UK net zero transition to cost £1 trillion, chancellor claims

Image: HMT.

Image: HMT.

The UK’s transition towards a net zero economy will cost the country more than £1 trillion, 40% more than the Committee on Climate Change has suggested, HM Treasury has claimed.

The Financial Times  has reported that a letter from chancellor Philip Hammond to Prime Minister Theresa May last month claimed that the true cost of setting a net zero emissions target by 2050 would be north of £1 trillion.

The letter, since published by FT journalist Jim Pickard, addressed to the Prime Minister and dated from last month, argues that while the chancellor agrees that government must legislate for a net zero target “as soon as possible”, it is essential that it “fully considers the implications of adopting a more ambitious target” before enshrining it in law.

The letter goes on to question the Committee on Climate Change’s forecasted cost of attaining net zero emissions by 2050, stating that the £50 billion per year estimate the CCC put forward last month is 40% lower than the Department for Business, Energy and Industrial Strategy’s estimate which stands at £70 billion per year.

Without any formal clarification on the issue, it remains to be seen how the government’s own analysis differs so markedly from the CCC’s.

The Committee’s analysis was exhaustively detailed in a 256-page report last month, examining the impacts establishing such a target would have throughout the economy, but limiting costs to within 1-2% of GDP.

Within the three-page letter, Hammond suggests that while his department’s analysis places costs within the CCC’s envelope of 1-2% of GDP, it forecasts them to be significantly higher.

It also stresses the level of disruption establishing a net zero target would cause to areas such as housing, industry and transport, arguing that “significant changes” to agricultural practices would be required.

The chancellor concludes with a recommendation that the PM accept the Committee’s target, writing: “The UK has shown excellent leadership on climate change over the past decade and must continue to do so. However, in order for this radical transformation to be successful, it is essential that we better understand the implications of setting a target that will shape our economy and society for a generation, before it is set in law.”

Publication of the letter follows what has been a trepidatious week for the issue of decarbonisation in Westminster.

On Tuesday it was claimed that cabinet ministers had agreed to use flexibilities to meet future carbon budgets, an issue which has sparked strong condemnation from the CCC in the past, followed a day later by news that the Treasury select committee was to launch an inquiry into the department’s decarbonisation efforts.

It also took centre stage during yesterday’s Prime Minister’s Questions when shadow energy secretary Rebecca Long Bailey, standing in for opposition leader Jeremy Corbyn, clashed with David Lidington over the issue.

Long Bailey initially questioned whether or not the Prime Minister had raised environmental issues with repeated climate change denier and US President Donald Trump during his state visit this week, before moving on to ask why the government is off track in meeting its own, legally-binding commitments.

Lidington’s reply, that the government is “not off track” in meeting respective targets, prompted a strong rebuke from the shadow energy secretary, who raised reports from earlier this week that the government is to use flexibilities to “fiddle” with forthcoming carbon budgets and scrutinised its record on solar PV, with domestic installs having fallen 94% month-on-month following the closure of the feed-in tariff.

“How much authority do this government actually have on this issue? Three current cabinet ministers have denied the scientific consensus on climate change, and several of those standing in the Tory leadership contest have close links with organisations and individuals promoting climate denial. It does not bode well,” she said.

Lidington’s assertion that the government remains on track to meet its carbon budgets is also only strictly true when referring to the third carbon budget. In respect of the fourth and fifth carbon budgets, covering the period from 2022 - 2032, the gap to meeting those budgets is actually widening by the government’s own assertion.

The government is also still yet to confirm publicly whether or not it has taken the decision under Section 17 of the Climate Change Act to use previous over-performance in emissions reduction to offset predicted underperformance within forthcoming budgets, a move which the Committee on Climate Change has repeatedly warned against.


Investment heads towards renewables and infrastructure

Foresight Group has launched a new fund to invest directly into publicly listed companies that own and operate infrastructure or renewable energy assets globally.  It is targeting a total return of more than 3% per annum above the rate of UK inflation (measured by UK CPI).

The company said that traditional sources of income were facing structural issues, and renewable energy and infrastructure had become  increasingly attractive asset classes and a mainstay of investing for diversification. These assets are often characterised by stable, project-level cashflows and deliver predictable income with lower volatility, low correlated to traditional asset classes.

Ahead of the Fund’s launch, Foresight  research with 144 advisers  revealed a strong appetite for global infrastructure amidst fears of a sustained downturn, Brexit uncertainty and market instability. Some 66% of advisers expect to see clients’ allocations to global infrastructure increase over the next three years - more than double the number since 2017 when just 32% of advisers predicted it would become more popular.  The Fund will invest in companies that own and operate assets ranging from solar power and geothermal generation plants to medical office buildings and storage facilities.


Barclays pledges to source 100% renewable electricity by 2030

6 June 2019, source, Sarah George at the edie newsroom

Transatlantic banking giant Barclays has pledged to source 100% renewable electricity by 2030, with an interim goal of 90% by 2025.

More than 170 companies have set 100% renewable targets under RE100 to date

More than 170 companies have set 100% renewable targets under RE100 to date

Given that the majority of its carbon footprint is currently accounted for by Scope 1 (direct) and Scope 2 (power-related) emissions, Barclays claims that the move will reduce its absolute global emissions by 80% by 2025.

In order to reach the new target, the company will sign a series of power purchase agreements (PPAs) with energy suppliers that own or operate external wind and solar projects across its two main markets – the UK and the US. These two markets account for 70% of the company’s total energy consumption.

Barclays has made the new commitment after joining The Climate Group’s RE100 initiative, which has garnered the support of more than 170 companies to date. This week has also seen Australian insurance major QBE join the RE100, setting its 100% renewable electricity target for 2025.

“Banks have broad environmental and social impact – both through our own operational footprint and through the ways that we mobilise capital, advise clients and develop products,” Barclays’ global head of sustainability and citizenship Alsa Palanza said.

“Joining RE100 and committing to sourcing 100% of our electricity needs from renewable sources enables us to minimise our direct carbon emissions while we continue to work with our clients to help facilitate the global transition to less carbon-intensive sources of energy”.

According to the latest RE100 progress report, Barclays is far from alone in choosing to use PPAs to decarbonise its electricity mix. In 2017, 16% of the renewable electricity consumed by RE100 members was sourced through PPAs.

(Green) power surges

As of November 2018, 155 companies across 140 global markets had joined the RE100 initiative, with the group collectively sourcing 188TWh of clean power annually. RE100 members leverage a combined annual revenue of $4.5trn or 5% of global GDP, making the group a powerful source of financing for clean energy infrastructure.

The likes of 3MMerlin Entertainments and Vodafone are among the newest additions to the scheme, with The Climate Group aiming for 500 RE100 members by 2020. Earlier this month, Landsec and the Royal Bank of Scotland (RBS) became the first two companies to join all three of The Climate Group’s business initiatives – RE100, EV100 and EP100, the latter of which focuses on energy efficiency.


Latest greenhouse gas emissions data shows steep rises in CO2 for seventh year

5 June 2019, source edie newsroom 

The concentration of carbon dioxide in the atmosphere has increased by the second highest annual rise in the past six decades, according to new data.

Readings from Hawaii observatory bring the threshold of 450ppm closer sooner than had been anticipated (stock photo)

Readings from Hawaii observatory bring the threshold of 450ppm closer sooner than had been anticipated (stock photo)

Atmospheric concentrations of the greenhouse gas were 414.8 parts per million in May, which was 3.5ppm higher than the same time last year, according to readings from the Mauna Loa observatory in Hawaii, where carbon dioxide has been monitored continuously since 1958.

Scientists have warned for more than a decade that concentrations of more than 450ppm risk triggering extreme weather events and temperature rises as high as 2C, beyond which the effects of global heating are likely to become catastrophic and irreversible.

May is the most significant month for global carbon dioxide concentrations because it is the peak value for the year, before the growth of vegetation in the northern hemisphere starts to absorb the gas from the air. The seasonal peak and fall can be seen in the Keeling curve, named after Charles Keeling, who started the observations on Mauna Loa because of its isolation in the Pacific Ocean.

This is the seventh consecutive year in which steep increases in ppm have been recorded, well above the previous average, and the fifth year since the 400ppm threshold was breached in 2014. In 2016, the highest annual jump in the series so far was recorded, from 404.1 in 2015 to 407.66 in 2016.

As recently as the 1990s, the average annual growth rate was about 1.5ppm, but in the past decade that has accelerated to 2.2ppm, and is now even higher. This brings the threshold of 450ppm closer sooner than had been anticipated. Concentrations of the gas have increased every year, reflecting our burning of fossil fuels.

Ralph Keeling of the Scripps Institute, and the son of Charles, said: “The CO2 growth rate is still very high – the increase from last May was well above the average for the past decade.” He pointed to the mild El Niño conditions experienced this year as a possible factor.

Tuesday’s findings come from Mauna Loa and the US National Oceanic and Atmospheric Administration, which has also made complementary independent measurements of greenhouse gas concentrations since the 1970s. NOAA’s Barrow observatory on Alaska’s North Slope showed an average of 417.4ppm over the period, but the Arctic typically has higher CO2 readings than the Mauna Loa series.

Pieter Tans, a senior scientist at NOAA, said: “It is critically important to have these accurate long-term measurements of CO2 in order to understand how quickly fossil fuels are changing our climate. These are measurements of the real atmosphere, and do not depend on any models, but they help us verify climate model projections, which if anything have underestimated the rapid pace of climate change being observed.”

Fiona Harvey

This article first appeared on the Guardian
edie is part of the Guardian Environment Network

French interconnector trip triggers flexibility providers into action

Image: Getty.

Image: Getty.

Flexibility providers sprang into action late last week after Britain’s interconnector suffered a trip, causing around 1GW of capacity to fall off the system.

Last Friday the interconnector between Britain and France suffered a trip, causing its output to half in moments. Around 1GW of generation capacity effectively fell off the grid, causing fluctuations in the frequency of the grid.

A graph illustrating the interconnector's trip and the subsequent drop in capacity. Image: Limejump.

A graph illustrating the interconnector's trip and the subsequent drop in capacity. Image: Limejump.

Grid frequency fell to 49.63Hz, prompting National Grid ESO to call upon its portfolio of frequency response assets to back the system up.

While the frequency was comfortably within its 49.5-50.5Hz limit - the System Operator has a normal operating target of 49.8Hz - and there was no risk of the fault triggering a stress event, flexibility providers were called into action while the trip was offset.

The trip's effect on grid frequency, which prompted frequency response providers to kick in. Image: Limejump.

The trip's effect on grid frequency, which prompted frequency response providers to kick in. Image: Limejump.

Energy aggregator Limejump said dynamic frequency response assets, predominantly batteries, were the first to respond, and were called upon to export “harder and harder” in response to the shift in frequency. Static frequency response assets such as diesel generators were next.

In total, National Grid instructed a range of assets to respond to the trip, highlighting the role flexibility providers have carved out for themselves in helping maintain a stable grid.

A spokesperson for Limejump confirmed that its batteries had been called upon throughout, but stressed the impact on pricing within the balancing mechanism was minimal.

“BM pricing doesn't react immediately as you submit prices one hour in advance. However Limejump assets were called by the control room at better prices than they would have received if there was no event.

“There would be an uplift in prices as 1GW of extra power [was] needed to be procured, but… on this occasion, we didn't see an immense price surge, but events like this can have that effect and are happening more frequently with the increasingly volatile energy market,” the spokesperson added.

Fellow aggregator Flexitricity was also called into action, and the company’s founder Dr Alastair Martin said the delivery of assets was “perfect” in response.

“Sudden failures of the French interconnector are not uncommon – in a bad year it might happen ten times. The level of frequency deviation, while a little on the high side for this size of loss, is not abnormal.

“Flexitricity has responded to these incidents before and stand ready to do so again. Having a varied portfolio of assets to use allows us to be prepared for fluctuations in energy demands and maximise value for our clients.”

The interconnector’s trip just happened to occur at a time when the UK grid was in the midst of a coal-free fortnight, a spell in which surging wind generation helped shunt coal off the grid, but also caused significant volatility in the country’s system price for energy.


Visualizing EV Sales Around the World

Published March 16, 2019 By 

It took five years to sell the first million electric cars. In 2018, it took only six months.

The Tesla Model 3 also passed a significant milestone in 2018, becoming the first electric vehicle (EV) to crack the 100,000 sales mark in a single year. The Nissan LEAF and BAIC EC-Series are both likely to surpass the 100,000 this year as well.

Although the electric vehicle market didn’t grow as fast as some experts initially projected, it appears that EV sales are finally hitting their stride around the world. Below are the countries where electric vehicles are a biggest part of the sales mix.

Electric vehicle sales

The EV Capital of the World

Norway, after amassing a fortune through oil and gas extraction, made the conscious decision to create incentives for its citizens to purchase electric vehicles. As a result, the country is the undisputed leader in EV adoption.

In 2018, a one-third of all passenger vehicles were fully electric, and that percentage is only expected to increase in the near future. The Norwegian government has even set the ambitious target of requiring all new cars to be zero-emission by 2025.

That enthusiasm for EVs is spilling over to other countries in the region, which are also seeing a high percentage of EV sales. However, the five countries in which EVs are the most popular – Norway, Iceland, Sweden, Netherlands, and Finland – only account for 0.5% of the world’s population. For EV adoption to make any real impact on global emissions, drivers in high-growth/high–population countries will need to opt for electric powered vehicles. (Of course power grids will need to get greener as well, but that’s another topic.)

China’s Supercharged Impact

One large economy that is embracing plug-in vehicles is China.

The country leads the world in electric vehicle sales, with over a million new vehicles hitting the roads in 2018. Last year, more EVs were sold in Shenzhen and Shanghai than any country in the world, with the exception of the United States.

China also leads the world in another important metric – charging stations. Not only does China have the highest volume of chargers, many of them allow drivers to charge up faster.

Electric vehicle charging stations

Accelerating from the Slow Lane

In the United States, electric vehicle sales are rising, but they still tend to be highly concentrated in specific areas. In around half of states, EVs account for fewer than 1% of vehicle sales. On the other hand, California is approaching the 10% mark, a significant milestone for the most populous state.

Nationally, EV sales increased throughout 2018, with December registering nearly double the sales volume of the same month in 2017. Part of this surge in sales is driven by the Tesla’s Model 3, which led the market in the last quarter of 2018.

U.S. Electric vehicle sales

North of the border, in Canada, the situation is similar. EV sales are increasing, but not fast enough to meet targets set by the government. Canada aimed to have half a million EVs on the road by 2018, but missed that target by around 400,000 vehicles.

The big question now is whether the recent surge in sales is a temporary trend driven by government subsidies and showmanship of Elon Musk, or whether EVs are now becoming a mainstream option for drivers around the world.


Negative pricing, flexibility and the power sector’s evolution

Image: National Grid.

Image: National Grid.

May 2019 could well be the month that the UK’s energy transition took hold. It was good news story after good news story, unless, of course, you owned a coal-fired power plant.

Or, indeed, were an energy trader hoping for a quiet bank holiday weekend.

Over the last bank holiday weekend, an “extraordinary turn of events” saw the UK’s power price turn negative for nine consecutive hours, a new record run for the country’s wholesale market. Demand for power slipped to 2GW below forecasts which, when combined with surging wind generation, saw prices fall to as low as -£71.26/MWh. In total, one 24-hour period saw 11 hours of negative power pricing, and the average system price for power on Sunday 26 May stood at -£12.16/MWh.

Put bluntly, if you owned a power station on that day without any guaranteed pricing arrangement, you stood to lose money.

Those events only served to underpin power price trends for month in total. Rarely was the wholesale price above £50/MWh and the average price throughout May 2019 stood at £39.47/MWh, according to Drax’s Electric Insights tool. For comparison, May 2018’s average system price was almost exactly £10 more expensive at £49.34/MWh, as was May 2017’s at £49.24/MWh.

In years to come, the energy sector may fondly remember May 2019 as the month coal fell off the grid, but in reality the level of change has been far starker, and the demands placed on grid operators and generators alike have evolved.

Negative pricing is not a new phenomena. A concerted spell of negative prices has already impacted the UK this year, most notably in March when a similar turn of events to those experienced last weekend sent prices into the red for six hours. Germany, with its higher penetration of renewables, witnessed some 134 hours of negative pricing in 2018 alone.

But what, perhaps, is new is the embracing of negative pricing as an opportunity, rather than an unfortunate side-effect of the clean energy transition.

Traders are having to be more hands on than ever before. Last weekend saw prices on energy exchanges go even lower than the -£71.26/MWh system price as traders feared that the pricing trend would continue downwards. And as supply continued to outstrip demand, National Grid was forced into action, ramping up its balancing activity. Most notably, the Thanet offshore wind farm off the south Kent coast received an instruction to turn down at -£135/MWh during the midst of the negative stretch.

In total, National Grid paid out some £6.6 million for grid balancing on Sunday 26 May, essentially 22-times the £300,000 it’d paid out the day before.

Yes, these numbers have been driven somewhat by freak events. Even the most forward-thinking of energy professionals have described them as unprecedented. But as the transition accelerates and our relationship with demand and supply patterns changes, so too will the markets that underpin it. Research and analysis firm Cornwall Insight has forecasted that periods of negative imbalance pricing could spiral over the next 15 years, becoming so prevalent that more than 10% of half-hourly settlement periods could produce negative prices by 2034.

This isn’t to say that networks are at any great risk - National Grid has long since argued it has the right suite of tools to manage these kind of instances, and is now confident it will be capable of operating a net zero electricity grid as early as 2025 - but it does throw up some interesting debates for the future of low carbon power in the UK.

A monthly average wholesale price south of £40/MWh might be good news for consumers, but it won’t exactly be welcomed by developers of subsidy-free renewable plants. Any entity looking to finance a utility-scale solar farm sans subsidy will tell you merchant risk is probably the biggest remaining obstacle to bringing a project to fruition, and trends for falling power prices will only make that hurdle harder to jump. Renewables in that sense are at risk of cannibalising themselves, fears which have been raised by the renewables sector for some time now. In that sense, the sector will be watching the ongoing Contracts for Difference auction, during which offshore wind prices are expected to reach historic lows, with great interest.

But at the other end of the spectrum instances like these throw greater weight behind the argument that the power sector no longer truly values generation, but flexibility. The ability to ramp your demand or output up or down and respond to what the grid truly needs, rather than just churn out power and turn off occasionally, is where the market is unquestionably headed.

Last weekend provides a snapshot of that. If you owned a large-scale battery, it was a big bank holiday weekend indeed. If you charged between the hours of 4pm and 5pm when prices were around -£60/MWh and discharged just six hours later when prices were £40/MWh, you were effectively paid some £100 per unit. That’s Hinkley Point C money.

Speaking to Current± last week, aggregator Limejump said that any smart trading strategy stood to deliver great revenue during periods of southward energy prices like last week. Battery storage operators were “definitely happy recipients”, the company said.

But chuck more battery storage and other flexible generators onto the grid, and the system stands to regulate itself. Negative pricing shouldn’t be seen as a problem in need of a solution, but instead an indication that we aren’t going flexible fast enough.


Radical action by 2030' needed to tackle Scotland's climate challenges

3 June 2019, source edie newsroom

The head of Scotland's nature conservation agency has warned the country faces an "apocalyse" of flooded towns, dead forests and polluted rivers unless urgent action is taken to cut CO2 emissions.

Francesca Osowska warned of abandoned rural areas

Francesca Osowska warned of abandoned rural areas

Francesca Osowska, chief executive of Scottish Natural Heritage, said the world had barely a decade to shift to a low carbon economy before the effects of global heating were irreversible and catastrophic. She said there were very clear threats facing Scotland, and by implication the rest of the UK, unless radical action was taken by 2030.

“Imagine an apocalypse – polluted waters; drained and eroding peatlands; coastal towns and villages deserted in the wake of rising sea level and coastal erosion; massive areas of forestry afflicted by disease; a dearth of people in rural areas; and no birdsong,” she told the Royal Society of Edinburgh on Thursday evening.

“All of this is possible, and there are parts of the world we can point to where inaction has given rise to one or more of these nightmare landscapes.”

Osowska said current levels of greenhouse gases in the atmosphere meant global heating of 1.5C was almost inevitable, requiring adaptation in the way people lived.

To prevent even more heating, there had to be sweeping changes to the way land and seas were exploited for food, towards much more sustainable food production; a marked shift towards sustainable transport systems; increased green spaces in urban areas; and significant reform of the economy, to promote greater equality.

Likening the relationship between the Earth’s climate and its biodiversity to marriage, she said there had been major shifts in climate and nature before. “But the rate of the current shift is both unprecedented and phenomenal,” she said.

“In the space of geological seconds – possibly milliseconds – we have crashed the marriage. Our actions threaten to disrupt the harmony that has existed over the last 10,000-15,000 years. We are entering a climate which may not be capable of sustaining the planet’s billions of people and nature as we know it.”

She cited goals set out in a recent report from the Committee on Climate Change (CCC), a government body that advises the UK and devolved governments on climate policy, which has called on the UK to adopt a target of net zero emissions by 2050. The UK government has so far failed to endorse that.

That required converting 20% of agricultural land to forestry, biomass for energy, or expanding carbon-rich peatlands; a switch to electrically powered transport; increasing renewable energy production by 50%; and heavy investment in carbon capture and storage, to pipe the CO2 still being produced underground.

The CCC said Scotland could achieve net zero – a figure that allows some CO2 emissions as long as that carbon is absorbed by other measures – by 2045 because it has greater scope for new forestry and renewable energy production.

Nicola Sturgeon, Scotland’s first minister, has adopted that goal but her government has yet to set out how it will be achieved. MSPs at Holyrood are resisting proposals for mandatory 20mph zones in urban areas and taxing workplace parking to help cut transport emissions.


All the World’s Carbon Emissions in One Chart

May 31, 2019  By 
global carbon emissions

All the World’s Carbon Emissions in One Chart

Two degrees Celsius may not seem like much, but on our planet, it could be the difference between thriving life and a disastrous climate.

Over two centuries of burning fossil fuels have added up, and global decision-makers and business leaders are focusing in on carbon emissions as a key issue.

Emissions by Country

This week’s chart uses the most recent data from Global Carbon Atlas to demonstrate where most of the world’s CO₂ emissions come from, sorted by country.

RankCountryEmissions in 2017 (MtCO₂)% of Global Emissions
🌐 Rest of World10,02827.7%
#1🇨🇳 China9,83927.2%
#2🇺🇸 United States5,26914.6%
#3🇮🇳 India2,4676.8%
#4🇷🇺 Russia1,6934.7%
#5🇯🇵 Japan1,2053.3%
#6🇩🇪 Germany7992.2%
#7🇮🇷 Iran6721.9%
#8🇸🇦 Saudi Arabia6351.8%
#9🇰🇷 South Korea6161.7%
#10🇨🇦 Canada5731.6%
#11🇲🇽 Mexico4901.4%
#12🇮🇩 Indonesia4871.3%
#13🇧🇷 Brazil4761.3%
#14🇿🇦 South Africa4561.3%
#15🇹🇷 Turkey4481.2%
🌐 Top 1526,12572.2%

In terms of absolute emissions, the heavy hitters are immediately obvious. Large economies such as China, the United States, and India alone account for almost half the world’s emissions. Zoom out a little further, and it’s even clearer that just a handful of countries are responsible for the majority of emissions.

Of course, absolute emissions don’t tell the full story. The world is home to over 7.5 billion people, but they aren’t distributed evenly across the globe. How do these carbon emissions shake out on a per capita basis?

Here are the 20 countries with the highest emissions per capita:

Emissions per capita
Source: Global Carbon Atlas. Note: We’ve only included places with a population above one million, which excludes islands and areas such as Curaçao, Brunei, Luxembourg, Iceland, Greenland, and Bermuda.

Out of the original 30 countries in the main visualization, six countries show up again as top CO₂ emitters when adjusted for population count: Saudi Arabia, the United States, Canada, South Korea, Russia, and Germany.

The CO₂ Conundrum

We know that rapid urbanization and industrialization have had an impact on carbon emissions entering the atmosphere, but at what rate?

Climate data scientist Neil Kaye answers the question from a different perspective, by mapping what percentage of emissions have been created during your lifetime since the Industrial Revolution:

Your Age% of Total Global Emissions
15 years oldYou've been alive for more than 30% of emissions
30 years oldYou've been alive for more than 50% of emissions
85 years oldYou've been alive for more than 90% of emissions

Put another way, the running total of emissions is growing at an accelerating rate. This is best seen in the dramatic shortening between the time periods taken for 400 billion tonnes of CO₂ to enter the atmosphere:

  • First period: 217 years (1751 to 1967)
  • Second period: 23 years (1968 to 1990)
  • Third period: 16 years (1991 to 2006)
  • Fourth period: 11 years (2007 to 2018)

In order to be a decarbonised economy by 2050, we have to bend the (emissions) curve by 2020… Not only is it urgent and necessary, but actually we are very nicely on our way to achieving it.

— Christiana Figueres, Convenor of Mission 2020


Has National Grid put another nail in gas’s coffin?

Who would be a gas generator? Despite the ejection of coal plants from the generation stack (and good riddance, I say), gas has got less and less of the wholesale energy supply market. It has been squeezed out between our growing renewables portfolio and the floor provided by nuclear, and it is increasingly missing out on lucrative high-priced periods because of the addition of gas engines and storage.

The situation has not been fatal, although it has certainly prompted a few closures, pushed along by the suspension of the Capacity Market as well as other uncertainties like the cost of carbon or of transporting gas.

Gas operators have survived by finding a new niche as the industry’s ‘go-to guys’. Balancing? Frequency response? Black start? Inertia? Gas operators have looked at their large rotating machinery and said “we can do that”, making scarcer energy revenues just a part of the mix of income.

What must have come as a very unwelcome shock is the news from National Grid that it wants to be able to operate the grid with all those services from other sources – renewables, storage, demand side response etc – at times when demand is covered by low-carbon generation. The newly independent Electricity System Operator has set out a road map to develop the necessary markets for ancillary services and it is aims to reach that goal by 2025.

What’s the problem? For all that gas plant have done to talk up the flexibility they can bring to the system, the fact is that they are not best placed to do it. They have done an excellent job of running plant as flexible units, even though they were designed to operate best at baseload, and gas turbine manufacturers have responded with upgrades that will allow them to be operated more flexibly – Uniper will be carrying out such an upgrade at its Enfield plant shortly. But all that cranking up and down places extra stress on the plant and ages it faster – and a battery, or a wind farm feathering its blades, can ramp up and down much faster. In open markets for ancillary services, gas will often be beaten.

Of course, that applies only when the wind blows or the sun shines. At other times – at the moment – gas will have far less competition.

Where does that leave gas? Lobbying against interconnectors, being queasily hopeful that nuclear reaches the end of its life (and perhaps that new nuclear is further delayed), fighting it out for what’s left of those revenue streams and hoping for a still, cold winter. It’s a hard model to build a business on – and it makes a Capacity Market that pays those plant to stay on the system throughout long periods of inaction even more important.

Who would be a gas generator? Fewer and fewer companies, is my guess.