Will wind farms pick up the tab for new nuclear? Wind farm developers fear National Grid proposals designed to accommodate nuclear power plants will lead to a huge increase in backup costs

David Hirst Comments.

Chris,

You are quite right to separate the issues of immediate loss of generation, which needs to be covered by frequency response, and the longer term periods of scarcity that need to be covered by “reserve”.

If the reports are true What NGC seems to be seeking to cover here is the more immediate frequency response, concerning the first half hour or so after loss, rather than coverage for longer periods. The increase in costs is directly and exclusively related to the increase in scale of the nuclear generators. If they are suggesting ~1.8GW as the preferred size (and I believe this is what EDF is proposing), then this is a major increase over the previous maximum single loss of Sizewell, which was about 1.3GW. If Sizewell did not exist, the largest loss is considered to be one (of the two) cross channel DC links at 1GW. Below that, 660MW is about the largest single unit that could be lost in a single event. Other units are around 550MW.

Depending on the concentration of the proposed nukes, it is possible that the loss of a single transmission line could introduce a big loss. At present, virtually all major sources are networked via 4 circuits (on at least 2 tower lines), (a redundancy factor of 4) so even the loss of a tower would allow continued generation. (This very high redundancy factor is driven in part – perhaps primarily – by the need for the nuke to have very highly reliable sources of electricity for the safety systems, even when the generation is shut down.)

“Cost related” tariffing is a mantra of Ofgem. Here is a case of a major extra cost being imposed on us all, and not being paid for by those who create the cost. An “externality” that is being ignored, to the benefit of the nuclear proposals. This is a direct subsidy of some £160m p.a. to the nuclear generators. By and large, it is a small loss to the coal generators, since, under existing arrangements, it is largely they who will gain the extra revenue (and emit the extra CO2).

NGCs reasons are also spurious, as they ignore the possibility of frequency response being provided by demand devices. Currently, there is a nominal possibility for this in the response bidding process, but even this has been a struggle and is difficult. They say that for users to understand costs, they would need to understand commercially confidential arrangements, as well as assess the frequency response need for each half hour. So they say it is better to keep all this hidden in an aggregate cost shared by all generators.

But it is quite easy to make an equally arbitrary pricing decision related to the scale of the generator. If users are to be denied scrutiny of NGCs response purchasing decisions, this is no reason why large generators should not bear a arbitrarily larger costs, and all we need to agree is a broad proportion of total costs to be borne by each size of generator.

This will still provide the investor certainty that NGC says is so necessary. It will also encourage smaller plant over larger plant. This offers system benefits. It is up to the generator to factor these into the investment decisions about the size of their plant.

So the suggested hidden reasons for the decision (that is the nuclear operators do not like it), does provide a clearer justification than the reasons given.

Chris, you do make the valid point that there will be periods when wind is not available, and this needs reserve available for those periods.

However, this is also true of nuclear plant. In general, when a nuclear plant goes off line, it has to stay off line for many hours and often days afterwards. Modern nuke plants may be able to do this a bit faster, but there is no experience of this, and in general, bigger things take longer.  It took over two days for Sizewell to come back after its last trip, and during these days, the wholesale cost of electricity was significantly increased. Mostly, it was probably the nuclear operator who paid this, as they had to purchase to cover contracts probably prices at “base load” levels.

Since, broadly, it is not nuclear that can respond to such short term demands, the reserve (fossil fuel) plant has to exist to cover for them too. It is not just wind generation that needs to have this reserve in order to achieve a reliable supply. NGCs decision does not address this.

NGC has made a wrong decision, and I hope OFGEM does something about it.

Regards

David

David Hirst  

Dave A./Dave E.,

Dave(s), I am quite happy with the proposition that nuclear (or any other equally sized fossil steam turbine for that matter) poses the largest instant* breakdown  threat on the grid, requiring a particular type of very rapid-response backup plant. This increased margin is to do with increase in individual unit size, nothing to do with the overall number of nuke stations as hinted. I believe that this instant-breakdown backup provision element should equitably be assigned to the large nuclear units causing it, (at least as a group) on the ‘polluter pays’ principle, just as I consider that ‘wind-out’ backup (see below) should similarly be fairly assigned to the wind farm operators.  So ‘smearing’ it over all power providers is a bit of an NG ‘cop-out’.

 Whereas of course it’s a large wind fleet that poses by far the largest cumulative ‘fleet’ loss-of-load threat over a gradual period (say 12-24 hours) during national-scale ‘wind-outs’. These two aspects of backup duty should not be confused or conflated.  Suitable flexible backup plant, (+load-shedding, STOR diesels etc etc) etc has to be provided to cover both eventualities, with the latter by far the larger in terms of plant capacity. 

 The reported item is a ‘lobbying piece’. Wind is not being specially ‘picked on’, just being asked to carry its own fair per-MW (rated capacity) share along with all the fossil generators. The fact that they will only deliver about 30% revenue relative to that rated capacity (making the capacity-based Large Loss Response levy larger in proportion to their annual output)  is wind’s own technical problem, not Nat Grid’s.

Chris Hodrien.

—– Original Message —–

From: Dave Elliott

To: energy-discussion-group@googlegroups.com

 The article  pasted below, published today, raises some disturbing  prospects of cost escalations for wind farms due to  the requirement to  upgrade the  grid backup  to  accomodate new nuclear power. 

  

James Murray, BusinessGreen, 24 Aug 2010

 http://www.businessgreen.com/business-green/news/2268599/exclusive-wind-farms-pick-tab?page=2

Wind farm operators could see their overheads increase by millions of pounds a year as a direct result of plans to upgrade and reinforce the grid to cope with a new fleet of nuclear reactors.

A number of renewable energy developers are angry at National Grid’s decision to retain the current charging regime it operates for providing backup power, despite the fact costs are expected to soar when new nuclear power plants come online towards the end of the decade.

National Grid released a consultation document in June detailing how the proposed development of six nuclear power stations would require the grid operator to increase the amount of backup power, known as “spinning reserve”, that it has available to call on in the event of a large power plant failing, from 1,320MW to 1,800MW.

The company estimated that as a result, the annual cost of providing so-called Large Loss Response will rise from £160m a year to £319m.

The consultation looked at a number of approaches to charging energy firms to cover the increased cost, but in a letter to Ofgem National Grid commercial director for transmission Alison Kay said the company had decided to retain the current regime, whereby generators are charged an equal amount per megawatt they provide to the grid.

Wind farm operators are known to be furious at the decision, which they claim will see them face an unfair doubling in charges from National Grid, despite the fact the company concluded in its consultation that generators with less than 350MW of capacity, including all operational wind farms in the UK, “pose no additional loss risk to the system”.

In contrast, nuclear developers, who argued that targeting the increased charges at larger power plants would jeopardise plans for a new fleet of reactors, are delighted at a decision that will see the increased cost of backup spread right across the energy industry.

Writing in her letter to Ofgem, Kay revealed that the decision to retain the current charging regime was driven in part by fears that changes would delay the new nuclear build programme.

 

“Information received through the recent consultation indicates that increasing costs on larger users could delay the commissioning of a large nuclear plant by a number of years, with any shortfall in generation capacity likely to be made up through a new CCGT [combined cycle gas turbines] plant,” she said. “This eventuality would increase the difficulty in meeting European and governmental environmental targets by delaying essential investment in lower-carbon technologies.”

 

Speaking to BusinessGreen.com, a spokesman for National Grid admitted some wind farm operators were frustrated by the decision. But he argued that developers working on larger offshore wind farms that will generate more than 350MW were pleased that they would not now face additional charges.

 

However, wind industry insiders insist support for National Grid’s proposals among offshore wind farm developers is in fact very low. They argue that even the largest proposed offshore wind farm sites are likely to use a number of different cables to connect them to the mainland, meaning any one connection is unlikely to exceed the 350MW mark that would mean they pose an additional risk to the grid.

 

Some wind farm operators are now urging Ofgem to challenge National Grid’s decision, arguing that the proposed charging regime will result in wind farms and other renewable energy projects effectively picking up a sizable chunk of the bill for the nuclear industry. They are insisting that Ofgem should adhere to the “polluter pays” principle and make sure nuclear operators pay for the additional backup capacity that they will require.

 

There are also suspicions within the industry that National Grid has been ” leaned on” by the nuclear lobby in order to ensure the increased cost of backup is shared by all generators – a charge rejected by National Grid.

 

The Open University is incorporated by Royal Charter (RC 000391), an exempt charity in England & Wales and a charity registered in Scotland (SC 038302).

 

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