Tag: renewable energy

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Going with the wind

The UK hosted the third Clean Energy Ministerial conference on 25/26 April 2012. More than 20 energy ministers from around the world attended. In his address, David Cameron, gave his backing to more wind farms being built in the UK, both onshore and offshore.

Currently just under 10 per cent of the UK’s electricity is generated from renewable sources. But to meet agreed EU targets this must increse to at least one-third by 2020. Most of this will have to come from wind.

But whilst wind turbines create no CO2 emissions, electricity generated from wind is currently some 15% more expensive than from gas. To make wind power profitable, energy companies are required by law to generate a certain percentage of their electricity from renewables and the cost is passed on to the consumer. This adds some £20 per year to the average household energy bill.

Over the coming years, many new power plants will have to be built to replace the electricity generated from older plants that reach the end of their life. So what types of plant should be built? Unfortunately measuring the costs and benefits from power generation is not easy. For a start, energy needs are not easy to predict. But more importantly, electricity generation involves huge environmental and social externalities. And these are extremely difficult to measure.

What is more, the topic is highly charged politically. The social costs do not fall evenly on the population. People might favour wind turbines, but they do not want to see one outside their window – or from their golf course!

The following videos and articles will give you some insight into the difficulties that any decision makers face in making the ‘right’ decisions about electricity generation

Webcasts and podcasts
Can Cameron still claim the ‘greenest government ever’? Channel 4 News, Tom Clarke (26/4/12)
Energy Secretary: UK will meet green targets BBC News, Ed Davey (25/4/12)
Donald Trump attacks Scottish government’s green policy BBC News, James Cook (25/4/12)
Trump: Wind farms ‘bad for Scotland’ BBC News (24/4/12)
Tycoon Trump fights Scotland over wind farms near golf resortReuters, Deborah Gembara (25/4/12)
Wind power blows Siemens off course Euronews, Anne Glemarec (25/4/12)
Mexico inaugurates largest wind farm in Latin America BBC News, Carolina Robino (9/3/12)
BP’s Flat Ridge 2 Wind Farm in Kansas YouTube, BPplc (10/4/12)
Arnold Schwarzenegger: Green quest goes on BBC News (26/4/12)
Denmark Pioneers Clean Energy Green TV (18/4/12)
EU wind industry defies recession Green TV (16/4/12)
Wind Farm Issues – Compilation LiveLeak (15/4/12)

News articles
David Cameron commits to wind farms The Telegraph, Louise Gray (26/4/12)
David Cameron says wind energy must get cheaper The Telegraph, Louise Gray (27/4/12)
Could 2012 be year of the wind turbine? The Telegraph, Louise Gray (3/2/12)
Green energy vital, says David Cameron Independent, Emily Beament (26/4/12)
Cameron: renewables are ‘vital to our future’ businessGreen, Will Nichols and James Murray (26/4/12)
Green energy ‘must be affordable’ – Cameron BBC News (26/4/12)
Wind farms will kill tourism, says Donald Trump Independent (25/4/12)
Donald Trump accuses Salmond of ‘betrayal’ over wind farm plans The Telegraph, Simon Johnson (25/4/12)
Turbine scheme provokes wuthering gale of protest Independent, Mark Branagan (6/4/12)
Prince Charles endorses wind power in new film at Sundance Festival The Telegraph, Roya Nikkhah (29/4/12)
Study claims tourists ‘not put off’ by wind farms in Scotland BBC News (24/4/12)
Tide turns in favour of wave power instead of wind farms Scotsman, David Maddox (23/4/12)
Rush towards wind-generated electricity will not reduce fuel poverty Power Engineering (21/4/12)
Shell says no to North Sea wind power Guardian, Terry Macalister (26/4/12)
David Cameron, the Speech He Needs to Make Huffington Post, Juliet Davenport (25/4/12)
Campaigners want David Cameron to come clean over wind farm policy Western Daily Press (27/4/12)
Being Green Doesn’t Mean Higher Electricity Costs Says Green Energy UK DWPub (27/4/12)

Documents
Cost Benefit Methodology for Optimal Design of Offshore Transmission Systems Centre for Sustainable Electricity and Distributed Generation, Predrag Djapic and Goran Strbac (July 2008)
A Cost Benefit Analysis of Wind Power University College Dublin, Eleanor Denny (19/1/07)
Ecological and economic cost-benefit analysis of offshore wind energy Renewable Energy 34, Brian Snyder, Mark J. Kaiser (2009)

Questions

  1. Why is difficult to predict the future (financial) cost per kilowatt-hour of electricity generation by the various methods?
  2. Why is it difficult to estimate the demand for electricity in 10 years’ time?
  3. Identify the external benefits and costs of electricity generation from (a) onshore wind turbines; (b) offshore wind turbines.
  4. Is ‘willingness to pay’ a good method of establishing the value of external benefits and costs?
  5. What are the steps in a cost–benefit analysis?
  6. What types of problems are there in measuring external benefits and costs?
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Powering growth

BP has just published its latest projection of energy trends – its Energy Outlook 2030. According to the press release:

World energy growth over the next twenty years is expected to be dominated by emerging economies such as China, India, Russia and Brazil while improvements in energy efficiency measures are set to accelerate.

The following podcast from the Financial Times features a discussion of the report and the factors affecting oil prices and their relationship to economic growth

Webcast
Emerging economies seen driving energy demand Financial Times videos, John Authers and Vincent Boland (19/1/11)

Articles
Energy outlook Financial Times, Lex column (19/1/11)
BP energy outlook: main points The Telegraph (20/1/11)
High energy prices need not mean doom Sydney Morning Herald, Jeremy Warner (21/1/11)

Report
BP Energy Outlook 2030 (January 2011)

Data
Power slide The Economist: Daily Chart (19/1/11)

Questions

  1. What are the most powerful driving forces behind the demand for energy?
  2. Why does the report forecast virtually no increase in energy demand in developed countries? What assumptions are made about growth rates in OECD and non-OECD countries?
  3. What factors would lead to a substitution of sustainable energy sources for fossil fuels? What would detrmine the size of such substitution?
  4. What is the role of the price elasticity of demand for and supply of oil and the income elasticity of demand for oil in determining oil consumption in different parts of the world?
  5. Why may high energy prices not necessarily mean ‘doom’?
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Stop gassing about gas and produce it!

The UK section of the North Sea used to be sufficient to supply all of the country’s gas requirements, but now some has to be imported from countries such as Norway. With the cold weather, the usage of gas has increased to record levels and there are now concerns for future supplies, especially if the cold weather returns.

However, the National Grid has said that there isn’t a problem, despite a glitch with a Norwegian gas supply. Gas supplies from various sources have been increased to deal with this record demand. There have been calls for Britain to build more gas storage facilities and the National Grid did issue ‘gas balancing alerts’, asking power firms and other large industries to cut back on their gas consumption. There are suggestions that even if supplies of gas aren’t a problem at the moment, we could see serious shortages in a few years.

Following growing demand for gas supplies, wholesale prices rose, but they did fall again when supplies were increased. Prices of household bills could be affected in the future, but for now, it’s too soon to tell. However, rising prices could spell further trouble for ours and other economies suffering from extreme weather on top of a financial crisis. Economic recovery could be put in jeopardy.

This fear of gas shortages and security of supply has led environmental and business groups to argue that Britain needs to diversify its energy supplies and become less dependent on foreign exports. This issue fits in with the latest developments in new investment in wind turbines.

Who knew that something as beautiful as snow could cause so much trouble and provide so much economic analysis!

National Grid warns of UK gas shortage Guardian, David Teather (5/1/10)
Is the United Kingdom facing a natural gas shortage The Oil Drum (9/1/10)
Wind farms: Generating power and jobs? BBC News (8/1/10)
Gas rationing in -22C Britain increases fears of energy crisis Mail Online, Martina Lees (8/1/10)
Gas usage hits new high in UK cold snap BBC News (8/1/10)
Energy fears over gas and kerosene shortages Scotsman (6/1/10)
Gas shortages highlights firms’ exposure to energy security risks Business Green, Tom Young (8/1/10)
Uh-oh: the return of $3 gas CNN Money, Paul R La Monica (7/1/10)
Natural gas prices seen rising with winter shortages Global Times, Chen Xiaomin (4/1/10)
Gas demand hits record on Thursday Reuters (8/1/10)

Gas demand in UK hits another highBBC News, Hugh Pym (7/1/10)

Questions

  1. Illustrate the effects in the gas market of increasing demand and the resulting shortages. Then show the effects of increasing the supplies of gas. How is equilibrium achieved when there is a shortage in the market?
  2. Why did energy prices increase and then fall?
  3. To what extent should the government have been able to forecast this higher demand? Should better contingency plans have been in place?
  4. The article from CNN Money looks at the effect of rising prices of oil and energy and how this is likely to affect consumer spending. Why could rising prices of these commodities adversely affect economic recovery?
  5. What is an ‘interruptible contract’ and how useful have they been in dealing with these gas shortages?
  6. Why has this gas shortage presented environmental groups with an opportunity to promote renewable energy supplies? Think about economic interdependence.
  7. What alternatives are there to our current gas sources? Are they realistic alternatives?