Showing posts from March, 2015

Energy Storage and the New EC State Aid Rules: Oops!

The new state aid rules require that electricity over 500 kW be sold to the grid. See 125. This, of course, is designed to frustrate distributed energy, which is emerging as the development that will change the whole utility industry.

But in the fine print, the new Guidelines also seriously impede energy storage. Electricity coming from energy storage that was renewable going into storage is no longer renewable coming out of storage. Definitions 1.3(19)(11). No operating support is possible if the guidelines are followed. This means that the RES producer must own his storage device to get any credit for the energy he produces and stores.

Operators owning storage devices (charged by third-parties) will not have any green support apparently since what they sell coming out of storage does not qualify for support under the guidelines.

But there is another catch, the guidelines also require that the electricity be sold to the grid to receive operating support, except for small …

Comparative Cost of Producing Energy

Here are some graphics on what it costs to produce electricity by technology. This does not count the cost of distribution, which heavily favors renewable energy that is locally produced and can be used locally without major distribution costs.

EdF is seeking a price for UK nuclear energy at 90 GB/MWhr (500 PLN) which is more than the average RES price projected under the new Polish law. Wind and PV will both be much, much lower by the time the UK opens a nuclear plant (if ever). The UK capex cost is 14 billion GB or 78 billion PLN. Both the energy price and the capex keep going up (these are from EdF in October 2014).

There is no real dispute that RES will be the cheapest energy available (especially with lower distribution costs) in the relatively near term future.

UK Illustrates How Fast RES Can Deploy(without auctions)

The UK just went from 4 percent renewable energy in 2013 to 19% in 2014. This is the pre-auction surge under their old system. But it illustrrates that RES projects can be rapidly developed in a system that is stable (aid to co-firing in the UK is restricted).

Wind and PV have development schedules that are quite short compared to other electricity production. Auctions will delay projects, since they cannot be put online as they are prepared. The dilemma of auctions is always that strict penalties deter bids and lower pre-qualificatgion requirements and lower penalties encourage bidders to under-bid and under-build. See EcoFys (2014).

An additional problem that I have suggested (I never saw this mentioned by anyone else) is that projects to be eligible  to bid must have all of the legal means of producing energy tied up in legal agreements and a substantial percent of these will lose the auction or not even be bid in the end. So, using the European Commission suggestion that twice the…

Victories for Biogas in Poland?

Checking out the law in detail to ask questions to URE..... there appear to be some good provisions for biogas in Poland if they are implemented intelligently.

The scope of biogas is changed to include all of the biomass allowed by the EU definition in the RES Directive. A change we (the Polish Biogas Association) urged them to make.

There is a question of how the reference price will be set for this category (other biogas), but they will have to be guided by cost of production under state aid rules. The cost is the same or higher than agricultural plants.

We would like additives like glycerin and enzymes added to the possible feed-stocks allowed by the law with a 2 % volumetric limit. This reflects the same rule the European Commission worked on for the End-of-Waste criteria for biowaste.

The 4000 hour "basket" [a set-aside for projects producing over 4000 MWhr per 1  MW of capacity] should allow biogas plants to win support up to the reference price level. So the big quest…

United States Renewable Energy Continues to Surge: Using the System that Poland Wants to Abandon

About 30 states in the United States use a "residential portfolio system for renewable energy, a quota system set by the public utility commission in the state which requires a fixed percent renewable electricity. This is sustained by certificates, as in Poland. Unlike Poland, co-firing biomass with coal is not traditionally popular. The United States has reached 14% renewable energy remarkably in a huge market when conventional electricity is much cheaper than in Europe.

The pace of RES growth continues in 2015. The U.S. Energy Information Agency estimates that renewables will contribute to a majority of the electricity production growth in 2015.

Even low natural gas prices have not affected RES growth. The major loser has been coal-fired plants. The lesson of RES growth without a significant impact on consumer prices (Livermore National Laboratory) has been generally lost to Europe, Competition among electricity producers is enhanced by RES development which helps to offset th…

Ridiculous Rhetoric About State Aid ... from the Experts on Using Illegal Aid

The ongoing discussion about trying to block the prosumer support in the final law due to "state aid" issues is about an hypocritical as it gets.

PO spokesmen raised this earlier and it appears that the President of Poland may not take the bait. A good decision, since the entire Polish support system has been operating illegally for nine years and the Government has known this for at least three years now.

Similarly, we have been seeing a big bluff on whether the new law must be notified to Brussels.

Everyone privately knows that it must be notified, reviewed and approved. For several reasons, it does not meet the block grant exemption from notification. Most obviously, it continues support in the form of Green Certificates which the European Commission has advised informally to UOKiK are state aid. Aid up to 2017 must be levelized by technology and certainly all of the technologies including in the Polish National Action Plan for 2020 will have to be included. Other aspect…

Polish Government Assures Folks that Electricity Prices Will Not be Affected by Reality

In the discussion after the law to transpose the new deal on European emissions controls and CO2 allowances, the Minister of Environment reassures the public that electricity prices wil not go up after 2020.  His basis for optimism is the free allowances given to Poland as a part of the deal reached with Brussels a few months ago.

I commented at the time that the allowances and funding provided would be way short of what is necessary to provide a soft landing for Poland (as long as the country was clinging to coal as its central energy source). Now it seems clear that the assumptions on the limited impact of the deal on Poland were likely a fantasy.

Much of the aid provided is supposed to go to de-carbonization of the Polish economy, not to preserving reliance on carbon. However, the aid is manipulated by Warsaw will likely not provide more than a fraction of the funds necessary to modernize the Polish energy sector.

The impact of higher prices per ton of CO2 in the emission caps is a …

Painful to Watch: Polish Government's Promises on Shale Gas Hit Reality

"As reported, Lane Energy Poland, whose shareholder is an American company ConocnoPhilips decided to liquidate a total of 5 wells for shale gas including the Łebień and Strzeszewie." 

UPDATE NOTE: Another shale gas developer announces the end: "The Board of Petrolinvest decided to suspend projects in oil and gas exploration in shale deposits, writes "Rzeczpospolita" and notes that a few years ago, the company saw in these projects huge growth potential. "