Welcome to the new version of European Tribune. It's just a new layout, so everything should work as before - please report bugs here.

EREC EU policy conference

by UnEstranAvecVueSurMer Mon Nov 23rd, 2009 at 04:18:29 AM EST

Hello daring reader,

Below are some rapid notes on the European Renewable Energy Policy Conference held in Brussels earlier this [last] week. Since you are all generally interested in renewable energy policy, I figured I might feed your chimney with what I heard - or didn't hear there.

In practice, here is a short summary:

  • The commission wishes as much RES in the energy sector as possible;
  • Utilities will fight this objective to the end, as the last Eurelectric study shows (CCS will do the trick of emissions reductions, when its not even in pre-validation stage);
  • Why we need a European energy policy is barely explained, as a few words about Climate Change seem to suffice for the entire conference. Security of supply, dwindling fossil fuel reserves did not receive any treatment;
  • Creating a European grid is difficult but necessary for a large penetration of RES (wind);
  • What will happen when RES start encroach on nuclear power's prerogative to base load power is not decided yet;
  • Energy efficiency and a housing sector revolution are central to achieving both emissions target and RES penetration targets after 2020;
  • The 10% objective in transports stands in the way of completion of the 2020 objectives.

And many other things which elude me now. Now for the entire note:

Front-paged by afew


The English language offers, amongst its many qualities, a distinction between policies and politics. Surely it seems that the distinction was lost on the speakers, whom more often than not offered one for the other.

In practice little if no new views were shared with the audience during the official presentations. Issues ranging from Euro-Mediterranean cooperation to RE financing were handled in similar fashions: broadly and ineffectually.

A perhaps dim view of what constitutes a policy resembles something like the following. A policy is an attempt to summarize in a set of propositions solutions to a given array of issues. While broad, this definition does have a few merits; for one, it crystallizes debates on the three areas of potential discord: (i) the problem, (ii) the solution, and (iii) the level of efforts needed to achieve a solution.

To use this definition at the Conference, we find that "utter uselessness", which one would wish to leave to abdominals machine sold on late night TV shopping programs, also applies here.

(i)    The problem:
    Climate change, defined broadly, appeared to be the most consequential issue to be addressed by a new energy policy for the European Union and indeed for the World through the Copenhagen Summit. If this writer readily concedes that no time should be lost in attempting to convert the skeptics on this issue, climate change should not become a jail-break card for use at difficult turns of phrases in commissioners' speeches. Climate change has severe consequences, some distant like rising sea-levels, and some more pressing, such as land fertility and its concomitant changes in food prices and migration. These beg for different strategies on the one hand, and for inclusion in our policy response on the other hand. To give a quick example of how this may play out, one may argue that urgency should drive us to reduce emissions of GHG gases with the highest short term impact such as methane - not CO2. As for land fertility changes, one may wish to integrate this constraint in her reflection over biofuels. Alas, views on the articulation of the exact problems we are facing were missing.

If energy security was alluded to, it was only in passing. Words often used were "facilitator", "accelerator" of renewable energy penetration, which helps narrowing the issue on the role of European and member states' institutions in the implementation of a given policy; another way to consider the issue however is to remark that no matter what policy is in fact implemented, fossil fuels are exiting the stage. Dwindling reserves, delayed investment, international relations considerations and accelerating rates of decline in existing fields shout for action; but one would be hard pressed to hear any argument integrating these issues. Instead, it seems, we are merely encouraging renewable energies. It is the humble opinion of this writer that this language reflects not simple political confusion over what issues renewable energy policy should be an answer to, but an integration of the political implications of a given policy at the industry level. Venturing in such territories is always hazardous, but the idea remains that discourse on RE penetration positions RE against other energy sources where in fact it opposes incumbent industries. In the lone words of MEP Claude Turmes, utilities are the biggest incumbents in the history of mankind with the exception of the Catholic church.

As a result, policy appraisal with regards to merits as a solution was difficult.

(ii)    the solution
Renewable energy policy was not presented, obviously, in full details, be it in terms of objective or in terms of method. DGTREN direction Jones echoed statements by other panelists that current trend would allow member states to overshoot their 2020 targets and later placed the 2050 target at 80% below 1990, with is tantamount to a 100% renewable energy system in Europe. If this is no doubt feasible, such a discourse should not focus on the objective - which is easily justifiable to a crowd of RE industry analyst and policy makers in the field - but on the readily identifiable issues and how the Commission proposes to tackle them.

Amongst the most obvious problems faced, teaching the law of diminishing returns to panelists appears to be the most daunting. Saying that the current pace of RE penetration will allow the EU to over shoot its target means that last year's rate of growth held for the next ten years will be enough. This is well and good, but technical considerations such wind, solar and biomass reserve, to use the oil industry term, matters. The price of penetration is a function of costs and resource, an issue which should not be downplayed. The overused expression "low-hanging fruits" comes to mind: now is the time to think about the more difficult challenges ahead.

A PV advocate forwarded the past 20 years progress in solar cells to the next 20 years to estimate the cost of PV then.

A few issues were alluded to which would have merited more discussion.

First, what will happen when RE start encroaching with nuclear power's base load prerogative is unclear. RE priority access appears to the political term to designate the issue, but no potential technological evolution in nuclear technology - iff coexistence is deemed, as is still debated, a good thing - were discussed. An explanation could be that nuclear power will not see any renaissance at all and that the phase-out of 60's and 70's plants will coincide with renewables penetration in base load supply.

Also, the question of how renewables will provide peak power was mentioned only in side remarks, including the CEO of Areva Renewables. One way to ensure that a maximum share of renewable energy at peak demand times is by ameliorating the grid so that excess production can be channeled where it is lacking. Overall, however, unless we are ready to install enough capacity so that load factor  times capacity equals peak demand, we will run into difficulties. Help form power-shedding, new hydro was not discussed.

As far as the Euro-Mediterranean cooperation is concerned, new ideas were few and far between. How the new name is going to affect the previous iterations is unclear. The panel was at pains to explain how it differed from the German consortium which seeks to channel power from north Africa to Europe. In fact, it seems to have become a new component of previous cooperation efforts, and will drive it. Questions over the replication of the old centralized model were not directly answered, nor were questions surrounding the practical power sharing agreement which will have to be found with host countries. Up until today, lack of economic development and dictatorships have allowed for rather simple royalty fees structure. If the Euro-Mediterranean initiative bears its fruits, that is, if it does lead to economic development and democratization, the questions of resource sharing will become more salient.

In fact, it is the opinion of the writer that the questions of centralization is not the most salient. If changes in the transmission sector allow for long distance spreading of power, then so be it. However, these technical changes do not modify our attitude towards energy producers. Historically, the West has been more than conciliatory with "trustworthy" suppliers. It would be a pity to continue on the same path.

(iii)    Complexity of the solution:

From points i & ii, it is clear that discussing whether options go far enough is not a simple task.

In his opening speech, Commissioner Piebald, through a speech reader, said that: "annual electricity growth will be 2.30% according to IEA, while power plants must be replaced to answer demands and respect new standards. But since we rely on markets, we can only steer companies to make the right choices". Later on, he argued that for this steering, "nor public opinion nor market forces will be enough."
This offering of stewardship from the Commission and the incident position it sees itself in --- a more dirigiste one --- is a bold statement. It was, however, not reiterated afterwards by other members of the Commission. Overall, this was the most interesting comment, since it anchored the discussion in a policy space; one can only regret this was not followed by most panelists.

One striking moment at the conference was the call from both Vestas and Areva Renewables for "predictability" within support schemes and overall policy, so that investments can take place. It were as if energy policy, commitment to emissions reductions, Kyoto had never happened and that renewable market was a fringe operation. In a private discussion, MEP Claude Turmes said that the simplest explanation was the overall opposition of big utilities whose coming irrelevance from decentralization was not lost on them. If these comments cannot readily apply to Vestas, the larger issue remains that utilities continue to oppose efforts toward higher renewable penetration and that this opposition is the largest hurdle that the EU currently faces in achieving a 100% renewable grid. It seems as though the issue of convincing remains, which, as this writer remarked in the introduction, is the one thing that was not done at all.

All in all, the most pressing issue for the E.U seems to be to prepare for a high renewable grid trough interconnections. The largest wind potential is in the north of Europe and will have cross borders without a hiccup. The new, proposed European regulator will attempt to do just that.

The issue of job creation was the subject of a whole panel discussion, but there again the issue of the effectiveness, measured in jobs created, of investments in renewable energy subsidies, was not addressed. Instead, a few numbers (8job per MW of wind constructed, 0.2 per MW in O&M) were given. Whether these includes jobs lost from disappearing industries was not indicated. At the end of the two hours sessions, we didn't know how renewable energy subsidies compared to the Keynesian alternative, burying bank notes in deep mines. Such a comparison however would go a long way in reassuring policy makers that the outcome of the renewable energy policy can be felt right away. In private, the speaker of the French government did express concerns that these measures would prove too costly: while this is a not a new concern, that the very people involved are not sure of the exact impact of their actions is somewhat worrisome. On a side note, he expressed disbelief when a speaker vouched for IRR "in the single digits". According to him, "financial engineering allows for returns up to 25% in France."

Final words:
This writer's dismay may very well come from his youthful impetuosity. That issues were only touched upon and not debated fully may in fact be rather usual at policy forums. Possibly, his longing for academic discussions and debates transpire in this short introductory note to the EREC Conference.

The European Union seems intent in accelerating renewable energy penetration in the coming decades. Until the results from both the RES Directive and Phase III of the E.U. ETS arrive, it will focus on energy efficiency in the housing sector, with a clear intent to make buildings net energy producers.

If this writer regret the fragmented nature of this policy debate, it may just be that such are the nuances, to call them that, of politics. Yet, if policy is so difficult, it must be because of all its discontents.

Display:
Excellent diary and illustration of both the power and techniques used by economic incumbents in their attempts to prolong their incumbency.  Politicians are reluctant to speak clearly due to their need for contributions and their fear of counter contributions from economic incumbents. Intellectual apprehension of clear policy needs are grotesquely inadequate to overcome this. Better to use the expected row over transit of natural gas through Ukraine this winter to rouse up support for generation of power through renewables, especially wind, which are more difficult to embargo, and use that opportunity to point up the importance of upgrades to the power grid. Were that adequate, were their gas shut off, people could at least plug in an electric space heater.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Nov 18th, 2009 at 03:14:01 PM EST
Piebald didn't speak directly... because he was in Moscow trying to avert the impending gas crisis. Which, it seems, is beginning today with the Ukraine's announcement that due to unforeseen events, the price of transit had doubled.

Much like Jérôme has been arguing, I doubt this will be seen as an occasion to wean us off gas. Instead, fearmongering will lead any policy initiative that may result.

I would say that were dwindling fossil fuel reserves an official reason for a renewable energy policy, the event could be interpreted at the political level as a sign of further justification to march on. But alas, climate change has replaced energy security as the official dogma.

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Thu Nov 19th, 2009 at 07:44:46 AM EST
[ Parent ]
UnEstranAvecVueSurMer:
the impending gas crisis. Which, it seems, is beginning today
Fortunately, one day later we read that Russia agrees to ease Ukraine gas supply terms...
Russia has agreed to ease the terms under which it supplies gas to Ukraine, in a deal which Moscow says should prevent disruption in coming months.

The deal was announced after talks between Russian Prime Minister Vladimir Putin and Ukraine's Yulia Tymoshenko.

It means Ukraine will not be fined for using less gas than in its current contract, because of the downturn.

(Source: BBC)

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Mon Nov 23rd, 2009 at 05:37:38 AM EST
[ Parent ]
Indeed. But do you think this precludes another "crisis"? If this apparently solves the issue at the state level, doesn't there remain the individual companies who may create problems?

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine
by UnEstranAvecVueSurMer (holopherne ahem gmail) on Mon Nov 23rd, 2009 at 06:53:28 AM EST
[ Parent ]
Excellent diary, Estran, thanks.

European Tribune - EREC EU policy conference

The 10% objective in transports stands in the way of completion of the 2020 objectives

What was said about this?

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Nov 18th, 2009 at 04:02:13 PM EST
Not a single word I'm afraid. This sentence reflects my own opinion about the complexity of the endeavor. Given that tramway/subway lines takes decades to design and built, I don't see any significant reduction in demand for transportation in the coming years, when certainly the 10% objective can only be achieved with a reduced overall demand.

The only remaining solution would be a drastic increase in efficiency of the existing transportation system. That doesn't seem to be in the works either.

The represent of the biofuel industries took the audience for newbies. While I sure am one in the industry, I don't think anyone needed to hear a rambling about military expenditures as an unpriced externality to oil prices. It is true, and we all know it. It felt like she had confused her political notes and her policy notes.


Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Thu Nov 19th, 2009 at 07:39:47 AM EST
[ Parent ]
Given that tramway/subway lines takes decades to design and built

Only when local authorities don't really see it as priority (but more a corruption cash cow...) and delay it permanently. Madrid showed repeatedly that four years are enough, from planning to opening; many tram lines elsewhere take a shorter time.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Nov 23rd, 2009 at 04:47:26 AM EST
[ Parent ]
When there's a will, there's a [tram]way.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Mon Nov 23rd, 2009 at 04:51:57 AM EST
[ Parent ]
Thanks for the correction.

What was the density of public transportation in Mardrid before these new lines? I'm wondering what can the impact of previous infrastructure on new construction.

My idea is that the MTA in NY is struggling to ameliorate its service because the underlying infrastructure is subpar and eats too much into its budget. Though I don't know that a mile of track there costs more to operate than anywhere else, I did see many more workers and repairmen than anywhere else.


Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Mon Nov 23rd, 2009 at 06:50:12 AM EST
[ Parent ]
I'm wondering what can the impact of previous infrastructure on new construction.

Most subway stations are in built-up areas and most tunnels under built-up areas.

the MTA in NY is struggling to ameliorate its service because the underlying infrastructure is subpar and eats too much into its budget.

New York has an extensive old system to maintain. However, for new projects, costs tend to climb to the sky in the USA for reasons not entirely clear to me -- the hiring of consultancies, redundant planning jobs, handed out to political clients, among them.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Nov 23rd, 2009 at 06:59:27 AM EST
[ Parent ]
I'm sorry I wasn't clear, I meant previous transportation infrastructure. Existing lines can eat up budgets if maintenance hasn't been taken seriously for too long, but it may also push planner towards incremental ameliorations on the existing lines rather than build new lines... and delay the inevitable at the expense of commuters.

As for NY, the lines can't be much older than London or Moscow, can they? But let's not get into the subjet of U.S. infrastructure, it's just too much of a shame.

On a side note, since I know that you are a train fan, I did NY-SF by train last summer. A great, great experience. I did take picture of bridges too !

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Mon Nov 23rd, 2009 at 07:10:25 AM EST
[ Parent ]
Existing lines can eat up budgets if maintenance hasn't been taken seriously for too long, but it may also push planner towards incremental ameliorations on the existing lines rather than build new lines...

This is more a question of tight budgets and priorities than old vs. new. The time it takes to build a new line should not grow, unless money is taken from the new project in the same tight budget.

In Madrid, there was already a major subway system, but new construction in recent years quadrupled that. What's more, in the same timeframe, there was money for major upgrades on old lines, too: many stations were lengthened, some tunnels were entirely rebuilt for a wider gauge [cross-section].

As for NY, the lines can't be much older than London or Moscow, can they?

Older than Moscow, more like London or Paris. But, much of the tunnel and track infrastructure is depreciated, ripe for an upgrade, and AFAIK this situation is worse than in Moscow or Paris (but maybe not London).

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Nov 23rd, 2009 at 07:29:34 AM EST
[ Parent ]
Older than Moscow, more like London or Paris.

That's presumably the oldest lines you are talking about. But some of the London and Paris systems are much newer (I'm not sure what proportion). On the other hand, I can't think of anything recent in NY apart from the Archer station extension in Queens.

by gk (gk (gk quattro due due sette @gmail.com)) on Mon Nov 23rd, 2009 at 07:35:33 AM EST
[ Parent ]
The first line in Moscow was opened in 1935. Most of the present systems in London, Paris and NYC were in place a decade earlier. Paris and NYC started -- with rapid expansion -- at the start of the 20th century, London even before.

After WWII, Paris, Moscow and New York kept extending old lines and building an entirely new one every few decades, and even London built a new line into the nineties. But New York more or less stopped in the early seventies. The one big project today is the Second Avenue Subway, put on hold repeatedly since the early fourties(!), but now in construction at last. To be fair, New York also built less spectacular but capital-intensive connectors and track quadruplings, the last one being the 63rd Street Connector.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Nov 23rd, 2009 at 08:16:28 AM EST
[ Parent ]
Dodo, I just remembered talking to someone working in Paris on the extension of a subway line. She said they were moving forward at the rate of 1m per 3 weeks, iirc.

How large of an impact can geology have?

At the end of the day, my question is how fast can demand for mobility channelled to new public transportation. If anyone has any idea...

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Tue Nov 24th, 2009 at 04:59:01 AM EST
[ Parent ]
The work on the Gotthard Base Tunnel gets up to 40m per day. I doubt there is anything geologically comparable in Paris, though you obviously have other problems, such as not to disrupt everything around you.
by gk (gk (gk quattro due due sette @gmail.com)) on Tue Nov 24th, 2009 at 05:09:05 AM EST
[ Parent ]
Up to, but even on average, multiple meters certainly. You can actually check advance reports:

  • Project organisator AlpTransitGotthard has a monthly update. It isn't awfully detailed, though: no October data for one of the two pairs of still active attacks, the one from Sedrun to the South (they only report the passing of the originally planned meeting point of the final two tunneling attacks, which was moved South by 1.7 km); and daily averages of 12.4 resp. 14.8 m for the pair of attacks from Faido to the North.

  • For Sedrun, the contractor's progress report is not much help, either, but in the reports from 2007, you find earlier averages of 6-6.5 m for this (blast-excavated) pair of attacks, and data for the geologically most difficult section of the entire tunnel (a zone of fractured, expanding rock North of Sedrun): traversed at 1.4-1.5 m/day.

  • For the Faido tunnel boring machines, there is also the contractor's semi-regular weekly report (showing a progress of 110.9 resp. 73.5 m in the two tubes).


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Nov 24th, 2009 at 06:07:49 AM EST
[ Parent ]
The website still talks about Cisalpino trains. Any idea whether the end of Cisalpino will have any effect on the technology?
by gk (gk (gk quattro due due sette @gmail.com)) on Tue Nov 24th, 2009 at 06:12:47 AM EST
[ Parent ]
None at all.

  1. Cisalpino's trains are to continue to be run by SBB resp. FS.
  2. Even if the new ETR610 Pendolinos continue to be troubled, no tilt technology needed in the NEAT tunnels.
  3. If the ETR610 are retired for whatever reason, what could be a result is that there will be no need for 250 km/h 'paths' [e.g. schedule slots], which would increase tunnel capacity. However, opening of the tunnels is still so far away that new 250 km/h capable trains could be purchased by then. (Or, who knows, some other operator -- DB, SNCF, Italy's new private NTV -- might request extended runs acorss the tunnel for their proper high-speed trains.)


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Nov 24th, 2009 at 06:23:06 AM EST
[ Parent ]
For the Faido tunnel boring machines, there is also the contractor's semi-regular weekly report (showing a progress of 110.9 resp. 73.5 m in the two tubes).

...and you get averages for the entire Faido tunnels (including weeks-long stops for vacations and maintenance) of 9.44 resp. 9.04 m/day. (So the final holing-through can be expected in the first half of 2011.)

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue Nov 24th, 2009 at 06:13:21 AM EST
[ Parent ]
rate of 1m per 3 weeks, iirc.

That slow would be possible across a problem zone, and even then only with long stops. 100m in 3 weeks would be more like it under a city like Paris, or even multiples of that.

Nowadays, unless facing unexpected geological problems (see the ill-fated North-South metro across Amsterdam), tunnel boring itself is not even the majority of the time of construction: there is surveying before, and elaborate tunnel fitting afterwards, and then track commissioning. For example, Paris's line 14 was dug for two years (at a rate of 350m/month), but opened three and a half years after tunnel boring was finished.

how fast can demand for mobility channelled to new public transportation

That's too broad a question... always depends on local circumstances, and what you mean by "channelled to new public transportation". (Do you mean how long it takes for inhabitants to switch to a new project? Or how long it would take to get a majority of them to switch to public transport? Or 100%?)

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue Nov 24th, 2009 at 05:31:10 AM EST
[ Parent ]
Indeed, this is too broad a question. I ask it the light of the RES directive objective of 10% RE in transportation. It is clear that such a penetration of RE will be possible only if overall fuel consumption of the transportation sector diminishes.

Since we know that demand for mobility is unlikely to decrease, the only solution a shift towards vastly more efficiency transportation systems -- public transportation. But then the time constraint kicks in, hence my earlier remark on subway/tramway line construction times.

I don't know what to think about this, given, as you said, how central political commitment is. The point is not really to forecast what may take place but to understand what is actually possible if there is a strong political will. Madrid, seems to be a clear case. What impact can we expect overall?

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Tue Nov 24th, 2009 at 06:09:41 AM EST
[ Parent ]
I note Madrid is an example for strong political will resulting in quick construction -- however, unfortunately, it is also an example of no priority in a shift to public transport. At the same time subway construction accelerated, road construction ran amok, too, with the result that the modal shift didn't change much -- while overall traffic increased.

Now, 10% renewables in transport? How exactly is that spelled out in the directives? On the face of it, that would require (1) a much more than 10% share of electric public transport in overall transport, and/or (2) a rather significant share of RE in the generation of that electricity. Now, in some countries, hydro takes a major part of railway electricity generation, don't know about the whole EU though.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue Nov 24th, 2009 at 06:40:40 AM EST
[ Parent ]
DoDo:
10% renewables in transport? How exactly is that spelled out in the directives?
As we know, biofuels were initially a substantial part of that. But 10% biofuels at the current level of fuel consumption in road transport is not attainable.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Tue Nov 24th, 2009 at 07:18:42 AM EST
[ Parent ]
Indeed. I wonder if the biofuels part in the 10% RE in transport goal is explicit.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Nov 24th, 2009 at 07:30:50 AM EST
[ Parent ]
Luis de Sousa - "The 10 per cent agri-fuels target has been seriously undermined"
an agreement that up to almost a third of the EU's 10 percent goal would be met not through biofuels but through electric cars and trains

That's a quote from a report on last-minute negotiations between the EP and the Commission a year ago. So two-thirds of the 10% are still supposed to come from biofuels.

See also Shifting The Biofuel Goalposts.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 24th, 2009 at 08:12:22 AM EST
[ Parent ]

On a side note, he expressed disbelief when a speaker vouched for IRR "in the single digits". According to him, "financial engineering allows for returns up to 25% in France."

There have been occasional projects with high returns, but single digits is indeed the rule for RE projects (especially in countries with stable frameworks, which is not the case of France...)

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Nov 18th, 2009 at 06:11:55 PM EST
Jerome a Paris:
not the case of France...

??

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Nov 19th, 2009 at 01:37:13 AM EST
[ Parent ]
The regulatory framework for wind projects in France has been changed several times over the past decade, creating a lot of confusion and headaches, and the occasional windfall for some lucky investors.

Things had stabilized in recent years, but préfets have sensed Sarkozy's lack of enthusiasm for the industry and has started making the permitting process a pain again.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Thu Nov 19th, 2009 at 05:34:55 AM EST
[ Parent ]
We should make a distinction between project IRR, which is often in the 6-8% range, and investor IRR, which doubles that.

I will shoot him an email to see if he's interested in hearing a bit more about this. I find it a bit problematic that the regulatory agency doesn't know how much money it allows investors to make. That, and the confusions between project and investor IRR is worrisome, while called project "financial engineering" is plain nonsense.

Also, I don't know if it's clear to them how exactly project finance changes returns: passing interest payment as costs to reduce taxes, leverage, shareholder loans, payments pushed to later in the project's life, etc.


Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Thu Nov 19th, 2009 at 05:01:44 AM EST
[ Parent ]
investment in the wind sector in feed-in tariff countries has been providing single digit returns for investors - the industry is considered low risk and providing stable cash flows, so the prices of esting assets have increased to reflect that reality (and the prices of turbines and other supplies have also increased to capture some of this).

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Thu Nov 19th, 2009 at 05:38:49 AM EST
[ Parent ]
This reduced risk perception certainly hasn't happened in banks, whose spreads are still relatively high. Commission fees, who probably had a reason to exist as long as they tracked project complexity, are now overshooting.

As for the rest, I'm still curious to see who in the value chain captures most of the subsidies.

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Thu Nov 19th, 2009 at 07:34:35 AM EST
[ Parent ]
margins and fees had fallen very low in 2007, but have shot up since the financial crisis, for a simple reason: long term liquidity has become rarer and a lot more expensive for banks and thus for their clients. But the overall cost of debt (margin + cost of funding) has thankfully not increased as much as the underlying money rates (EURIBOR et al) have gone down.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Thu Nov 19th, 2009 at 02:27:22 PM EST
[ Parent ]
European Tribune - EREC EU policy conference
In his opening speech, Commissioner Piebald, through a speech reader, said that: "annual electricity growth will be 2.30% according to IEA, while power plants must be replaced to answer demands and respect new standards. But since we rely on markets, we can only steer companies to make the right choices". Later on, he argued that for this steering, "nor public opinion nor market forces will be enough."
This offering of stewardship from the Commission and the incident position it sees itself in --- a more dirigiste one --- is a bold statement. It was, however, not reiterated afterwards by other members of the Commission. Overall, this was the most interesting comment, since it anchored the discussion in a policy space; one can only regret this was not followed by most panelists.
I have not followed in detail Piebalgs' policy statements over his 5-year tenure but I believe this is a change in his tune. Too bad politicians only start saying sensible things when they have at least one foot out of office.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Mon Nov 23rd, 2009 at 05:16:25 AM EST
A variation of this theme (dirigism in the new millenium, to sex it up) is the subject of my next diary...

Ok, in case I don't follow up on that, here is the gist of my question. I work in a renewable energy investment fund. In what sense can I be said to work for the private sector, considering that:

  • my income is footed by taxes on electricity consumption;
  • the only way to operate is project finance, which increases returns and reduces taxes because projects are seen are no risk, and thus obtain low yields.
I fight with the idea that these links, while indirect, makes most of the REN industry akin to subcontractors. Of course, there are no contracts Governments anywhere; instead, "market mechanism" arrange for the centrally allocated funds to be share amongst the industry.

SO, is this just keynesianism in the new millenium? Or was the classical distinction between the private sector and government a myth to begin with?

I surely recall my teacher's insistence on the microfoundations of economic theory, yet not once was it brough up that homo economicus fills the ranks of public servants too.

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Mon Nov 23rd, 2009 at 07:04:51 AM EST
[ Parent ]
UnEstranAvecVueSurMer:
was the classical distinction between the private sector and government a myth to begin with?
I suggest reading Galbraith's The New Industrial State or Minsky's Stabilizing an Unstable Economy for discussions of how the market mechanism is incompatible with capital-intensive activities. (We're talking about physical capital with long lifetimes)

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Mon Nov 23rd, 2009 at 07:10:10 AM EST
[ Parent ]
I bought Galbraith's The New Industrial State last week because it kept coming up in your comments here. I'll let you know what I think.

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine
by UnEstranAvecVueSurMer (holopherne ahem gmail) on Mon Nov 23rd, 2009 at 07:11:56 AM EST
[ Parent ]
European Tribune - EREC EU policy conference
One striking moment at the conference was the call from both Vestas and Areva Renewables for "predictability" within support schemes and overall policy, so that investments can take place. It were as if energy policy, commitment to emissions reductions, Kyoto had never happened and that renewable market was a fringe operation.
This is a point that Jerome makes repeatedly (most recently, here) about the US, though I don't know whether the problem also occurs in some European countries.
the main reason there is not enough manufacturing capacity is because the US has an appalling track record in supporting the industry: 3 times over the past decade, Congress allowed the main regulatory instrument, the PTC, to elapse, causing a catastrophic drop in installations:

...

There is no secret: the only way to have manufacturing investment in an industry which needs no subsidies, but a specific regulatory framework is to have stable policies and, dare I say it, an industrial policy to promote both the wind industry (a good thing in itself) and the wind turbine manufacturing industry.



En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Mon Nov 23rd, 2009 at 05:21:57 AM EST
about the Dutch equivalent of the PTC - but at minimum subsidies for wind mills (and I'm trying to find out on solar panels) have a poor track record in the Netherlands. I recall that in August 2006, with one stroke of the pen, the entire subsidy scheme for individual wind mills got scrapped. Not that I mind too much - I personally prefer wind mills grouped in parks than haphazardly dotting the landscape everywhere, and (partly thanks to J!) there's been some significant expansion on the first.
by Nomad on Mon Nov 23rd, 2009 at 06:22:26 AM EST
[ Parent ]
I personally prefer wind mills grouped in parks than haphazardly dotting the landscape everywhere

You mean aesthetically?

Aesthetically, I like it less when dozens of windmills are clearly in rows -- viewed from certain directions, that really obstructs view and makes for an 'industrial' appearance. Single or smaller groups of windmills placed haphazardly feel more natural. [My 'standards' for both are on the plains West of Vienna where I travel often.]

Non-aesthetically, to block single windmills would mean to block farmers and co-ops from starting projects of their own and limiting it to utilities/major investors only, and I would be very much against that. Renewable energy as distributed power has the extra qualities of 'democratising' electricity production, and boosting a rural economy depressed by the pressure on prices in agriculture.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Nov 23rd, 2009 at 07:39:05 AM EST
[ Parent ]
Certainly aesthetically. Go visit Flevoland province and have a look. There are only two words for the result: damn ugly. BTW, cutting subsidies is not the same as blocking.

Whereas I've long been a fan of the idea of "democratising" energy production as opposed to keeping it centralised, I have not ever read an analysis that effectively enlists the benefits or arguments whether it is at all realisable.

by Nomad on Mon Nov 23rd, 2009 at 08:02:18 AM EST
[ Parent ]
What do you mean 'realisable'? Most of existing wind and solar power production is distributed.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Nov 23rd, 2009 at 08:19:29 AM EST
[ Parent ]
Currently an estimated 3 percent of the Dutch energy production is generated through durable energy sources - that should include existing wind farms.

How realisable is it to add a remaining 97 percent through de-centralised energy production? And if realisable, what are the benefits compared to centralised energy production?

by Nomad on Mon Nov 23rd, 2009 at 08:36:45 AM EST
[ Parent ]
For 2008:

Total durable energy production: 3.4 %
Total durable electricity production: 7.5%

Source.

Same question, just for 92% instead of 97%.

by Nomad on Mon Nov 23rd, 2009 at 09:01:38 AM EST
[ Parent ]
Ah, so you ask about high penetration. But it's not decentralised-or-not that counts there, but intermittency. On that subject, since we aren't anywhere near 100% in ten years by current trends, and PV and other penetration lags behind wind, it is a bit early to say -- there are regional model projects, but that's all. As for what the Netherlands should aim for in ten years, high penetration, also see Migeru downthread.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Nov 23rd, 2009 at 02:22:22 PM EST
[ Parent ]
Pushing the answer onto intermittency sounds like a straw man argument to me...

I'll take this as "I don't know" and keep on rooting for big wind farms in the meantime.

by Nomad on Mon Nov 23rd, 2009 at 04:51:51 PM EST
[ Parent ]
Pushing the answer onto intermittency sounds like a straw man argument to me...

Huh!? I repeat: I don't see what distributed power has to do with the provision of high grid penetration. The only issue I can see is distributing intermittency-caused local surpluses/mitigating  intermittency-caused local shortages, which leads straight to intermittency.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Nov 23rd, 2009 at 05:43:58 PM EST
[ Parent ]
by Nomad on Tue Nov 24th, 2009 at 02:48:38 AM EST
[ Parent ]
Indeed,  but the fact is that at the EU policy level, that message has been hammered time and time again. That it bears repeating is one thing, but to make it the central point of two 15 minutes presentation is another.

True, some countries in the EU don't use this tenet, but the new directive has been trying to streamline support schemes.

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Mon Nov 23rd, 2009 at 06:45:51 AM EST
[ Parent ]
European Tribune - EREC EU policy conference
All in all, the most pressing issue for the E.U seems to be to prepare for a high renewable grid trough interconnections. The largest wind potential is in the north of Europe and will have cross borders without a hiccup. The new, proposed European regulator will attempt to do just that.
Spain is poorly connected to the European grid and so a link across the Pyrenees would appear to be a priority if wind-generated power mush "cross borders". However, the evidence seems to be this might not be necessary...

(h/t ChrisCook)

Recent data from two meteorologically unusual days in Spain - the world leader in the management of renewable energy supplies - shows this assertion is almost certainly false.
  • During part of 8 November, Spain saw over 50% of its electricity come from turbines as an Atlantic depression swept over the country's wind parks. (They are so big that no one seems to call them `farms'.) Unlike similar times in November 2008, when Spanish turbines were disconnected because the grid had an excess of electricity, the system accepted and used all the wind power that was offered to it.
  • A very different event in January of this year saw unexpectedly high winds shut down most of the country's turbines with little warning. The grid coped with this untoward incident as well. These two events show that a well run transmission system can cope with extreme and unexpected events even with a large fraction of power provided by wind.

Over the course of this year Spain will generate about 14% of its total electricity from wind and this number is likely to rise to the high twenties by 2020.



En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Mon Nov 23rd, 2009 at 05:25:08 AM EST
See a detaield rundown here. For some reasn this site is censored by my work IT filters, so I can't quote it...

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Mon Nov 23rd, 2009 at 06:25:01 AM EST
[ Parent ]
That is the article CC quoted. I like this bit:

Carbon Commentary · Spain's variable wind and stable electricity networks

As its electricity transmission company, Red Eléctrica de España or REE, reminds us, the country is unusually isolated from international interconnections. It is `a peninsula electrically speaking, with weak electrical interconnections with the European Union'.[1] A country with limited capacity to import or export power has more issues accommodating large amounts of wind power. Denmark has international connections to cover 50% of its electricity while Spain has less than a tenth this amount. (The UK also scores extremely poorly on this dimension.)

Spain is able to manage the integration of wind power into its grid primarily because it has reasonable amounts of hydro-electricity and pumped storage.[2] Hydro-electricity can be used when winds are less than expected and pumped storage can assist both when wind is unexpectedly high or unexpectedly low.

And also
But is wind so variable that power stations need to provide immediate backup? The utterly superb REE website provides easy-to-use data to test this theory. I've used this data to try to demonstrate that wind production was remarkably consistent during the peak day of 8 November.[3] Not only is wind speed largely predictable with good meteorology, but REE data shows that even in the windy days of early November, the amount of electricity generated only varied gradually.
Woo hoo! A "superb" data source for making charts... My mouth is watering already...

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Mon Nov 23rd, 2009 at 06:34:40 AM EST
[ Parent ]
I think they are trying to prepare for a massive offshore wind capacity in the channel/north sea/baltics and allow that power to flow south.

The assumption is that a 100% REN grid means that high resource regions will have overcapacity.

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Tue Nov 24th, 2009 at 04:51:07 AM EST
[ Parent ]


Display:
Go to: [ European Tribune Homepage : Top of page : Top of comments ]