Only interconnect

Jersey Electricity and Jersey Gas fight over marginal carbon emissions from imported electricity.

A nice classroom case on green economics. An inter-corporate fight has broken out in Jersey (the original small island off Normandy) between Jersey Electricity and Jersey Gas. Gas is all imported in small tankers; since 1984, electricity has been imported from France through a submarine cable, now leaving only vestigial local generation. So Jersey Electricity trumpets its low carbon footprint, as French generation is 78% nuclear and 88% low-carbon (2004). Jersey Gas isn’t happy as there’ s nothing it can do to lower its carbon footprint short of dying.

The States of Jersey are revising building regulations to set a carbon emission standard that gas can’t meet. With its back to the wall, Jersey Gas looked for talking points against electricity. They took out a full-page advert in the local paper:

ELECTRIC HEATING – HOPE YOU LIKE IT, BECAUSE YOU’RE STUCK WITH IT. No matter what the cost to you and the environment
…the States of Jersey Environment Department think that electricity is low carbon and good for the environment. They are wrong. On island electricity generation is high carbon. about 3 times that of gas. The JEC will confirm this. European electricity – what do the French think? The French Secretary of State for Ecology … interviewed in Le Monde, 1 October 2008, “We have a serious problem with electricity heating in France. It was a mistake to develop it …” … THIS IS GOING TO COST: YOU. Electricity is more expensive than other fuels. THE ENVIRONMENT. Electricity is not a low carbon fuel …”.

Jersey Electricity complained to the UK Advertising Standards Authority and won.

What’s worth a second look is the claim Jersey Gas’ lawyers made in the proceedings that since the European electricity market is integrated, the carbon intensity of Jersey’s electricity is that of marginal European supply: which is mostly fossil, and higher carbon than locally consumed gas. If that’s so, then the claimed advantage over gas disappears.

Right or wrong? The answer is relevant to any region within a grid, like California (connected to the rest of the continental USA), the USA (connected to Canada) and China (connected to Russia).

Answers welcome – for once I can guarantee the attention of a live policymaker.

My take: Jersey Gas has one good point but is still wrong.

A market is a social institution, not a technical fact. The European bulk electricity market is being developed under pressure from Brussels, but it hardly existed when the first submarine cable was laid in 1984. The cable was certainly not a standalone investment by entrepreneurs who proposed to buy electricity in a market which didn’t exist. It was part of a long-term contract with EDF: without access to the details, it must be the case that EDF promised to sell and Jersey promised to buy, over a period long enough to amortise the investment. This contract makes Jersey an integral part of the French grid and consequently its demand is part of EDF’s operational management and forward planning.

EDF (or the grid operator RTE, spun off from it at Brussels’ insistence) has different and more arm’s-length relationships with other cross-border counterparties in Belgium, Germany, Spain or the UK over interconnectors. The market here is intraday. EDF will presumably try to sell spot electricity if there’s a surplus from nuclear and wind, otherwise not.  So institutionally a French frame of reference is correct, subject to a detailed look at the contracts.

Jersey Gas’ good point is to look at marginal carbon emissions. For gas, it’s a single number: 214 gm/kwh according to the Carbon Trust, a respected UK NGO. For electricity, it depends on the time of day and year. If you are deciding today in Jersey whether to switch on your washing machine at 6 p.m. or midnight, the relevant variable for carbon worry is the short-run – instantaneous -  marginal cost. It’s of course desirable for consumers to be given real-time information about these costs. But this is the wrong framing for planning and regulatory purposes. The argument is about public policy, in the form of building and other regulations and taxes designed to affect consumers’ investment decisions and habits of life over a horizon of decades.

A more wonkish approach could go like this. Start with your annual curve of carbon emissions per marginal kwh, supplied by the generators. [Update It should have a mere 8760 data points, one for every hour of the year.] Next, for any given category of appliance, you estimate an annual load curve [for the same time periods]. Finally you sum the marginal carbon emissions over the year [the scalar product], and take the mean. This won’t be the same for a home space heater – daytime and evenings excluding summer – or an electric car – night-time all year. The worries of French greens about space heating are not misplaced. Jersey regulators can’t rely on “electricity is greener”: they should dig properly into typical load curves for different types of use, and insist on smart metering to empower and inform consumers.

You still have to choose between short- and long-run carbon costs. Picking short-run, the advantage is that you can estimate the numbers to some accuracy for France. Installed French nuclear capacity has been steady at 63 GW for decades; it is 85% available. Assume the downtime is flat – an implausible worst case, as I’m sure EDF manage to schedule regular maintenance for the summer. The latest annual consumption curve I could find was for 2003, but the shape won’t change much. Combining the weekly output with the daily variation, I got this only slightly stylised supply and demand curve:
Source: RTE, processed

It looks as if nuclear energy covers all demand for six months of the year, mean demand for nine months of the year, and the nighttime minimum more or less the whole year. The French have so much nuclear capacity that capacity usage is only 77%. For the remaining 7%, equivalent to 25 days a year, some plants are idled because RTE can’t sell the output to anybody, interconnectors or no. Marginal output is therefore non-nuclear for only a fraction of the year – eyeballing the graph, no more than a quarter. Deduct hydro and wind, and you only need made a small correction to carbon intensity for fossil. Taking the mean, French electricity is only 5% carbon-intensive; the summed marginal share may be a few times that, but no more. Jersey regulators are entitled to ask for an exact carbon emission curve.

If it’s investment decisions you are trying to influence, the correct marginal cost is formally the long-term one. This is much more iffy. However, if the correct institutional frame is France, then it’s easy enough to check qualitatively what EDF are planning: more of the same. The plan is to replace the current nuclear reactors with a new standard design over the coming decades. Since the new EPR design is rated at 1650 MW and the oldest of the existing park are 900 MW, EDF can easily increase nuclear capacity if it wants to. EDF will also grow its wind park of 2 GW. Whatever happens to nuclear costs, its carbon intensity will stay negligible.The short-run carbon curve is a good approximation to the long-term one.

Can Jersey Gas win the argument if we concede their use of the European and not the French market as the reference? There is a lot of uncertainty and dithering about new nuclear capacity anywhere outside France, so the long-run European marginal carbon intensity is guesswork. We can say that new capacity will be a mix of nuclear (from France), wind or gas, so long-run marginal cost is a hybrid of these: conservatively ignoring the menu of other jam-tomorrow renewables (PV and thermal solar, tidal, geothermal). The economics dictate that wind output will be taken up first, even if it has to be balanced half the time by gas (or in some places hydro). A third each would be a reasonable guess. Modern gas generation produces 360 gm carbon per kwh (here, p.9). So worst-case long-run marginal carbon intensity is unlikely to be higher than 150 gm/kwh (allowing generously for transmission losses).   Jersey’s imported gas comes out at an uncontested 214 gm/kwh, so Jersey Gas can’t win even stacking the deck.

Author: James Wimberley

James Wimberley (b. 1946, an Englishman raised in the Channel Islands. three adult children) is a former career international bureaucrat with the Council of Europe in Strasbourg. His main achievements there were the Lisbon Convention on recognition of qualifications and the Kosovo law on school education. He retired in 2006 to a little white house in Andalucia, His first wife Patricia Morris died in 2009 after a long illness. He remarried in 2011. to the former Brazilian TV actress Lu Mendonça. The cat overlords are now three. I suppose I've been invited to join real scholars on the list because my skills, acquired in a decade of technical assistance work in eastern Europe, include being able to ask faux-naïf questions like the exotic Persians and Chinese of eighteenth-century philosophical fiction. So I'm quite comfortable in the role of country-cousin blogger with a European perspective. The other specialised skill I learnt was making toasts with a moral in the course of drunken Caucasian banquets. I'm open to expenses-paid offers to retell Noah the great Armenian and Columbus, the orange, and university reform in Georgia. James Wimberley's occasional publications on the web

6 thoughts on “Only interconnect”

  1. I'm puzzled – as I read you, you are talking about the comparison between electricity generated with natural gas and electricity generated in a nuke – for uses that have to be made of electricity? Running motors, lights, etc. That's clearly going to favor the nuke. But the ad you reprinted was about using electric heat, and it's my impression that it's hard for that to favor electricity, that it's far more efficient in general to use all the heat from burning gas to make heat where you are than to use the electricity from distant generation (where waste heat was blown off in cooling towers) to make heat in your house.

    In my own house, we burn a wood stove all winter, with gas back-up. That means the electricity from our local nuke can go to electricity-essential uses. So, yes, 214 gm/kwh, okay, but if you have a gas furnace heating air in your house, I have doubts.

  2. it’s far more efficient in general to use all the heat from burning gas to make heat where you are than to use the electricity from distant generation

    If the electricity is generated by burning gas (or other fossil sources, which are mostly worse than gas), and the electricity's being converted directly in space heaters, I'd say that's self-evidently true. But if the energy is primarily nuclear, which has a much lower carbon footprint, then it's not clear to me that the carbon footprint for electric heat would be worse. In James' calculation he's trying to figure out how much of that energy actually comes from fossil fuels.

    Second, the electric heat doesn't have to be a simple heater, it could be a heat pump. They're basically air conditioners run in reverse; they use the electricity to pump heat energy from outside into the house. This is Carnot-limited, like an air conditioner or refrigerator, but is still much more efficient than just dumping the electricity as heat. Electric heating in new buildings would presumably involve heat pumps.

    The electric heat in my old townhouse in Malden, Mass. was actually a heat pump, with an auxiliary electric heater for the coldest times. It worked remarkably well even in Massachusetts winters, probably abetted by the connected townhouse construction.

  3. I gather that the amount of carbon dioxide released to the atmosphere during the gas extraction and conditioning process is highly dependent on the source. I've seen numbers ranging from fractions of a percent to several tens of percent carbon dioxide, and I don't know what's reasonable.

    Unless carbon dioxide released during the extraction and conditioning process of raw natural gas is negligible, it should appear in the comparison.

    Is it negligible? If not, is it accounted for?

  4. Steve: sorry, no idea of the numbers on your problem. Given that marginal European gas comes from Russia, it's sensible to worry about production leakages. But this has no effect on the comparison between gas that arrives in Jersey directly in tankers and indirectly via German power stations.

  5. But hold it. The planning that's been done for electricity almost certainly didn't take into account the wholesale replacement of gas-based heating with electrical heating. Indeed, current peak capacity of the two cables supplying Jersey is (according to a link on the first page of the obvious search) 145 MW. Peak winter demand is currently (ditto) 150 MW. So until a new cable is laid, any marginal increase in electricity consumption is going to come from on-island generation.

    And electric heating is really truly not something you want to be making part of your load-shedding regime.

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