Energy
Sat, Sep 18, 2004
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Winding Up for the Challenge
Oil Prices The New Status Quo
Analysts Doubt OPEC's Clout
Philippines to Upgrade Vital Power Line
Micropower Could Fuel UK Homes

Winding Up for the Challenge
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The fledgling renewables industry is demonstrating a scope for technical innovation.
Renewable energy is a growth area for advanced technology. Utilities, governments and international bodies such as the EU are imploring the engineering and scientific communities to find new ways to wean us off our reliance on fossil fuels and help them meet ambitious environmental targets.
Research grants and other backing are available. Even the private investment sector appears to be more favorably disposed to an area of technology whose time seems to have come--admittedly after some false starts over the past few decades, e4engineering.com reported.
The UK government's record so far is mixed, with words of support and ambitious targets undermined by an apparent unwillingness to grasp the nettle firmly (a familiar pattern, its detractors might say).
It has, for example, seemed to dither over which strand of technology to throw its weight behind, with solar energy apparently out of favor to be replaced by wind power as flavor of the month. The fledgling renewables industry is, however, getting on with it as best it can, demonstrating a scope for technical innovation in the face of a challenge that characterizes much of what is best in UK engineering technology.
The wind energy sector in particular is beginning to step up the pressure on the government to sort out the confused approvals process for both onshore and offshore wind farms.
The industry welcomed new planning guidelines issued last month that are generally supportive of wind energy developments and calls on local authorities not to place constraints on renewable technologies.
In this case, however, the government may be the least of the nascent industry's problems. Wind farms are already bracing themselves for a hurricane from that deadliest of perils: the Celebrity Nimby.
The puffing began when luminaries such as TV gardener Alan Titchmarsh and botanist David Bellamy weighed in with a blast against despoiling the countryside. And it is with a certain weary inevitability that we learn that Prince Charles, scourge of GM food and amateur nanotechnologist, is already on the case.
And we just know it won't stop with wind farms. Wave and solar installations will inevitably come under the same scrutiny, even though they produce not an iota of anything harmful and consume nothing that nature will not instantly replace.
These people will oppose them because they don't like the look of them. (Presumably HRH, with his love of fine architecture, will be lobbying for the nation's power stations, complete with their quaint emissions, to be listed as national treasures.)
The irony of course is that these same people would recoil at the prospect of a nuclear power station within 100 miles of them, but yelp with indignation if their lights went out. This magazine has long argued that nuclear and renewable technologies will both have a role in supplying the UK's long-term energy needs.
The nuclear industry has done its image no favors over the years. The renewable technology sector is in danger of being shot down even before it has a chance to show what it can do.

Oil Prices The New Status Quo
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Away from the Middle East there are supply risks from disruption in Russia, Venezuela, Nigeria and Indonesia.
Whether or not the oil price peaked in August at almost $50 per barrel, they days of the $22-28 OPEC price band look like ancient history. Experts now believe oil could stay in the upper $30-40 price range for some years.
If OPEC leaders could command a lower oil price then they would do so but they appear powerless to move the market. Most now worry that consumer nations are going to be forced into a recession that will lower demand and therefore bring lower oil prices.
However, the strong global economic recovery in the first half of 2004, and the arrival of China as a major new consumer nation, paints a very different picture. China has boosted its consumption of oil by a thumping 20% this year, or 800,000 barrels per day and its many new car owners have known nothing but high fuel prices, ameinfo.com reported.
Now it may be that after the US election is out of the way that a more sober economic policy of higher taxes and more normal interest rates will dampen the economy. This would have a knock-on effect in Asia and Europe. Hence the very highest oil prices could be off the agenda.
However, the International Energy Agency has now revised its 2005 estimates for the average price of Brent crude to $35 per barrel which compares with $28 per barrel as recently as last year. Aside from demand are the problems on the supply side that seem to multiply.
Away from the Middle East there are supply risks from disruption in Russia, Venezuela, Nigeria and Indonesia. Iraq still seems a long way from controlling ongoing security issues and capacity could be shut off at anytime. Even Saudi oil capacity could be hit by a terrorist attack, although defense arrangements make this unlikely.
What is clearly needed is huge investment in additional oil production capacity, and yet only Abu Dhabi is quietly getting on with it. Other oil investment plans remain on the drawing board rather than actually getting under way. Eventually massive oil revenues and high prices will cause a change of heart but there is no sign of it just yet.
In the meantime, AME Info predicted $50 a barrel earlier in this year in this column, and the balance of probabilities must be that this price level will be tested again before much longer. All it takes is for one or more supply side factors to fail, or global economic growth to exceed expectations, or both.

Analysts Doubt OPEC's Clout
As OPEC's leaders prepare to discuss oil price and output targets amid strong demand, analysts wonder if the organization–s influence has waned at a time when producers outside the organization such as Russia and Norway are gaining clout.
Adam Sieminski, an oil price strategist with Deutsche Bank in London, said given the fact that crude futures are well above the organization–s current price target--even as OPEC members pump more than their official quotas allow­"it doesn't really matter very much" in the short-term what the group decides.
Oil prices have soared all summer due to the extremely thin margin of spare output capacity worldwide and fears of supply disruptions around the globe. On Monday, crude futures hovered near $44 a barrel as traders focused on Hurricane Ivan's path and the potential damage it might cause to oil and natural gas rigs in the Gulf of Mexico, suntimes.com reported.
The world's supply cushion is thin in part because the Organization of Petroleum Exporting Countries vastly underestimated oil demand growth, particularly in China and the United States, earlier in the year, analysts said. Now it seems the group lacks the ability to increase production quickly enough to bring prices down.
Recent attempts by oil superpower Saudi Arabia to lower prices have failed.
The Saudis said last month they were willing to put on the market an additional 1.3 million barrels per day, virtually all of their extra available production. But with daily global consumption around 82 million barrels, the comments served only to highlight the market's supply limitations in the eyes of many analysts.
Sieminski said OPEC "production is already over quota and over the likely higher quota" the cartel is expected to announce at its meeting this week.
His comments came before Algerian Oil Minister Chakib Khelil said he supported increasing OPEC's output by 2 million barrels a day, or more than 7 percent, when it meets Wednesday.
That decision, if approved, would increase OPEC's self-imposed output limit for all its members, except Iraq, from 26 million barrels a day to 28 million barrels.
Doing so would bring the organization in line with actual output, which is currently more than 27.4 million barrels.
Another senior delegate, who was not identified, said the organization isn't likely to change its current price band of $22-$28 a barrel.
Qatar's oil minister, Abdullah bin Hamad, said raising the organization's ceiling on output won't be the main topic of discussion. And Hamad said he believed raising the price band to $30 a barrel was a good idea, since it would be "a good level for consumers and producers."
But there is also some concern within OPEC of the damage that could be done if prices remain too high. If that happens, consumers could seek alternatives to oil, and non-OPEC producers could glut the market with their own crude.
Russia and Norway, the second- and third-biggest oil exporters, aren't beholden to OPEC and can adjust their output to correspond with the market's dictates, oil officials there say.
In afternoon trading Monday, US light crude was up $1.07 to $43.88 a barrel on the New York Mercantile Exchange.

Philippines to Upgrade Vital Power Line
State-owned National Transmission Corp., or Transco, said Tuesday it will start this week upgrading a vital power transmission line to increase the supply of electricity from renewable sources in the main island of Luzon and in central Philippines.
Alan Ortiz, Transco's president and chief executive, said the upgrade of the 230-kilovolt Binan-Dasmarinas line will quadruple the capacity of a double circuit, single conductor power line that now transmits a load of 300 megawatts.
The upgrade of the high voltage line will allow it to carry 1,200 MW, making it compliant with Philippine Grid Code and allowing it to carry more electricity from power plants located in areas south of Manila. The upgrade will take about four months, yahoo.com reported.
Provinces just south of Manila are home to large base-load plants that use geothermal steam, natural gas and coal as fuel. Their concentration in the southern section of Luzon island had strained the transmission capacity in the area.
"Once the line upgrade is finished," said Ortiz, "the Ilijan gas-fired facility in Batangas can dispatch up to 1,200 MW which is a significant increase compared to its current dispatch of 600 MW."
He said the greater dispatch from Ilijan will displace electricity generated by power stations using imported oil and "minimize our dependence on oil."
Ortiz said it will also allow the power-starved Visayas region in central Philippines "to reclaim about 400 MW of capacity which is currently exported to Luzon."
The electricity is generated using geothermal energy from the Visayas and transmitted using submarine cables.
The line upgrade was supposed to have been done five years ago, before the new natural gas-fueled power plants became operational. But a concrete plan was only drawn up when Transco was created last year.
Ortiz said arrangements have been made with National Power Corp. (NAP.YY) and power distributor Manila Electric Co. (MERB.PH) to ensure that electricity supply isn't disrupted when the high voltage power line is shut in the last four months of the year, when electricity consumption is lower.

Micropower Could Fuel UK Homes
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Integrated solar fascia and glass on a London building
A mini-power station on the roof of many UK homes will soon be possible and affordable, a British think-tank says.
The Green Alliance, an independent body which advises policy-makers, says that micropower schemes have come of age.
In a report which will be published on 15 September, it says the Sun, the wind and even the heat in the soil can all provide clean energy for a household.
The report says micropower can help the UK to keep its promises on tackling climate change, and also to save money, bbc.co.uk reported.

Only Connect
Entitled A Micro-generation Manifesto, it describes the concept as "the generation of low-carbon heat and power by individuals, small businesses and communities to meet their own needs."
The report says: "Bringing energy generation closer to people in this way will forge the vital link between our concern about climate change and our energy consumption in the home...
"Homes with micro-generation are also affordable homes, with low or zero energy costs.
"And by curbing the rising demand for imported electricity, home energy generation can avert the need for investment in large new power stations and the aging grid network."
Examples of micropower the report mentions include:
* ground source heat pumps: they extract stored solar energy from the ground to run a home's central heating, and can cost as little as an oil-fired boiler to install. Widely used in the rural US, they produce three or four units of heat for every unit of electricity they use, and can be reversed to provide cooling
*systems using solar power to heat water
*generating electricity from the Sun by using photovoltaic (PV) panels
*micro-turbines to capture wind power: no larger than a TV aerial or satellite dish, they can supply domestic energy and feed back any surplus into the grid. They will be available within a year, and can cost under ¨1,000 ($1,800)
*micro-hydro schemes, which use the force of river currents to drive a small turbine
*combined systems (CHP), burning woodchips or gas, designed to provide a household with both heat and power.
The Green Alliance says that with domestic energy demand increasing almost as fast as that of transport, the government should make micropower a priority.
Huge increase ahead
It says the 2.4 million new homes planned by 2016 under the Sustainable Communities Plan will increase carbon emissions by 4.2 million tons, neatly canceling out the amount of domestic energy saving the government hopes to achieve by 2010.
A recent review recommended doubling the house-building program to complete 4.5 million homes by 2016, which would see carbon emissions rising by 7.8 million tons.
Carbon dioxide is the main gas produced by human activities which scientists say is exacerbating natural climate change.
Jo Collins of the Alliance said: "Micro-CHP boilers, mini-wind turbines and PV arrays should become familiar household fixtures. Micro-generation must be taken more seriously.

Defraying the Cost
"These new technologies cut greenhouse gas emissions, provide reliable energy supplies, and ensure that every home is adequately and affordably heated.
"Installing just six panels of solar PV on a typical new three-bedroom house would reduce that household's carbon emissions by over 20%."
The Alliance says the cost of micropower would be an investment to set against the government's current annual expenditure of ¨1.85 billion ($3.3bn) on winter fuel payments for the elderly.
It also wants micropower to be a condition of private finance contracts in the government's plans to replace or refurbish every secondary school in the country.