This week we are back to OPEC, which finally agreed to limit production in an attempt to stop the “downward spiral” in oil prices:
Al Arabiya: OPEC powers agree to oil output freeze
Top oil officials from Saudi Arabia, Russia and several key OPEC members agreed on Tuesday to freeze oil output productions after a meeting in Doha to tackle a devastating supply glut. The talks in the Qatari capital Doha, which had been kept under wraps until recent days, involve powerful Saudi Oil Minister Ali al-Naimi and his Russian counterpart Alexander Novak, sources said, two figures who must reach an accord for any coordinated global action to hold any hope of success. They were joined by Venezuela’s Oil Minister Eulogio Del Pino, who has in recent weeks been visiting major oil producers to rally support for the idea of “freezing” production at current levels in an effort to halt a downward spiral in prices, sources have said. Qatar, which holds the rotating presidency of OPEC this year, was also present as it played an important role in coordinating consultations among members and suggestions for extraordinary meetings of the group. The meeting came after more than 18 months of declining oil prices, knocking prices be-low $30 a barrel for the first time in over a decade. The slump has been longer and deeper than anyone predicted, and the mood may be shifting among producers which until now have been determined to defend market share rather then prices.
Only to have its plans torpedoed by Iran:
Wall Street Journal: Iran Balks at Committing to Capping Its Oil Production
Iran dented the efforts of other big oil exporters to limit production Wednesday by refusing to curb its own output, demonstrating the limits of OPEC’s power to boost prices amid rising tensions among its members. Iran’s oil minister Bijan Zanganeh’s decision threw into question the future of a plan brokered by Saudi Arabia and Russia this week for major oil producing countries to limit their output to last month’s levels. The efforts come as the Organization of the Petroleum Exporting Countries scrambles to find ways to prop up an oil market rocked by surging production that outpaces demand by more than one million barrels on any given day. Prices have fallen by two-thirds since June 2014, throwing global markets into turmoil and ravaging OPEC countries like Venezuela and Nigeria and nonmember Russia. “Iran is saying, ‘We are not playing with you,’ ” said John Hall, chairman of the London consultancy Alfa Energy and a longtime observer of OPEC. “If Iran is working outside OPEC, the group cannot move. OPEC cannot do anything without Iran.” The broken-down oil talks also added a new layer to the heightening tensions between Saudi Arabia and Iran, longtime rivals who are the Middle East’s dominant powers for the Sunni and Shiite strains of Islam, respectively.
More stories below, including nuclear in South Australia and South Africa, Tesla batteries in Hawaii, Scotland facing a power crisis, how EDF’s decision to keep Torness open undermines democracy, the impacts of Brexit on UK renewables, the world’s largest floating solar PV plant, National Grid signs up for “footroom”, the Gatwick Gusher, Patrick Moore’s $100,000 CO2 wager and what really happened to 150,000 Adelie penguins.
Oil prices fell 4 percent on Friday, with Brent down a third straight week, as record high U.S. crude stockpiles intensified worries that a plan to freeze world output will do little or nothing to reduce massive oil supplies already in the market. A slide in the U.S. equity markets, which have for weeks been trading in tandem with oil, also weighed on crude, traders said. Brent crude settled $1.27, or 3.7 percent, lower at $33.01 a barrel. U.S. crude lost $1.13, also finishing 3.7 per-cent lower at $29.64. Even data from industry firm Baker Hughes showing the U.S. oil rig count at its lowest since December 2009 after nine straight weeks of declines failed to lift crude prices. Brent finished the week down 1 percent while U.S. crude ended flat after a particularly volatile week for oil, where prices fell and rose as much as 5 percent in a day.
The capacity of wind power generation worldwide reached 432.42 gigawatts (GW) at the end of 2015, up 17 percent from a year earlier and surpassing nuclear energy for the first time, according to data released by global industry bodies. The generation capacity of wind farms newly built in 2015 was a record 63.01 GW, corresponding to about 60 nuclear reactors, according to the Global Wind Energy Council based in Brussels. The global nuclear power generation capacity was 382.55 GW as of Jan. 1, 2016, the London-based World Nuclear Association said. Both wind power and nuclear energy are being touted as alternatives to fossil fuel power as they produce fewer greenhouse gases. Wind energy has captured renewed attention as technological innovation has considerably lowered its generation costs while nuclear power continues to suffer a backlash following the 2011 Fukushima meltdowns. Wind power is the leading energy source in the transition from fossil fuels to renewables, the wind energy council said as it released the data last week.
Decarbonise SA: Nuclear energy and climate change
In the margins of the Paris climate talks, a refreshing dialogue was taking place. Nuclear energy was being put forward for serious consideration by some of the very scientists responsible for putting climate change on the public agenda. The views of James Hansen, Kerry Emanuel, Ken Caldeira and Tom Wigley are summarised in this editorial. They have in effect thrown a gauntlet at the feet of the organisations and governments that claim to work towards preventing a greater than two-degree rise in average global temperatures. This is a gauntlet that sorely needed to be thrown. Among the country exhibitions at the talks, only the USA was brave enough to promote nuclear energy as a climate solution, and then partly in the context of advanced (i.e. not yet commercially available) technology. The depressing fact of the matter is that fear of the reaction against nuclear energy has become so great that countries would prefer not to openly acknowledge the CO2 reducing potential of the technology, even when the fate of the climate may, in part, rest upon it. This culture of silence from those who claim to represent our collective interests is deeply disturbing.
A royal commission headed by former governor Kevin Scarce has tentatively found that SA could host a viable and highly profitable waste storage and disposal facility. The controversial proposal has been slammed by green groups, who have promised to campaign fiercely during a period of public consultation. While both major parties at a state and federal level are awaiting the royal commission’s final report before formally responding, neither have ruled out support for a waste dump. Labor’s national platform, which states that the party is “strongly opposed to the importation and storage of nuclear waste” in Australia, had been seen as a major hurdle. But Opposition Leader Bill Shorten on Tuesday appeared to offer his qualified support, saying his views were aligned with SA Premier Jay Weatherill. “What we need to make sure if it’s going to be high levels of storage, getting into the international business of storing other people’s nuclear waste, is that there’s an economic benefit, that it meets all the environmental concerns, and that there is community support,” Mr Shorten said. Federal Resources Minister Josh Frydenberg said there was economic merit in waste storage as well as a need to dispel myths about the process. “If the South Australian people and the South Australian government want to go down the path of bringing in high-level waste, it would be a brave federal government that stood in its way,” he told the National Press Club.
State governments may have to spend billions of dollars to duplicate the electricity network to cope with the unreliability of renewable energy sources such as wind and solar, according to the national energy forecaster. As the Australian Energy Market Operator released a report that found there could be reliability issues for the South Australian market, which has embraced renewable technology, its chief executive, Matt Zema, said the rise of wind and solar could also create problems throughout the country. “It is becoming more and more of a challenge. We might need to build another interconnector to the South Australian market to improve reliability and in the longer term another bigger loop across the nation to be a back-up,” Mr Zema told The Australian Financial Review. Electricity prices spiked in South Australia late last year after problems with the Heywood interconnector to Victoria, effectively cutting off South Australia from the NEM. South Australia did not have enough of its own locally generated power to cope with demand, which significantly pushed up prices. A joint report between AEMO and South Australia’s electricity transmission company Electranet found there will be ongoing issues with controlling reliability in the state’s power network either during or following any future loss of the Heywood interconnector and the closure of coal-fired power stations.
Minister of Energy Tina Joemat-Pettersson says South Africa has to build nuclear power stations because the country doesn’t have enough water. Joemat-Pettersson argued the case in Parliament during the second and final day of debate on President Jacob Zuma’s State of the Nation Address (Sona). “Koeberg [Nuclear Power Station] uses 22 billion litres of sea water, it does not use fresh water, and it recycles water. Twenty-two billion litres of sea water; nuclear energy also contributes to desalination and we are going to need it.” The mister says by contrast, coal-fired power stations consume billions of litres of water. “Medupi Power Station will use 17 billion litres of fresh water a year; 17 billion litres of water, which we will all be looking for because this drought is not going to stop tomorrow.” Joemat-Pettersson says renewable energy cannot provide sufficient baseload supplies to support the industrialisation of the country.
Solar installer SolarCity announced on Tuesday that it plans to use batteries from electric car maker Tesla for a solar project that it has been working on in Hawaii. SolarCity’s Tesla collaboration will make up a solar and energy storage system across 50 acres just north of the Hawaiian city of Lihue. The company plans to install 13 megawatts, or 52 megawatt-hours, worth of Tesla batteries. While 13 megawatts is relatively small in terms of power generation, it’s actually quite large for a grid-connected battery project. The utility will use the batteries to generate power at night, when the sun goes down between the hours of 5pm to 10pm, and when the solar panels are no longer producing energy. The utility will pay SolarCity 14.5 cents per kilowatt hour over a 20-year contract for the combined solar and storage project.
The United States could slash greenhouse gas emissions from power production by up to 78 percent below 1990 levels within 15 years while meeting increased demand, according to a new study by NOAA and University of Colorado Boulder researchers. The study used a sophisticated mathematical model to evaluate future cost, demand, generation and transmission scenarios. It found that with improvements in transmission infrastructure, weather-driven renewable resources could supply most of the nation’s electricity at costs similar to today’s. The model allowed researchers to evaluate the affordability, reliability, and greenhouse gas emissions of various energy mixes, including coal. It showed that low-cost and low-emissions are not mutually exclusive.
French energy firm EDF will extend the life of four of its eight nuclear power plants in the UK. Heysham 1 and Hartlepool will have their life extended by five years until 2024, while Heysham 2 and Torness will see their closure dates pushed back by seven years to 2030. EDF said its deci-sion to extend the life of its plants followed “extensive technical and safety reviews”. Chief executive Vincent de Rivaz said: “Our continuing investment, our expertise and the professional relationship we have with the safety regulator means we can safely prolong the operating life of our nuclear power stations. Their excellent output shows that reliability is improving whilst their safety and environmental performance is higher than ever.” The four nuclear plants employ about 2,000 permanent staff and 1,000 contractors. They provide electricity to about a quarter of the UK’s homes. The announcement comes amid concern about the amount of energy available to keep the lights on, due to the closure of many of Britain’s ageing power plants.
The Scottish Green Party has accused energy film EDF of dictating government policy by extending the life of an East Lothian nuclear power station by seven years. EDF announced on Tuesday the decision to extend the operating life of Torness nuclear power plant, which will be 42 years old when it is retired in 2030. The Scottish Green’s infrastructure and investment spokeswoman said the move undermined democracy. “The announcement is bad news for East Lothian and bad for Scotland,” Sarah Beattie Smith said. “The fact that a private company can dictate energy policy for another seven years undermines democracy, both in the local community in East Lothian and nationally at a time when the Scottish government ought to be focused on our ambitious climate targets. Torness is almost 30 years old and we should be planning for its decommissioning. With Scotland’s abundant renewable energy resources and the need to focus on energy efficiency, we have no need for nuclear [power] and we should be investing in jobs and infrastructure that do not store up exorbitant costs for future generations.”
Utility Week: National Grid to pay customers to use excess wind power
National Grid has signed up to the demand turn-up system, Footroom, which is an automated service that notifies connected businesses of an approaching increase in wind. Businesses can then increase demand and production while wind farm output is at its highest, receiving an additional payment from National Grid for doing so. This means National Grid can leave the wind generation running and avoid making controversial ‘constraint payments’, whereby wind farms are paid to close down when there is too much wind. National Grid said: “The purpose of demand turn-up is to increase demand on the system at times of high generation and low demand. Primarily it will be used overnight to balance wind and interconnector flows on top of nuclear baseload.” Flexitricity’s founder and chief strategy officer, Dr Alastair Martin, said: “Currently, when the wind is at its strongest, the grid turns large power stations down or off. But it can’t turn down all of them, so sometimes it has to turn off some of the wind farms. With Footroom, businesses can boost productivity for minimal extra cost and are incentivised to do so. In turn, the grid can increase the amount of electricity distributed to homes from clean, renewable energy sources.”
The UK’s energy future was left up in the air after EDF dodged a decision on Hinkley Point C, the planned nuclear plant which will provide 7% of Britain’s electricity and employ 25,000 people by 2025. The French giant said the first phase of construction would launch “very soon”, but failed to commit to a timescale or confirm whether it had funding in place, casting doubt on the future of the project. EDF has already sold a 33.5% stake to China General Nuclear Power Corporation, but today’s dividend cut could ignite fears the energy giant lacks the firepower to execute the plan. Prime Minister David Cameron has been trying to smooth through the £18 billion construction costs of the plant in Somerset by wooing Chinese investors to back the project.
Construction of Europe’s largest floating solar PV array is underway on London’s Queen Elizabeth II reservoir, where the installation will help Thames Water meet its target of self-generating a third of its own power by 2020. The 6.3MWp system will cover around a tenth of the reservoir, with the energy produced to be used to help power a nearby water treatment facility. Just over 23,000 solar panels will be installed to make use of the reservoir near Walton-on-Thames, which is surrounded by residential properties. The project is the result of an agreement between Thames Water, Ennoviga Solar and Lightsource, which will oversee deployment of more than 61,000 floats and 177 anchors to provide the floating platform for the solar array. The project marks the first time Lightsource, the UK’s largest PV developer, has worked on a floating solar installation as the company looks to build on its experience in the rooftop and ground-mounted sectors.
Scotland will face serious electrical supply problems when Longannet coal-fired power station is closed next month, a leading energy expert has warned. Paul Younger, of the University of Glasgow, believes the country will no longer be able to produce enough power when the Fife facility shuts on March 31. The professor of energy engineering said he was “confident” that supplies will be hit by the closure and warned that renewable schemes would not be able to fulfil peak demand. He also warned that inadequate infrastructure means Scotland cannot rely on suppliers south of the Border to bail the country out. He said: “When we lose Longannet at the end of next month, we are going to start to see problems with voltage control – I am confident of that. It’s what we call ‘brown-out’ rather than ‘black-out’ in the first instance but the fact of the matter is, that from the start of April this year, Scotland is able to produce only 60 per cent of the peak demand for electricity on demand. So, there will be times when we are fortunate and the wind will be blowing at just the right second but our luck won’t always be in.
Shares in UK Oil and Gas Investments soared by as much as 77pc after the Aim-listed developer announced that oil from its well near Gatwick Airport in Surrey flowed at a faster rate than expected. UK Oil and Gas (Ukog) has claimed that oil from the so called “Gatwick gusher” at Horse Hill flowed from 900m below ground level to the surface without extra help from operators, and at a better rate than expected of 463 barrels a day. The exploration company said the first ever flow test proves that “significant quantities” of Surrey oil can be brought to the surface “at excellent flow rates”. The well flowed for more than seven hours yesterday (Monday) and further flow tests will be carried out today. Ukog and its partners in Horse Hill have claimed that more than 9.2 billion barrels of oil lie under the 55 square kilometre licence area in the Weald Basin. However, some experts have questioned how much of this oil will be recoverable and the viability of large scale drilling ever taking place in the area.
Shares in German energy group RWE, the parent company of npower, plunged almost 14pc after it announced it was scrapping its dividend in a bid to preserve cash amid deteriorating market conditions. Chief executive Peter Terium said the decision to cancel the dividend for the 2015 financial year “did not come easily”, but was “necessary to strengthen our company” as the economic prospects for conventional power generators in RWE’s home German market have worsened. Germany wants to generate 80pc of its electricity from renewable sources by 2050 and has been subsidising green energy, such as wind and solar power, in recent years. This change in policy has flooded the market with state-subsidised renewable energy and coincided with a sharp global downturn in wholesale energy prices, heaping pressure on utility companies such as RWE and its rival Eon, which operate coal and gas-fired stations as well as nuclear plants. Energy companies also face a multi-billion pound nuclear clean up bill after the German government called for all nuclear plants to be shut days after the Fukushima nuclear disaster in Japan in 2011.
Britain faces a “looming gap” in its energy supplies because of a series of failures in the Government’s scheme to keep the lights on, British Gas owner Centrica has warned. Ministers must make “significant changes” to their capacity market, which pays power stations to guarantee their availability, in order to push the subsidy high enough to secure investment in new gas plants, it said. The current scheme overestimates how much wind power may be available, given there will be “zero” when the wind doesn’t blow, and procures insufficient reliable power plant capacity, the energy giant said. Centrica issued the warning as it reported annual results in line with expectations and reassured investors that it could “more than pay” for its dividend – which it cut by 30pc last year – even at current low commodity prices. Shares rose almost 7pc on the news.
Dozens of new highly polluting diesel generators are to be built in the UK after being handed consumer-funded subsidies worth £175m over 15 years. Companies proposing to build 650 megawatts of new small diesel engines won subsidies through the latest round of the Government’s capacity market scheme, which is designed to ensure there are enough power plants to keep the lights on in 2019-20. The scheme was originally intended to deliver big new efficient combined-cycle gas turbine (CCGT) plants to replace old polluting coal-fired power stations, but has so far failed to do so. Subsidies are awarded through a reverse auction to whichever companies can of-fer to provide capacity for the lowest possible price. Five proposed big new CCGT plants with a combined capacity of 4GW entered the auction, according to analysis by Cornwall Energy, but withdrew as the subsidy on offer fell to £18 per kilowatt – too low to be economically viable. In-stead, the capacity market, which will pay out more than £830m in consumer-funded subsidies in 2019-20, has primarily benefited existing gas, coal and nuclear plants – as well as sparking an unintended new industry constructing diesel plants.
British firms can expect to see their energy bills fall by between 10-20pc this summer as turmoil in the oil market pays dividends for customers. The wholesale cost of gas on the UK market has plummeted by more than 40pc in the last year due to a global oversupply and depressed oil prices. The weaker gas price has also caused wholesale electricity prices to slump by more than 30pc, because a large amount of the UK’s power network is gas fired. Although companies are unlikely to see their bills fall at the same rate once government levies and transport costs are included, cost savings are still likely to top those seen by domestic customers. Typically, firms are able to negotiate contracts with energy suppliers, meaning that the business-to-business market is more competitive than household supply.
Spurred on by the EU Renewable Energy Directive and government action, private sector investment and innovation has driven an incredible surge in renewables across the UK (and the world). Between 2008 and 2015, the percentage of electricity from renewables in the UK grew from around five to over 20 per cent. The costs of solar power have fallen 75 per cent in the past five years and they continue to fall. Innovations such as Atlantis Resources’ tidal turbine project – predicted to produce enough power for 175,000 homes – are fast moving from pipedream to reality. The UK is also a world leader when it comes to collaborative scientific research. But all of this is threatened by short-sightedness of a very British kind. This year we will have a referendum on our membership of the EU. Take away the EU Renewable Energy Directive and a Brexit would likely see recent government attacks on renewables intensify. And as Bloomberg reports, the UK will lose out on billions of pounds of renewable investments – in wind farms and grid upgrades – if we leave and ditch our stake in the European Investment Bank. Furthermore, any post-Brexit move to curtail freedom of movement would see us cut off from large parts of the EU science programmes that have born us so much fruit. Despite our small population, UK scientists publish 16 per cent of the world’s most cited research papers. Our excellence sees the UK get a disproportionate amount of money from the EU: “For every £1 we contribute to the research pot, we get approximately £1.40 back,” says New Scientist.
International Business Times: Obama’s Climate Envoy Warns Of ‘Diplomatic Consequences’ If US Reneges On Paris Accord
U.S. President Barack Obama’s top climate negotiator Todd Stern on Thursday warned of “diplomatic consequences” if a new president tried to back out on commitments under the Paris climate accord signed in December. The comments were made just days after the U.S. Supreme Court temporarily froze Obama’s ambitious Clean Power Plan, which seeks to cut pollution from power plants. Speaking to reporters in London Thursday, Stern said that the fallout would be similar to when former U.S. President George W. Bush pulled the U.S. out of the Kyoto Protocol in 2001. “There was a lot of blowback that the U.S. got generally diplomatically across the range of diplomatic concerns and I have no doubt that it would be very significant if the U.S. were to do that with regard to Paris, probably much, much more significant than what happened before,” Stern reportedly said. “There is a record there that you can look at to have a pretty good sense that there would be diplomatic consequences.”
Reuters: U.N.’s climate chief to quit
The U.N.’s climate chief said on Friday she will step down in July, at the end of a six-year term. Christiana Figueres, a 59-year-old Costa Rican, said she would not accept any extension of her term as head of the Bonn-based U.N. Climate Change Secretariat after what she called the historic Paris Agreement. Figueres, a former Costa Rican climate negotiator, took over the U.N. job at a low point in 2010 after a summit in Copenhagen the year before collapsed in acrimony between rich and poor. She patiently worked to build trust among governments with radically different interests, ranging from the United States and China to small island states worried by rising seas or OPEC nations fearing a loss of export revenues. Nicholas Stern, of the London School of Economics who wrote a 2007 study about the economics of climate change, said Figueres had an “outstanding ability to see where we need to go as a world and to bring people together”. Her successor is likely to come from a developed nation.
A scientific team led by Christopher Turney, a professor of climate science at Australia’s University of South Wales (UNSW), claims that a giant iceberg caused by the effects of global warming decimated a colony of Adelie penguins by blocking their way to feeding grounds off the eastern coast of Antarctica. But some critics are challenging that assertion, pointing out that the penguins may have just migrated to happier hunting grounds. “More than 150,000 Adelie penguins have perished in a single colony in Antarctica after the grounding of a giant iceberg” five years ago, Turney and fellow researchers from UNSW’s Climate Change Research Centre and New Zealand’s West Coast Penguin Trust wrote in an article published this month in the British peer-reviewed journal Antarctic Science. However, the study acknowledged that “abandoned Adelie penguin colony sites are common,” and stated that another penguin colony located about five miles away was “thriving”. Turney was the leader of the Australasian Antarctic Expedition 2013-2014 that went to Antarctica to update the scientific records compiled a century ago by Sir Douglas Mawson, including a census of the penguin population at Cape Denison.
Dr. Patrick Moore, PhD ecologist and President of Ecosense Environmental Inc. has offered a bet of US$100,000 that global CO2 emissions will be higher in the year 2025 than they were in 2015. His offer was made a month ago to his nearly 10,000 followers on Twitter (@EcoSenseNow) and was re-tweeted to tens of thousands more, yet no one has taken the wager. “The warmists claim that 97 percent of climate scientists believe that human CO2 emissions will cause dangerous climate change,” Dr. Moore stated. “The UN Paris climate summit was hailed as ‘an historic agreement that is our best chance save the planet’. If that is so then surely they believe CO2 emissions will come down during the next ten years, as pledged by all the countries attending the meeting. Yet no one seems willing to put their money where their rhetoric is.”