STOR: Are even higher diesel generator costs just over the horizon for energy customers?

On current figures, as Richard North, Christopher Booker and James Dellingpole have explained in recent days, the Short Term Operating Reserve (STOR) scheme that provides back up for wind power and renewables in the form of a national network of diesel generators controlled remotely by the National Grid, is expected by 2020 to cost UK energy consumers close to an extra £1 billion.

However it is possible that figure could increase substantially for energy consumers because of factors that investors, who are rushing to install generators to cash in on incredibly lucrative standby payments and grossly inflated tariffs per MWh, may not have considered.

There is a very reasonable possibility that the propensity of the EU to impose regulation on anything that moves could be extended to things that don’t, such as stationary diesel generators that comprise the STOR network.  The subject of regulation of diesel generators forms a discussion piece on the website of the Association of Manufacturers and suppliers of Power Systems (AMPS).

The EU is nothing if not a fan of harmonisation and standardisation.  For while at this time the EU Stage IIIA regulations affect emissions from portable and rental generator sets in the power range of 18-560 kVA, but not emissions from stationary, non-road diesel generator sets such as those used for STOR-type prime, peak shaving, load shedding or emergency standby power, the EU could decide to move to adopt US Tier IV-style regulation for diesel stationary engines.

Stage III A of the EU regulations covers engines from 19 to 560 kW including constant speed engines, railcars, locomotives and inland waterway vessels, Stage III B covers engines from 37 to 560 kW including, railcars and locomotives and Stage IV covers engines between 56 and 560 kW.  If these regulations were to be applied to stationary diesel generators, which arguably pose a greater risk to people because of their fixed locations and their in situ emission of the nitrogen oxides, hydrocarbons, carbon monoxide and other particulates the regulations are designed to limit in fixed locations, existing generator sets may need to be modified or replaced.

The investors who are piling in for their cut of the STOR largesse are not going to want to see margins eroded by the need to replace or update at significant cost their gen-sets.  The costs will be passed on when the government’s operating reserve becomes a hostage to fortune upon which it is ever more reliant due to its obsession with renewables at the expense of conventional energy generating plant.

In the AMPS piece it is clear the power systems manufacturers have already been anticipating what this means for their profits.  As Richard Cotterell, the General Manager at the Perkins Engines Company Large Engine Centre in Stafford makes clear:

France, Germany and Switzerland and other European countries have their own regulations. India, for example, regulates diesel engines up to 800 kVA, whereas the EU only regulates [non-road, portable gensets] up to 560 kW.

Furthermore, the emissions regulations set for electric power engines are several years behind highway engines, so as Perkins also manufactures on-highway engines we are less apprehensive about more stringent emissions legislation. Our electric power division in Stafford, UK will be able to leverage Perkins in-house expertise and knowledge that our brothers have in Peterborough, as well as our parent company Caterpillar has around the world.

In other words, they can bring modification solutions to the market quickly – but it will be at a cost to the owners of the gen-sets.  Perkins stands to do well out of a change in the regulations, as does its fellow Caterpillar company, FG Wilson (now Caterpillar NI), which is Europe’s largest manufacturer of diesel & gas generator sets and power generating solutions.

Interestingly last summer, FG Wilson as it was then, began to implement a significant redundancy programme across its plants at Larne, Monkstown and Belfast when it decided to move the manufacture of retail size gen-sets to China because that’s where its major market for the units is. A Caterpillar employee tells me its strategy is to build its equaipment as close to its customer market as possible.  So it is noteworthy and very telling that the manufacture of large gen-sets of the type used in STOR diesel parks has been kept in Northern Ireland, as demand for them in the UK is robust.

Ultimately the inescapable fact is that the UK government has put this eye wateringly costly STOR in place at our expense and we could soon see our supreme government in Brussels take regulatory measures that further add to the cost, which we will also be expected to cover through our energy bills.  We are in a lose – lose – lose situation and despite the huge implications for energy customers the mainstream media and the likes of its eco-activist, climate defending superstars like the BBC’s Roger Harrabin, remains silent.