In 1979, a period dominated by high oil prices and deep concerns about the future supply of energy resources, Gerald Leach and a team from the International Institute for Environment and Development (IIED) wrote an important book called “A Low Energy Strategy for the UK”.  It was controversial at the time as it stated that “the United Kingdom could have 50 years of prosperous growth and yet use less primary energy than it does today”.  This, the study argued, could be achieved by improving thermal performance of new buildings, implementing energy performance standards for cars and major household appliances, and improving industrial energy efficiency.  Leach’s scenario was similar in message to Amory Lovin’s more famous  “soft energy path” for the USA, published in “Energy Strategy: the Road Not Taken” in 1976.  Both advocated a bottom-up approach to energy modeling rather than the prevailing top-down approach and forecast future energy consumptions much lower than the prevailing official forecasts – both turned out to be more accurate than the official forecasts when it came to actual energy consumption.

Leach’s conclusion (and that of Lovins in the US) was controversial at the time as official government scenarios were still based on the belief, (perhaps still current in some circles), that there was a rigid link between energy use and GDP – something that was probably true between 1953 and 1973 – a period when affluence was increasing along with the ownership of cars and energy using appliances.  The Department of Energy projections for primary energy use were between 32% and 63% higher than the 1976 consumption (460 to 570 million tonnes coal equivalent (mtce) compared to the 1976 consumption of 349 mtce).  The Leach analysis was widely considered to be unrealistic by the energy establishment at the time so nearly 35 years later it is interesting to compare the Leach scenarios with what actually happened.

Table 1 summarizes the Leach et.al. scenarios, the official UK Department of Energy scenarios of the late 1970s, and the actual out-turn for UK primary energy consumption.  To avoid confusion over energy units (Leach used mtce, now primary energy is reported in mtoe – million tonnes oil equivalent) and different inflators for GDP I have converted everything to indices starting at 100 in 1976.

Table 1. Summary of Leach scenarios, Department of Energy scenarios and actuals.

Interestingly enough the actual GDP out-turn has been squarely in the Low-High scenario range outlined in Leach which were in-line with the official reference forecasts used by the Department of Energy at the time.  So the economic forecasts were basically good.  Two things really stand out:

• the big difference between the Department’s forecast for primary energy use in 2000 and the actual out-turn
• the actual 2010 primary energy use is close to Leach’s high scenario.

Looking at energy use per GDP ratios we can see that the official Department of Energy forecast a range between 0.76 and 0.85 for 2000, Leach’s scenario was between 0.54 and 0.55, (considered outrageously low and impossible by the establishment), and the actual out-turn was 0.6.

Whatever the causes, we are practically living in what was defined in 1979 as a radical, low energy future.  

Now this is a very simple analysis and of course there are a number of factors that turned out to be different to the scenarios and will affect the conclusions including:

• the sectoral breakdown of the economy now looks different to the scenarios of the late 1970s, (industry making up 30% of GDP by 2010 compared to an actual of 24%)
• the sources of primary energy projected also look different to reality.  The use of gas was seriously under-estimated, Leach projected 14% of primary energy in 2010 would be gas, in reality the number was more like 35%, as the use of gas for power generation was restricted until the 1980s.

Given the importance of energy forecasts at the current time it is useful to review old future energy scenarios and see what we can learn.

There is an interesting quote in Leach (p.186) in response to the then government’s plans to expand generating capacity and nuclear power that has a strange resonance today:

“The enormous investments for new power stations assumed in official forecasts are vastly reduced.  The current Department of Energy forecast estimates that 83 GW of new plant must be built in the UK by 2000.  Our figures are 26 and 30 GW for the Low and High cases respectively.  At an estimated £500 per kilowatt installed capacity for plant only (at 1977 costs) the investment savings on our projections are of the order of £26 – £30,000 million, or well over £1,000 million a year.  We should be very surprised if this sum did not amply cover the costs of all the energy conservation measures assumed in this study.”

Interestingly, the 83 GW of new plant needed by 2000 referred to here is about the same as the total UK generating capacity today.  The Department of Energy’s “reference forecast” for 2000 also included 40 GW of nuclear capacity (compared to the actual today of 10 GW).

Maybe we haven’t learnt very much about energy forecasting.  A lot of the basis of the planning for the current Electricity Market Reform (EMR) was built on DECC scenarios which showed significant increases in electricity demand, up to a doubling of demand by 2050, based partly on assumptions about the electrification of heat and the spread of electric vehicles.  Other scenarios, some of which showed demand going down, were discounted.  For details see the report, “A corruption of governance” by the Association for the Conservation of Energy (ACE):

http://www.ukace.org/wp-content/uploads/2011/11/ACE-Campaigns-2012-01-Corruption-of-Governance-Jan-2012.pdf

My conclusions from reviewing Leach’s “low energy strategy”, Lovin’s “soft energy path” and other studies are as follows:

1. government forecasters and indeed most mainstream analysts have trouble seeing outside the perceived wisdom of the time – the prevailing paradigm.
2. official forecasts tend to overstate future energy use.
3. bottom-up, technically based, demand led models may be more reliable than economic top-down models.
4. the link between energy and GDP is more complex than we thought – but it is weakening over time.
5. we achieved significant improvements in overall energy efficiency consistently over a 35 year period, during which energy efficiency was really only a major concern for about ten years between the mid-1970s and mid-1980s.
6. energy efficiency has effectively delivered more energy services than any other source of energy.
7. the Leach book should be required reading for energy analysts and policy makers.  Although long out of print copies can be found on Amazon and Abe Books.

The final point – if we effectively achieved a “low energy” future without paying attention to increasing the rate of reduction in energy intensity the question is what could we achieve if we actually do pay attention to the energy efficiency resource?

For many years it has been an article of faith amongst energy economists and analysts that energy demand will always increase with increasing wealth (GDP). This is the basis of most energy scenarios and forecasts.  Now, however, some evidence is appearing that this linkage has been broken, or at the very least significantly changed.  If it proves to be correct it has significant implications for energy planners and the energy industry everywhere.  It also has implications for fans of the Jevons paradox.

The Energy Information Administration is projecting that electricity use in the U.S. will rise an average of just 0.6% a year for industrial users and 0.7% for households through 2040 – well below the projected rates of economic growth.  Some of this is due to changes in the structure of the economy but some is due to accelerated efforts to improve energy efficiency.  As a result utilities are having to rethink old assumptions.

http://online.wsj.com/article/SB10001424127887323689604578217831371436110.html

Massachussets for example, which has long had aggressive energy efficiency goals has set even more rigorous targets in its 2013-15 Clean Energy and Climate Plan (CECP).  The state has the following aims: to increase electric energy savings from 2.11 percent of retail electricity sales in 2012 to 2.60 percent by 2015 and gas energy efficiency from 1.02 percent to 1.19 percent over the same period.  The proposed three-year energy savings for the period 2013-2015 is about 1.19 million megawatt hours greater than savings from the combined 2010-2012 levels, or equivalent to the greenhouse-gas reductions that would be achieved by eliminating the energy use of approximately 100,000 homes.

Here in the UK we have seen a number of businesses including Sainsburys switch from a relative energy reduction target (energy per square metre or similar) to an absolute energy reduction target.  Given that the retailers haven’t given up growth this really illustrates that energy use can be decoupled from economic growth.

If we can accelerate the on-going reduction in energy demand per unit of GDP from its long-term average of c.1% per annum to 2 or 3% per annum, then overall energy use will go down if economic growth is 2 to 3% per annum (which would be very nice in the UK or the rest of Europe!). This acceleration in the rate of reduction in energy demand per unit of GDP should be one of the key targets of energy policy.

I recently read a great book for anyone interested in the history of energy in the UK; Children of Light.  How Electricity Changed Britain Forever, by Gavin Weightman. (http://www.amazon.co.uk/Children-Light-Electricity-Changed-ebook/dp/B004IK8M7G).  With electricity and a potential crisis in electricity supply in the UK in the newspapers nearly everyday it is important to put the issue in context and that means understanding the history of the electricity industry.  Children of Light is an excellent account of that history from its beginnings in the 1870s right through to privatization in the 1980s.  As well as being informative the book is highly enjoyable, providing a great perspective on the mix of technology, companies and individuals who changed the UK by developing the electricity industry.

It was good to find out that one of the first public electricity systems in the world was in Goldalming in Surrey (apparently there is a plaque in the town marking this), even though it wasn’t really the first in the UK it was a good year ahead of the more famous Pearl Street in New York in 1882 which normally gets the credit for being first in the world, (Edison had better PR!).  Godalming’s eIectricity was provided by a water wheel on the river.  It was also good to be reminded that the main selling point of electricity was that it was cheaper for lighting than gas – the cost was £195 per annum to light the streets of the town compared to £200 from the gas company.  All the switches from one energy source to another historically have been because the cost of providing energy services from the new source is cheaper – something we ignore at our peril.

The influence of great engineers and entrepreneurs, some of whose names are still familiar today like Merz and McLellan, Siemens and Edison is well described, as well as some names that will only be familiar to older readers (me included) such as Swan, Crompton, Armstrong, Thomson-Houston and Ferranti.  The anglo-German nature of Siemens was news to me – William Siemens represented his brother’s firm, (Werner Siemens), and lived most of his life in the UK, and ended up being knighted.  The influence of American entrepreneurs on the London Underground was also fascinating.  The Central line was built with “international finance and American technology” from General Electric (trains), Sprague (lift motors), Thomson-Houston (electrical distribution gear) and Babcock & Wilcox (boilers).  The development of the Underground was also driven by American Charles T. Yerkes, who had served jail time in the US for taking funds from the Philadelphia town treasury with the help of the Treasurer.  Yerkes was a great promoter, and generally “colourful” character, and went on to make a fortune in Chicago street railways.  Eventually he was forced out of Chicago and based himself, along with his entourage, including his second wife, a seventeen year old girl and a former lover, in London’s Claridge’s hotel.  He then proceeded to play Monopoly with the existing proposals for new tube lines and the companies running the District and Metropolitan lines.  He brought in American investment and technology and in a short period effected the electrification of the District and Metropolitan lines, and the building of the first sections of the Bakerloo, the Piccadilly and the Northern lines.

A really interesting part of the history is the municipal ownership of electricity suppliers.  In 1926 there were 572 “authorized undertakings” with 438 generating stations – two thirds owned by municipalities – and this level of local ownership continued until nationalization in 1947 when some 600 companies were taken into the British Electricity Authority and fifteen area boards.  Maybe with the dissatisfaction with existing suppliers and the move towards community energy we are going back to having locally owned suppliers.

Other snippets from the book that stood out for me include;

• battles over planning for pylons, particularly in areas of outstanding natural beauty like the South Downs or the Lake District – shades of wind farm planning battles.
• complaints about prices going up (despite public ownership).
• the need for pre-payment meters in poorer areas.
• the ability to rent electrical appliances – this spread the cost and helped build demand as more people could then afford electricity consuming goods.
• Ferranti’s invention in 1929 of the electric fire with a parabolic reflector, I remember them as being very common into the 1970s – we certainly had one throughout the 1970s.

Anyway the book is well worth reading for anyone interested in the energy industry and how we got to where we are today.   I recommend it.

I was surprised recently to see a headline (Daily Telegraph Business 3 July) that said ‘New nuclear possible by 2020, Davey insists”.  Apparently Ed Davey, the Secretary of State for Energy and Climate Change, said that Britain could have a new nuclear reactor generating by 2020.  My immediate thought was, what did he have for breakfast that day or what was he smoking, as we all “know” that every nuclear plant project around the world is years late and way over budget. I decided to check into this by looking at the statistics on the World Nuclear Association (WNA) website which helpfully has a lot of data on every nuclear power station and project.

For details see: http://world-nuclear.org

So is it really possible for the UK to build and commission a new nuclear plant by 2020 which is six years and five months away (77 months)?

Here is some data from the WNA website to help you judge.  For the first pass I just looked at reactors that had been commissioned since 2000.

The average time to build for all reactors commissioned since 2000 was 9.6 years (115 months).

Now this includes all types and sizes of reactors including some 220 MW capacity PHWRs (Pressurised Heavy Water Reactors) whereas the planned UK reactors at Hinckley Point C are PWRs (Pressurised Water Reactors), or to be more precise EPRs (European – or Evolutionary – Pressurised Reactors).  The EPRs are 1,650 MW capacity.  So let’s take the non-PWRs out of the equation and just look at the build times of PWRs, build time is defined as construction start date to date of first commercial operation.

The average time to build for all PWRs commissioned since 2000 was 10.4 years (124 months)

To be fair there are some obvious outliers in the data, mainly Russian, Ukrainian and Czech reactors that took inordinate amounts of time to build – an amazing 27 years in the case of the Rostov 2 reactor, (started 1^st May 1983, commercial operation 10^th December 2010).  Clearly there were special circumstances, i.e. the little matter of the fall of the Soviet empire.  So let’s take out all the plants that took longer than 15 years to build.

The average time to build for all PWRs commissioned since 2000, excluding all those that took longer than 15 years to build, was 6.4 years (77 months).

To move one step further and to favour the nuclear industry, let’s take out all those PWRs that took longer than 10 years to build.

The average time to build for all PWRs commissioned since 2000, excluding all those that took longer than 10 years to build, was 5.1 years (61 months).

So let’s look at the track record of EDF building EPRs.  The other EPRs being constructed are Olkiluoto 3 in Finland and Flamanville 3 in France.  Construction of Olkiluoto 3 started in 2005 and originally the station was supposed to be completed by 2009.  It is now expected that operation will start in 2016 – implying a build time of 11 years.  Originally the cost estimate was €3.7 billion, (an obvious low ball bid!) but the cost is now expected to be €8.5 billion.  Flamanville 3 construction started in December 2007 with an estimated build time of 54 months (4.5 years), implying commercial operation some time in 2012.  Estimated costs have, like Olkiluoto 3, risen from €3.5 billion to €8.5 billion, and estimated completion is now in 2016 (implying a build period of 9 years, 108 months).  EDF Energy has, according to the Telegraph, “refused to give an up-to-date timetable for building” the reactors at Hinkley Point C (perhaps not surprising!).  Ed Davey did hedge his bets by saying; “We are still hopeful we could see new nuclear generating in maybe 2020, 2021. I’m not going to say it will definitely be there because we haven’t signed a deal yet.”  In may, Chief Executive of Centrica, which pulled out of the project in February, said, “instead of … taking four to five years to build, EDF were telling us that it was going to take nine to 10 years to build” – which implies EDF are less optimistic than Ed Davey of generation by 2020.  Given the experiences at Olkiluoto and Flamanville nine to 10 years seems a more realistic estimate than the six to seven years implicit in Ed Davey’s comments.

So is it really possible that we could have a new EPR nuclear plant up and running by 2000?  Looking at the data, and being positive you have to say it is possible but it certainly doesn’t look likely.

I can only assume the comment by the Secretary of State was designed as part of the current reassurance campaign that the lights won’t go out as the supply margin gets smaller as older nuclear plant and large coal plants are decommissioned.  It is clear that the risk of the lights going out is increasing, but then we knew that a long time ago and previous governments ignored the issue.  To quote “Old Sparky”, who writes the “Keeping the Lights On” column in Private Eye (which should be essential reading for all energy analysts), Plan A for keeping the lights on was “windfarms, new nukes and pixie-dust”, Plan B was a new dash for gas.  Plan C is to “pay large electricity consumers to switch off when requested; encourage industrial companies and even large hospitals to generate their own diesel-fired electricity (not a hard sell when the grid can’t be relied on); hire diesel generators to makeup for the intermittency of windfarms.”  Plan B – the dash for gas – probably won’t ease the problem in the next three to four years, (neither will EMR), but plan C probably will………with any luck……….and a following wind, (or more accurately good wind days on days with high demand),……….if nothing goes wrong on the wrong day at the wrong time.

Never having read Alice in Wonderland I decided to look up the quote about believing six impossible things before breakfast.  In response to the White Queen telling Alice that she is one hundred and one years, five months and a day old, Alice says

“I can’t believe that!” said Alice.

“Can’t you?” the Queen said in a pitying tone. “Try again: draw a long breath, and shut your eyes.”

Alice laughed. “There’s no use trying,” she said: “one can’t believe impossible things.”

“I daresay you haven’t had much practice,” said the Queen. “When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”

Now, believing six impossible things before breakfast is a useful skill, especially when thinking about the future or for people who want to change the world like entrepreneurs.  However, I am not sure it is a useful skill for politicians in charge of energy policy.

Iam going to cover the topic of Electricity Demand Reduction (EDR) and the Electricity Market Reform (EMR) soon, that is the essential piece of the puzzle that is being ignored in all of this debate.  All I will say for now is, as new nuclear is getting a £10 billion guarantee and a strike price in the range of £80 to £115 per MWh, can we have let’s say a £1 billion guarantee for electricity demand reduction projects and a strike price that is a fixed percentage of that for nuclear – let’s say 75% –  and let’s see how many MWh (or more accurately negawatt hours) the energy efficiency industry can deliver by 2020.

It is easy to forget in a modern, developed democracy but there is a very real link between electrical power and political power.  This is most noticeable in emerging economies but it is true everywhere – probably because in most countries used to 24/7 reliable power a prolonged (or even a short) time without electrical power would quickly lead to the fall of a government.

This link was most noticeable to me in my time in Romania (1994-1998) which was quite soon after the fall of Nicolae Ceauşescu and communism.  There was an old adage in Romania. ‘When the President of the country telephones the President of the electricity company the President of the power company may or may not take the call, depending on what he is doing or what he feels like.  If the President of the power company calls the President of the country, the President of the country always takes the call.’  I am not sure how true it was but it was told to me by a former President of the power company and it really reflected the power of the power utility.  It was further brought home to me when during the election of 1996, (which led to the first post-communist change of power and the first President who was not associated with the former regime), when there were stories of local power officials using the threat of power cuts to industrial enterprises to encourage block voting in a certain way.

Anyway, there clearly is a link at many levels – the prolonged absence of electricity could cause civil unrest and ultimately the downfall of a government.  If the UK power crisis does get to the situation where the “lights go off”, i.e. there are blackouts – which with luck we will avert (luck not the best thing to plan on!) – we will once again see the close link between electrical power and political power, a link not really seen in the UK since the dark days of the miner’s strike and the three day week of the 1974.

For any readers too young to remember the three day week see http://en.wikipedia.org/wiki/Three-Day_Week for details.