Page 37 - bne monthly magazine October 2022

bne October 2022 Cover story I 37
“Our forecast is for 59% utilisation or 315TWh based on EDF's guidance.”
NPP usually run at around 95% utilisation, but this years reduction
has taken another massive 135TWh
of power out of Europe’s generating capacity. France’s will go from exporting more than 19% of the electricity it produced in July 2021 to importing 12% of its electricity needs in July 2022.
Slovakia has also invested in nuclear power and recently completed a third reactor at the Mochovce power plant, making it self sufficient in energy.
Belgium is one of the European countries that has invested in renewables and has a fleet of offshore wind turbines, but it still heavily dependent on its nuclear power stations half of which are approaching the end of their working lives and will soon need to be replaced.
Norway is a major exporter of hydropower, but this summer was so hot that water levels in reservoirs fell so far that it has reduced its ability to generate hydropower. The same heat as also stymied the use of coal fired power stations as the depth of rivers fell so much that coal barges could only be half loaded else they would be unable to navigate canals.
Not enough gas
The shortage of generating capacity makes Europe’s power sector dependent on Russian gas. In Germany’s case, although only 15% of generating capacity depends on gas fired power stations with the bulk relying on renewables, it is that 15% that provides the flexible surplus power in times of peak demand.
Without it the system breaks down
just when power is most needed.
This leads to a so-called “frequency incident” when the balance between generation and demand for power must be coordinated and kept in a very tight corridor. If this balance is lost, then the system shuts down to avoid damaging the equipment. An entire system spanning over 20 countries has been built up to maintain this balance – one that Ukraine joined the day before the
war with Russia started. Renewables are not suitable for maintain this balance as they are not reliable.
The clash with Russia has already affected the reliability of the European power system as the number of frequency incidents has been growing in the last two years. There were 33 hours of frequency incidents in 2020 which grew to 54 hours in 2021.
“Well, in 2021 alone the European Grid had two major incidents, classified
as “Scale 2” incidents, for which final reports had to be prepared by an expert panel at ENTSO-E,” says Stahel. “The problem is that the Continental grid is increasingly incapable to match load with generation.”
Too many countries are relying on
the import of power to cover their shortfalls. There is simply not enough generating capacity in Europe to provide power security to the continent. Cutting off Russian gas to just a few countries could have power outrage consequences that will ripple out across the continent.
Even before it invaded Ukraine on February 24, Russia was manipulating European natural gas markets. It substantially reduced exports after summer 2021 and did not refill Gazprom-owned storage sites in the EU. Since spring 2022, Russia has used its remaining supplies as leverage to push
individual countries to relax sanctions on financial transactions and technology. By the beginning of July 2022, Russia was sending one-third of previously anticipated volumes, leading to a more than tenfold increase in EU gas prices.
Germany is a key piece in the jigsaw and replacing the 32TWh of nuclear power is turning into a major headache.
“As almost all fuels are affected, short-term fuel-switching supply elasticities are close to being exhausted. For example, EU coal-fired power generation increased only from
82TWh in the second quarter of 2021 to 95TWh in the second quarter of 2022 because available capacities were limited and coal prices tripled. Instead, demand reductions – both actual and anticipated – now play an outsized role in clearing the market,” says Bruegel.
Expanding the coal fired power output in all of the EU produced only an extra 13TWh of power -- only a third of the missing German nuclear output.
The alternative of reducing demand
is not working either as government’s decision to rush into offering subsidies for soaring gasa bills is actually working against efforts to tackle the crisis.
Despite soaring gas costs, thanks to both the regulation of prices on most national markets and the subsidies governments are already paying, prices
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