This week’s Blowout features the plight of two of Europe’s major electric power suppliers – RWE and EON – who because of market pricing mechanisms that favor renewable energy over fossil fuel generation are rapidly losing value. What happens if they are driven out of business? Plus Saudi Arabia budgeting for $29 oil in 2016, bad years for natural gas, nuclear in China and Belgium, Wylfa shut down, France distributes iodine tablets, the Chinese coal mine moratorium, different perspectives on the Paris climate agreement (including how George W. Bush saved it), San Diego votes to go green, a barge loose in the North Sea and how climate change will make ten of your favorite foods disappear while causing 200 million Americans to suffer severe psychological distress.
Germany’s unprecedented energy shift is turning newly built power plants into white elephants that will never produce any electricity. Once the backbone that underpinned growth in Europe’s biggest economy, coal and gas plants are being marginalized in a new world where solar and wind are all the rage…..
…..With electricity prices at their lowest level in more than a decade, the outlook is now so bad that RWE AG will never start its 1 billion-euro ($1.1 billion) Westfalen-D plant, while EON SE applied this year to close two new unprofitable gas-fired units. Essen-based RWE, which lost more than half its market value this year, said Friday it wasn’t “economically viable” to complete the unit, which has been dogged by delays and defects including a chemical leak. EON SE earlier this year filed to temporarily close two unprofitable units in Bavaria, now kept in reserve to ensure the country has enough supply to meet demand. Irsching-4 was commissioned in 2011, while Irsching-5 started a year earlier.
Record-low coal prices and increased wind and solar generation that pushed European power prices to their lowest in a decade may cause further declines in 2016. Average day-ahead electricity prices in Germany, Europe’s biggest market, fell 3.3 percent to 31.68 euros ($34.62) per megawatt-hour in 2015, the least since 2004 on the Epex Spot SE exchange in Paris. Northwest Europe coal fell 33 percent while the share of Germany’s energy demand met by renewable output increased by four percentage points to 30 percent, according to preliminary figures by utility lobby BDEW. The decline is set to con-tinue across Europe as prices for fuel and carbon emissions remain low, according to Christian Holtz, an analyst at consulting firm Sweco AB. German power for next year, a European benchmark, Wednesday traded at 28.13 euros per megawatt-hour, 11 percent below the 2015 delivery price, according to broker data compiled by Bloomberg.
Energy & Carbon: Backing up renewables is proving cheaper than we thought
The UK Capacity Mechanism was designed to procure the cheapest way of maintaining adequate generating reliability for the system. Some have complained that the scheme has actually ended up incentivising lots of small, diesel power plants. What has been lost in that debate over the merits, or otherwise, of diesel has been the success of the Mechanism: for the second year running, it has achieved grid reliability at costs much lower than predicted. The December 2015 auction, for capacity delivered in 2019/20, cleared at a price of £18/kW per year. Only eighteen months earlier, the government had predicted the “cost of new entry” at two and half times this level, at £49/kW. Backing up renewable energy is proving a lot cheaper than most people thought.
Washington Post: Wind, solar power soar in spite of bargain prices for fossil fuels
In normal times, a months-long slide in energy prices would be enough to rattle a man who makes wind turbines for a living. Yet amid a worldwide glut of cheap fossil fuels, business is blowing strong for Vestas Wind Systems and its CEO, Anders Runevad. The company posted record gains in 2015 and inked major deals to build wind farms in the United States, Europe, Africa and Asia. That boom in turbine sales was part of a global surge for wind and solar energy, which occurred despite oil, coal and natural gas selling at bargain rates. “We’re seeing very good momentum across the board globally,” said Runevad, a soft-spoken Swede whose firm is now the world’s biggest producer of wind turbines. “We’re seeing growth in every region.” Vestas’s performance is emblematic of the changing fortunes for renewable energy, an industry that achieved a number of mile-stones this year. Massive new projects are under construction from China and India to Texas, which now far outpaces California as the nation’s leading wind-power state. Just this month, the United States crossed the 70-gigawatt threshold in wind-generated electricity, with 50,000 spinning turbines producing enough power to light up 19 million homes.
Last October, The Guardian estimated that 30 million electricity customers would be on the hook for at least £4.4 billion for the new nuclear power plant, with potentially £20 billion in government subsidies. Around the same time, the UK’s Solar Trade Association also weighed in with an assessment of the damages. The STA solar power analysis is an interesting attempt to calculate how much subsidy solar power would need to achieve an electricity output equal to that of Hinkley Point C over its 35-year subsidy period. STA points out that Hinkley C was awarded a “strike price” of £92.50 per megawatt-hour at 2012 prices, under a 35-year contract. The Guardian points out that’s twice the going market rate. The analysis found that compared to an overall subsidy cost of £29.7 billion for Hinkley Point C, a total subsidy of only £14.7 billion would be needed for an equivalent output of electricity sourced from solar, including the solar facilities themselves, energy storage facilities, and other balancing mechanisms that complement solar power.
Solar power systems rose by 28% in Scotland last year, but the Scottish Government has been challenged to make prospects for sun energy even brighter. WWF Scotland and the Solar Trade Association Scotland have revealed that the total installed capacity of solar photo-voltaic (PV) systems north of the Border has now reached 179 megawatts (MW). More than 40,000 homes and 850 business premises in Scotland now have solar PV arrays. The total installed solar PV capacity on homes now stands at 159MW. WWF Scot-land director Lang Banks said: “Despite the challenges facing the industry, it’s fantastic to see so many homes and businesses embracing solar power. Although the total installed solar capacity is small when compared to wind energy, we should remember that collec-tively these solar panels are helping to prevent thousands of tonnes of emissions every year.”
Saudi Arabia on Monday said this year’s budget deficit amounted to $98 billion (367 billion riyals) as lower oil prices cut into the government’s main source of revenue, prompting the kingdom to scale back spending for the coming year and hike up petrol prices. For two consecutive years the kingdom has posted a deficit, and it is planning for another budget shortfall next year, projected at $87 billion (326 billion riyals). The Saudi government has been digging into its large foreign reserves, built up during years of higher oil prices. To cover the difference between its spending and revenue over the past year, Saudi Arabia has drawn its reserves down from $728 billion at the end of last year to around $640 billion.
Saudi Arabia’s 2016 budget is allegedly based on an average crude price of about $29 per barrel, Bloomberg reports, quoting Riyadh-based Jadwa Investment. On Monday, Riyadh posted its next budget for next year that will see a $36 billion cut in spending, based on a $87 billion deficit. On Monday, Saudi Arabia announced a record high $98 billion budget deficit. The country’s earnings in 2016 are forecast at $137 billion, $25 billion down from 2015. This year’s original budget plan projected revenues of almost $191 billion.
Wall Street Journal: Natural Gas Prices Finish Down 19% for the Year
The natural-gas market posted its second straight year of losses in 2015 due to a growing oversupply of the fuel. After posting a 32% loss in 2014 amid robust production, prices slid another 19% this year due to still-ample output and surprisingly weak demand. A strong El Niño weather pattern has reduced the need for heating fuels in the U.S. in recent months, pushing natural-gas supplies to a record in November. Natural-gas prices fell to a 16-year low on Dec. 17. The market remains oversupplied. Stockpiles stand at 3.756 trillion cubic feet, 14% above the five-year average for this time of year.
San Antonio Express: Natural gas production set for decline in 2016
Natural gas drillers were battered by the lowest prices in more than a decade and a half in 2015, but they still managed to produce more than ever before. That’s expected to change in 2016, when most analysts predict domestic natural gas production will show its first annual decline since hurricanes Katrina and Rita smashed into the Gulf Coast in 2005. Next year’s decline will be driven by a different storm — the financial strain of 12 months of $2 natural gas, weak demand and biting cuts to budgets that may overwhelm drillers’ efforts to keep the gas flowing. The reversal could signal a high-water mark for the shale boom that drove U.S. natural gas production to new heights and ultimately sent prices to 16-year lows. “We’re probably going to see an acceleration of bankruptcies and consolidations,” said Sam Andrus, the leader of consulting group IHS Energy’s natural gas group. “People who have been kicking the can down the road are going to run out of rope.”
China boasts the world’s largest nuclear power capacity under construction as it strives to reduce pollution from coal-burning generators, an official said Tuesday. Nuclear power projects approved and under construction will be able to provide 32.03 million kilowatts, said Nur Bekri, head of the National Energy Administration. In 2015, 8.2 million kilowatts were put into operation and 8.8 million kilowatts were approved for construction, he said. China currently has a 25.5 million kilowatt operating capacity. The country aims to raise total installed nuclear power to 58 million kilowatts by 2020, according to an energy development action plan released by the State Council in 2014. China saw rapid nuclear power growth in recent years, but it suspended approval of new programs after Japan’s Fukushima nuclear disaster in 2011. The country restarted nuclear power plant construction in 2014 as it tries to make energy production and consumption greener.
Daily Star Lebanon: Wylfa 1 shuts down
Britain closed its oldest nuclear reactor, Wylfa 1, after nearly 45 years of operation on Wednesday, operator Magnox Ltd said. “Wylfa Nuclear Power Station closed down, marking the conclusion of Magnox reactor generation in the U.K.,” it said in a statement. The nuclear reactor in Wales was scheduled to shut down at the end of September 2014, but operations were extended until this week. The 490-megawatt nuclear reactor started operating in 1971 next to its twin Wylfa 2 reactor which was permanently shut down in April 2012.
Deutsche Welle: Belgium restarts controversial aging nuclear reactor
Belgium has restarted an aging reactor at its Tihange nuclear power plant near the border with Germany. Environmentalists and the German government have voiced concern over the plant’s safety. Energy company Electrabel, which operates seven reactors at the Tihange and Doel nuclear power plants, restarted the Tihange 1 reactor on Saturday only a week after a fire in a non-nuclear section of the plant forced it to shut down. Built in 1975, the Tihange 1 reactor is the oldest at the power plant, located about 70 kilometers (43 miles) from the German border city of Aachen. The plant was scheduled to close down in 2015 but due to the country’s heavy reliance on nuclear power the government extended the plant’s life to 2025 to provide time to develop other energy sources. Earlier in December another reactor at the facility, the Tihange 2, went back online after almost a two-year shutdown following the discovery of thousands of micro-cracks in the reactor casings. Energy company Electrabel, which operates seven reactors at the Tihange and Doel nuclear power plants, restarted the Tihange 1 reactor on Saturday only a week after a fire in a non-nuclear section of the plant forced it to shut down. Built in 1975, the Tihange 1 reactor is the oldest at the power plant, located about 70 kilometers (43 miles) from the German border city of Aachen.
France’s nuclear safety watchdog is to distribute iodine tablets to people living near the country’s 19 nuclear power stations, warning that an accident is possible but not probable. In the fifth such distribution campaign since they began in 1997, the Nuclear Security Authority (ASN) will make iodine tablets available to 400,000 households and 2,000 establishments, such as schools, businesses and local government offices, in a radius of 10 kilometres of a nuclear power station. Potassium iodide is a “simple and efficient” way to protect the thyroid gland against the effects of radioactive iodine, which can lead to cancer, if it is released into the air by a nuclear accident. The tablets have a life span of seven years and the last distribution campaign was in 2009. Nearly five years after Japan’s Fukushima nuclear disaster, “we know that a nuclear accident is possible in France, even if it is not probable, far from it”, ASN joint director-general Alain Delmestre told the AFP news agency.
Bloomberg: China to Halt New Coal Mine Approvals
China will stop approving new coal mines for the next three years and continue to trim production capacity as the world’s biggest energy consumer tries to shift away from the fuel as it grapples with pollution. China will suspend the approval of new mines starting in 2016 and will cut coal’s share of its energy consumption to 62.6 percent next year, from 64.4 percent now, Xinhua News Agency reported Tuesday, citing National Energy Administration head Nur Bekri. It’s the first time the government has suspended the approval of new coal mines, according to Deng Shun, an analyst with ICIS China. “This new policy, along with efforts to eliminate inefficient mines, may help to ease the severe domestic oversupply” of coal, Deng said by phone from Guangzhou. “It will take several years to take effect.”
Secretary of State John Kerry says the climate change deal he helped broker in Paris was the Obama administration’s most “important” accomplishment in 2015. “As one year gives way to the next, international leaders have an opportunity to build on several major achievements of 2015,” Kerry wrote in an oped published Tuesday in the Boston Globe in which he also listed the nuclear deal with Iran, signing the Trans-Pacific Partnership, and normalization of diplomatic relations with Cuba. “Of these, none is more important than the recent global agreement in Paris to prevent the most harmful impacts of climate change.” Kerry wrote. “We have a shared responsibility now to sustain the momentum generated in Paris, so that the targets established there are considered not a ceiling on what we can accomplish, but rather the platform upon which we can make further gains,” Kerry wrote.
U.N. Secretary-General Ban Ki-moon said he’s “very much grateful” to former President George W. Bush for kick-starting efforts that led to a first-of-its-kind international agreement on climate change. In an interview with The Associated Press, Mr. Ban spoke of a 2007 U.N. climate conference in Bali where the U.S. agreed, albeit reluctantly, to enter negotiations for addressing climate change. “Miraculously, I was able to save this one, but I didn’t know why,” Mr. Ban said. It wasn’t until the end of Mr. Bush’s presidency that he finally found out. In early 2009, Mr. Ban and his wife were invited to dinner at the White House, where Mr. Bush explained that when the Bali meeting reached an impasse, he got a call from the head of the U.S. delegation asking for direction, AP reported. “Suddenly, you came to my mind,” Mr. Ban recalled the president telling him. “Then I told the delegation head, ‘Do what the secretary-general of the U.N. wants to do.’”
Milwaukee Journal-Sentinel: Paris Conference nothing but hot air
The hype and hyperbole leading up to the COP 21 Climate Conference last month in Paris was nothing short of amazing. World leaders and other self-described experts attempted to convince people around the world that the conference was critical to the future of the planet, critical to the future of life itself. Noted environmental scientist Pope Francis ominously warned mankind that “we are on the brink of a suicide.” Global warming enthusiasts and President Barack Obama were hoping that the 200 or so nations attending the summit would agree to a compact that would reduce greenhouse gas emissions so that global temperature increases would be limited to 2 degrees Celsius above preindustrial levels. In reality, they were hoping to create a legally binding agreement that would impose draconian carbon dioxide restrictions on advanced countries such as the United States and, in the process, unplug our modern society and push us back into the stone age. They also wanted contractual language that would have forced the U.S. and other developed nations to pay $100 billion or so a year in extortion money, some called it climate reparations, to the least developed nations of the world.
Huffington Post: Four climate change myths
Myth 1: We can firmly connect global action on emissions to a temperature rise target: Much time was spent (in Paris) arguing between capping warming at 2 degrees or 1.5 degrees, mostly to appease small island states. However, the climate system has far too many variables to draw a clean mathematical relationship between emissions, sinks and warming.
Myth 2: Resolving climate change is ultimately a question of money: Helping poor countries adapt to climate change is worthwhile, but this is justified by humanitarian and justice concerns and not by reduced emissions. The fact is that a dollar spent reforming the Chinese, Indian — or, for that matter, the American — economy to use less energy would have far greater effect on global emissions than a dollar spent helping a small poor country buy solar panels.
Myth 3: Technology will eventually provide a solution: Despite what many hope, it is not clear what technology the developed world has to offer. Rich countries may eventually invent a new technology that radically changes how we use energy, but this hope is no replacement for a real policy like a carbon tax.
Myth 4: The world can decouple economic growth from the use of fossil fuels. … this is unattainable without radical new technology or nuclear energy (which is usually off the table). How are we supposed to provide electricity for the billions of people who still lack access to reliable energy — a basic right — without using carbon? The International Energy Agency predicts that over 75 percent of the world’s energy in 2040 will still be provided by fossil fuels. A radical shift to renewables is not feasible in the short-term.
San Diego Union Tribune: San Diego’s climate change plan gets final OK
Raising the bar for municipalities across the country, San Diego on Tuesday adopted one of the nation’s most ambitious plans to cut carbon emissions. The City Council unanimously approved the co-called Climate Action Plan, which requires annual emissions be cut in half during the next two decades based heavily on a strategy to use 100 percent renewable energy within that same timeline. If the city doesn’t follow through on its promise to fight climate change, environmental groups and even the state attorney general could file lawsuits to force elected officials to comply. Several environmental advocates warned at Tuesday’s meeting that they were ready to use legal action if necessary.
Violent weather in the North Sea killed an oil worker for a Norwegian firm and prompted oil companies to evacuate workers after a barge broke loose in the storm. Statoil, a Norwegian company, and COSL — China Oilfield Services Limited — issued a statement say-ing they had learned “with great sadness” that one person had died and two were injured when a wave broke over a drilling rig Wednesday. The rig, called the COSL Innovator, is under contract to Statoil at the Troll field in the North Sea, west of Bergen, a city on Norway’s southwestern coast. The injured people have been taken by helicopter to shore, the statement said. The barge that broke loose had drifted passed BP’s Valhall oil field — but remained unmanned and out of control early Thursday, a rescue operation coordinator said. Efforts to bring it under control were continuing, he said.
Beer, apples, chocolate, coffee, wine, chips, peanut butter, seafood, rice and avocados.
Natural disasters and extreme weather events will strike many places that are densely populated: 50 per cent of Americans live in coastal regions exposed to storms and sea level rise, 70 per cent of Americans live in cities prone to heat waves; major inland cities lie along rivers that will swell to record heights, and the fastest growing part of the nation is the increasingly arid West. People may, indeed, suffer from anxiety about climate change but not know it. They will have a vague unease about what is happening around them, the changes they see in nature, the weather events and the fact that records are being broken month after month. But they won’t be sufficiently aware of the source. This anxiety will increase as reports of the gravity of our condition become more clear and stark. Our mental healthcare system is not prepared for so many new patients.