China is going for coal
Builders of electricity grids find themselves constantly navigating between crises.
Construct too few generators, and blackouts will spread whenever demand peaks. Construct too many, and you have a financial crunch, as an oversupply of electricity pushes prices below what investors expected. Add to that the risk of a climate catastrophe if you depend on fossil fuels rather than renewables and nuclear, and the road to success is a narrow one.
Right now, China seems to be worried only about the first problem. The country approved 20.45 gigawatts of new coal-fired power in the first three months of this year, more than it did during the entirety of 2021, according to a review last month by Greenpeace East Asia. Combined with the 90.72 GW given the green light last year, that’s equivalent to adding all the coal-fired generation in Japan, Germany and Poland — three of the biggest users of the fuel — in just 15 months.
Taking the shortest route to keeping the lights on in a dysfunctional grid is being prioritized above financial and environmental concerns. Those latter issues won’t go away, however, and threaten to come back to bite Beijing’s economic planners.
The problem for China is that it’s treating coal-fired power the way the US and Europe treat gas. Electricity demand tends to rise and fall throughout the day. To accommodate this variability, grids were traditionally structured around always-on, so-called “baseload” power plants, plus a fleet of “peaker” plants that could be switched on and off to follow the morning and evening surges in demand.
As anyone who’s tried cooking with both a gas and charcoal-fired grill will know, solid fuel is ill-suited to this sort of operation. Coal plants, like charcoal barbecues, take a long time to be coaxed to and from their operating temperatures. On top of that, the brute machinery needed to shuttle sooty rocks around means that they’re simply more expensive to build — around $505 per kilowatt of capacity in China at present, according to BloombergNEF estimates, compared to $290/kW for gas.
That makes it challenging to use coal to provide peaking power the way US and European grids use gas turbines. Their slow ramp-up and ramp-down means you’re more likely to be generating outside the peak and below your operating costs. The strain that the temperature cycles place on the structure of the plant shortens its operating life, too.
Those high expenses per kilowatt aren’t a problem if you’re operating 60% of the time, but Chinese coal plants hardly ever hit those levels. Generation costs go up as utilization goes down, so that a technology priced at $69 per kilowatt-hour in baseload operation may be several times more expensive when run as a peaker. Faced with a shortage of domestic gas supplies and an excess of coal, Chinese engineers have been working hard to design coal plants that can be switched up and down like gas plants. (Read this fascinating Twitter thread by Lantau Group analyst David Fishman for an example.) Still, the laws of physics and economics are unyielding.
It’s the latter that may prove most damaging. Those $505 per kilowatt costs mean that every gigawatt of coal adds half a billion dollars to China’s teetering $23 trillion mountain of debt.
Indeed, in many places it’s the stimulus provided by that lump of cash, rather than any fundamental need for fresh generation, that appears to be driving development. “Of the 25 coal power projects in development in Guangdong last year, 19 were in part intended to help boost local economies,” especially in undeveloped parts of the province, according to a study this month by Zhang Xiaoli, a consultant at the Beijing-based Green Development Program.
Worse still, excess capacity doesn’t just damage its own profitability, but that of the entire remaining fleet which must sell power into the same oversupplied market. More than half of China’s coal-fired power plants lost money in the first half of 2022, according to the China Electricity Council, an industry group. Losses in 2021 came to 101.7 billion yuan ($14.5 billion), based on official data.
Even after depreciation, China’s 1,129 gigawatts of coal plants represent hundreds of billions of dollars of assets, whose ability to create cashflow and pay off their debts is damaged every time a fresh generator is connected. There’s as much as 200 gigawatts of renewables coming online this year as well — power that’s usually cheaper and cleaner to run than even the lowest-cost coal plants.
The pockets of China’s state-owned enterprises seem so deep that it’s tempting to think losses simply don’t matter. But the fate of India’s indebted, state-owned electricity distributors shows that’s not the case. Their chronically late payments to utilities are one reason that generators have been keeping dangerously low coal stocks in recent years, since they lack the cash to buy more.
China’s provincial governments hope that adding excess coal will help save them from a power crisis — but in doing so, they’re raising the prospect of both a climate crisis, and a financial one.
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Majority of United States Faces 'Elevated Risk' of Summer Power Blackouts Amid Green Energy Push
America's increased reliance on green energy in favor of coal and gas has a majority of the United States facing an "elevated risk" of summer power blackouts, according to a leading grid reliability watchdog.
The North American Electric Reliability Corporation (NERC) last week published its 2023 summer reliability assessment, which found that two-thirds of North America could face power shortages this summer during periods of extreme heat. That vulnerability, the watchdog group said, stems from America's increase in green power generation and decrease in fossil fuel power plants. While coal and natural gas plants can be turned on and off at the flip of a switch, green alternatives such as wind and solar rely on favorable weather conditions to operate at full capacity. If those conditions aren't met, power demand can outpace supply.
"The system is closer to the edge," NERC director of reliability assessment and performance analysis John Moura said last week. "More needs to be done."
Moura is far from the only expert sounding the alarm on America's unreliable power grid. Both state and federal officials in recent weeks have warned that high summer temperatures, combined with low nightly winds, could bring power blackouts across the country. "I'm afraid to say it, but I think the United States is heading towards a catastrophic situation," Federal Energy Regulatory Commission member Mark Christie said during a May Senate hearing.
Despite those warnings, President Joe Biden has moved forward with plans to accelerate U.S. coal plant retirements. With nearly half of America's coal power already set to disappear by 2030, Biden's Environmental Protection Agency earlier this month unveiled new standards that force coal and gas power plants to slash their carbon emissions by a whopping 90 percent between 2035 and 2040. In order to meet the near-impossible standards, those plants will have to spend big on infrastructure upgrades—costs that may prompt the plants to shut down rather than comply.
"Coal is more than five times as dependable as wind and more than twice as dependable as solar when electricity demand is greatest," America's Power CEO Michelle Bloodworth said in a statement, "yet bad public policy and EPA regulations are forcing the closure of coal plants."
In addition to his far-reaching fossil fuel regulations, Biden has spent hundreds of billions of dollars on tax breaks and subsidies aimed at increasing electric car use. And in April, Biden's Environmental Protection Agency announced a new rule that imposes strict tailpipe emission limits on vehicles sold—so strict that it effectively forces automakers to ensure that two-thirds of the cars they sell are electric by 2032.
Those moves could also put strain on the nation's power grid. As more Americans plug in their cars instead of filling them up with gasoline, grids across the country will need to put out more power to keep up. The issue has already plagued some U.S. states—in September, for example, California urged electric car drivers to stop charging their vehicles due to power grid strain. Still, the ordeal did not stop state officials from moving full steam ahead with plans to outlaw gas-powered vehicles and eradicate fossil fuel power plants.
"We understand we cannot have the lights go off," California Energy Commission vice chair Siva Gunda told the Washington Post. "But the fear of these questions being brought up is not a reason to slow down from what we know is morally and societally what we need to do."
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Green Germany: Europe’s Economic Engine Is Breaking Down
Germany has been Europe’s economic engine for decades, pulling the region through one crisis after another. But that resilience is breaking down, and it spells danger for the whole continent.
Decades of flawed energy policy, the demise of combustion-engine cars and a sluggish transition to new technologies are converging to pose the most fundamental threat to the nation’s prosperity since reunification. But unlike in 1990, the political class lacks the leadership to tackle structural issues gnawing at the heart of the country’s competitiveness.
“We’ve been naïve as a society because everything seems fine,” BASF SE Chief Executive Officer Martin Brudermüller told Bloomberg. “These problems we have in Germany are accumulating. We have a period of change ahead of us; I don’t know if everyone realizes this.”
While Berlin has shown a knack for overcoming crises in the past, the question now is whether it can pursue a sustained strategy. The prospect looks remote. Chancellor Olaf Scholz’s make-shift coalition has reverted to petty infighting over everything from debt and spending to heat pumps and speed limits as soon as the risks of energy shortfalls eased.
But the warning signals are getting hard to ignore. Despite Scholz telling Bloomberg in January that Germany would ride out Russia’s energy squeeze without a recession this year, data published Thursday show that the economy has in fact been contracting since October and has only expanded twice in the past five quarters.
Economists see German growth lagging behind the rest of the region for years to come, and the International Monetary Fund estimates Germany will be the worst-performing G-7 economy this year. Nonetheless, Scholz again sounded upbeat.
“The prospects for the German economy are very good,” he told reporters in Berlin after the latest economic data. By unlocking market forces and cutting red tape, “we are solving the challenges that face us.”
The risk is that the latest numbers aren’t a one-off, but the sign of things to come.
Germany finds itself ill-suited to sustainably serve the energy needs of its industrial base; overly dependent on old-school engineering; and lacking the political and commercial agility to pivot to faster-growing sectors. The array of structural challenges points to a cold awakening for the center of European power, which has become accustomed to uninterrupted affluence.
To its credit, industrial behemoths like Volkswagen AG, Siemens AG and Bayer AG are flanked by thousands of smaller Mittelstand companies, and the country’s conservative spending habits put it on a stronger fiscal footing than its peers to support the transformation ahead. But it has little time to waste.
The most pressing issue for Germany is getting its energy transition on track. Affordable power is a key precondition for industrial competitiveness, and even before the end of Russian gas supplies, Germany had some of the highest electricity costs in Europe. Failure to stabilize the situation could transform a trickle of manufacturers heading elsewhere into a stampede.
Berlin is responding to concerns by seeking a cap on power prices for some energy-intensive industries like chemicals through 2030 — a plan that could cost taxpayers as much as €30 billion ($32 billion). But that would be a temporary patch, and shows Germany’s desperate situation in terms of supply.
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Australia: The renewables backup problem
In the Snowy 2.0 project,‘Florence’, the gigantic tunneller, has fallen through some soft ground and become hopelessly stuck. She is now wedged in tonnes of earth and rocks and appears to be immovable.
But who can forget the promises made by Malcolm Turnbull, then prime minister, about the potential of Snowy 2.0? Pumped hydro would be one of the missing jigsaw pieces that would enable a deep penetration of wind and solar generation in our electricity grid. It was going to cost around $2 billion, although this had the same credibility as the original estimates of the cost of the NBN, which were devised on a drink coaster.
Moreover, the figure of $2 billion never included the cost of the additional transmission needed to hook the project up to the grid. That would cost more billions and would be subject to fierce local opposition as the required pylons and cables cut an ugly swath through rural land.
Even so, those were the salad days for the project. Water would be pumped up during the day to the upper dam – electricity prices would be cheap and generated mainly by renewable energy – and released when needed to the lower dam, thereby generating electricity. OK, there’s a lot of energy lost in the process and, of course, no new electricity is actually generated. And given the capital costs, it’s not clear it would ever generate a rate of return. But what the heck, when you are saving the planet.
We were told that Snowy 2.0 would act like a giant battery, providing needed backup to intermittent renewable energy. The nominal capacity was around 2,000 megawatts, about the size of a standard coal-fired power station, although it would only be able to operate for several hours each day. It was to be ready in 2023-24, which now sounds hopelessly optimistic.
The most likely scenario now is that the project will be completed by the end of the decade and the total cost, not including transmission, will be around $10 billion. Let’s not forget that stuck-Florence is costing an arm and leg because this type of specialised machinery – she was built in Germany – is leased and daily fees will still be ticking over. One way or another, the operators will find a way around the Florence problem.
The bigger picture is this: renewable energy will simply not work without sufficient backup and it’s the backup conundrum that has everyone stumped. Even if Snowy 2.0 had gone well, it is only a tiny part of the backup solution. The trouble is that Australia’s topography simply doesn’t lend itself to multiple pumped hydro projects.
The Kidston project in far-north Queensland has been nearly a decade in the making and this was starting, by chance, with two dams at different levels that existed because of a former mining operation. The biggest capital contribution to the project has come from governments, with the investors contributing a smaller amount. When it is eventually finished, it will help power households in the area but any cost-benefit analysis would show that this project should never have gone ahead.
The hope of the side was always batteries, the bigger the better. But the assumed technology leaps have simply not occurred. They provide a few hours of power and do help with stabilising the grid through frequency control. But given the components required to build these batteries – think lithium, cobalt, nickel – and the shortage of them, it’s not clear that batteries are a universal solution. They also remain expensive, in part because so many countries around the world are following the same path: renewable energy plus batteries.
Gas plants are the obvious solution, but they of course emit carbon dioxide. While closed-cycle gas turbines are much more efficient than the open-cycle ones – they use less gas and emit less carbon dioxide – it is the latter which are best designed for backup because they can be cranked up at short notice to cover shortfalls from renewable sources. In other words, to make solar and wind viable means of generating electricity, they need to be backed up by relatively emissions-intensive gas plants. You know it makes sense.
It’s also important to note here that the buildout of land-hungry wind and solar means that any existing coal-fired plant is made obsolete before its time. That is because these plants are simply not designed to provide backup power; rather they are designed to provide continuous power with constantly turning turbines. When made to provide backup power, their operating and maintenance costs skyrocket.
The fact is that even the pious Climate Change and Energy Minister, Chris Bowen, cannot make the wind blow or prevent the sun from setting. Even in his true-believing world, there is a need for backup power. Building more and more solar and wind installations doesn’t overcome this problem and is highly inefficient of itself.
A number of countries, including the UK, Canada and France, have become very lukewarm about nuclear energy but are now having second thoughts. These governments are committing to substantial investments in new nuclear installations, which are not necessarily well-designed to provide backup but can do so without any emissions.
Over time, these governments may conclude that it’s just easier (and cheaper) to go fully nuclear and forget the turbines and solar panels. After all, these renewable installations wear out quickly – probably off-shore turbines last only 15 years – and will need to be replaced. This will leave Australia in a pickle, with a motley collection of wind, solar, gas plants, ugly big batteries and possibly Snowy 2.0, adding up to unreliable and expensive power.
Just perhaps a future government will see sense and take a different path that involves nuclear power. This could be about the same time that Florence is finally rescued from her uncomfortable resting spot.
https://www.spectator.com.au/2023/05/florence-gets-stuck-in-a-pickle/
***************************************My other blogs. Main ones below
http://dissectleft.blogspot.com (DISSECTING LEFTISM )
http://edwatch.blogspot.com (EDUCATION WATCH)
http://pcwatch.blogspot.com (POLITICAL CORRECTNESS WATCH)
http://australian-politics.blogspot.com (AUSTRALIAN POLITICS)
http://snorphty.blogspot.com/ (TONGUE-TIED)
http://jonjayray.com/blogall.html More blogs
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Jim Hansen and his twin
1 comment:
Sorry but Wind and Solar just wont work they should not used to power a a whole Nation since the wind don't blow 24/7 and the sunset is still a factor
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