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Another hit piece by the Economist.

Maybe I'm unfair, but reading it I get the strong impression that these folks build their facts around their chosen message. One inconsistency I spotted immediately was this:

But because so much renewable power has come on stream, and because it has priority access to the grid, the spot price of electricity has fallen to a level at which modern, clean natural-gas power plants are not viable. Only ageing, dirty brown-coal power stations with low variable costs can compete.

But... surely the price differential between gas and lignite fuel is not affected by how much renewable electricity is released on the grid? Or by what fraction of the time these fossil power plants will run?

What they probably mean with this muddle, is that the investment in new gas backup plants is not attractive under these conditions. So, pre-existing lignite plants are used.

Somebody should write a comment piece on this. Jerome?

by mustakissa on Fri Jun 14th, 2013 at 02:06:47 PM EST
The effect they observe is that gas, as the highest cost (both levelized and marginal) producer is being displaced from baseload and scheduled load following use by wind, whereas lignite is not (yet).

This is because natural gas has a cost structure that never actually belonged in the baseload portfolio. It's presence in the baseload portfolio of Britain is partly a symptom of the gross inefficiency of deregulating the electricity market, and partly an atavistic legacy of Thatcher's crusade against the British coal miners and the contemporary development of the North Sea.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jun 14th, 2013 at 02:55:07 PM EST
[ Parent ]
Or to put it a bit differently: Europe in general and Britain in particular has been heavily under-investing in baseload for a generation and a half. This has allowed gas to creep into the baseload portfolio, where it has no business being under any sane grid planning regime.

Now new baseload is coming online, in the form of wind and solar, and this is in some measure making up for the underprovision of baseload. This, of course, displaces gas, because gas is a generating mode that has no business being run as baseload in the first place. That this leaves in place those legacy modes that are optimized for baseload production, such as lignite, is not a bug. It's a feature.

If you don't like that feature, make a political decision to close the lignite-burners - they will be easily replaced with gas in the short term and renewables as they come online.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jun 14th, 2013 at 03:01:05 PM EST
[ Parent ]
All that may be true, but that's not what they write!
by mustakissa on Sat Jun 15th, 2013 at 02:45:30 AM EST
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They write that the relative share of gas is dropping, and the relative share of coal is rising, due to the entry of renewables into the grid. That's the sum total of their "analysis," such as it is.

There is no causal model, because economists don't do causal models. There is no robustness check against alternative scenarios, because economists don't do causal models and you need a causal model to construct credible alternative scenarios. There is no internal consistency check on the story, because the Economist does not do due diligence when a naive reading supports the conclusion it wants.

The overwhelming majority of your average issue of The Economist is written by highly educated incompetents for highly educated incompetents.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Jun 15th, 2013 at 03:10:19 AM EST
[ Parent ]
We've discussed the rise in coal last year already on ET. I can't dig up past comments so will just rewrite it:
  • gas is relatively more expensive currently because it is still largely indexed to oil in Europe (under long term supply contracts), while coal went down thanks to the price pressure from shale gas in the US which has led to lower coal consumption there and volumes avialable for export;
  • coal plants will need to close soon; they have a set number of hours to run before doing so (under a EU directive), and it makes sense to run them as much as possible when it is unusually profitable to do so, like today, rather than wait for later
  • gas plants are higher in the merit order and thus taken out by renewables more often than coal. As renewables keep on growing, coal will be hit too.

One could argue that Gerany should have closed coal plants before the nukes (I share that opinion), but most of the rest of what they say is silly.


Wind power
by Jerome a Paris (etg@eurotrib.com) on Sat Jun 15th, 2013 at 05:32:19 AM EST
[ Parent ]
> last year

Now that wasn't even worthy of a commentary. It's down there with 'global warming stopped last Friday'.

Where's the world coming to when not even economists grasp a concept like 'the longer term'?

by mustakissa on Sat Jun 15th, 2013 at 07:31:10 AM EST
[ Parent ]
mustakissa:
Where's the world coming to when not even economists grasp a concept like 'the longer term'?

Well, not all economists failed to grasp the longer vs. the short term:

The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again. -- John Maynard Keynes -- A Tract on Monetary Reform (1923) Ch. 3
by Bernard on Sun Jun 16th, 2013 at 06:55:19 AM EST
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So Keynes was anti wind power - I always suspected it.
by IM on Sun Jun 16th, 2013 at 12:32:27 PM EST
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Only in the long run.
by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Jun 16th, 2013 at 12:47:48 PM EST
[ Parent ]
displaced from baseload and scheduled load following use by wind

...and solar (primarily solar). But it could be the lignite, too, with the two new variable power plants that can do some scheduled load following; and it can certainly be anthracite coal. But the trick is elsewhere: even baseload prices are low because there is too much power on the market; but they single out renewables for this, instead of new coal.

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

by DoDo on Fri Jun 14th, 2013 at 03:28:28 PM EST
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Quoted for truth.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sat Jun 15th, 2013 at 09:00:52 AM EST
[ Parent ]
was saying this last week...


The fact is that wind power generates many well-paying, desirable jobs in rural places with not much else going for them. New energy sources also allow these states to diversify their economies. This alliance of green and red politics helps keep the industry going at a time of low wholesale electricity prices--the result partly of cheap shale gas, and partly of a drop in demand because of the sluggish recovery.

All would not be lost if the PTC disappeared. Without it, there will still be a trickle of demand for new turbines. Concerns about the intermittent supply of energy from wind are dying down. It turns out that with enough wind farms sited in enough places, the supply evens out. The wind is always blowing somewhere. And a solid majority of Americans continue to favour alternative, clean power sources over traditional fossil fuels.

Private insurers say that last year was the second-most-expensive in American history for disasters related to climate change, costing them $139 billion. But private insurance paid only a quarter of these costs, leaving taxpayers to cover the rest. By comparison, funding renewable energy properly seems rather cheap.



Wind power
by Jerome a Paris (etg@eurotrib.com) on Sat Jun 15th, 2013 at 05:26:50 AM EST
[ Parent ]

Apparently "The Economist" is many people, and they don't all talk to each other.

About the intermittency concern, perhaps what has happened is, that in a number of places wind penetration is well over 20% now, and contrary to the scare stories the lights didn't go out... however, their story is still wrong: yes, the wind blows (almost) always somewhere, like the sun is shining almost always somewhere; but still you need back-up. Even for penetrations of 100%-plus. But perhaps Jake is right and The E isn't into due diligence much.

A positive surprise though is that they really make the renewables-climate link explicitly, even if based on an iffy example (but then, money is what they understand). That counts as a victory for the good guys.

by mustakissa on Sat Jun 15th, 2013 at 11:07:29 AM EST
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