Wednesday 24 September 2014

TILOS project - Horizon 2020

Very proud to be part of this ambitious and promising research bid with a truly unrivalled consortium! 






Monday 22 September 2014

A second dash for gas in the UK?

Most people are aware of the UK's "dash for gas" of the 90s. While controversial, mainly with the loss of jobs in the broader coal sector it has offered the country some reasonable benefits; namely in reducing electricity sector emissions and modernising the electricity sector overall. Some may even go as far to argue that it "liberated" the country from a heavily unionised mining sector that was deemed to be a serious threat to power supply security.

More recently, there has been a somewhat global interest for a new dash for gas. That has been mainly fuelled by the US success in accessing previously considered as unconventional gas reserves. What is known to most, as fracking (or hydraulic fracturing and horizontal drilling technologies) has been credited for lowering gas prices in the US, making the country the largest gas producer and sparking hopes of complete US energy independence in the foreseeable future. Sounds too good?

In the UK, the Coalition Government has been keen to revive the country's dash for gas era and at the same time replicate at least some of the successes of the US experience with shale gas. In this post I will just list a few of the related policies that demonstrate the Government's gas bias.

Shale gas
It does not take much to understand that this Government really wants to promote shale gas in the UK. Chancellor George Osborne puts together the "most attractive tax breaks in the world" for the shale gas industry, while cutting subsidies for the most promising of renewables. If case you had any, David Cameron should have left no doubt about the Government's intentions when he took the case for shale gas on his shoulders. Since the UK's population density was seen as one of the main obstacles in developing shale gas the Government decided to find a solution. How? by allowing drilling companies right of access underneath your house, for as a long as drilling is at least 300m deep. A target easily attainable by the shale gas industry.

You may have thought that's about enough support for the shale gas industry, but the UK Government did not think so. Imagine (and it's not hard to) that some shale gas drilling operations fail and causes widespread environmental pollution. It has happened in the US and it can happen in the UK. The small drilling companies will easily go bust and then it's going to be the British taxpayer paying for the environmental disasters. This is not a very good incentive for drilling companies to improve their safety record me thinks... Discussing the shale gas case is not the focus of this post; that is a topic I will return to quite soon. However, the Government's support for shale gas is quite clear.

Gas-fired power stations
It is true that as far as fossil fuel-fired power generation goes, Combined Cycle Gas Turbines (CCGT) are the most environmentally friendly option we have. It can be argued that we also have Carbon Capture and Sequestration (CCS), but its commercialisation may be decades away. In the meanwhile the UK power sector requires £110bn of investment to substitute its old coal and nuclear power stations.

The Government's preference is, again, with gas. The expectation is that new power stations will be allowed to emit up to 450gCO2/kWh; a target which is easily achievable by CCGT systems. Any gas power stations will be exempt from potential new targets until 2045. In the meanwhile, planning for decarbonising the UK economy by 80% until 2050 show that the electricity sector should be largely decarbonised by 2030. All that when reducing subsidies for onshore wind and solar energy. The result will be to lock-in the UK economy in expensive, gas-fired power generation and gas imports.  

Capacity market
Faced with a capacity crunch, the Government decided to create a capacity market.This market should ideally incentivise power stations to meet peak-power demand when needed. Because of their flexibility, a significant segment of this market will be met by open cycle gas turbines (most often these are different than the CCGT power stations). However, the demand-side response (DSR) systems can also play a very important role. Their contribution is well recognised and used in the US and elsewhere. Demand-side response systems offer an aggregated service to the grid which means that they interrupt certain eligible loads (consumptions) when the grid cannot cope with the demand. This service has widespread environment and financial benefits and is a first steps towards a smart-grid.

Even though the Government decided to allow DSR providers to enter the capacity market it also made sure to put them in a disadvantage by allowing them to bid for only one year contracts (instead of up to 15 years for gas-fired providers). As a result they are losing out in providing competitive prices and securing long-term income. It has also forced them to either take part in the capacity market now (Transitional Arrangements) or in the enduring market (from 2018 onwards).

One more way to make sure we are locked-in to an expensive and imported gas-fired future...