Our new Federal Government

While I was blogging about the grid batteries in South Australia, we got a new Federal Government. It took a while, we were without a functional Federal Government since December 2018 when the then coalition broke up. This new coalition consists of seven parties from four different political groups. This Frankenstein coalition want to be called the “Vivaldi” coalition (after the violin concertos “The Four Seasons” by Vivaldi, representing the colors of the four political colors of the groups in the coalition). To make such a coalition work, compromises had to be made and also political presents had to be given.

Probably one of those presents is that the Minister of Energy is provided by the Green party. Our Minister of Energy now is Tinne Van der Straeten and the readers of this blog know her as the politician who managed to increase, ahem, fossil fuel subsidies and the Green party was apparently proud of that achievement.

The new coalition is very ambitious. When it comes to energy, they aim for the closure of the nuclear power plants by … 2025. To put that in perspective, our nuclear plants currently produce almost half of our electricity and this amount of power needs to be replaced within the next five years (it took decades to come to ten or so percent of solar and wind). They want to do this replacement by stimulating intermittent technologies, cooperation with neighbor countries (increased import and export), energy saving and also some gas-fueled power plants will be needed too. At the same time they also want to make energy cheaper, ensure energy security, create more jobs and lower emissions. All this without having to increase taxes…

Our energy Minister wants to promote offshore wind as a national pride (Dutch ahead), beside our most famous export products like chocolate and beer. That might all very inspiring, but generally there is a lack of detail how this goal of closing our nuclear infrastructure could be accomplished. The only thing we hear are some really vague statements that sometimes show that her knowledge of the subject is rather superficial. She however knows the slogans of her party very well. Like for example this tweet (translated from Dutch):

‘Renewable energy is growing into the cheapest way to generate electricity in many places in the world’

We are at a historic tipping point. More than ever it is clear: renewable energy is the future. We are going to seize that future.

Tweet Tinne Van der Straeten (@tinnevds) 2020-10-07

It links to the short, superficial and one-sided article Solar and wind energy becomes cheaper than coal and gas (Dutch ahead) in an otherwise good newspaper. It claims that solar and wind energy is at a tipping point (again?) and producing electricity that is cheaper than that of coal and gas in many places in the world. This is based on the data of the International Renewable Energy Agency (IRENA).

I encountered such a claim before. There is certainly a core of truth in it, but there are important nuances to be made.

Firstly, there is no doubt that there are places in the world where solar and/or wind make sense, but that doesn’t necessarily mean that it will also work in our country. For example, electricity from solar panels make sense in UAE, this because of the favorable location (plenty of sun in the desert and days of roughly the same length due to the proximity to the equator, not much difference between demand in winter and summer, plenty of open space, a different investment climate, and so on. This will however not fly in Belgium, there are less favorable conditions here (we are located more to the North, resulting in a greater difference between day length over the seasons and there is also more demand when there is less sun available, and so on).

Our Minister’s suggestion that we now should embrace solar and wind because these are the cheapest energy sources in many places in the world is misleading. We are not the ones at such a tipping point, but those who didn’t look at the IRENA data would now assume that we are.</pM

Secondly, the material and installation cost is surely lower than a decade ago, but that is just only one element of the total cost. Although the Minister insists that all costs of fossil fuels and nuclear need to be taken into account, for some reason this seems not to be the case for solar and wind. There are things like needed backup capacity, curtailment, strengthening of the grid, land use, subsidies, feed-in tariffs, exemptions and other invisible costs that currently are conveniently not accounted for. Despite the claim that solar and wind generation is cheaper than coal and gas, wind energy and (grid size) solar apparently still are in need of support (even the IRENA report admitted that things like subsidies or feed-in tariffs contribute to that being “cheaper”). I wonder what the end result would be if all costs of the integration of intermittent sources into the grid are being accounted for…

These hidden costs might not be so obvious at first. The integration of intermittent sources on a grid will also have consequences for the (dispatchable) power sources. For example, one of our Minister’s first tasks was visiting the European Commission to … propose a subsidy for gas-fueled power plants used as backup capacity when the sun doesn’t shine and/or the wind doesn’t blow. That those backup plants are in need of subsidies is not hard to understand. They will only work for a fraction of the time and they will also be working at a lower efficiency as a direct result of the intermittent production of solar and wind. So, integrating intermittent power sources on the grid make such backup plant economically less viable, but they can’t be missed to balance the grid. If our Government want such plants to operate in our grid, then they will have to provide support for them, hence the proposal to subsidize them.

Our Minister and the green party triumphantly announced that visit to the European Commission, but for some reason they didn’t mention the proposal… It might be pretty easy to spin the increase of the fossil fuel subsidies as beneficial to poor people, but it will not be that easy to explain the need for additional subsidies for gas-fueled power plants to the supporters and the public.

Hey, but wouldn’t that increase prices of electricity? This would mean that not only solar and wind get financial support, but also the chosen backup strategy do need support. Adding to the operational cost of the grid. Didn’t this Government promise to lower the electricity prices? Well yes, but they are not going to do that in a different way. Not by lowering the operational cost of the system, but by pulling out costs that are currently included in the electricity price. That will surely lower the electricity price, but the costs that are pulled out need to be paid one way or the other by the Belgian people. The overall the cost will be higher, but some elements will not be attributed anymore as energy costs.

This trick makes that our Government might well achieve their goal of lowering electricity prices, but it will not because of the integration of solar and wind, on the contrary.

It will be interesting to see how this will evolve. This is not a strong coalition, it was build on fear of new elections that would probably make the coalition formation even more difficult. I wonder how long those diverse parties are willing to make compromises and stick to their plans. Whatever the case, I hope that they soon release the details how they see it possible to replace roughly half of our power supply in five years. That could get interesting.


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