Why the Lights May Be Going Out Again All Over Europe...
Jul 03 - Sunday Business; London (UK)
SOUTHERN Europe faces a rerun of the summer of 2003, when a heat- wave caused French power cuts and a halt to electricity exports that left half of Italy sweltering in the dark. Although energy firms and politicians promised then that they would make sure there was no repeat of the crisis, it seems few lessons have been learned.
With temperatures across France peaking at 40C last week, Electricite de
France (EdF), the state generator, is running into hot water. The company's
attention was focused on its Tricastin nuclear plant, which draws its cooling
water from the Rhne, where temperatures upstream of the power station had
reached 25.6C.
Although that exceeds the normal ceiling at which production must halt, the
company has a special heat-wave dispensation that allows it to maintain
operations until the river water downstream reaches 29C.
Some 33 departements, a third of the total, have imposed restrictions on
water use, and in some regions, emergency plans for care of the elderly have
been implemented. EdF has urged consumers to turn off appliances they don't need
and those with air conditioning to throttle back, insisting blithely that
"if the outside temperature is about 32C, a temperature of 27C will be
sufficient to ensure your comfort".
Europe's biggest generator, which needs to present a competent image ahead of
its planned E40bn (Pounds 26.7bn, $48.4bn) plus initial public offering (IPO)
this autumn, insists it has learned lessons from its 2003 failures. Summer
maintenance shutdowns, which contributed to power shortages two years ago, have
been scheduled to allow more flexibility in case of a heat-wave, its spokeswoman
insists. "We have tried to learn the lessons from 2003 and improve our
planning," the company says.
This year, the company says that its four seaside plants at Gravelines, Pauly,
Paluel and Flammanville, on the north coast, and which are untroubled by the hot
water problem, will have 12 of their 14 reactors available throughout the
summer.
In addition, it says plentiful snowmelt from the Alps has combined with
better management of water stocks to ensure enough supply to the hydro stations
it uses to top up peak demand.
But trouble is brewing. EdF's core problem is its heavy reliance on 19 giant
nuclear generating complexes, 15 of them drawing water from rivers that can't
provide sufficient cooling when air temperatures top 100F for protracted
periods.
On Tuesday, the French, German, Dutch, Belgian and Luxembourg energy
ministers agreed to order their power operators to study improvements to their
national grid interconnections that would help the neighbouring European states
meet demand peaks.
The rapid restructuring of the French power system to allow real competition,
together with preparations for the flotation of EdF, ensures French power
managers already have their hands full, however.
In Italy, the situation may be worse. The Italian electricity industry
survived the June heatwave with its reputation intact despite record demand. But
the real test will come later in the summer, especially if, as seems possible,
it does not rain.
The high temperatures last week brought back memories of the 2003 drought.
The electricity grid all but collapsed under unprecedented levels of demand and
the operator was forced to start cutting power to large parts of industrial
heartland in the north.
In the autumn the grid finally did collapse. A power line brought down by a
tree in Switzerland set off a chain reaction which overloaded Italy's system and
switched off the lights throughout the country. It may not have been the weather
that caused the catastrophic failure but it highlighted the fragility of the
national grid.
Since then the there have been efforts made to improve things. Last week the
government expressed confidence that there will be no repeat of the 2003 fiasco.
Davide Tabarelli, senior economist at Ricerche Industriali ed Energetiche, an
energy research consultancy in Bologna, agrees - at least for the time being.
"A new electricity trading exchange and other improvements have created
6,000 megawatts of extra capacity. There is also less demand from industry
because of the recession. But we are only at the beginning of the summer,"
he said.
Italy's national grid operator, GRTN, says that there is now 12% of reserve
capacity to cover periods of intense demand compared to 2% in 2003. GRTN plans
to spend E2.4bn over the next nine years partly on boosting capacity further but
also on measures to ensure prices for consumers come down.
Early this year, Italy's energy regulator said that efforts need to be made
to increase competition. It said the former public monopoly, Enel, still has a
dominant position which allows it to influence price levels. Consumer groups say
that Italians pay E100 more than other Europeans.
Enel, on the other hand, has seen its own trading position helped. Since the
trading exchange was started last year, the electricity producers have been
better remunerated for boosting supply in times of need.
Italy's power companies have to to use older, less efficient plants to
increase supply. But they were not able to pass on the higher costs to
consumers.
The new exchange means that the government can pay extra for electricity that
costs more to produce. Supplies from abroad, without which Italy's lights would
go out regularly, have also become more efficient. The main line that carries
electricity across the Alps from Switzerland has been expanded so that another
country- wide power cut like the one in 2003 is no longer possible.
But water, or the lack of it, is still going to be crucial to electricity
supplies. Italy's largest river, the Po, is already down to a trickle because of
the smaller amount of snow in the Alps over the winter. In 2003 it only reached
this level at the end of July. Several power stations on the banks of the Po use
the water from the river to cool the generators.
Last week demand for electricity last week hit an all-time peak as consumers
turn up the air conditioning in record June temperatures. Consumption of 54,100
megawatts was well short of the 60,000 megawatts capacity. But any power
stations put out of action will compromise Italy's efforts to keep supplies
going.
And there are still problems at a local level. There were several power cuts
in central Milan last week including one in the area around the stock exchange.
Italy's national grid says that the city was receiving adequate supplies at
the time. It was therefore a problem of the city supplier AEM. The Milan company
believes the high temperatures in the centre caused the failure in the local
network.
The government is hoping that June will prove to have been a freak month as
far as the weather is concerned. It has repeatedly rejected fears of another
power crisis.