Gas alert as demand and prices rise

[Vortex]

PM says gas won't run out despite freeze

Aw heck, we're stuffed then ....

http://uk.reuters.com/article/idUKTRE6081LI20100109

[mikepepler]

Yet despite his promises, if you look at the National Grid website, there was another GBA issued just after 5pm... Once again, prompted by problems with the supply to the Langeled pipeline, as through dropped from 70mcm/day at lunchtime to 10/mcm/day right now (9pm).

Short, medium and long range storage are all being drawn on heavily right now. If the weather stays cold, or perhaps even just average, there won't be spare gas to refill the stores, and if more cold weather comes later in the winter...

[Andy Hunt]

http://marketinformation.natgrid.co.uk/ ... gView.aspx#

[Adam1]

but all this misses the point of the Times article, which was to ask how is all this to be made to happen - and paid for?

The investment in gas supply infrastructure from which we are now benefiting was made because the capitalist bastards saw an opportunity to make money and they took it, just as the Government's market-based approach assumed, because that's what they do.

In a world where there is a large slice of cheap or even free electricity generation it will be much more uncertain that if you invest in manageable, reliable means of compensating for the variability of wind, you will make money out of it - so the necessary investment may well not come from the market.

Your point about geographical diversity - yes, but only up to a point. It's easy to build the second wind farm a long way from the first, and the third, but sooner or later you run out of places that are a long way from all the existing sites such that the 2174th windfarm will have to be built close to, and therefore its output will be correlated with, at least some of the other 2173. And while it is true that there is never no wind anywhere, particularly in Europe as a whole, it is also true that there is sometimes very little wind anywhere and sometimes a lot of wind everywhere.

In describing the problem with the market's ability to finance 'back-up', there appears (?) still to be an assumption that we will have to invest in lots of new (presumably fossil fuel/uranium based) generation to 'back up' wind. This isn't a solution for me. We have to move towards a near 100% renewables grid and make the best of it using storage based methods of 'backing up' renewables. If the market cannot deliver then non market mechanisms will be needed.

Whatever the problem of pricing and market mechanisms, these cannot be reasons not to go ahead with variable and relatively unpredictable renewable sources. In the end, we have no choice. Physical constraints always trump political, ideological or economic ones.


I'm not saying that geographical distribution 'solves' variability, but it does mitigate it enough to invalidate a simple extrapolation.

[kenneal - lagger]

We'll need a higher price for carbon to level the playing field. At the moment the pollution caused by fossil fuel power stations isn't charged for, but should be.

[Keepz]

In a world where there is a large slice of cheap or even free electricity generation it will be much more uncertain that if you invest in manageable, reliable means of compensating for the variability of wind, you will make money out of it - so the necessary investment may well not come from the market.

Why not? Unless you are saying that the wind will blow more reliably in the future, isn't the market for compensating for wind power unreliability fairly guaranteed? And isn't the guarantee of a massive build of wind power also guaranteeing the size of a future market for unreliability compensation?

Sounds like a venture capitalist's dream come true!!

And as that is the case, isn't it the job of the market to figure out the most efficient and cost-effective way of doing it, in order to make it profitable?

You can't just pick and choose where your free market argument should or shouldn't apply Keepz.

What I'm saying is precisely that there isn't a free market - the Government is trying to make the market deliver low-carbon energy supplies in a way which is not the most efficient and cost-effective, and markets don't like investing in inefficiency and non-cost-effectiveness and can't be made to.

[Keepz]

We'll need a higher price for carbon to level the playing field. At the moment the pollution caused by fossil fuel power stations isn't charged for, but should be.

Agree that the price of carbon needs to go up (and the comment should be addressed to the European Commission and other EU governments, for it's their generosity with carbon allowances that has kept the price low) - but would query whether that will level the playing field; it's already tilted away from fossil fuels (and nuclear) by the Renewables Obligation

[emordnilap]

We are idiots to keep spending billions on new energy sources without spending an equal amount on reducing our energy requirements.

I agree.

That now makes two of us.

[biffvernon]

So what do we think of the Hansen approach of carbon fee with dividend, or the British Columbia carbon tax, now that Annie Leonard has trashed any ideas of cap and trade (see thread books film magazine forum)?

[madibe]

kenneal wrote:
We are idiots to keep spending billions on new energy sources without spending an equal amount on reducing our energy requirements.


I agree.

That now makes two of us.

make that 3

[Andy Hunt]

In a world where there is a large slice of cheap or even free electricity generation it will be much more uncertain that if you invest in manageable, reliable means of compensating for the variability of wind, you will make money out of it - so the necessary investment may well not come from the market.

Why not? Unless you are saying that the wind will blow more reliably in the future, isn't the market for compensating for wind power unreliability fairly guaranteed? And isn't the guarantee of a massive build of wind power also guaranteeing the size of a future market for unreliability compensation?

Sounds like a venture capitalist's dream come true!!

And as that is the case, isn't it the job of the market to figure out the most efficient and cost-effective way of doing it, in order to make it profitable?

You can't just pick and choose where your free market argument should or shouldn't apply Keepz.

What I'm saying is precisely that there isn't a free market - the Government is trying to make the market deliver low-carbon energy supplies in a way which is not the most efficient and cost-effective, and markets don't like investing in inefficiency and non-cost-effectiveness and can't be made to.

Can you give me a successful example of a purely market-driven, efficient and cost-effective low carbon energy supply solution?

[Keepz]

[quote="Andy Hunt

What I'm saying is precisely that there isn't a free market - the Government is trying to make the market deliver low-carbon energy supplies in a way which is not the most efficient and cost-effective, and markets don't like investing in inefficiency and non-cost-effectiveness and can't be made to.

Can you give me a successful example of a purely market-driven, efficient and cost-effective low carbon energy supply solution?[/quote]

No, because the carbon price hasn't yet been got to work properly; if the Government would focus on getting that right, thereby creating a commercial incentive to reduce carbon outputs to complement the existing commercial incentive to supply energy, the market would find its way to deliver such solutions. The same approach worked very effectively in the US with sulphur emissions


Later edit: what am I thinking of, of course there is an example of a market-driven low carbon energy supply solution - the existence of companies like GoodEnergy, who have been able to base a business model on providing electricity sourced from renewables for those who want and are prepared to pay the premium for it. A large part of the Government's problem, however, is precisely that most consumers don't particularly want and aren't prepared to pay a premium for low-carbon energy, which is why Governments have to find ways of creating the commercial incentive that the demand side doesn't

[emordnilap]

The same approach worked very effectively in the US with sulphur emissions

Jon Hilsenrath, ‘Cap-and-trade’s unlikely critics: Its creators - economists
behind original concept question the system’s large-scale usefulness, and recommend emissions taxes instead,’ Wall Street Journal, August 13, 2009:
”When he was a graduate student in the 1960s working to reduce pollutants, Thomas Crocker devised a cap-and-trade system similar to one being considered in Congress… ‘I’m skeptical that cap-and-trade is the most effective way to go about regulating carbon,’ says Mr. Crocker, 73 years old, a retired economist in Centennial, Wyo. He says he prefers an outright tax on emissions because it would be easier to enforce and provide needed flexibility to deal with the problem… The other, John Dales, who died in 2007, was also a skeptic of using the idea to tame global warning. ‘It isn’t a cure-all for everything,’ Mr. Dales said in an interview in 2001. ‘There are lots of situations that don’t apply.’ Mr. Crocker sees two modern-day problems in using a cap-and-trade system to address the global greenhouse-gas issue. The first is that carbon emissions are a global problem with myriad sources. Cap-and-trade, he says, is better suited for discrete, local pollution problems. ‘It is not clear to me how you would enforce a permit system internationally,’ he says. ‘There are no institutions right now that have that power.’ The other problem, Mr. Crocker says, is that quantifying the economic damage of climate change -- from floods to failing crops -- is fraught with uncertainty. One estimate puts it at anywhere between 5% and 20% of global gross domestic product. Without knowing how costly climate change is, nobody knows how tight a grip to put on emissions…
Mr. Crocker says cap-and-trade is better suited for problems where the damages are clear -- like acid rain in the 1990s -- and a hard limit is needed quickly.”
11. Even pro-corporate lobbies like the American Enterprise Institute admit this is a bad idea. See Alan Viard, ‘The cap-and-trade giveaway,’ The American, June 26, 2009, http://www.american.com/archive/2009/ju ... e-giveaway, last accessed October 11, 2009.

[Aurora]

The Guardian - 11/01/10

Russian energy group with the power to plunge Europe into darkness

http://www.guardian.co.uk/business/dan- ... scompanies

[Aurora]

BBC News - 11/01/10

National Grid has issued its latest "balancing alert" on gas supplies.

It is the fourth warning of a potential shortfall in supplies since the current cold spell began.

These alerts are a signal to the market to increase gas supplies, and encourage electricity providers to use alternative fuels such as coal.

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