Black Vision

An International Energy Agency report has warned that creaking electricity supplies may come under increasing pressure as demand rockets. The timing of the report — coinciding with Dubai’s power cut — makes worrying reading for the UAE.

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By  Arabian Business Published  June 19, 2005

Black Vision|~|DELIBERATE-200.jpg|~|DELIBERATE: Analysts say that grids are often built to go down, as a lack of failure means there is over-capacity.|~|THE OPENING words of a new International Energy Agency (IEA) report are likely to send a shiver through the city of Dubai, recovering from last week’s sudden power cut. “These events can happen anywhere, and they do!” the report says. “The results are blackouts, brownouts and other curtailments on electricity consumption.” In simple terms, the IEA report — called Saving Electricity in A Hurry: Strategies to Deal With Temporary Shortfalls In Electricity Supplies — warns that power cuts are likely to become the norm in countries where development is taking place at an unstoppable pace. It claims that a combination of “bungled” utility privatisation programmes, increasing demand, ageing infrastructure and a lack of pre-planning could hit major nations. Often the actual shortages themselves are brought on by a variety of events all occurring at once, a kind of electrical ‘perfect storm.’ “Most shortfalls appear to have been a convergence of two or more problems. These unfortunate combinations of events are easy to identify in retrospect, but difficult to confidently forecast. Such shortfalls might occur as a result of reduced hydroelectric supplies caused by a drought, a breakdown in a power plant, a heat wave, or partial loss of transmission or distribution capabilities,” the report states. Saving Electricity in A Hurry targets the electricity grids in developed countries. It acknowledges that outages do occur in developing nations, but it’s focus is on the OECD countries. It looks at previous outages in nations like the United States, Canada, New Zealand and Norway for lessons learned. However, it does not think that such outages are a thing of the past — far from it. “There is every reason to expect that another shortage ... will appear soon,” the report says ominously. Increased demands on modern electricity grids come from two major sources, heating and cooling. In the winter demands are placed upon electricity supplies from the desire to warm houses and workplaces. They have now been joined by the more modern need to cool houses and workplaces during hot weather, using air-conditioning. Stewart Gray is a senior electricity analyst at Wood Mackenzie energy consultants in the UK. “Until the cost directly affects consumers there seems little chance that people’s behaviour will change drastically,” he tells Arabian Business. “In general, the desire for consumer items like air-conditioners is still rising, so are the demand for halogen light bulbs. People are very keen on those, for example, but they use a lot of juice. So until governments are willing to make consumers pay more for the cost of these items demand will continue to rise.” The report is adamant that consumers of electricity will have to learn that these desires can not always be guaranteed. “In a crisis it is acceptable to request consumers to make themselves more uncomfortable, hotter in the summer, colder in the winter, and be inconvenienced,” the report says, alarmingly. Saving Electricity in A Hurry also underlines the way that energy efficiency must be paramount in any scheme to stop shortages occurring in the future. The report targets short-term measures, after an outage has occurred. But it also demands that nations study methods to limit electricity use in the first place. “If economic common sense and obvious environmental benefits are not enough, the insurance against crippling electricity shortages provides yet another justification for maintaining aggressive energy efficiency programmes," the report says. Gray argues that energy efficiency is often a desire rather than a practicality. “Governments all seem to want to make their energy use more efficient, but at the moment they do not want to make the necessary moves. They are not keen to make consumers pay more,” he says. One reason for wanting to avoid any kind of cut-off in electrical supplies is obvious. A sudden loss of electricity is dangerous. As the report points out: “Even a single blackout can lead to deaths.” But as well as obvious physical problems, as seen in the New York ‘brownouts’ with Metro train passengers trapped underground, the economic costs can also be huge. There are estimations that the Californian energy crisis of 2001 racked up over US$800 million in costs for the West Coast state. Wholesale energy prices in California’s deregulated markets increased by up to 1000% as companies profited from the shortage, costing the state’s essential services a small fortune. As well as this, Californian consumers, trapped by their local federal arrangements, contributed an even greater share than the government in energy saving measures. Without prompt action from citizens and commercial users, an extra US$1.3 billion would have been added to the cost of the electricity downtime. “Internationalising grids is a prudent option to avoid localised problems,” says Gray. “Creating energy infrastructures that go across borders, such as has been done and is being done in Europe, makes the whole system more secure. Nevertheless saving energy to start with is, of course, a good idea.” Some of the IEA’s suggestions for saving energy seem sensible, some far-fetched. The organisation places great importance on the use of media to inform and educate consumers — even down to “celebrities” making energy saving “cool”. But it also advocates watching TV in the dark, slowing the speed of escalators in commercial buildings and turning off “second (or third)” refrigerators. One aspect of the report that appears a little confusing is when it says “actions by terrorists or criminals could also create shortfalls in electricity supplies.” Outside of Iraq’s difficulties, with attacks on oil and electricity installations, there is little evidence to say terrorism or criminal gangs could be a deciding factor in electricity power cuts. “Power plants, transformer stations, and transmission lines are attractive and vulnerable targets for terrorists,” alleges the report. “Oil and gas pipelines, oil storage tanks, and other major facilities upstream of the electricity grid are also prime targets. These actions could disrupt the supply chain for a few minutes or even many months because these facilities are unique and not easily replaced.” The report says that attacks have “been thwarted” around the world, but cites no examples or evidence. “Problems really come from the type of investment the market is making,” says Gray. “For a long time the electricity industry has been living off the fat of previous years. Because markets have been liberalised there is less incentive for new power generation systems. In the UK for example this is the first time since the end of the Second World War when no new conventional power plants are being built. That creates a strain on demand.” In conclusion, the organisation is keen to point out that electricity shortages are, unsurprisingly, something to avoid. Without forward planning in the sphere of electricity grids the outcome can be a potential disaster. “Saving electricity in a hurry is not an elegant, localised, operation like building a new power plant; it is a messy, chaotic, activity with groups scrambling all over and sometimes bumping into each other,” the report cautions. “It … can be expensive in unfamiliar directions, such as for advertising, rebates, and other subsidies. But this may be the only alternative to much more severe economic dislocation and disruption.” Gray agrees, but points to one hidden factor that many outside of the electricity industry do not realise. “There is a kind of unspoken rule within the industry. That is that systems are built to occasionally fail. The general rule of thumb is that they will go down once a decade, if they don’t ever fail it is generally thought that you are producing too much electricity which is wasteful. The trouble in this case is that people do not want to be told this. And as you can imagine, governments are not very keen to tell their consumers that, not very keen at all.” ||**||

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