How will the UK keep the lights on this winter?

Today will see a policy speech by the Prime Minister on the subject of wind power and the offshore version in particular. Compared to our nuclear plans it seems extraordinarily cheap to say the least.

Every home in the UK will be powered by electricity from offshore wind farms within a decade, Boris Johnson will say in his conference speech on Tuesday morning.

Promising to “build back greener”, the prime minister will pledge £160m to upgrade ports and factories for building turbines.

The plan aims to create 2,000 jobs in construction and support 60,000 more. ( BBC News)

These sort of statements are revealing for what they do not say. For example “Every home” sounds all encompassing but what about industry? Also we are turning out eyes away from days when the wind does not blow.  Then we note the £160 million is just to have the ability to build the wind turbines. Finally we see that these jobs have an extraordinary multiplier of 30! Or Alice has gone through the Looking Glass yet again.

Actually the going through the Looking Glass theme continues.

He will say the UK is to become “the world leader in clean wind energy”.

“Your kettle, your washing machine, your cooker, your heating, your plug-in electric vehicle – the whole lot of them will get their juice cleanly and without guilt from the breezes that blow around these islands,” he will say.

We get some more details here.

The scheme will see the money invested into manufacturing in Teesside and Humber in northern England, as well as sites in Scotland and Wales.

Mr Johnson said the government was raising its target for offshore wind power capacity by 2030 from 30 gigawatts to 40 gigawatts.

The rhetoric becomes ever more extraordinary.

“Far out in the deepest waters we will harvest the gusts, and by upgrading infrastructure in places like Teesside and Humber and Scotland and Wales, we will increase an offshore wind capacity that is already the biggest in the world.”

The PM will also repeat his pledge for the UK to become the “Saudi Arabia of wind power”, adding: “As Saudi Arabia is to oil, the UK is to wind – a place of almost limitless resource, but in the case of wind without the carbon emissions and without the damage to the environment.”

Where are we now?

According to UK_WindEnergy this is the state of play as I type this.

GB Grid: #Wind is generating 4.50GW (13.53%) out of 33.26GW

In itself that is an achievement as there was a time we would not have believed it to be possible. There are times over the next day or so when it is expected to be much better.

Today’s forecasted metered #Wind peak is 10,180MW between 23:00 and 24:00 GMT Tomorrow’s is 12,105MW between 10:00 and 11:00 GMT

We get several perspectives from this. The first is that in theory some 40 GW of wind power would cover current UK electrical power needs. But as we move to practice we have the issue when we have less wind as we have as I type this or even worse a still day.

Also the numbers are even on the best days quite a bit below the maximum. As we stand according to RenewablesUK the maximum operational capacity is 24 GW yet we at best struggle to actually get much above half of that. They do a calculation to try to allow for that.

The load factor is the actual output of a turbine benchmarked against its theoretical maximum output in a year. The load factor is calculated by RenewableUK as a rolling average of the past five years.

What is it?

  • onshore wind: 26.62%
  • offshore wind: 38.86%
  • BEIS “all wind”: (onshore + offshore): 31.14%

As you can see for wind power in total we get about 31% of the maximum on average. Intriguingly the new plans suggest we will do much better?

BEIS also states that the load factor for new build offshore wind (2023/24/25) is 58.4%

Have we built the existing ones ( providing 38%) in the wrong place or has there been some new advance?

A Confession

Although they would not put it like this The Guardian has published a tacit admittal of my points today. Take a look at this by the author Chris Goodall.

We should go much further because we’ll need to generate far more electricity to meet demand from electric cars and from heat pumps for heating homes. If we increase generation by about 20 times from today’s levels, it will give us sufficient electricity almost all the time, significantly reducing the problems arising from the unpredictability and intermittency of most renewable sources.

There are two refreshing elements of honesty here. The first is the acknowledgement of the unreliability of renewable energy sources and the second is that we are going to need a much higher level of electricity generation in future. I am reminded of the electric car issue regularly as there are nine charging points around Battersea Park and for now there is plenty of excess capacity there. But we see that more electric cars are being purchased.

Demand for battery electric vehicles (BEVs) increased by 184.3% compared with September last year, with the month accounting for a third of all 2020’s BEV registrations. ( SMMT)

The requirements for such a plan are really rather extraordinary though.

Is such as massive expansion actually possible? I have calculated that the UK would achieve this target by devoting about 5% of its maritime zone to offshore wind, 2% of the land area to solar panels and about 12% to onshore wind.

Storage

There is a plan for that too.

Under the scenario described above, we will have far too much electricity almost all the time. Batteries can cope with some of this surplus but most of the power should be converted to hydrogen. Today, hydrogen is created from fossil fuels but it can be easily made from water using electrolysis. The gas can be stored to make electricity on the rare occasions when the available renewable power is insufficient. Hydrogen is hugely versatile; it can also be deployed to power vehicles, to provide the energy for steel-making and other industrial processes, and to act as the critical raw material for the chemicals industry.

With battery technology as it is I am struggling not to laugh at the mention of it. But let me hand you over to How Stuff Works on Hydrogen.

It’s expensive to pull hydrogen from water………..here are other problems as well: Scientists are still struggling with the challenge of how to store hydrogen. Because it has such a low energy density, hydrogen needs to be stored and transported under high pressure — which makes it bulky and impractical. The pressure issue compounds another issue with hydrogen energy; like gasoline, hydrogen is highly flammable, but unlike gas, it has no smell.

The latter was highlighted many years ago by the Hindenburg disaster.

Comment

There have been considerable achievements here over time. I have just checked on the UK government website and as of the end of August we have some 13.5 GW of solar capacity as well. In theory we are covered but of course practice is very different to that.

GB Grid: #Solar is generating 2.26GW (6.56%) out of 34.43GW ( @UK_SolarEnergy )

The solar problem is that it works for fewer hours and at weaker power at the time we most need it. On the upside it has been getting cheaper as according to the official figures the cost of small scale production fell by 12.3% between 2014 and 2018.

Added to the availability of supply when we need it is the cost issue. The price falls for solar are especially welcome as we have seen electricity prices rise by so much. Although price and cost issues get hidden behind a barrage of rhetoric like this from Chris Goodhall.

Author Chris Goodall says tackling the climate crisis is neither difficult nor expensive and can help boost the economy……..

It is hard not to laugh at the idea that his plan is ” relatively cheap “. Also later we get this.

Many other countries, such as the US, have publicly controlled energy companies that can act to meet local needs and minimise the cost of gas and electricity.

I am not sure that is going so well and given the quality of local government in the UK I fear the worst from this.

 The UK should follow the example of Germany and offer the chance to local governments to run all the utility networks in their areas.

After all isn’t the German system a bit of a mess?

Returning to my title here is Ofgem on the subject which for some reason they seem to be rather out of date on.

Electricity capacity margins (the average amount of extra electricity available compared to peak winter demand) are tightening in Britain. This is because older and less profitable power stations are closing. However, if needed, National Grid can use extra tools to balance the system in winter 2016/17.

Are those the same “extra tools” available to the Bank of England?

Here is Imperial College on last year.

When output from wind power fell sharply on cold, calm days the stress to the system increased and in one incident created a higher chance of blackouts, with just 0.2GW of spare capacity available, compared to over 4GW the following day.

Also some had to reduce usage.

An evening peak in demand was also managed with factories and supermarkets reducing their electricity usage, helping to maintain normal day-ahead power prices.

The balancing ability we have is pretty much supplied by gas with biomass also helping to some extent.

 

 

Of hot air, wind power and UK real wages

Today brings us to the latest UK labour market data but before we get there we see two clear features of these troubled times. One is in fact a hardy perennial referred to in Yes Prime Minister by Jim Hacker over thirty years ago although he was unable to arrange one. From Kensington Palace..

Their Royal Highnesses The Duke and Duchess of Sussex are very pleased to announce that The Duchess of Sussex is expecting a baby in the Spring of 2019.

Who says the UK has no plans for Brexit when a Royal Baby is in the process of being deployed?

Next comes some intriguing news from Scottish Power reported by the BBC like this.

Scottish Power to use 100% wind power after Drax sale

My first thought was to wonder what happens when the wind does not blow? Or only weakly as for example if we look at UK electricity production this morning where according to Gridwatch it is 5 GW out of a maximum of around 12.5 GW? There is little extra on this to be found in the detail.

Scottish Power plans to invest £5.2bn over four years to more than double its renewables capacity.

Chief executive Keith Anderson said it was a “pivotal shift” for the firm.

“We are leaving carbon generation behind for a renewable future powered by cheaper green energy. We have closed coal, sold gas and built enough wind to power 1.2 million homes,” he said.

As you can see the issue of when the wind does not blow gets entirely ignored in the hype. Indeed one part of its past production which could help to some extent by being used when the wind does nor blow which is hydro power has just been sold! As to the claims I see that this provides cheaper electricity that is rather Orwellian as we know that the green agenda is driving prices higher but tries to hide it. Still the good news for Scottish Power customers is that if all the statements are true then there will be no more price rises because energy costs are now pretty much fixed.

As you might expect raising such thoughts on social media leads to some flack. According to @Scottishfutball I am a stupid man although that tweet has now disappeared. Here is a longer answer to show the other side of the coin from Is anybody there on Twitter.

When the wind doesn’t blow they have hydroelectric power, wave power, solar, biomass, pumped hydro storage. Add in micro grids, battery storage and deferred demand and it’s very achievable.

The hydro power they just sold? And what’s “deferred demand”?

Wages

Here the news was a little better.

Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 3.1% excluding bonuses, and by 2.7% including bonuses, compared with a year earlier.

So we see that on this three-monthly measure total pay has risen at a 0.1% faster rate and basic pay by 0.2%. The balancing item here is bonuses which fell by 1.3% in August on a year before.

Let us take a look at this as the Bank of England wants us to. Here is its Chief Economist Andy Haldane from last week.

A year on, I think there is more compelling evidence of a new dawn breaking for pay growth, albeit with the
light filtering through only slowly……….Looking beneath the headline figures, evidence of an up-tick in pay is clearer still. Private sector pay growth (again excluding bonuses) has been grinding through the gears; it recently hit the psychologically-important 3% barrier. Private sector wage settlements so far this year are running at 2.8% and in some sectors, such as construction and IT, are running well in excess of 3%.

Someone needs to tell Andy that if an average is 3% some will be above and some will be below. Also is the growth 3% or 2.8%? But let us ignore those and Andy’s lack of enthusiasm for bonuses, no doubt influenced by his own personal experience. On this measure we see that private-sector pay growth is now 3.1% so another nudge higher and with July and August both registering 3.3% we could see another rise next time. The trouble is that whilst this is welcome we are back at the old central banking game of cherry picking to data to produce an answer you arrived at before you looked at it. Also one cannot avoid noting that the theory Andy so loves – and has led him regularly up the garden path over the past 5 years or so – would predict this wage growth to be more like 5%. Or to put it another way the view shown below seems not a little desperate and the emphasis is mine.

This evidence suggests the pulse of the Phillips curve has quickened as the labour market has tightened.
Unlike over much of the past decade, estimated wage equations are now broadly tracking pay.

So the new “improved” models are just the old ones in a new suit?

Some reality

If we switch to total pay we see that over the course of 2018 it is much harder to pick a clear pattern.  Whilst we are a little higher than a year ago as 2.7% replaces 2.4% it is also true that we opened the year at 2.8%. Next month should be better as the May 2% reading drops out but it is a crawl at best. If we switch to real wages we are told this.

Latest estimates show that average weekly earnings for employees in Great Britain in real terms (that is, adjusted for price inflation) increased by 0.7% excluding bonuses, and by 0.4% including bonuses, compared with a year earlier.

Here comes my regular reminder that even such small gains rely on using an inflation measure that is not fit for purpose. This is because the CPIH measure relies on imputed rents which are a figment of statistical imagination and which, just by chance of course, invariably lower the reading. We will be updated on the inflation numbers tomorrow but it was 2.4% compared to the 2.7% of its predecessor ( CPI ) and the 3.5% of the one before that ( RPI)  as we try to detect a trend. Even using it shows that the last decade has been a lost one in real wage terms.

For August 2018, average total pay (including bonuses), before tax and other deductions from pay, for employees in Great Britain was: £523 per week in nominal terms, up from £508 per week for a year earlier……..£492 per week in constant 2015 prices, up from £489 per week for a year earlier, but £30 lower than the pre-downturn peak of £522 per week for February 2008.

As you can see even using the new somewhat deflated inflation number there will be another lost decade for real wages at the current rate of progress.

Comment

Today has mostly been a journey of comparing wish-fulfillment with reality, or the use of liberal quantities of hopium. Still perhaps it will be found at a fulfillment center, whatever that is. From CNBC.

Tech giant Amazon is set to install solar panels at its fulfillment centers across the U.K.  ( H/T @PaulKingsley16 )

If we switch back to the Bank of England which of course is also full of rhetoric on the climate change front, as after all someone has to offset all the globetrotting of Governor Carney, we return to wages again. Actually it has reined in its views quite a bit.

The rise in wages projected by the Bank is, to coin a phrase, limited and gradual. Private sector pay is
assumed to rise from 3% currently to around 3 ¾% three years hence, or around 25 basis points per year.

The catch is the implied assumption that we will always grow because any slow down would then knock real wages further. But even on that view once we allow for likely inflation it looks as if there will be only a little progress at best.