Tag: energy policy

How a new industrial revolution in green energy is transforming the North once again

6 October 2016

Sustainable business

The North of England has long been a proving ground for the kind of engineering innovations that have transformed the world. The heartland of the First Industrial Revolution, it is now at the centre of a new revolution focused on clean energy production and sustainable power, led by organisations like Drax.

Europe’s largest decarbonisation project

Over the last decade, Drax has been carrying out a major high-tech engineering and infrastructure project to upgrade half its generating units to use sustainable biomass in place of coal.

These converted units now produce enough electricity to power Birmingham, Leeds, Sheffield, Liverpool, Manchester and Newcastle – all using compressed wood pellets, cutting carbon emissions by more than 80%.

But more than just having environmental benefits, it’s provided a huge boost to the economy.

Boosting the UK economy

In 2015, Drax contributed more than £1 billion to the UK’s GDP and supported some 14,000 jobs across the country.

“The economic benefit has reached all parts of the country,” says CEO Dorothy Thompson. “We’ve been the catalyst for rejuvenation and growth across the Northern Powerhouse, with port expansion on the coasts of East Yorkshire, the North West and North East.”

This boost was particularly significant in the North, where Drax generated over £620 million for the local economy.

Innovation driving a better future for Britain

It’s these kinds of innovative upgrades that are helping to tackle the urgent environmental challenges that our society faces as we make the transition to lower carbon and renewable power, and changing the way we think about producing energy in the UK.

Having nurtured the Industrial Revolution, today the North of England is again the focus of a major paradigm shift. Where once coal fields and smoke stacks dominated the local landscape, now Drax’s giant biomass storage domes speak of a new future for the region, for the UK, and for renewable energy production as a whole.

To find out more about how Drax has benefited the UK’s economy, please visit https://www.draximpact.co.uk/

The power industry in 2016: Where are we now?

Power generation

Britain is in the middle of a transition. While at one point it was the centre of the global coal industry, it’s now pushing further towards renewable resources. But 2016 has been a tumultuous year marked by political changes that have sent shock waves through the whole country. The energy industry is no exception – but that is not to suggest it’s on shaky ground.

Here we look at some of the year’s major events and how they’ve affected the energy landscape.

Leaving Europe

Britain’s vote to leave the EU could have a major impact on the domestic energy landscape. Europe has played a central role in setting emissions targets for power stations, promoting renewable technologies and trading carbon. The UK also benefits from being in the Single Energy Market, where energy market rules and regulations are harmonised across a number of European countries. A post-Brexit resolution to these issues is likely to remain uncertain for some time.

As Drax CEO Dorothy Thompson told a conference in Florida in late September:

“It will take a number of years for the UK to actually exit the EU, and we think politicians on all sides will push for an orderly departure.”

Implementing the Paris Agreement

Following last year’s Paris Agreement on Climate Change, the UK Government demonstrated its commitment to being a world leader in clean energy by setting its Fifth Carbon Budget. The Budget, initially proposed by the independent advisory body the Committee on Climate Change, sets a cap on the UK’s greenhouse gas emissions for the period 2028-2032. The cap is ambitious and would require the UK to reduce its emissions to a level 57% lower than they were in 1990. The Government is working on a new Emissions Reductions Plan that will map out how it intends to meet this goal and accelerate decarbonisation in the power, heat, transport and agricultural sectors.

Political change

The reshuffle following Theresa May’s election as Conservative Leader and therefore Prime Minister also marked the end of the Department of Energy and Climate Change (DECC), previously responsible for overseeing the country’s energy policy and its transition towards greener, more renewable energy sources. While the decision raised concerns in some quarters over the Government’s commitment to decarbonisation, placing energy policy at the heart of a modern industrial strategy under the new Department for Business, Energy and Industrial Strategy could reap dividends in the long-term.

Green light for Hinkley Point

Perhaps the single most highly scrutinised energy issue of the year, and an indirect fallout of the summer’s political drama, was the Government delaying its approval of the planned Hinkley Point C nuclear power station.

The project backed by EDF and Chinese investors was, when first announced by the French government-controlled energy company in 2007, due to be generating electricity by the festive period just a decade later.

Jumping ahead to 2016 and having been approved by Theresa May two months’ later than the industry anticipated, expectations are that the development is unlikely to cook its first Christmas turkey until 25th December 2025 – at the very earliest. This raises serious questions over what will fill the gap left by aging nuclear power stations that are due to close over the next few years. This said, delays to Hinkley Point C present an opportunity for alternative energy sources such as offshore wind, solar and compressed wood pellets to make their case to work together as smart, affordable solutions that could be in place well ahead of 2025.

Whole system costs

The research and thinking around the issue of whole system costs continued to grow. A series of reports from NERA Consulting and Imperial College London showed that intermittent technologies such as wind and solar make managing the national energy grid more expensive in the absence of flexible, dispatchable technologies like biomass. It is only when these hidden costs are taken into consideration that we can truly understand the affordability of different energy technologies.

Recognising the importance of this issue to good policy making, the Government has commissioned its own research on whole system costs, which is due to be published later this year.

Coal closure

2016 saw some important landmarks in Great Britain’s history as a coal-using nation. A 12-hour stretch in May this year was the first time since 1882 – the year GB’s first coal-fired power station went online – that the country was powered for more than half a day completely by other fuels.

Plans outlined last year by then Energy Secretary Amber Rudd had aimed to ban unabated coal power stations by 2025. This year has already seen coal-fired casualties. Full or partial closures of five major coal burning power plants in Great Britain have taken place in 2016: Ferrybridge, Longannet, Rugeley, Fiddler’s Ferry (some units of SSE’s north west coal station will remain active until next year) and Eggborough (re-opened in late September for the winter 2016/17). By the end of 2016, the equivalent of between two and three Hinkley Cs (8 GW) will have come off the system.

While Rudd’s plans still stand, delays to Hinkley Point C and a lack of new flexible power stations being built in Great Britain means that the Government will need to think carefully about how to get coal off the grid in an orderly fashion to avoid a capacity crunch in the early 2020s.

Ancillary = essential; Capacity crunched

Despite the strides made by renewables over the course of the year and the recent boon to the nuclear sector’s future, GB power infrastructure badly needs flexible fuels. The ability to generate more power – or less – in mere seconds when the country demands it is becoming increasingly important with the growth of wind and solar power.

As more offshore wind arrays are constructed and solar farms and roofs proliferate, there are an increasing number of gaps in our electricity supply being filled by power sources that can be dialled up and down when the wind doesn’t blow and the sun doesn’t shine. While Drax and two planned power projects in the North East of England (Lynemouth and MGT Teeside) are turning to a coal-to-biomass conversion and a new build biomass combined heat and power plant to meet these needs, the Government continues to look for ways to encourage companies to build new gas power stations as well as emerging battery storage technologies. A critical route to incentivising these technologies is the not-very-aptly-named ancillary services market. It involves the high voltage electricity system operator in Great Britain, the National Grid, buying services to ensure the lights stay on, the increasingly electric transport sector keeps running and our high-tech world of work stays online.

Energy future

So far there have been some very big changes over the course of the year. However the energy ecosystem in Great Britain should be robust and flexible enough that the transition from coal to low carbon and renewable technologies in the future should be a secure and affordable one. This will require a mix of smart solutions. A key enabling technology will be coal-to-biomass upgrades that can run as both baseload and flexible generators.

Mind the gap

Dorothy Thompson, (2005-2017 Chief Executive, Drax Group)

28 July 2016

Opinion

Later today the EDF Board is expected to give the go-ahead for a new nuclear power station at Hinkley. This will provide some long overdue clarity for Britain’s energy sector, but we now need to quickly move on and make the right decisions to secure the best mix of power generation.  The drawn out debate around Hinkley Point C has diverted attention away from the sector’s biggest challenge.

The Government has made it clear that coal must come off the system by 2025.  But coal still provides up to one fifth of the UK’s electricity, and plugging that gap will be far from easy.  Nor will doing so in a way that allows the country to meet its carbon targets while supporting the technologies that will deliver a modern energy system fit for the 21st century. The Government’s intention is absolutely right, but how does it intend to meet its target?

Let’s be clear, a positive Hinkley Point C decision will play an important role in the necessary energy mix but will provide no silver bullet. By most estimates, when finally complete, the nuclear plant will provide seven percent of the UK’s electricity needs.  However, this isn’t expected to come ‘on grid’ much before 2030, and let’s remember that in 2030 all but one of the UK’s current operating nuclear reactors are scheduled to be closed. Hinkley will therefore be replacing only some of the lost nuclear capacity, not providing ‘new’ energy to replace coal.

The last few years have seen a huge and welcome expansion in renewable sources of generation like wind and solar in the UK, but they are intermittent and cannot fill the gap alone. They still need to be supported by a constant supply of electricity that can be flexed up and down when the wind does not blow and the sun does not shine – a regular scenario on these shores.

As a form of low-carbon baseload generation, nuclear will undoubtedly be part of the answer. However, as we’ve already seen with Hinkley Point C, planning, funding and building new power stations can be a long and costly process. It has taken over a decade to reach today’s decision. In the past year alone, more than 5 gigawatts (GW) of coal power generation– Hinkley Point C is set to provide 3.2 GW – has come off grid well before the Government’s target of 2025. We don’t have the luxury of time: every day lost adds to the cost of addressing this challenge.

Gas will play a role but many, including the Institution of Mechanical Engineers (IMechE) have pointed out the huge number of gas-fired power stations we’ll need to plug the gap that ending coal creates. IMechE estimates 30 will be required which is clearly unrealistic, since the UK has built just four in the last 10 years.

At Drax, we have developed a solution to these challenges. We have used state of the art technology to upgrade some of our coal facilities to generate electricity from biomass in place of coal.  These facilities are already providing a reliable and flexible flow of electricity that also helps the UK meet its carbon targets.  The biomass we use is compressed wood pellets which perform in much the same way as coal and deliver an 80% CO2 saving.

Our biomass facilities are already powering three million homes and with the right support we can double this, helping to plug the energy gap that old plant coming off and delays to new build will leave us with.

Using biomass is more cost-effective than other renewables. This was illustrated by a recent study from Imperial College and economic consultancy NERA when they analysed the hidden costs of the back-up needed to meet demand created by intermittent renewables. Our biomass facilities can provide all of the electricity services required to keep the UK electricity system stable. Providing these services is set to become increasingly important in the years ahead as a greater need to back-up and balance the system will be required.

Finding the right mix of power generation will not be easy, but it is important we make every effort to get it right. Like Hinkley Point C, biomass is not a silver bullet, but it can and must play its part in helping the country transform to a low-carbon future.

The true cost of replacing coal-fired electricity generation

Dorothy Thompson, (2005-2017 Chief Executive, Drax Group)

17 February 2016

Opinion

To make up for these closures, the Government is already planning to bring on new capacity. A new gas-fired power station will open at Carrington this summer, and we’re expecting to hear any day now that another nuclear power station will be created at Hinkley Point. And of course more electricity from renewables must be added over the years ahead as we look to meet our ‘go green’ targets.

In fact, the Government already has a plan in place to award contracts for new green energy off the back of three auctions over the next four years. The first of them is due later this year.

Drax understands that every one of those auctions is focused on offshore wind.

However, new independent research published by NERA Economic Consulting and Imperial College London questions that ‘single technology’ approach. 

Commissioned by Drax Group plc from leading economists, the research reveals the ‘true’ cost of the main forms of renewable energy – wind, solar and biomass.

And the evidence shows that opening up these auctions to include other renewables could result in significant savings that could be passed on to consumers. 

Where could these savings come from?

Renewables like wind and solar are vital, but they are by their very nature intermittent. That means other forms of power generation need to be available on standby at very short notice to meet the gap between supply and demand.

The costs of providing this standby electricity are passed on to consumers in their energy bills.

But crucially, they are not reflected in how the Government ranks the support that each type of renewable energy requires. Essentially the costs are hidden.

The NERA/ICL research shows that if these ‘hidden costs’ are added in, the true picture is very different.

When the true costs are taken into account, the Government’s preferred option – offshore wind – turns out to be the most expensive. In fact, the cheapest option is deploying new technology to existing power stations, enabling them to use biomass – essentially replacing coal with compressed wood pellets.

All in all, getting cheaper renewables into the mix could save consumers up to £2.2bn. How? Support for renewables is already funded through a portion of your energy bill, and bringing in a more cost-effective mix reduces the support needed.

That is why we at Drax are urging the Government to look at the true costs of new renewable capacity and include us in the mix for new power contracts.

To do so would not only lead to a potential £2bn saving for consumers, but replacing more coal with biomass gives the UK that reliable standby power we know we will need when other renewables can’t deliver it.

Using the latest technology we’ve already upgraded half of our Power Station to run on compressed wood pellets. The job’s not done. With the right support we want to carry on with the work we’re doing and help the Government to achieve its target of getting coal off the system by 2025.

Rethinking the UK’s future energy mix

Andy Koss, CEO Generation until April 2020

13 January 2016

Opinion

Since the Climate Change Summit in Paris, there’s been a lot of talk about how we can remove coal from the energy mix in the UK and limit further climate change.

One way would be to close down all the coal-fired power stations. But coal still provides more than 20 per cent of the UK’s electricity. And the Department for Energy and Climate Change (DECC) predicts we will need almost 20% more electricity by 2035, not less (chart, below). What’s more, building new capacity to replace those power stations would take years, while buying in extra supplies of energy at short notice can mean extra costs being passed on to customers.

The good news is that at Drax, we’ve already developed a solution to the challenge, as I told the Yorkshire Post recently.

We’re doing it by converting our coal-fired generating units to use compressed wood pellets. And we’re using world-beating technology developed by our own engineers here in the UK.

In fact, we’re now producing more electricity from wood pellets than from coal at Drax. And we’re doing it day in day out. In all, around four per cent of the UK’s entire electricity needs every single day of the year are now being met thanks to our unique biomass technology at Drax.

This enables us to take low-grade wood and compress it into small high-density pellets to use in our specially adapted generating units. Even including a minimal quantity of carbon emissions in the supply chain, conversions still cut greenhouse gases by over 80% compared to coal.

If we can get the support to convert the other three generating units at the power station then we’ll cease using coal at Drax. This would help the government’s proposed target date of ending unabated coal electricity generation in the UK by 2025.

I think at a very high level that support is there.

We all know that wind and solar energy have the potential to take a bigger role in Britain’s energy mix. But, to do so, they need to be accompanied by another technology that can be turned up to fill gaps when the weather means they produce less energy than required.

Our high-density wood pellets are the only non-fossil fuel that can do this. Looking to the future, as wind and solar grow and Britain becomes more dependent on them, it will be ever more important to have this reliable, renewable support on hand.

We’re well behind our European neighbours in using wood pellets for energy, and a long way behind countries like Germany and Sweden. Taking steps to catch up with the European average is the fastest, most affordable and most reliable way to move away from coal to the renewable fuels of the future. To take those steps, energy companies like Drax and the Government need more dialogue.