Tag: Energy

The Differing Drivers of EU Electricity Policy – Mike Bostan

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Countries and companies are likely to store an extra supply of gas to cover more than the normal consumption need, in order to avoid any disruption of the gas supply to consumers. However, the cost of storing this extra supply must be added to the price, making the gas more expensive. Too much focus on affordability may become a vulnerability of the gas supply. Conversely, too much emphasis on secure supply can affect price. So where is the balance? What factors drive EU policymakers to pay more attention to one policy goal?

This dissertation investigates such fundamental system imbalances in the domain of electricity and finds that differing drivers of EU electricity policy depend on its purpose. While affordability and security of supply legislation respond to expected drivers, such as electricity price or interrupted electricity, the environmental policy is an anomaly. Environmental policy is not responding to drivers such as air pollutants or GHGs reduction, but to a different set of drivers, highlighted in the paper.

Presentation

This is my book, a PhD thesis discussing the fundamental imbalances of the EU electricity system.

Link: https://doi.org/10.26481/dis.20220914mb

EU Electricity Policymakers’ (in) Sensitivity to External Factors (Article)

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Below is the abstract of an article I wrote for the International Journal of Energy Economics and Policy in autumn 2021. Link to full paper at the end of the post.

The article explores a possible reason for the consistent dominance in the EU energy space of one energy policy priority, environment, when a more balanced policy would be expected, according to the classical energy trilemma.

Stemming from a policy dynamics theoretical background, the sensitivity of EU policymakers to external factors is quantitatively tested by comparing legislative output against key relevant indicators, such as the public opinion and air pollutants emissions. The study encapsulates the last three decades, across all the three energy pillars of the energy trilemma, plus a fourth, internal energy market. The investigation converts into ordinal values data from selected indicators so as to create comparable scales.

Results show that, unlike other energy pillars, which display strong connections between external factors and legislative output, environment legislation is rather indifferent to external factors pressure. Possible explanations are incorrect policy calibration or internal factors, originating in the rational choice realm.

This research is one of the first to introduce comparative assessments in the Environmental Policy Integration discussion and employs in novel ways research methods for energy policy analysis emerged in the field of energy security policies.

DOI for full article: https://doi.org/10.32479/ijeep.11630

EU Electricity Policy (Im)balance: A Quantitative Analysis of Policy Priorities Since 1986 (ARTICLE)

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Below is the abstract of an article I wrote for the International Journal of Energy Economics and Policy in 2021. Link to full paper at the end of the post.

The European Union has produced hundreds of laws in the field of electricity policy in the last three decades, on issues ranging from nuclear disposal to renewable energy generation support. Is the EU electricity policy of the last 30 years balanced, according to the classical energy trilemma framework?

An all-inclusive, quantitative, multi-decade examination of the EU energy policy is still lacking. Besides the traditional policy perspectives, policy density and intensity, this paper proposes a novel method to measure policy outcomes: policy importance. The results show that EU energy legislation is indeed imbalanced.

Environmental concerns rank first among EU electricity policy priorities; however, since 2003, the creation of an internal market has started to challenge environment as the top priority. Furthermore, internal market policies tend to have a higher trend of adoption than environment. Security of supply is at the bottom of EU policymakers’ attention.

The EU energy policy is becoming more intricate, but not more revolutionary. Meaningful policy changes occur at a stagnating yearly rate, despite the increasing power of the EU institutions.

DOI for full article: https://doi.org/10.32479/ijeep.11461

Assessing European electricity policy goals and achievement levels (ARTICLE)

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Below is the abstract of an article I wrote for the 13th International Conference on Energy Economics and Technology in 2019. Link to full paper at the end of the post.

Our aim in this research paper is to assess the evolution of European Union’s electricity policy ambition. To find its electricity policy ambition we identify the targets and objectives of EU legislation and analyse their evolution in time, for the four main pillars of the EU electricity policy and for our selected categories.

The assessment is based on a policy density and policy intensity analysis. The empirical research resulted in about 300 pieces of binding EU legislation in the electricity sector, reuniting around 700 targets and objectives, during 30 years of collected data.

The policy density analysis covered several dimensions: stages, overall numbers, EUR-Lex placement, pillars and categories. The research found that legally-binding legislation has an upward trend from 1986 to 2018. Almost half of the EU electricity legislation classifies as environment legislation, if analysed from the pillars of energy policy viewpoint. If a more nuanced filter is used, categories, then environment and nuclear legislation make about two thirds of all EU electricity-relevant binding legislation.

The policy intensity analysis revealed that, using a categories filter, environment and internal market are dominating, with the nuclear categories far behind. It reveals that there are many pieces of legislation in the nuclear sector, but they are generally less complex, with fewer targets and objectives than other fields.

Constructing a major targets/objectives and categories matrix, we found that the largest amount of financing is towards nuclear research. Most expansion of duties for the European Commission happened for the internal electricity market category, followed by, surprisingly, security of supply. Major developments took place mainly for environmental; energy efficiency and savings; and internal energy market categories.

Quantitative demonstration that RES development is moderately driven by climate legislation.

Link: https://tu-dresden.de/bu/wirtschaft/bwl/ee2/ressourcen/dateien/enerday-2019/Paper-Bostan.pdf?lang=en

Sustainable Energy – Without the Hot Air – David J.C. MacKay

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This heated (environmental) debate is fundamentally about numbers. How much energy could each source deliver, at what economic and social cost, and with what risks? But actual numbers are rarely mentioned. In public debates, people just say “Nuclear is a money pit” or “We have a huge amount of wave and wind.” The trouble with this sort of language is that it’s not sufficient to know that something is huge: we need to know how the one “huge” compares with another “huge,” namely our huge energy consumption. To make this comparison, we need numbers, not adjectives.

The book tries to quantitatively check how a world driven by renewable energy would like. The calculations look at possibilities, how much we can produce, compared with how much we consume, in terms of kW, ignoring the costs of technologies and deployment. Only if the numbers add up is checked.

The research is divided into three parts. First part is taking different classes of consumption and production and stacks them into two columns, seeing how the numbers look like, The second part explores scenarios involving various deployments of renewable electricity technologies or carbon reduction. Finally, the third part presents the technical analysis behind the numbers presented.

The analysis focuses on the United Kingdom, investigating how much the country can produce in terms of renewable electricity and looking at different scenarios, including imports for more renewable-potent neighbours.

The investigation by David MacKey is looking at the key problems of energy sustainability, checking real energy consumption, not only electricity, but including for example transport, products we buy and agriculture.

Although feeling a bit dated sometimes, Sustainable Energy, first published in 2008, still brings insightful findings. It is one the most, if not the most comprehensive analysis of how realistic a renewable future is.

Unfortunately, David MacKey passed away in 2016, but his superb analysis remains. He was Professor of Physics at the University of Cambridge.

I recommend the first part of the book to everyone interested in energy, while the third part is really for only those really into the topic.

This is the first book I post which was read on my new e-reader.

The Future of Humanity: Terraforming Mars, Interstellar Travel, Immortality and Our Destiny Beyond Earth – Michio Kaku

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The deep space transport uses a new type of propulsion system to send astronauts through space, called solar electric propulsion. The huge solar panels capture sunlight and convert it to electricity. This is used to strip away the electrons from a gas (like xenon), creating ions. An electric field then shoots these charged ions out one end of the engine, creating thrust. Unlike chemical engines, which can only fire for a few minutes, ion engines can slowly accelerate for months or even years.

The Future of Humanity is one of the best books on science and astrophysics published in English language. It is now already considered a classical book on futurism and cosmology.

The book starts imagining how humans may solve some of the technical challenges in exploring space. Transport, propulsion, habitats, the economics of trying to finance the space exploration, robots are discussed, using the latest scientific discoveries. A lesson in astrophysics is offered, explaining our sun system, galaxy and the universe at large. Towards the end of the book, the latest theories proposed to explain the universe as wee see it are described.

Michio Kaku is professor of theoretical physics in the City College of New York and a proponent of the string theory (theory in which the point-like particles of particle physics are replaced by one-dimensional objects called strings). He wrote several well-received books on futurism and physics.

It is an awe-inspiring call to try and reach the starts. The message of the book is to not forget the long term: expand beyond our native planet, otherwise the nature will overwhelm us. I am making an exception and will add another quote from this author, which I find revealing:

Looking back at those dark days, I am sometimes reminded of what happened to the great Chinese imperial fleet in the fifteenth century. Back then, the Chinese were the undisputed leaders in science and exploration. They invented gunpowder, the compass, and the printing press. They were unparalleled in military power and technology. Meanwhile, medieval Europe was wracked by religious wars and mired in inquisitions, witch trials, and superstition, and great scientists and visionaries like Giordano Bruno and Galileo were often either burned alive or placed under house arrest, their works banned. Europe, at the time, was a net importer of technology, not a source of innovation.

I devoured the book in about three days. It is easy to read, the concepts from physics are easy to follow, despite their complexity, and the ideas proposed feel innovative and optimistic. A great book, particularly for young adults, searching for a meaning in life.

Energy and Civilization: A History – Vaclav Smil

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Despite many differences in agronomic practices and in cultivated crops, all traditional agricultures shared the same energetic foundation. They were powered by the photosynthetic conversion of solar radiation, producing food for people, feed for animals, recycled wastes for the replenishment of soil fertility, and fuels for smelting the metals needed to make simple farm tools.

The books from Vaclav Smil are a trove of knowledge on energy evolution. This book discusses the evolution of human energy advances over time, from agriculture to weapons.

The book reads more as an academic article, with a plethora of references and sources. One sixth of the book is just references. Very dense in knowledge and explanations, it overwhelms the reader with the sheer depth of analysis.

Smil tries to use largely a single energy unit, joules, to measure everything, from the various techniques to harness animals to work to the different ways to pass water through the watermills. The purpose is to quantify the evolution of human energy efficiency over time.

The book is encyclopedic in its depth and range, truly a history. The book dryness of writing and data is broken by very informative and engaging boxes, explaining various facts and developments.

The only downside is the grammar errors found here and there sometimes.

I was impressed by the precision and correct analysis of energy sources and transformations, missed by many pundits.

Also impressive is the general neutral tone regarding various sources that the author manages to impose.

Overall, an incredible book, THE book on energy history.

Bidding Zones analysis – group project

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Below my group project on Bidding zones for the EU Electricity ‎Network Codes course.

Do you think that the changes made by the Clean Energy Package to the bidding zone review procedure will lead to different results or create more challenges?

The newly-adopted Electricity Regulation (ER), article 14.1, states that “[…] Bidding zone borders shall be based on long-term, structural congestions in the transmission network. Bidding zones shall not contain such structural congestions unless they have no impact on neighbouring bidding zones […]”. EU TSOs and NRAs are mandated by the Capacity Allocation and Congestion Management Guideline (CACM GL) and ER to assess on a regular basis the existing bidding zones (BZ) configuration, and possibly initiate its review and reconfiguration.

A BZ review was voluntary under the CACM GL (article 32.1), but became compulsory under the ER (article 14.3). Under CACM GL, the review should include scenarios that take into account “likely” infrastructure developments within the following ten years (article 33.1), while the methodology required by the ER should be based on structural congestions that were not expected to be overcome (e.g. due to grid expansion) within three years (article 14.5). The ER obliged the TSOs to present a BZ methodology by October 2019 (article 14.5), and the all TSOs proposal was submitted on 7 October 2019. It includes one annex per region presenting the alternative BZ configurations that will be compared to the status-quo during the review.

According to the ER, the relevant regulatory authorities shall take a unanimous decision on the TSOs proposal by January 2020. If unanimity is not reached, ACER shall decide on the methodology and alternative BZ configurations, by April 2020 latest. Once the methodology has been decided, the TSOs of each region have one year to submit a proposal to amend or maintain the bidding zone configuration, based on the results of the review. The proposal comes on the table of the concerned NRAs for approval. If unanimity is not reached, the European Commission has the final say on maintaining or amending the current BZ configuration.

The puzzle is whether the TSOs’ methodology proposal is able to identify structural congestions. Via art. 16(8) ER, it can be interpreted that a Member State (MS) suffers from structural congestion if it doesn’t comply with the 70% minRAM clause. If this is the case, the MS has two options: establish a (multi)national action plan or amend its BZ. There are two BZ configuration principles. Firstly, the BZ should be constructed independent of political borders, but built around structural congestions. Secondly, the size of a BZ should be a fine balance between structural congestions and market liquidity and competitiveness.

The main opportunities and challenges arising from the changes introduced by the CEP are summarized below:

Opportunities:

  • The 70% minRAM clause of article 16(8) offers an opportunity for a willing TSO and a MS to change the configuration of a BZ.
  • Splitting BZs may be politically sensitive at the national level, so putting ACER and the European Commission in charge of final decisions may break local interests and put the interest of the EU market as a whole ahead of national interests.
  • A process for amending BZ is now relatively clearly defined, allowing MS the possibility to create and follow action plans. The clarification was important, as the first BZ review was not successful. Action plans offer MS more time, but multiple opportunities have been built into the procedure to revert from an action plan to deciding on a BZ reconfiguration.

Challenges:

  • At the center of the BZ review process lies the identification of a structural congestion. Thus, this should be the first step of the process. However, TSOs must already propose alternative BZ configurations, even if no methodology has been developed to identify structural congestions. In this context, it is not surprising that in the annex many TSOs argue that they don’t propose a BZ alternative because their country doesn’t suffer from structural congestion (see table in annex at the end of this paper). In this context, the whole process already stops at the first step.
  • The attempt to define structural congestion based on the 70% minRAM clause has also severe limitations. Differences in interpretation can be observed (not only across MS but also different stakeholders) and it is in the NRAs’ responsibility to check for compliance. Consequently, it doesn’t appear as an appropriate tool to pressure MS suffering from structural congestion to amend their BZ.
  • Additionally, it solely gives arguments for splits and not for mergers of BZs which could be beneficial from a market liquidity and competitiveness perspective. This is obvious from reading the annexes of the all TSOs proposal, where almost only arguments against or in favor of splits are listed.
  • As stated above, if the NRAs don’t come to an agreement concerning which BZ configurations should be evaluated, ACER will take the final decision. In relation with the complexity of the situation, in particular in the central EU region, questions can be raised concerning the competences, e.g. in simulation, needed for taking such decision. Any decision not well argued or missing consistency could be raised in court.

Conclusions

The BZ reconfiguration is a necessary step towards solving several present and future congestions, in addition to requesting TSOs to offer more capacity to the market. The ER, part of the Clean Energy Package, was a natural opportunity to develop such a plan. A rather clear and agreed methodology, follow-up steps and backup solutions are all foreseen in the ER.

However, there are a number of drawbacks, such as the bias towards splitting BZ in the BZ reconfiguration, instead of merging them as well. The procedure for identifying structural congestions is possibly flawed, as TSOs must propose alternative BZ configurations in parallel with developing a methodology that must be approved by regulators. In addition, connecting BZ configurations to the 70% clause with all of its limitations (diverse interpretations, in/sufficient data availability, etc.) and action plans does not contribute to its implementation, but it is watering down the process. Furthermore, leaving European institutions as ultimate decision-makers, might look as a solution but it remains to be seen if it will be fit for purpose due to the dominantly political nature of the process.

PROMO: Energy MBA in Bucharest

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The MBA in Energy at the Academy of Economic Studies (ASE) in Bucharest starts the registrations for prospective candidates between 23-25 July 2018.

Organized by the Faculty of Business Administration in Foreign Languages (FABIZ), the Energy Master is the best in Romania and is done in collaboration with representatives of the energy business environment (OMV Petrom, Siemens, CEZ, Electrica, Transgaz etc.).

Join the new challenges and be a part of the Energy Business!

The programme is open to all bachelor degree graduates, but candidates need one year experience in energy. Of course, a good command of English is required, as it is taught in English.

It is a flexible MBA, held during weekends, for 4 semesters. The courses range from “EU Policy in Energy” to “Energy Trading”. The professors and experts’ team is excellent, including one of Romania’s best energy professionals, Corina Popescu.

Please find below the brochure of the programme.

Brosura_MBA-Energie_6.2018

More information also at the following link: mba-energie.ase.ro.

Coal: A Human History – Barbara Freese

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Some saw in the mines scientific proof of biblical flood. Some credited coal with protecting people from the bubonic plague; others accused it of promoting baldness, tooth decay, sordid murders, caustic speech and fuzzy thinking.More recently many of us believed we could burn vast amounts of coal without disrupting the natural balance of the planet. No doubt we have still much to learn about coal, but at least we’ve been able to dispel many of the old myths.

The book talks about the history of coal, since Roman times to modern day. Barbara Freese talks about both the good and the bad sides of the mineral. As the author is an environmental lawyer, the book slightly tips on the bad side of coal, however the research is deep, insightful and entertaining.

Coal is appreciated by Ms Freese as the basis of the Industrial revolution and the rock that made the British Empire and the United States. It significantly improved living standards by increasing on a massive scale the efficiency of industrial processes.

On the other side, the bad environmental effects were constant, from the fumes and hard working conditions to current greenhouse gas problems.

The message of the book is that coal was never popular, but always useful. The author finishes the book on a positive note, such as using coal for in plastics and other alternative uses.