used as storage and back up to expanded renewable supply. This is important in a world where the cost of renewables plus 7 day battery storage is cheap but the cost of renewables plus 270 day storage is expensive. I think that a relatively small proportion of hydro or nuclear capacity could be used to avoid a lot of seasonal battery storage. Take Costa Rica as an example. It currently generates about 78% of its electricity from hydro schemes. How easy is it for Costa Rica increase its own solar PV generation and to import solar PV generated power from Honduras, Nicuragua and Panama during the day and then use it's hydro schemes to provide night power during the winter to Central America.

I don't know. Politics I expect will be an impediment.

But I think there is a big prize for parts of the world that get this right; dramatically cheaper industrial electricity compared to parts of the world that don't get it right.

Current Location: Costa Rica
Current Music: A Mariachi Medley

There has been quite a lot of focus recently on what a 100% renewable grid might look like. The focus is generally on a grid using a mix of solar PV and wind with some hydro and an assumption that battery storage will be used to smooth supply to match demand patterns.

There are generally two approachs to a grid set up like this.

Option 1 is to set up your generation capacity so that over the couse of the year it generates 100% of the required electricity consumption (plus whatever safety margin thought prudent). This is likely to involve shifting solar PV generated electricty from the middle of summer to late winter. If all you allow yourself is wind, solar PV and batteries this might involve a lot of storage, perhaps prohibitively large amounts of storage.

Option 2 is to set up your generation capacity so that the amount produced at your lowest ebb is equal to the demand requirements. For example, you would build enough solar PV so that the electricty output on December 21st was equal to the demand on December 21st. Or perhaps you'd look at your worst week. This means less battery storage but during the summer when solar PV is very productive you probably end up throwing away quite a lot of electricity.

I've not seen any modelling on the demand shifting impact of pricing or how the storage requirements are impacted by larger grids or adding small amounts of biomass-fired generators or some small modular nuclear reactors. That's all probably helpful but probbably still leaves the 100% Renewable Boosters with some work to do.

This is all well and good and completely irrelevant to the renewable electricity industry. Nobody today has to be aiming for 100% renewables tomorrow.

At the moment wind power and solar PV in good locations are as cheap or cheaper than building new thermal generation plant. The cost of wind and solar PV is falling. Up until the point where the maximum generation of all non-despachtable renewables is about equal to the amount of generation that can be turned down or off easily then it makes economic sense to keep adding renewables. Then add a bit of interconnector capacity. Particularly if you don't happen to own any of the gas or coal plants who are having their market share reduced. The spinnng reserve already exists and if it goes bankrupt it still exists, just owned by a bank.

Looking further ahead, it isn't necessary for renewables plus storage to be able to cover 100% of demand as it happens in order for renewables to become the dominant form of generation. The price point renewables need to reach is to be cheaper than the gas or coal burnt in a thermal plant. At that point you don't have to decide between solar PV and a Combined Cycle Gas Turbine, it's cheaper to build both and use the solar PV as cheap fuel for the gas plant.

And it looks like in some parts of the world solar PV has already reached that point.

Current Mood: aggravated
Current Location: Mexico
Current Music: Good Day Sunshine by the Beatles

I have been surprised by energy things over the last week.

Firstly, I'm surprised that OPEC appears to be getting its act together to control supply and therefore increase prices.

http://www.bbc.co.uk/news/business-37502538

I'd largely decided that either (or both) the Saudi's had lost control of the price setting process within OPEC or they were trying something that would take a few more years to either work or not.

The agreed cuts in production are relatively small, and come at a time of fallling demand for oil. Oil, despite increasing sharply in price today is still around the $50 a barrel level. Less than half the $110 barrel recent peak. We've also yet to see if the dirty work of allocating the cuts in production amongst members will happen.

I don't think this changes my general assumption that oil and gas will remain significantly lower than recent highs for at least a few years because OPEC are unable or unwilling to drive up the price significantly. But that assumption is now on the watch list.

Secondly, I've been surprised by how quickly solar generated electricity costs are falling. Record low prices in the Middle East of $23 per MWH or £18 (compared to £50 $65 in the UK at the moment or £100 $130 for Hinkley Point C.

http://blogs.platts.com/2016/09/27/solar-prices-point-to-middle-east-future/

http://rameznaam.com/2016/09/21/new-record-low-solar-price-in-abu-dhabi-costs-plunging-faster-than-expected/

At $23 per MWH solar electricity is cheaper than the gas you would burn in CCGT to generate the same volume of electricity. Which leaves a lot of value left over to build complementary infrastructure like High Voltage DC transmission cables, or storage. It also makes places like the Middle East pretty attractive for high energy intense industries.

This doesn't appear to be a trend only in the Middle East. Latin America (also close to the equator) has seen sharply falling solar prices.

I'm not sure what's driving this. My guess is that solar generation balance of plant costs are falling but I'm not sure why.

My current assumption for solar electricity is that I expected the costs to fall by 1-2% year on year for a decade or two leading to cost parity with other grid sources in good locations over the decade 2020-2030. Looks like I might have to keep an eye on this assumption too. I think there is a virtuous circle operating in solar generation where learning curve effects and economies of scale make marginal production cheaper as total production increases so it could be that solar generation is about to fall more steeply in price than I anticipated.

Thirdly, I'm surprised to discover I might be making a small personal investment in some solar panels of my own so I need to go an remind myself how the Feed-In Tarrifs work.

My assumption had been that as I lived in a ground floor flat in Victorian tenament building in Edinburgh my own personal experience of renewable generation would be limited. Again, one to watch.

So, it's been a surprising week in energy.

Current Mood: surprised
Current Location: Somewhere Sunny
Current Music: She's Electric by Oasis

I doubt that Hinckley Point C will ever generate a megawatthour of electricity.

I'm not saying that it definately won't happen but my money is on it not happening.

It's a risky project. Building nuclear power stations is difficult and fraught with technical and political risk. They are vast, difficult and very regulated construction projects with plenty of scope for things to go wrong. They are also subject to risk of legal challenge or outright civil disobedience actions from opponents.

It's expensive in interesting ways. At a budgeted £18bn for construction it puts a lot of money at risk for EDF and any of the investors. Which include both the French and Chinese state. They should be looking at the project execution risk and worrying whether £18bn will buy them a working power station. My view is that they won't get a working power station for £18bn and might not be able to get a working power station at any money.

It's also expensive in terms of the price for any electricity produced. £92.50 / MWH in the 2012 market was expensive. That strike price is index linked and estimated to be £120 / MWH. You can buy onshore wind today for about £60 / MWH. The price of that is falling. As is the cost of solar PV.

Now there is some value in having a diversified energy supply. What would we do if we discovered that all our new wind turbines had a latent defect or that solar PV caused cancer? I'm not sure it's worth paying double the going rate for electricity.

So, it's a difficult project that represents a financial risk to its investors and a bad deal for consumers.

And it won't be finished for ten years, probably longer.

By which time technology and the economics that go with that technology will have moved on. Solar PV will be cheaper, wind will be cheaper, I'd expect storage to be cheaper. All available in small increments. The oil price looks like it won't get much above the value implied by the long term cost of US fracking - so about $80 a barrel. In 2012 oil was above $100 a barrel.

if you can't build the project unless you can sell the power at £92.50 plus then I don't see how you can build the project.

This was true in 2012. I mean that had the plant gone ahead when first planned we would be looking at a one third complete power station that had started as expensive and was now out of the money but we'd have been committed to it. We now have four more years of information about the likely trajectory of energy prices. By the time the UK government conducts its review we'll have another year, perhaps two of information.

If my major premise about energy prices (that over the coming decades they are capped by the cost of fraking and then the cost of solar PV) is correct then Hinckley Point will look like a worse idea with every quarter that passes.

Current Mood: Sceptical
Current Location: Hinckley Point by Sea
Current Music: Windmills of Your Mind, by Noel Harrison

I was recently asked (and flattered to be asked) for my thoughts on energy by someone who was engaged in a post-grad in energy studies. This is what I sent them.

( Read more... )

That's my energy starter for ten.

Current Mood: energetic
Current Location: The Windy North or the Sunny South
Current Music: The Sun Has Got His Hat On, by Gay and Butler