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11 ideas for avoiding power shortages

By Benedict De Meulemeester

By Benedict De Meulemeester on 20/08/2012

The Belgian press seems to have discovered that the problems with Doel III could turn into a supply problem. All day long, interviews and statements have been published and aired about the possibility of power shortages next winter when two nuclear power plants could be shut down due to the reactor vessel fissures. Ministers of the government disagree on whether there will be a shortage and whether this will drive up prices. And nobody even seems to dare to think about the worst case scenario. I described that in my previous blog article, namely the possibility that the fissures discovered in Doel III can be found in many more nuclear reactor vessels. That we have discovered a larger problem in Belgium by applying new measurement technology and that applying that measurement to other nuclear power stations will unveil similar problems. I had hardly published my blog article, or I read in De Morgen that the nuclear inspection authorities, FANC, are indeed considering that possibility …

However, I don’t want to spread any panic. Like I said in my previous problem, this could still turn out to be a non-event. We have seen last year with the shutdown of eight nuclear power plants in Germany that we should be careful of over-estimating the effect in terms of shortages and price increases. However, we could be heading for a severe power supply crisis in Belgium and Europe. It is therefore more than appropriate to start thinking about what we can do to limit shortage issues. Here are my ideas:

  1. Avoid the shutdown of other power stations, e.g. the coal- and biomass-fired power station of Ruien or the gas-fired power station of T-Power. I think it is very important for all of us to get a view on what capacities we are talking about.
  2.  Use the full capacity of cogen units. Try to get the operators of small cogeneration units, e.g. in greenhouses ready to produce at full capacity on days of shortages and high spot prices. Oblige the companies that buy power from these cogeneration units to share the benefits of higher spot prices with the producers. And why not setting up a system for informing these (many) owners of small cogeneration units when their power is needed and well paid?
  3. Set up a demand side load reduction program. Make an inventory of the possibilities for reducing load in industrial companies. Strengthen the incentives for applying the reductions.

However, I am afraid that these are the only measures that the government can take to avoid problems next winter. There is however, a whole set of measures that should be implemented to avoid that we get ourselves into this situation ever again.

  1. Relax the power plant licensing rules. The lack of investment in power production in Belgium has wrongly been blamed on economics, lack of profitability. The profitability of a gas-fired power station is not lower in Belgium than in the Netherlands. Moreover, power producers sell their power on the North-West European market, not just in Belgium. They have chosen to build their plants in the Netherlands because it was easier to get licences there.
  2. Expand interconnection capacities. Build a connection with the German power market and with the UK.
  3. It was OK to review the subsidies for solar and wind, as they were too generous. However, we should carefully watch whether the investment in renewable is not coming to a standstill. Use nuclear rent taxes to reduce the cost of subsidizing green energy for the end consumer.
  4. Revamp the programs for increasing energy efficiency.

Fukushima in 2011 and the Doel III incident, have made clear that nuclear energy is far from the cheap, safe and reliable energy that its proponents claim it to be. As far as safety is concerned, Fukushima made clear that severe accidents happen three times as often as previously estimated. The Doel III incident makes clear that it is impossible to identify all potential safety risks upfront. As far as price is concerned, I recommend anyone to have a look into the discussion currently regarding investment in new nuclear power plants in the UK. Potential investors want a £140 per MWh guaranteed power price. That is not cheap, it is more than twice the current UK wholesale market price. And if you consider the sort of supply issues we would face if the worst case scenario regarding the vessel fissures becomes reality, reliability of nuclear energy becomes problematic. Especially in countries like France and Belgium, with more than half of the power produced by nuclear, this over-dependence creates a serious problem in case of safety issues.

If ever there was something like a nuclear renaissance going on, my guess is that it is definitely over by now. It looks like our future power mix will be based mostly on a combination of renewable and gas-fired electricity. Security of electricity supply is therefore always a question of security of gas supply as well. For securing our gas markets, we should take the following measures:

  1. Keep supporting the development of the Zeebrugge Hub. Remove the remaining barriers for its attractiveness as a trading hub. Keep supporting the expansion of the LNG import capacities. Good work has been done already, and it has transformed the Belgian gas market into one of the most competitive and best-priced of Europe. But we need to continue to push forward.
  2. On a European scale, action is to be taken on removing the old oil-indexed long-term contracts from the market. The Belgian government took an important step here by banning oil-indexation of gas prices for end consumers (residential). However, this discussion should be taken upstream. Nobody has an interest in the suffocating of large gas import companies when they are obliged to buy gas oil-indexed and sell it at Hub prices.
  3. Europe needs to start up the discussion regarding shale gas production. A serious study of its environmental impact should be carried out. The question should be: “is it possible to produce shale gas without intolerably more environmental damage than conventional gas production?” This is particularly a concern in Belgium where the press is completely mute on this topic.
  4. The North-West European and Mediterranean gas and power markets are to be connected. The barriers to liberalization in Spain and Italy are to be removed. Excess power and gas capacities in the South of European have to find their way to the North when necessary.

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