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SER-2 [03] Communication on the Security and Solidarity Action Plan

by Luis de Sousa Mon Feb 2nd, 2009 at 04:00:53 AM EST

Continuing the analysis of the Second Strategic Energy Review (SER-2) the insight is this time on the document entitled "Communication from the Commission to the European Parliament, the Council, The European Economic and Social Committee and the Committee of the Regions". This is a formal document that details the Energy Security and Solidarity Action Plan, presented in the Memo reviewed last time.

This post tries to highlight important aspects that aren't referenced in the Memo and presents the tactic actions proposed by the Commission to put the Plan into practice.

promoted by afew


An audio version of this log entry can be downloaded here

On the introductory section of the document the following paragraph is worth highlighting:

However, complementary measures are necessary  to attain all three underlying objectives of the EU's new energy policy: sustainability, competitiveness and, above all, security of supply. For example, the EU is projected to remain  dependent on imported energy - oil, coal and especially gas - for many years to come. Europe's indigenous production of fossil fuels is declining. As a result, net imports of fossil fuels are expected to stay at roughly today's levels in 2020 even when the EU's climate and energy policies are fully implemented.

These lines pretty much wrap up the motives and expectations that drive European Energy Policy at the moment: internal fossil fuel depletion is fully acknowledged forcing an end to the growing consumption, but faith still remains on an ever available foreign supply. This expectation of stable imports is a very relevant aspect of SER-2, that will become more clear in the analysis of following documents.

For each of the five strategic lines that compose the Action Plan the Commission sets a number of steps that more or less correspond to a chronological setting of the tactics that implement these strategies. Following is a digest of these.

Promoting infrastructure essential to the EU's energy needs.

First step: the EU should agree that the projects outlined by the Commission are energy security priorities. These are the infrastructure projects described in the Memo, listed below. The Communication goes at some length describing them, a worthy reading that for the sake of brevity isn't fully reproduced here.


  • Baltic Interconnection Plan - to be developed in 2009 with the aim of connecting the remaining isolated energy markets in Europe, covering gas, electricity and storage. A regional Summit will be held in the second half of 2009 to start its implementation.

  • Southern Gas Corridor - connecting to the Caspian and Middle Eastern sources. On a first phase the objective is to build pipelines to Azerbaijan and Turkmenistan, Iraq and Mashreq countries, later eyeing Uzbekistan and Iran; no objective time frame is given.

  • Liquefied natural gas - still this year the Commission shall propose an LNG Action Plan aiming to foster regasification capacity in Europe as well as liquefaction capacity in gas exporting nations. This plan is seen as vital to states that are today dependent on a single supplier; the Solidarity Plan should facilitate the transport of gas liquefied in coastal states to inner states.

  • Completion of the Mediterranean Energy Ring - linking Europe and North Africa with gas and electricity interconnectors, essential to develop the region's solar and wind resource. By 2010 the Commission shall present a Communication outlining the links that are missing from the plans set by the December 2007 Euromed Energy Ministerial meeting and the Mediterranean Solar Plan adopted in Paris in July 2008.

  • North-South gas and electricity interconnections within Central and South-East Europe - a continuation of the New European Transmission System (NETS) initiative to create a common gas transmission system operator, the Energy Community Gas Ring, the priority interconnections identified by the Energy Community ministerial in December 2007, and the Pan-European Oil Pipeline.

  • Blueprint for a North Sea offshore grid - in order to interconnect national electricity
    grids in North-West Europe and plug-in several planned offshore wind projects. Together with the Mediterranean Ring and the Baltic Interconnection projects, the Commission aims at a future European Supergrid.

Second step: detail these actions identifying financing needs and potential sources of finance. These needs will be identified by the Commission in collaboration with member states, industry, energy operators and regulators and the Parliament. The work shall take place during 2009 and 2010 resulting in a series of Communications.

Third step: implementation 2010 onwards. This last step will most likely require a budget reformulation; the Commission has today for this area a budget of 22 million euros, provided by the TEN-E instrument, that is visibly insufficient for projects of the dimension outlined above. Accompanying SER-2, a Green Paper is tabled to launch a reflection on the replacement of TEN-E for a new instrument, the EU Energy Security and Infrastructure Instrument, with other range of executive possibilities.

A greater focus on energy in the EU's international relations

The document goes at some length discussing economic relations in the energy field with several countries, describing several tactics to strengthen such ties. Energy is posed as essential content of the EU's foreign relations, both at the trade and political levels, something that the document alludes to not being exactly the case at the moment. Below is a digest of the tactics put forward.

  • Norway - supplier of 24% of the EU's gas imports and 16% of its oil imports, is already integrated in the European Economic Area. The Commission aims at deepening further energy relations with Norway, collaborating with it for the maximization of the energy output  from the Norwegian continental shelf, include its wind resource.

  • Ukraine, Republic of Moldova and Turkey - negotiations are under way for these three countries to join the Energy Community, a programme to create a south-eastern energy market subject to the EU's legislation for the internal market, and security of supply of gas and electricity (with discussions on the way for an extension to oil). The Commission expects this programme to kick-start a reform of these countries' energy sector, especially an upgrade of Ukraine's gas transit infrastructure.

  • Belarus - on a single sentence the document calls for the development of a specific strategy to secure the transit of energy from Russia through this neighbouring country.

  • Russia - is and will for long be the EU's largest energy partner (read supplier). The Commission shows the intent of renegotiating the 1997 Partnership and Cooperation Agreement, replacing it by a new agreement deepening the EU's relations with Russia. Two goals are proposed: the liberalization of Russia's internal market (which according to the Commission would facilitate its reform) and the establishment of transit rules across the pan-European continent. So far Russia has constrained negotiations on a new Agreement to its  accession to the World Trade Organisation

  • Caspian - the Commission calls for the development of a Partnership with the countries of this region along the same lines of that developed with Russia. Empowered by the Council's decision to give high priority to the relations with these countries, the Commission will work to strengthen the Baku process and to build bilateral relationships.

  • Iraq and the Gulf Cooperation Council - already in cooperation with the EU through the EU-OPEC Energy Dialogue. The Commission will develop further relations with these countries in the field of hydrocarbons (e.g. clean technologies) and procure bilateral agreements to secure the energy supplies from the region.

  • Australia, Canada, Japan and the US and emerging consumer countries (China and India) - promote cooperation with these countries for the transparency of international energy markets and to commonly address sustainability issues.

  • Latin America and the Caribbean - home to alternative energy suppliers with whom the EU is already developing multilateral and bilateral partnerships. Brasil is referenced as an important supplier of biofuels.

  • Algeria, Egypt, Libya and Nigeria - already important suppliers of energy, these countries are part of a continent with great potential, not only in what concerns hydrocarbons, but also on renewable energies. The major goal put forward by the Commission is the Trans-Sahara Gas Pipeline, that it pretends to secure with bilateral agreements using instruments such as European Neighbourhood and Partnership Instrument, the European Development Fund and the European Investment Bank.

On Nuclear energy the document poses the following tactic:

With the Instrument for Nuclear Safety Cooperation, the EU will cooperate with and assist third countries in improving their nuclear safety culture and the safety of their operating nuclear power plants. For emerging  countries intending to build nuclear power plants, the EU will help in the development of competent and independent nuclear regulatory authorities, capable of ensuring that the new plants are built according to international nuclear safety standards and operate in accordance with the highest standards.

Closing this section a reference is made to the construction of a common foreign energy strategy. The Commission expresses that to make such common policy a reality, a single foreign energy representative is not needed, but a proper planning and effective coordination of State level with Commission level policies. To that goal the Commission proposes to identify concrete mechanisms to ensure transparency between these two executive planes. It goes further with possible legislative measures:

[...] the Commission will consider proposing a revision of Regulation 736/96 which obliges Member States to notify to the Commission investment projects of interest to the Community in the petroleum, natural gas and electricity sectors, in order to increase its relevance to today's energy challenges. The Commission will consider how best to further develop early warning systems with key neighbouring energy partners.

Improved oil and gas stocks and crisis response mechanisms

The Commission starts this section by noting that the mandatory oil stocks regime, in place since 1968, has been successful in response to short term disruptions. Part of its success has been the relatively loose implementation leaving to each state the choice between ad hoc government stocks, industry stocks or a combination of the two. Still, the Commission will propose new legislation to improve the system, making it more transparent and less permeable to speculation.


At present, the EU publishes data on the level of strategic oil stocks for each Member State. Unlike the US, it does not publish information  on the level of additional commercial oil stocks held in the EU. In order to improve oil market transparency and limit the effects of uninformed speculation, the Commission proposes that the EU now  takes the step of publishing, on an aggregated basis,  the level of commercial oil stocks held by EU oil companies on a weekly basis.

The Commission held off from proposing mandatory strategic gas stocks, mainly for its costs: five times those of oil stocks. Preference is given to harmonisation of security of supply standards and emergency measures, allowing for a better EU-wide coordination on crisis response. Diversifying supplies, especially with the build up of LNG infrastructure, is also given as a better alternative to strategic storage.

It is quite possible that this view will be rendered outdated during the next months, given present stock levels in the UK.

A new impetus on energy efficiency

This section of the Action Plan tables a further package towards the goal of 20% improvement in energy efficiency, adding up to the legislation presently under discussion at Parliament. This new package breaks down the following way:

  • Energy Performance of Buildings Directive - to be revised broadening its scope, simplifying its implementation and developing energy performance certificates for buildings.

  • Energy Labelling Directive - also to be revised in order to broaden its scope, from solely  home appliances today to a wider range of energy-using products; classifications for a series of products groups will be revised or introduced anew. A new energy label for car tyres will be introduced under a separate legal instrument.

  • Ecodesign Directive - its implementation will be intensified, with minimum requirements to be adopted in coming months for: light bulbs, electrical equipment in standby and off-mode functions of devices, street and office lighting equipment, external power supplies and simple set-top boxes for televisions; shortly after will follow: washing machines, dishwashers and refrigerators, boilers and water heaters, motors, and televisions. This Directive together with the Labelling Directive should allow the EU to save 96 Mtoe by 2020.

  • Cogeneration Directive - in inception, with a Communication and technical details to its implementation to be published shortly.

  • Covenant of Mayors - together with other financial and legal instruments will be used by the Commission to disseminate best practices on energy use, recurring to benchmarking and networking mechanisms.

  • Cohesion Policy Funds - to be used promoting energy efficiency improvements in the industry, commerce, transport and public buildings, cogeneration and local energy production, innovation for sustainable energy, and training  for monitoring and evaluation of energy performance. Funds from the Cohesion Policy will be used with the same intent.

  • Green Tax Package - this will be presented to align the Energy Tax Directive with the energy and climate change package and propose the employment of VAT and other fiscal instruments in promoting energy efficiency.

Making better use of the EU's indigenous energy reserves

This section opens up with pretty straightforward numbers:

Energy produced within the EU represents 46% of the total consumed. Before the 20-20-20 initiative, this was set to fall to 36% by 2020. Implementation of the new Energy Policy would keep it at around 44% of EU consumption.

The following energy sources are approached in the Communication:

  • Renewable - this is one of the "twenties" already agreed upon: growing the renewable share of the market from 9% today to 20% by 2020. This target will be empowered by the Renewable Energy Directive after which the Commission will focus on monitoring its application.  In this line the Commission will produce a Communication entitled "Overcoming Barriers  to Renewable Energy in the EU", that will identify difficulties in scaling up renewable energies (e.g. grid constraints) and propose measures to deal with them. In this chapter the Commission will work with the European Investment Bank and the European Bank for Reconstruction and Development to set up a proposed EU Sustainable Energy Financing Initiative, in so facilitating the mobilization of funds needed for the proposed growth of these energies.

  • Oil and Gas - for these traditional energies the Commission proposes to focus on developing the remainder of the conventional reserves and properly assess and produce unconventional reserves as shale and peat. The Commission will also work towards more transparency in the refining market and to ensure adequate diesel refining capacity in the future; a Communication on Refining Capacity and EU Oil Demand shall be presented in 2010.

  • Coal - seen by the Commission as a virtually infinite energy source whose usage will grow around the world as inside the EU, among an healthy international market. Carbon Capture and Sequestration (CCS) will be introduced in 12 commercial scale demonstration plants up to 2015. Only by then will the Commission consider imposing mandatory CO2 emissions standards and only if the Emission Trading Scheme proves unsuccessful by then.

  • Nuclear - the Commission notes that although Uranium supplies are well diversified and stable, and that Uranium prices do note have a major impact in the final price of electricity, the majority of Nuclear plants operating in the EU will reach the end of designed lifetime in the next 10 to 20 years. No policy tactic is defined in support of Nuclear, leaving the Commission that decision to each state. Nonetheless, it pretends to guarantee an high standard of safety by developing  common legislation for nuclear plant safety and waste management.

The Communication closes with a few guidelines "Towards a Vision for 2050". This is still a rather immature vision composed by an open list of issues to tackle. For the sake of brevity, these issues are simply listed without further deepening:

  • Decarbonising the EU electricity supply by 2050.

  • Ending oil dependence in transport.

  • Low energy and positive power buildings.

  • A smart interconnected electricity network.

  • Promoting a high-efficiency, low-carbon energy system throughout the world.

Final comments

The sheer size of the infrastructure build up plans plainly shows that the Commission has gained the sense of urgency that the moment requires. Unfortunately there is a clear over reliance on Natural Gas, especially in the ambitious plans for a Southern Corridor and the build up of LNG infrastructure. On the former, if a single transition country can be the source of the trouble seen in recent weeks, a lot is left to be desired from such international project; on the later the Commission seems to be underestimating the competition for LNG contracts from other international importers.

The document makes no acknowledgement of Norway's and Russia's depletion, the former on Oil and Gas the later at least on Oil. The intent to liberalize Russia's internal energy market is  maladjusted and could even be seen as offensive by this partner. There are no moral or economic grounds on which the EU can promote Thatcher Politics abroad.

The weekly publication of commercial stocks is quite welcome. Transparency driven initiatives like this not only benefit the market as can bring citizens closer to the Commission and promote a unified vision of the EU.

It is encouraging to see that the Commission is not actually blindly pushing CCS forward but instead putting it as a sort of last measure; even so, the 12 demonstration projects should be called into question. On the other hand the Commission doesn't perform any visible assessment of future coal supplies from exporting countries, not even acknowledging recent constraints in the international coal market.

This carefulness with CCS might actually make room for Efficiency measures to have a real impact. The approach taken by the Commission based manly on regulatory market legislation can have swift and important effect on energy consumption. The labelling tactics can also have an extra benefit in the present time of economic difficulties: it creates a product differentiation mechanism from which EU companies can benefit, valuing goods fabricated internally, that although more expensive, are more energy efficient. The Commission can go as far as forbidding altogether low efficiency products from entering the EU's market.

The laissez faire position the Commission takes on Nuclear energy boarders on irresponsibility. If this internal energy source is set to decline in coming decades the EU either needs a strategy to invert that trend or to fill the gap with other energy sources. On this point it is important to note that there's no renewable energy capable of performing the baseload role Nuclear has today. While hydroelectric and tidal power can effectively produce energy on a predictable basis, the continuous production of a Nuclear power plant isn't replicable. Even if the tactics to promote renewable energies laid down above come to fruition a parallel programme is needed to develop/implementing energy storing mechanisms.

The reflection on the Commission's energy budget is quite welcome. The Community should agree in due time how these projects are executed (in case they are approved) either by reinforcing the European budget, by state execution (in which case leaving the Commission solely on a coordinating role) or by a combination of the two. Ideally, a framework for the execution process of pan-European energy projects should be brought about.

Finally, how can any Energy Policy be successful, at this particular moment in time, without taking Transport as a central target of action is something only this Commission seems to know.



Previous entries in the series:

SER-2 [02] Memo on the Security and Solidarity Action Plan

SER-2 [01] Introduction

Display:
Quest for knowledge time.

Started running a quick and dirty Model re: linked document and came up hard against a question to which I can't answer (Read: AT goes, "D'oh?"

The Question: Is energy a good or a service?

This may seem a silly question ...

OK, it IS a silly question ...

but to really get down & boogie, analytically speaking, I really need an answer.

Help?

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Feb 1st, 2009 at 03:21:48 PM EST
I'm not going to try and answer, but another question occurs to me:

To what extent is "energy" ever supplied? Is it not rather goods that are capable of producing energy in certain circumstances?

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Feb 1st, 2009 at 03:48:34 PM EST
[ Parent ]
Is energy produced?

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Feb 2nd, 2009 at 03:44:41 AM EST
[ Parent ]
I knew somebody would get on that ;). It's a question for physicists, IANAP.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Feb 2nd, 2009 at 04:07:12 AM EST
[ Parent ]
Energy is neither created nor destroyed, only transformed. That's the First Law of Thermodynamics. So in a sense, no, energy is nor produced.

However, usable energy (also known as Free Energy in Thermodynamics) is destroyed or (hopefully) consumed, and is not conserved but degraded. That's the Second Law of Thermodynamics. And in this sense yes, energy in usable form (often using a low-entropy form of matter as carrier) is produced.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Mon Feb 2nd, 2009 at 05:15:06 AM EST
[ Parent ]
Thanks. In terms of economics, then, is it not reasonable to say that what is bought and sold are different commodities from which (usable, or free) energy may be produced (ie do thermodynamic work) by the use of different transformative appliances (wood stove, gas cooker, electric heater, machine tool, light bulb, internal combustion engine, micro computer, oil furnace, etc)?
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Feb 2nd, 2009 at 08:25:55 AM EST
[ Parent ]
In addition, whether Energy is produced or not, it is transferred between more or less neatly contained and defined systems and it is this transfer that has (a) value.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Mon Feb 2nd, 2009 at 08:58:12 AM EST
[ Parent ]
To go back to AT's original question, I would say an extensive thermodynamical variable is a good, and an intensive variable is a service.

Examples of goods: (Thermodynamic Free) Energy, (neg)-Entropy, Space/Size, (amount of) Matter, electrical charge/current, magnetic moment (i.e., strength of a magnet).

Examples of services: Temperature, Pressure, surface/linear Tension, electrical Voltage, magnetic Field.

Hah.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Mon Feb 2nd, 2009 at 09:49:11 AM EST
[ Parent ]
No, still not produced. Exploited. 'Production' would still violate the Second Law.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Feb 2nd, 2009 at 10:53:23 AM EST
[ Parent ]
If you ignore the low-grade "waste energy" that is "produced" when you "produce" some amount of high-grade "usable energy".

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Mon Feb 2nd, 2009 at 11:13:02 AM EST
[ Parent ]
I think you know, "Energy" is both.

Cost of goods and service by resource type are bundled in consumer (business or residential) price(s) as if to reflect discount scale economies enjoyed by the utility provider.

Electricity is a "energy" commodity (goods). The amount and quality (e.g. timed demand, generator fuel) consumed are subject to variable rates of the utility's cost structure. Consumer rents equipment to terminate delivery (service).

Gas and heating oil are "energy" commodities (goods). The amount and quality (e.g. grade) consumed are subject to variable rates of the utility's cost structure. Consumer rents equipment terminating delivery (NG service); consumer owns equipment terminating delivery (oil, propane, wood, other service).

Diversity is the key to economic and political evolution.

by Cat on Sun Feb 1st, 2009 at 06:04:06 PM EST
[ Parent ]
One thing I've learned over the years constructing Models is to find out and then use the Standard Analytical basis people in the particular industry use.  Otherwise you end up with a might fine, perfectly useless, piece of nothingness.

I see the argument going either way or, even, both.  

(Oh, please not both!)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Feb 1st, 2009 at 10:56:55 PM EST
[ Parent ]
LOL. "I see the argument going either way or, even, both." The argument whether or not to model real terms of business? That exercise is polemic. As is, ultimately, whether or not one's government permits individuals and firms "off-grid" energy generation.

"Energy" is both. The evidence is all around you. You have only to examine your monthly utility bills (to "discover" the values of variables of the supplier's model). To populate a database of rates, then deduce cost structure of one or more suppliers given prevailing commodity prices (e.g. spot, futures), requires some greater investigatory um rigor.

Diversity is the key to economic and political evolution.

by Cat on Mon Feb 2nd, 2009 at 09:02:22 AM EST
[ Parent ]
Why?
by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Feb 1st, 2009 at 07:11:28 PM EST
[ Parent ]
Why do I need to know or why am I doing it?

For the 'need to know,' see above.

Re: "why doing it" ...

I could bullshit up an answer but the plain unvarnished truth is:  I enjoy building Models & I got curious.  Never done anything like this before and ... what the heck?  Why not?

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Feb 1st, 2009 at 11:00:48 PM EST
[ Parent ]
How/why is the model different depending on whether energy is a good or a service?

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Mon Feb 2nd, 2009 at 08:36:21 AM EST
[ Parent ]
Want to know all my secrets, huh?  ;-)

The easiest way to explain it is ...

A good is a noun.  A service is a verb.  


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Feb 2nd, 2009 at 07:32:44 PM EST
[ Parent ]
A good is a noun.  A service is a verb.

I said downthread that a good is extensive, a service is intensive.

Interesting analogies.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Feb 3rd, 2009 at 03:34:06 AM EST
[ Parent ]
Good catch.

And from that ... offhand, or superficially, it looks like Power (the entirety of it) can be Modeled using Categorical Logic and Set Theory -- if one allows Triples in the latter.  Bringing up the intriguing notion of using (stealing) the idea of functor from Category Mathematics as a way to handle Power-as-Supply and Power-as-Demand as across Time.

Of course, there are systems of Temporal Logic running around based on Modal Logic.  I'm not convinced, yet, they are all that useful in a dynamic environment.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Feb 3rd, 2009 at 12:28:52 PM EST
[ Parent ]
Categories are great for modelling processes because they are naturally represented by directed graphs (arrow diagrams) where sets are naturally represented by collections of points. Of course you can build set theory within category theory or category theory within set theory so it's a matter of choosing the most convenient set of axioms.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Wed Feb 4th, 2009 at 04:01:38 AM EST
[ Parent ]
The rest is over my head, unfortunately.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Wed Feb 4th, 2009 at 04:04:15 AM EST
[ Parent ]
You're running a model on the SER? Cool. But the answer, of course, depends upon your model.

For most purposes I think you'd model energy (in its manifestations as resource input and electricity) as a good.

I'm personally opposed to treating natural resources as goods rather than as capital (in which capacity I'd guess they're neither goods nor services), but maybe that is a different discussion.

by nanne (zwaerdenmaecker@gmail.com) on Sun Feb 1st, 2009 at 09:18:25 PM EST
[ Parent ]
Please place the emphasis on "quick and dirty."

Due to lack of time and resources, it's doubtful the thing is going to be worth spit.

 

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Feb 1st, 2009 at 11:02:40 PM EST
[ Parent ]
Energy at its genesis is neither a commodity or a service, it is the ability to bring about, transport and provide commodities and services.

Even so, some energy vectors can be traded as commodities, like gasoline or electricity.

You might find me At The Edge Of Time.

by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Mon Feb 2nd, 2009 at 03:37:42 AM EST
[ Parent ]
Luis de Sousa:
Even so, some energy vectors can be traded as commodities, like gasoline or electricity

Indeed.

And IMHO the future of the global financial system (at least for cross-border transactions - domestic trade is another issue) lies in the commoditisation - by the simple expedient of creating Units redeemable in energy - of such energy vectors, and thence to their "monetisation" through an International Energy Clearing Union.

Certainly the concept of a global "Petro" energy standard and the global monetisation of natural gas went down really well in Iran last week.

If I stay snowed in up here in Scotland, I might even complete that article for the Oil Drum you suggested I write ;-)


"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Feb 2nd, 2009 at 07:58:38 AM EST
[ Parent ]
Yes I agree. Energy can be a commodity money, but unlike its predecessors it won't be an hurdle for economic activity with a static supply.

Btw, do you know Andrew Mckillop and his latest ideas [pdf] ?

You might find me At The Edge Of Time.

by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Mon Feb 2nd, 2009 at 08:33:42 AM EST
[ Parent ]
Thanks for the link. Interesting, and in many ways on the same lines.

But I don't think centralised institutions and architectures are optimal. McKillop seems to be looking at a centralised Keynesian International Clearing Union/ Bancor approach.

When I talk about "frameworks" I don't mean "Organisations" or "Institutions" but simply agreements or protocols with cross border application.

I think we need local solutions linking up regionally and globally to form a global network from the bottom up, rather than any more global organisations funding things "top down".

But it's really about "whatever works", isn't it?

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Feb 2nd, 2009 at 09:01:58 AM EST
[ Parent ]
Energy at its genesis is neither a commodity or a service, it is the ability ...

I disagree. This language dissembles the tangible constituents (mechanical processes, equipment such as transmission lines, production inputs such as "natural" commodities and human labor) --"its genesis"-- that yield benefits, both tangible and intangible such as "ability."

"Vector" analyses are merely discursions about mathematical relationship(s) among terms of production, purportedly of economic interest to the owner of the means of production.

To ignore tangible goods and services that constitute "energy" benefits is perforce magical thinking about "energy" production of a calibre represented by political assumptions of this EU policy paper. That is the ownership interests in natural resources of peoples who are not EU beneficiaries of "its genesis." You note obliquely EU dependencies in North Africa to obtain EU energy production goals:

The major goal put forward by the Commission is the Trans-Sahara Gas Pipeline, that it pretends to secure with bilateral agreements using instruments such as European Neighbourhood and Partnership Instrument, the European Development Fund and the European Investment Bank.

What is the purpose of deflecting ownership interest in and information about EU-located energy production or conservation for that matter?

Diversity is the key to economic and political evolution.

by Cat on Mon Feb 2nd, 2009 at 09:46:25 AM EST
[ Parent ]
... are, of course, services, whether its distribution and retailing of energy or of finished consumer goods.

Fuels used to provide concentrated energy (it is, of course, the concentration being purchased, since the energy itself is conserved) are goods.

Electricity is a service, of course ... sometimes its a service produced from a mix of fuels and capital goods. sometimes its a service produced primarily from capital goods harvesting a sustainable renewable source of concentrated energy.

Because of the dominant important of transmission infrastructure, natural gas is a good that acts very much like a service.

Because of the dominance of fossil fuels as concentrated energy sources, we treat energy primarily as a good, but if we shift to a sustainable, renewable Energy Economy (and the alternative is, of course, economic collapse), we must also shift to treating energy primarily as a service.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Feb 2nd, 2009 at 12:56:44 PM EST
[ Parent ]
Because of the dominance of fossil fuels as concentrated energy sources, we treat energy primarily as a good, but if we shift to a sustainable, renewable Energy Economy (and the alternative is, of course, economic collapse), we must also shift to treating energy primarily as a service.

Yes, that is it.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Feb 3rd, 2009 at 03:37:45 AM EST
[ Parent ]
Regarding the first step, the 'essential' infrastructure projects, I note the total focus on gas. Beyond the hopeless Nabucco ("Southern Gas Corridor") and the overblown LNG, I flag this:

Completion of the Mediterranean Energy Ring - linking Europe and North Africa with gas and electricity interconnectors, essential to develop the region's solar and wind resource.

Heh, electricity interconnectors may be essential to develop solar and wind, but not gas. I consider this a greenwashing of the gas pipeline network expansion scheme.

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

by DoDo on Mon Feb 2nd, 2009 at 03:44:01 AM EST
well spotted, dodo!

i just don't get any serious will to embrace change in this SER.

too bad, as its weaseliness will not do anything for the transparency deficit in the EU, neither will it help the public to have faith that the energy issue is being seriously addressed here.

the blasé assumptions about gas and nuclear are tantamount to hiding one's head in the sand and whistling dixie at the same time!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Feb 2nd, 2009 at 06:16:08 AM EST
[ Parent ]
Hmmm... gas can be used as a backup in CSP, so I don't know if this is a complete fraud.

Aside of that, expanding the gas infrastructure would make sense on its own.

by nanne (zwaerdenmaecker@gmail.com) on Mon Feb 2nd, 2009 at 06:22:01 AM EST
[ Parent ]
Gas can, but circum-mediterranean gas pipeline interconnectors aren't useful for that...

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Feb 2nd, 2009 at 10:56:29 AM EST
[ Parent ]

The Communication closes with a few guidelines "Towards a Vision for 2050". This is still a rather immature vision composed by an open list of issues to tackle. For the sake of brevity, these issues are simply listed without further deepening:

  • Decarbonising the EU electricity supply by 2050.
  • Ending oil dependence in transport.
  • Low energy and positive power buildings.
  • A smart interconnected electricity network.
  • Promoting a high-efficiency, low-carbon energy system throughout the world.

2050. No details. Whereas the money earmarked for Nabucco or LNG would be better spent on any of these.

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

by DoDo on Mon Feb 2nd, 2009 at 03:59:37 AM EST
The laissez faire position the Commission takes on Nuclear energy boarders on irresponsibility. If this internal energy source is set to decline in coming decades the EU either needs a strategy to invert that trend or to fill the gap with other energy sources.

Internal energy source? Hardly. However, I entirely agree on the need for a policy on replacement -- which in my view would be a stronger promotion of renewables. (I note what I observed in prior diaries here on ET: in Germany over the past few years, the growth in renewables balanced the fall in nuclear, but this was masked by the growth in net exports matching growth in gas.)

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

by DoDo on Mon Feb 2nd, 2009 at 04:04:06 AM EST
What do you mean by Nuclear energy in Europe being a foreign energy source? I'm not aware of any state importing electricity from a neighbouring country.

You might find me At The Edge Of Time.
by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Mon Feb 2nd, 2009 at 05:06:21 AM EST
[ Parent ]
from what i understand, italy imports a staggering amount of electricity from switzerland and france.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Mon Feb 2nd, 2009 at 06:17:44 AM EST
[ Parent ]
The fuel, of course.

You don't import electricity generated by power plants buring imported gas or coal, either...

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

by DoDo on Mon Feb 2nd, 2009 at 10:57:44 AM EST
[ Parent ]
Gas and Coal are ready to use energy vectors once they are above ground. Uranium mining is just a small part of the Nuclear electricity generation process, that doesn't produce energy, just rocks.

You might find me At The Edge Of Time.
by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Tue Feb 3rd, 2009 at 04:30:54 AM EST
[ Parent ]
I ask again: so what? It is essential, it stores the energy to be used, and it is imported 100%, that's all what counts when you say "internal energy source".

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Feb 3rd, 2009 at 10:42:50 AM EST
[ Parent ]
... simply inviting Australia into the EU?


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Mon Feb 2nd, 2009 at 01:01:22 PM EST
[ Parent ]
On this point it is important to note that there's no renewable energy capable of performing the baseload role Nuclear has today.

I leave the details to Jérôme and Crazy Horse; but your claim reflects an outdated concept of how baseload should be provided, and runs counter to actual studies on wind power network integration.

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

by DoDo on Mon Feb 2nd, 2009 at 04:06:28 AM EST
Outdated concept? Have you seen a generation or grid load graph recently?

You might find me At The Edge Of Time.
by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Mon Feb 2nd, 2009 at 05:09:28 AM EST
[ Parent ]
... generation or grid load graph is located the concept of how baseload power should be provided?

The concept of how baseload power should be provided is what the reader of the graph brings with them and forms part of core premises for the conclusions drawn from the graphs.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Feb 2nd, 2009 at 01:00:16 PM EST
[ Parent ]
Yes. And?

In the English language, power generation is usually separated in two parts, "base load" and "peak load". Of this, base load is a planned supply that follows an expected demand curve, while peak load responds to actual fluctuations of both demand and base load.

However, German comes closer to actual practice by dividing what English calls "baseload" in two: "Grundlast" is a part nearly constant throughout the day, while Mittellast involves the planned variable capacity, which is increased/decreased in say 15-minute blocks.

Now, one thing Mittellast does is balancing the known (and expected/predicted) daily oscillation of demand. But the other is to balance known (expected/predicted) changes in Grundlast, e.g. say the stoppage of a coal power station for maintenance or a nuclear plant for refuelling or post-accident repairs.

When you speak about base load, you seem to consider the Grundlast part only. However, renewables, especially with increasing grid penetration and geographical extent, can be predicted, predicted with sufficient precision to be considered in the Mittellast planning -- the same way the temporary decommissioning of a large coal or nuclear power plant can be. (In fact, for Mittellast operators, they allow for a more efficient operation than having to adapt to 1000 MW suddenly off the grid.)

All of this is not rocket science. High grid penetration wind power is actual reality in Denmark or North Germany

Temporary storage can enable even higher grid penetration. But, so can the up-scaling of grids -- and the combination of different intermittent renewables (solar and wind have a natural compensation in their intermittence, for example). However, such high levels of grid penetration on an EU-wide basis is still years if not decades in the future.

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

by DoDo on Mon Feb 2nd, 2009 at 02:17:54 PM EST
[ Parent ]
I should add: I hope Crazy Horse will pitch in on this with comments more informed than mine; while I am told Jérôme is away and unlikely to do so.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Feb 2nd, 2009 at 02:21:17 PM EST
[ Parent ]
Your understanding of modern practice in separating types of "baseload" generation is excellent, and should be understandable here.  Your point regarding the ability of renewables to be predictable is worth highlighting.


However, renewables, especially with increasing grid penetration and geographical extent, can be predicted, predicted with sufficient precision to be considered in the Mittellast planning -- the same way the temporary decommissioning of a large coal or nuclear power plant can be.

While no weather predictions are foolproof, the ability to predict likely wind generation has been evolving strongly over the past decade.  Accuracy increases as penetration increases over wider areas, as well.

I think it's important to set a frame on how to review power generation.  The frame is that we are somewhere past the beginning of a major transition period, from the old world of centralized generation to the distributed world of intermittent generation coupled with a load-following smart grid, including rate structures which allow certain industrial load to be switchable.

They are truly two different systems, and right now we're "Lost in Transition,"  as we re-calibrate the system.  The experience in Denmark and northern Germany has provided much insight.  Most importantly, the utilities involved were quite negative about windpower penetration a decade ago, but operating experience at higher and higher penetration levels turned the opinion around.

In 2008, windpower produced more than 40% of net energy consumption in three Federal states, Lower Saxony, Mecklenberg West Pomerania, and Schleswig Holstein.  These are areas with some of the weakest grid infrastructure in Germany!

The German Energy Agency Dena produced a huge grid integration study in 2005, including the wind industry and the major transmission companies E.ON Netz, RWE Netz and Vattenfall Transmission.   Summary here.   Briefing Paper Here.

As far as I know, the study itself is only in German, though I hope I'm wrong.  Ongoing work is certainly updating the results from 2005.


"Life shrinks or expands in proportion to one's courage." - Ana´s Nin

by Crazy Horse on Tue Feb 3rd, 2009 at 02:44:02 AM EST
[ Parent ]

Wind energy does not require construction of additional `balancing' power stations
The amount of control and reserve power to balance the increasing amount of wind power has been calculated. The amounts of control energy are strongly depending on the accuracy of the short term wind power forecast, and the deviation between forecast and actual feed in.
The quality of the forecasting tools keeps on improving. It is found that the additional required balancing power (positive and negative regulation power, from secondary and hourly reserves) can be provided by the remaining conventional plants. There is no need for new investments in additional power stations for this purpose to meet the balancing needs of the German system with 36 GW of wind power. An overview of the required balancing power capacities is given in table 2.  In 2015 on average 3.2 GW positive regulation power representing 9% of the installed wind energy capacity and 2.8 GW negative regulation power representing 8% of the installed wind energy capacity is required.


"Life shrinks or expands in proportion to one's courage." - Ana´s Nin
by Crazy Horse on Tue Feb 3rd, 2009 at 02:51:31 AM EST
[ Parent ]
From the English Wikipaedia:

Baseload plant, (also baseload power plant or base load power station) is an energy plant devoted to the production of baseload supply. Baseload plants are the production facilities used to meet some or all of a given region's continuous energy demand, and produce energy at a constant rate, usually at a low cost relative to other production facilities available to the system.[2] Examples of baseload plants using nonrenewable fuels include nuclear and coal-fired plants. Among the renewable energy sources, hydroelectric, geothermal[3] and OTEC can provide baseload power. Baseload plants typically run at all times through the year except in the case of repairs or scheduled maintenance. (Hydroelectric power also has the desirable attribute of dispatchability, but a hydroelectric plant may run low on its fuel (water at the reservoir elevation) if a long drought occurs over its drainage basin.)

You can find similar definitions on Shakespeare language if you google the term, like this from an Engineering company:

Base load (also baseload) is the minimum level of demand on an electrical supply system over 24-hours: the load that exists 24 hours a day.

A base load power plant (or base load power station) is one that is best suited to serving this load because it takes a long time to start up and is relatively inefficient at less than full output. These plants run at all times through the year except in the case of repairs or scheduled maintenance.

This is the same concept used by the local grid operator, from whose publications I have the closer contact with this particular issue.

By saying that this is an outdated concept you are alluding at it being somehow time-dependent. While the minimum demand on a grid can eventually evolve through time, it always exists, even if it is zero. Baseload is a concept bound to the concept of Electric Grid.

You might find me At The Edge Of Time.

by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Tue Feb 3rd, 2009 at 04:24:35 AM EST
[ Parent ]
The discussion of what baseload means is irrelevant as we move away from the past; how you achieve serving the load is what's critical.  Demand-side dispatchability can even be considered part of that.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin
by Crazy Horse on Tue Feb 3rd, 2009 at 04:43:47 AM EST
[ Parent ]
The statement was:
reflects an outdated concept of how baseload should be provided

Now, obviously, if there are outdated and, by implication, up to date concepts of how baseload should be provided, it follows that the provision model is the thing that can go out of date.

So it is a sweeping red herring and non sequiter to say:

By saying that this is an outdated concept you are alluding at it being somehow time-dependent. While the minimum demand on a grid can eventually evolve through time, it always exists, even if it is zero. Baseload is a concept bound to the concept of Electric Grid.

And the glaring mismatch between the claim being attacked and the argument introduced to attack it only reinforces the point about outdated concepts about the provision of baseload. The fact that the minimum amount required over a period has a distinctive name obviously does not imply that it requires a distinctive kind of plant to put specific "baseload" electrons onto the grid.

It can, indeed, as easily imply things about demand management as supply management, and the things it implies about supply management may well be about dynamic throttling of deferrable power sources as about long term construction of 24/7 always on power plants.

The existence of the name implies existing or past institutions within the electricity generation industry, but institutions are always past-bound.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Feb 3rd, 2009 at 10:30:56 AM EST
[ Parent ]
I did not say base load power plant. I just said base load. Your second quote is in conflict with Wikipedia:

Base load power plant - Wikipedia

Baseload (also base load, or baseload demand) is the minimum amount of power that a utility or distribution company must make available to its customers, or the amount of power required to meet minimum demands based on reasonable expectations of customer requirements. Baseload values typically vary from hour to hour in most commercial and industrial areas.

...so we can say at the least that there are differing interpretations of the term in English. (I note though that that quote is from a for-the-wide-public glossary article again titled base-load power plant, and the same glossary lacks any article on other loads; so I hazard to assume that Harris Group is imprecise there.) Portuguese is yet another thing. (I'm curious if there is a Mittellast equivalent in your language, or is it lumped together with peak load.)

Finally, as Bruce and Crazy Horse said, the issue is how you supply expected demand, not how you continue to supply it in the idealised form of the traditional way, e.g. a near-constant part and daily periodic part. (Where, as I indicated, the shutdowns of large baseload power plants already represent a deviation from the ideal that has parallels with grid operation in the new regime with high grid peneration intermittent generation.)

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

by DoDo on Tue Feb 3rd, 2009 at 10:56:57 AM EST
[ Parent ]
Addledum:

1) Here is the graph showing the Grundlast - Mittellast - Spitzenlast concept from the German Wikipedia:

2) I find that while Mittellast (c. intermediate load) does seem to lack from English totally, there is a Wikipedia article titled Load following power plant:

A load following power plant is a power plant that adjusts its power output as demand for electricity fluctuates throughout the day. Load following plants are in between base load and peaking power plants in efficiency, speed of startup and shutdown, construction cost, cost of electricity and capacity factor.


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Feb 3rd, 2009 at 11:04:28 AM EST
[ Parent ]
specializes in them.

You can't be me, I'm taken
by Sven Triloqvist on Tue Feb 3rd, 2009 at 11:52:36 AM EST
[ Parent ]
The SER is not about today, it is about the day after tomorrow. Plans to fundamentally change the grid seem to be a big part.

Also, north sea wind and CSP can very well provide baseload power.

On nuclear power:

New nuclear will still have lead times of 10-15 years, and is politically unacceptable in a lot of countries. I fail to see how nuclear could be more than a small part of any solution to oil and gas scarcity or climate change. The laissez-faire stance of the Commission is a logical outcome of political differences between the Member States, and should be seen as a satisfactory compromise.

by nanne (zwaerdenmaecker@gmail.com) on Mon Feb 2nd, 2009 at 06:32:57 AM EST
[ Parent ]
Of course, if I'd just read the thread a bit farther, i wouldn't have had to spend so much time putting together the previous comments.  Here it is in all its simplicity.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin
by Crazy Horse on Tue Feb 3rd, 2009 at 02:53:01 AM EST
[ Parent ]
Please read my comment up-thread on baseload.

Why would the Commission just stare at a state like the UK, that committed energy suicide by making coincide the decommissioning of its Nuclear Programme with the decline of the North Sea Oil & Gas?

In my view that is not governing, simply letting that folk out in the cold. And do you think the same about Gas? Or about fossil fuels in general?

Finally, neither I, nor the original text approached Nuclear as a "solution" to anything. What's at stake here is the unchecked decline of this electricity baseload provider.

You might find me At The Edge Of Time.

by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Tue Feb 3rd, 2009 at 04:43:42 AM EST
[ Parent ]
I'll have to explain some political realities here.

The Commission is the 'guardian of the treaties' and otherwise the servant of the Member States. Energy policy does not have a strong basis in the treaties. Therefore, the Commission has no leverage. The idea that it could berate a major Member State for its politically motivated energy choices, let alone block them, is comical.

As for fossil fuels, we have a policy to shift away from them. Since you're interested in my thoughts: I'd like this policy to be stronger. I'd also like to see more interconnections, storage and solidarity provisions.

by nanne (zwaerdenmaecker@gmail.com) on Tue Feb 3rd, 2009 at 06:09:29 AM EST
[ Parent ]
nanne:
Energy policy does not have a strong basis in the treaties. Therefore, the Commission has no leverage. The idea that it could berate a major Member State for its politically motivated energy choices, let alone block them, is comical.

boy, is that ever last century...

mind you if energy policy consists largely of squabbling between companies all racing to middleman russian gas and other imported (fossil) fuels, then no wonder...

energy self-sufficency for all europe right now as top priority, if it seems expensive now, that's nothing compared to how it will seem even in 10 years!

we are hemorrhaging capital every day to keep ugly, toxic leviathan in business lowering our quality of life as it purports to fill our 'needs'.

if our needs were met on our home ground, there would be a massive wave of simplification with respect to foreign affairs, freeing up energy to focus on other problems, while also feeling the hot breath of global warming cooling even a little perhaps.


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Feb 3rd, 2009 at 06:21:26 AM EST
[ Parent ]
Yes. We do see some movement in the right direction, but I'd want it to be faster and less muddled.
by nanne (zwaerdenmaecker@gmail.com) on Tue Feb 3rd, 2009 at 04:53:57 PM EST
[ Parent ]


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