Memorandum submitted by Professor John
H Gittus
An Answer to EAC Question C4: "To what extent
would nuclear new build contribute to security of supply (ie keeping
the lights on)?"
By Professor John H Gittus. F R Eng. D Sc (Physics,
London University). D Tech (Metallurgy, Royal Technical High School,
Stockholm). B Sc (Mathematics, London), F I M. F I S. Consultant
to Chaucer Syndicates, Lloyd's of London Insurance Market. Royal
Academy of Engineering visiting Professor, University of Plymouth.
SUMMARY
1. Currently the Security of Electricity
Supplies in the UK is the highest among the G8 Countries.
2. This is largely because the UK is almost
completely independent of imported fuels.
3. In 2024 the situation will, on present
forecasts, be reversed and the UK's Supplies of Electricity will
be the least secure among the G8 Countries.
4. This is largely because, by then, the
UK will be uniquely dependent on imported fuels, particularly
imported gas.
5. Historically, the UK's Gross Domestic
Product has been reduced by an amount equal to the magnitude of
each of the major, politically-inspired blackouts that have occurred.
6. The magnitudes of the Blackouts forecast
to occur when the UK is reliant on imported fuels are much greater
than those that have occurred in the past.
7. Such blackouts would, on past experience,
lead to such large losses of GDP that the UK could not reasonably
be expected subsequently to recover its position in the Global
economy.
8. If instead of importing so much gas from
outside the EU, the UK builds nuclear power stations to replace
the present ones, which are near the end of life and makes more
use of the renewables then the Security of Supply can be preserved.
One way of doing this, without Government Subsidies, would be
to introduce Security of Supply Obligation Certificates, SOSOC's,
similar in principle to the present Renewable Obligations Certificates,
ROC's.
INTRODUCTION
This work is an extension of an analysis of
the Security of Electricity Supplies in the UK that I did in 2002-03,
to assist with the UK Government's Energy Review[72].
In that analysis I focused on the likely frequency and magnitude
of Electricity Blackouts in the UK, due to all causes, including
Political Risks, bad weather, industrial action and accidents.
I used Meteorological Models, Insurance and Political Risk Data-Bases.
In the present study I extend the earlier work to cover the G8
countries, forecasting the frequency of electricity blackouts
due to Political Risks, Industrial Action and Terrorist Risks.
POLITICALLY-INSPIRED
INTERRUPTIONS OF
OIL SUPPLIES
HAVE REDUCED
GDP OF UK AND
JAPAN
Disruption of UK oil and coal supplies due to
political activities has occurred twice per decade in the last
50 years. Fig 1 shows how the interruption that occurred in 1974
reduced the GEP of both the UK and Japan.
INDICES
OF BUSINESS
RISK CORRELATE
WITH DISRUPTION
OF OIL
SUPPLIES
Figure 2 shows that the history of disruptions
to oil supplies correlates well with indices of Business Risk
based on experience in the Marketplace.
For the countries of the Middle East that have
the greatest oil reserves and which are shown in, the average
Political Risk Insurance Premium in 2002 is 3.3% and the range
is from 1% for Qatar to 9% for Iran. These figures do not differ
significantly from the actual percentage, 5.3%, of our oil supplies
that the UK lost, due to political action, in the period 1954
to 2002.
FORECASTING THE
FUTURE DISRUPTION
OF UK OIL,
GAS, URANIUM
AND OTHER
FUEL SUPPLIES
Above I showed that the actual Risk, in percentage
terms, presented by Politically-motivated interruptions to oil
supplies over the last half century is numerically similar to
the Political Risks to Business in the countries of the Middle
East from which this oil was imported. These Political Risks were
represented by the Premiums needed to insure them.
Those Premium-values are similar to the Premiums
for the countries from (and through) which the UK and other countries
will be importing most of its gas in 2024 and the years leading
up to 2024.
I have used these indices to calculate the frequency
and magnitude of future interruptions of supplies, to the UK,
of oil, gas, and uranium and of the other fuels that we shall
be using to generate electricity.75[73]
If interruptions of gas supplies follow the
pattern of historic interruptions of oil and coal supplies in
terms of duration and frequency, then we can expect them to occur
at intervals of order 10 years and to last a significant part
of a year on each occasion.
EVIDENCE OF
INTERRUPTION OF
GAS SUPPLIES
TO EUROPE
FROM RUSSIA
It might be argued that it is unfair to forecast
the interruption of gas supplies from Political Risk Indices alone,
even though those indices correlate well with the historic interruption
of oil supplies. However there have already been several interruptions
of supplies of natural gas to Europe from Russia and this raises
our confidence in the forecasts. For example:
1. On 18 February 2004, Russia's gas
holding Gazprom stopped gas supplies to Belarus. As a result,
Russian gas supplies to Poland, Lithuania and the rest of Europe
through Belarus were halted. This radical step on the part of
Gazprom was due to the fact that "The Belarussian state-owned
company Beltransgaz has not fulfilled all of its transit obligations."
2. Again, several times in the first
half of 2002, Russian companies cut off natural gas supplies to
the Ukraine and Georgia to force payment of debts. Russian gas
giant Gazprom is now suing Ukraine to pay for gas that Kiev has
allegedly siphoned from the pipeline transiting its territory.
Longer, less frequent stoppages may easily be envisaged.
3. An interruption in gas flows from
Russia, Turkey's main supplier, put Ankara, Istanbul and Bursa
in the dark and the cold. Although Russia's national gas company,
Gazprom, has made assurances that interruptions in gas supplies
were out of the question, few people in Ankara and Istanbul are
relieved. "We have never seen Russia as a reliable gas supplier,"
said one Istanbul businessman. "And recent failures in gas
supplies proved us correct."
My earlier, detailed analysis led to the forecast
that, in a typical year in the coming decade:
There will be no gas flow from Russia to the
UK for a few percent of the time.
For about 15% of the time, Russian gas will flow
to the UK at no more than 50% of the intended rate.
FORECASTS OF
BLACKOUTS IN
THE G8 COUNTRIES,
2004 TO 2024
Using the methods of analysis summarized above,
I have extended the study of Security of Supply to cover all sources
of electricity and each of the G8 Countries.
First, to exemplify the methodology, are shown
Figures containing some of the data used in making these forecasts:
Figure 3 shows the Political Risk Indices for
countries that export most of the World's coal.
Figure 4 shows the Political Risk Indices for
countries that export most of the World's uranium.
Figure 5 shows the cost of Intermittency for
renewable sources of electricity.
Figure 6 shows the sources of UK electricity
for the period 2004 to 2024.
Figure 7 shows the sources of US electricity
for the period 2004 to 2024.
I have amassed and analysed similar data for:
— All of the G8 countries and
— All of the fuels that they import,
and that they will import, for the purposes of generating electricity.
Figure 8 then shows the magnitude of the Blackouts
that are forecast to occur in each of the G8 countries, with a
Probability of between 2% and 5% in 2004 and 2024.
By comparing the blackouts that have occurred
historically in the UK with the Gross Domestic Product I have
found that there is a one-for-one correlation: a prolonged blackout
that led to a loss of 5% in the UK's electrical supply also caused
a 5% loss of GDP.
USE OF
SECURITY OF
SUPPLY CERTIFICATES
We cannot tolerate the situation portrayed in
Figure 8.
It implies a loss of security of electricity
supplies so great that the UK's economy would never regain its
place in the world. What can be done about this?
One solution, which I put forward to exemplify
a suitable course of action, is to introduce Security of Supply
Obligation Certificates, SOSOC's. The would operate in the same
manner as Renewables Obligation Certificates, ROC's. Figure 1
shows first estimates of the effect of SOSOC's upon the mixture
of different sources of electricity that would be used in the
UK in 2020.
The amount of gas imported from Russia and other
countries outside the EU would fall and the amount of nuclear
power and renewable power would increase to make up for this.
Figure 1: First Estimates of the Potential Effect
of Security of Supply Obligation Certificates on Sources of UK
Electricity in 2020.
Figure 2: Initial Computation: Blackouts Lasting
More than a Day, forecast to occur with 2% to 5% Probability in
2005 and 2025.
Figure 2 shows that the increase in nuclear
and renewable generation, instigated by the use of SOSOC's, is
forecast to remedy the lack of security of supply that would otherwise
prevail in the UK in 20 years' time. Now the Security of the UK's
electricity supplies is third or fourth highest in the G8 countries
in 2025, instead of falling to last place.
CONCLUSIONS
1. The reliability of fuel supplies for
electricity generation in G8 countries has been calculated for
2004 to 2024 using data bases for Business Risk and Political
Risk Insurance Premiums.
2. The forecasts agree numerically with
historic data for the reliability of oil supplies.
3. It is forecast that the likelihood of
fuel shortages leading to major electricity blackouts is currently
least for the UK, compared with the other seven G8 nations.
4. This is because the UK is currently completely
self-sufficient in fuels.
5. However by 2025 the situation is reversed,
and the UK is more likely to suffer major blackouts than any other
G8 nation.
6. This is because the UK will, by then,
be amongst the least self sufficient in fuels.
7. Historically, the UK's Gross Domestic
Product has been reduced by an amount equal to the magnitude of
each of the major, politically-inspired blackouts that have occurred.
The same thing has happened in Japan and other countries.
8. The magnitudes of the Blackouts forecast
to occur when the UK is reliant on imported fuels are much greater
than those that have occurred in the past.
9. Such blackouts would, on past experience,
lead to such large losses of GDP that the UK could not reasonably
be expected subsequently to recover its position in the Global
economy.
10. If instead of importing so much gas
from outside the EU, the UK builds nuclear power stations to replace
the present ones, which are near the end of life and makes more
use of the renewables then the Security of Supply can be preserved.
One way of doing this, without Government Subsidies, would be
to introduce Security of Supply Obligation Certificates, SOSOC's,
similar in principle to the present Renewable Obligations Certificates,
ROC's.
25 August 2005
72 My work on Security of Supplies in the UK is summarized
in BNFL's Submission to UK Government Consultation on Energy Policy.
5 September 2002. Back
73
75 The Indices for Political Risk used in this work have been
developed from a Data Base prepared by The PRS Group, Inc, 320
Fly Road, Suite 102, PO Box 248, East Syracuse, NY 13057-0248,
USA. The forecasts extend to 2009 and have been extended to 2025
for the present study. The Data on Political Risk Insurance Premiums
have been developed from a Data Base prepared by AON Plc. 8 Devonshire
Square, London EC2M 4PL. These Premiums are based on historic
losses. Back
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