Russian Gas

Sam Flemming has published an article in the Daily Mail brilliantly describing the problems that the UK energy sector faces.

Yes, it's the Daily Mail and they are out there just to scare people, but it is true - there is good reason to be concerned.

Jeremy Warner has also published an article with a slightly different, but also very valid, point of view.

The final article I read was from the BBC - EU officials say that even during the Cold War the Russian gas supply was stable. So was the FTSE.

Ukrainian gas problems

Once again Ukraine has reduced gas supplies to western Europe. Yawn.

I was chatting to a colleague of mine about this - after all it's a major energy security headache, and he suggested that it wasn't a reason to build coal. Rather, he suggested, we should invest in more gas storage facilities.

I suppose that he is right, but right now it's a bit concerning.

The BBC caries a bit more news - A statement on Naftogaz's website lists nine countries, including Germany, Poland, and Hungary which, it says, will receive reduced supplies - going to Naftogaz's website reveals the list includes Moldova, Bulgaria, Romania, Greece, Turkey, Poland, Hungary, Slovakia, Germany.

So not us, yet.

It might though - what's to stop these countries (or those further down the pipe) reducing their flow on to us? We're a net importer of gas, the north sea just doesn't cut the mustard any more.

Looks like we'd better start thinking seriously about more gas storage, or ways to reduce gas dependency.

Blackouts

Ed Milliband yesterday refused to rule out a blanket ban on coal power stations.

There's good reasons for this - when assessed against the conditions imposed upon electricity generators by the government.

Probably the largest though is security of supply. Yes - I don't want global warming, and yes - if it happens - it will be hugely expensive.
Can you imagine how expensive it will be if we don't have electricity?

The national grid yesterday warned of regular rolling blackouts. This is no myth - everyone is talking about the energy gap.

Just a quick graphic to show how large the problem is (taken from the RWE factbook (it's easy to find on the web).

The blue shows how much electricity is being generated (read it with the vertical axis on the left) whilst the grey line shows how much is spare (used when plants are offline being serviced, or when peak demand rises above long term projections). That can be read with the vertical axis on the right.
As you can see we'll run out of electricity just in time for the opening ceremony of the 2012 olympic games.

Ofcourse this is with no new build - and remember that renewables can be expected to fill some of this gap - but I believe the timescales involved (when compared against the timescales for windpower grid connections) mean that coal and nuclear (on existing sites with current grid connections) must play a role - right Mr. Miliband?

Tripartite electricity production

There's more to generating electricity than just wiring a bicycle up to a washing machine.

With the scale required to generate the shear volume of electricity this country needs we (as a nation) need large, expensive, power stations. That means we need good ideas about how to invest the large sums required in the kit to ensure that we get the right stuff.
After all - once it's there no one is going to want to pay to change it for many, many years.

That's why the governments requirements for electricity generation (placed upon the generating companies) are so important. They are:

Ending fuel poverty

Ensuring security of supply

Complying with climate change requirements
......within a competitive market.

That's three requirements superimposed upon the need for a competitive market.

I've just read an article in the Independent about the need for the UK to have a joined up energy policy. Couldn't agree with it more.

Interestingly they came to same conclusion as I did (perhaps I wouldn't have linked to them if they didn't?). We need Kingsnorth - obviously with conditions - but we need it badly.

Energy security

What price should be put on energy security? I would most happily put quite a large price!

Others disagree - the trouble is they matter - they're the people who sign off the infrastructure.

The UK does have very little gas storage. It's very expensive - gas has to essentially be contained in old gas fields and is much more expensive than oil (which requires steel tanks) or coal (which requires a big field).

Jim Watson is arguing today in the guardian that we need to increase our gas storage in this country - and I think he's right. Energy security is an issue and needs to be looked at.

I disagree, however, that this would solve the energy security problem. There is more to energy security than just having power - if it's too expensive for me to buy then it's exactly the same to me as not having any.
Diversification can solve this. If the price of gas rises greatly less gas is used in electrical generation, more coal is used. The opposite happens when the price of gas falls.
It keeps my electrical bills down.

The final argument is a limit on electrical generation emissions of 500g/KWh. This is designed simply to ban coal - it serves no other purpose.
I would also ask what the point is in this cap - after all we operate in a fixed carbon market at the moment where a scalable cap already exists.

I don't understand the difference. Why is this not merely an opportunity for people to flex their green credentials?