Ireland’s strategy to double the onshore wind sector by 2020 is not without risk and neither is it the lowest-cost option, writes Dr Anthony White. Would converting Moneypoint to biomass improve security of supply at a lower cost?
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Ireland has a power industry of which we can be proud. It has achieved a remarkable transformation over the last decade, replacing oil with gas and, latterly, wind. This is a major achievement. However, meeting the renewables target is not a normal business activity: it is a response to the political decision to meet the EU renewables target (to source 20% of energy needs from renewable sources by 2020), as part of the battle against climate change.

Today’s generation gets no benefit for taking on additional costs. The projected benefit goes to future generations, in the form of a hopefully more stable climate. Therefore, the political imperative is to ensure that meeting this target is achieved at lowest cost to the current population and with minimal risk. This cost consideration is amplified by the problems caused by the fact that Ireland is currently climbing out of recession and so, any help to local employment should also be a consideration.

The Irish Government’s current strategy of meeting the renewables target is not without risk. This is to expand the onshore wind sector so that it doubles from providing around 20% of electricity generated today to 40% by 2020. Neither is it the lowest-cost option. Conversion of Ireland’s largest power station, Moneypoint, offers a cheaper and less risky option, whilst improving security of supply and offering the potential to revitalise Ireland’s rural economy.

This Directive requires Ireland to meet 16% of its gross final energy demand from renewable sources. In 2007, Ireland decided to achieve this by incentivising renewable forms of electricity generation to deliver 40% of its electricity and renewable fuels to deliver the needs of 10% of transport and 12% of heating.

The renewable electricity was assumed to come primarily from wind. Indeed, wind was the only credible large-scale option at the time. Over 200 wind farms have been built and Ireland is just over halfway to the target. Yet life has moved on; other options are now available and Ireland is no longer enjoying the growth of the ‘Celtic Miracle’. Indeed, during this time, electricity prices have risen inexorably, faster than Ireland’s European competitors. They are now amongst the highest in the European Union.

Environmental considerations and system issues


biomass ireland

Moneypoint, Co Clare

Therefore, in choosing how to meet the renewables target, cost must surely be an important factor, as well as others, such as the impact on Ireland’s industries, particularly bloodstock and tourism, as well as the ability to reduce greenhouse gas emissions.

In order to double Ireland’s wind generation, another 200 wind farms will need to be built, which will require expansion of the transmission, requiring 700km of transmission lines and new pylons. This is likely to cost up to €3.9 billion. It is, of course, gratifying that EirGrid has responded to this demand by considering all options and may be able to dispense with some of these lines by employing FACTS (flexible alternating-current transmission system) devices, or series compensation, which allow the existing lines to be exploited further. Nevertheless, the wind turbines themselves are not shrinking violets and will be difficult to blend into the environment.

There is a further problem with wind in that it is variable. It cannot be varied up and down in response to changes in demand. Indeed, the variation in the wind causes the existing fossil stations to ramp up and down: this imposes costs on the network and also causes these fossil stations to run less efficiently.

If wind is to expand to 40% of generation, these ‘system effects’ can no longer be ignored. Indeed, up to now, variations in wind generation have been of the same order or smaller than changes in demand. As such, the ‘system costs’ of this first 20% have not been significant. However, if wind generation is to double, it will be variations in wind production that will dominate changes in the scheduling and dispatch of the fossil station. This will impose additional costs.

In fact, the owners of the wind farms generating this additional 20% will receive a fixed €75/MWh for generating but will impose costs on the transmission system of around €30/MWh, as estimated by the Single Electricity Market Committee in 2014 and the Irish Academy of Engineers in 2012. This suggests that the real cost of this additional wind will require customers to pay around €105/MWh; not the €75/MWh it says ‘on the tin’.

There is also a stability issue. Wind-generated electricity is usually injected onto the networks though inverters. As such it is ‘asynchronous’. If there is too much asynchronous generation at any time, there will not be sufficient ‘system inertia’ to enable the whole system to ride through sudden changes in demand and generation. The risk is similar to that of stalling a car when the engine is turning over slowly. This system inertia is currently provided by the large steam turbines used in fossil stations and currently EirGrid has to ‘constrain off’ wind generators if wind produces more than 50% of demand.

EirGrid is examining ways to increase this limit to 75%, but it will not be cheap and is likely to involve desensitising some of the protection equipment. The consequences of ‘stalling’ the system would be a countrywide blackout and would take many days to recover.

Other countries, such as Denmark, are not exposed to such a risk. Their transmission systems are joined to the large continental networks through ‘synchronous’ links and so can take advantage of the system inertia provided by the large fossil, nuclear and hydro units operating across the continent.

Sustainable biomass


Biomass Ireland

Biomass

The Moneypoint option has only become available on account of the emergence of an international trade in sustainable biomass in the form of wood pellets. Conversion of Moneypoint, a 900 MW coal-fired power station, to burning wood pellets would allow Ireland to meet its 2020 renewables target in one fell swoop.

Drax in the UK has shown this to be technically feasible and that it may be achieved to time and to cost with no threat to security of supply. What is more, the international industry has grown to the extent that long-term contracts at fixed prices are available.

Taking the information released by Drax, such as a delivered fuel price of £7.75/GJ and allowing for Moneypoint’s superior circumstances:

  • Its location on the coast and ability to take cargoes directly, whilst Drax has to tranship to rail and haul pellets 70 miles from the ports; and
  • The more generous and flexible design of its boilers, given that Moneypoint was designed to take coal from many sources.

The long-term cost of imported fuel to Moneypoint could be around €7.50/GJ, making a marginal generating cost of €80/MWh and a total cost, including financing, of around €95/MWh. This may be compared with the €105/MWh that customers would have to pay for more onshore wind when system costs are included. Recent work by Prof Jimmy Burke of University College Dublin has shown that a sufficient indigenous sustainable biomass supply could be established at costs delivered to Moneypoint of about €6.0/GJ. This would require the conversion of 8% of Ireland’s agricultural land (beef farming) to biomass production. This would improve overall farming incomes.

Converting Moneypoint would be easier than the wind option; converting the boilers would cost around €380 million, one tenth of the cost of the transmission reinforcements required to accommodate doubling wind. It does not require any changes to the transmission system, since all that would be changed is the fuel at one power station. There are no additional system costs and no threat to transmission system stability.

It also avoids threatening the tourism and bloodstock industries. What is more, the switch to biomass could also improve security of supply. The international biomass trade has enjoyed stable prices since 2009. This would lead to Ireland’s generation costs being less susceptible to the price swings associated with coal and gas prices.

Another factor to consider is that wind generation tends to displace power from gas-fired stations. Yet sustainable biomass at Moneypoint would displace coal, which emits twice the amount of greenhouse gases as gas-fired generation. Therefore, sustainable biomass at Moneypoint is a much-lower-cost way to reduce greenhouse-gas emissions.

Employment


The power sector is highly capital intensive and, as such, is not a generous source of employment. The number of long-term jobs in the wind industry is likely to be small, though larger during construction. About 3,500 jobs would be supported by expanding wind to 40% by 2020, but there would only be about one thousand jobs thereafter.

Were Moneypoint converted and started operating on imported biomass, it could act as a source of local supply by providing long-term contracts to indigenous suppliers. In this way, Moneypoint could provide about 6,000 full-time jobs. In addition, about 900 jobs in the local Killrush economy will be at risk in 2025 if Moneypoint continues to burn coal and closes, as is currently scheduled.

The conversion of Moneypoint to sustainable biomass is a proposal worthy of consideration. Meeting Ireland’s renewables target will lead to higher costs, whichever form of renewable generation is supported by Government. Moneypoint can help ameliorate these costs – it is cheaper and less risky than building yet more wind farms, poses no threat to heartland tourism and bloodstock industries and could improve security of supply. It also has the potential to rejuvenate Ireland’s forestry sector and create a sustainable biomass industry.

Dr Anthony White, MBE is co-founder of BW Energy. He has over 35 years’ experience in international power markets and low carbon economy from capital markets analytical and industry strategy roles. His key responsibilities included being lead analyst for the top ranked energy team at investment bank, James Capel, who advised the UK Government on privatising the power sector. As Head of Citigroup’s pan-European power team he also oversaw market liberalisation in other European markets. He also was National Grid’s Group Head of Strategy in the 1990’s. More recently, Dr White was a founder of Climate Change Capital, a specialist low carbon advisory and asset management business. He is actively involved in UK energy and power market policy participating in numerous UK Government advisory bodies including the Energy Advisory Panel, Commission on Environmental Markets and Economic Reform, Energy Networks Strategy Group and the Nuclear Liability Financing Assurance Board. Dr Anthony White is also a Non Executive Board member of the Crown Estate and Green Deal Finance Company.

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Ireland has a power industry of which we can be proud. It has achieved a remarkable transformation over the last decade, replacing oil with gas and, latterly, wind. This is a major achievement. However, meeting the renewables target is not a normal business activity: it is a response to...