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Blowing a hole in wind power

A fair proportion of the readers of this column are rich, and many, if not most, of them will have nephews, who have been put on earth to test the patience of people with money. I mean not just actual children of siblings, but also metaphorical nephews, the sort of people who will be approaching the rich man with ideas for tropical nightclubs, “alternative” magazines, or independent films. Independent of box office success, that is, not independent of you.

In recent years, alongside those business plans for clubs and straight-to-video films are a growing sheaf of proposals for renewable energy projects. While varied in location and technology, the angel-financed renewables proposals often have a couple of elements in common: sponsors with an insufferable sense of moral superiority, and a studied vagueness about technical and economic risks. This is a sort of anti-world of most energy industry planning, which tends to be neutral in tone, technically intense, and based on comparative micro-economics.

Many of you will be getting a renewables proposal. The risk of having to deal with them in the course of holiday visits with relatives is increasing over the coming days and weeks. You can’t just get your lawyer to draft a reply. What would you say to your sister when you see her next?

So you should learn a few back-of-the-envelope issues about renewables investing. The sector that attracts much of the attention of new entrants to the energy field is wind power. Everybody, even an arts graduate, knows what wind is, where it can be found, and what a windmill looks like, at least on the outside. And North America and Europe have tax credit and subsidised purchase schemes for wind power. So if you have tax schemers and energy moralists within commuting distance of each other, you will have amateur wind power proposals.

I’ve toured wind farms over the years, and noticed the waves of construction that matched the ebbing and flowing of tax credits. The technology has improved immensely. Wind turbines can now provide their own voltage support, and they can be controlled by the operator through the SCADA (Supervisory control and data acquisition) system. (Ask your nephew what the previous sentence means. You may be able to put an end to the pitch after he stammers out an incoherent reply.)

There are two main issues with wind turbines: they have to be connected to the power grid, which involves some tricky technical problems, and wind doesn’t blow all the time. Over time, dealing with these problems will lead to wind farm construction being taken over entirely by utilities and experienced merchant generators, but you can’t wait that long.

I went to the Electricity Supply Board of Ireland to hear what they had learned about wind power integration. Ireland is very green, of course, and the state-owned ESB has its own Hibernian Wind Power subsidiary. Of the approximately 6,000 megawatts of installed capacity on the Irish grid, 800 is wind powered. The state has a target of 3,000 MW of installed wind capacity by 2020. Michael McNicholas, the executive director of ESB International, and, unlike your nephew, an engineer, was extremely helpful.

“Ireland has one of the best wind regimes in Europe,” he says, “with a load factor of 30 per cent.” That means that with the natural fluctuations, the turbines supply power 30 per cent of the time. “In the past, we found once wind penetration got beyond 6 per cent of the total (production), you began to have an impact on the stability of the overall system. Now the proportion of wind power to the system can be stable up to about 10 per cent.”

Keep in mind that the national renewable portfolio standard proposed in the US House of Representatives’ energy bill would require a 15 per cent share of renewables for the US grid. The proposal is a priority of the wind power promoters, and a key element of the economics of many of the plans out there.

So how do serious wind developers, such as the ESB, reconcile the intermittency of wind with the ambitious installed capacity targets? Some renewables-enthusiastic countries, such as, say, Denmark, deal with the issue by being connected to a bigger country. When Denmark’s numerous turbines generate too much or too little power, the fluctuations are shuffled off to the larger European (principally German) grid.

Ireland, however, is too isolated, and countries such as the UK or the US are too large to deal with the problem with imports and exports. So in those cases, above the upper stability limit for the proportion of wind power, say 10 per cent, the wind turbines must be backed up with “spinning reserve” gas turbines.

Usually these are simple cycle gas turbines, basically big jet engines with generators attached, kept on standby (consuming some gas), waiting for the wind to die. Then they are rapidly spooled up by the grid operator until the wind comes back.

Of course, the stability limit for un-backed-up wind power might be lower if there is less of a general operating reserve available, such as is likely to be the case in California or elsewhere in the US in coming years.

The ESB has taken all this into account in its planning, unlike some. Even so, Mr McNicholas says: “The total cost of wind should take account of that backup requirement, and the total costs of wind on the system is not computed today. In a market such as the US, where you don’t have the same driver of carbon credits, wind doesn’t have that benefit going for it. In Ireland, we need to have a market structure that will incentivise developers to build the (backup) plant. We need to pay for available capacity, not just energy.” That hasn’t been set up yet, as it would need legislative action, not just planning, and when fully costed, such a capacity market would be controversial.

The consumer would be paying for a lot of plant sitting idle over two thirds of the time.

Then there’s the gas availability for the backup generation. Ireland has two undersea pipelines supplying it with British and Norwegian gas. Does the non-existent backup gas turbine capacity for your nephew’s wind farm have a pipeline near it? And where does that gas come from? Surely not the Arctic, or from offshore drilling.

As long as wind power was within the range of statistical error for energy supplies, these questions were not important. But they are now. Ask your nephew for the answers.

By John Dizard

Financial Times

3 December 2007