Friday, 22 July 2016

EDF to postpone Hinkley Construction start to at least mid 2019

The media is full of stories that EDF is about to announce a 'final investment decision' on Hinkley C nuclear power station, whereas the logic of its own press statements suggest that the project is in fact in deep freeze. Once again, EDF's superb public relations is convincing people that its disastrous Hinkley C power plant project is moving ahead, whilst the reality is that it is announcing that the project will not be started until at least 2019. And even this date seems to be associated with the commissioning of the terribly delayed sister project at Flamanville.

I have lost count of the number of times that EDF has sparked speculation that it is about to announce a final investment decision for the project. These 'announcements', given through press briefings about which EDF bristles with annoyance if people question their connection with reality, have occurred several times since 2012.

And yet EDF's own press release in effect says the opposite of the 'final investment decision' press stories that EDF have inspired.The document, released by EDF on July 21st, actually says: 'The first concrete of reactor 1 of HPC, scheduled for mid-2019, would coincide with perfect continuity with the start-up of the EPR at Flamanville, scheduled for the end of 2018'

So, what is actually happening is that, as experts familiar with the saga know only too well, EDF is confirming that Hinkley's construction could not possibly begin until the safety issues surrounding the reactor design have been cleared and the working of the Flamanville project has been demonstrated. This is not going to happen for a minimum of THREE YEARS.
Of course even this possibility defies commercial logic given that the project would bankrupt EDF without massive subsidy from the French state.The UK has agreed in principle to pay EDF (in today's money) around £100 per MWh for 35 years of operation for the project, but even this price would not go close to covering the risk that EDF would take with the project. Hence the need for a massive state handout. The French unions and many financiers and managers inside and outside the company regard the whole thing as a politically motivated piece of industrial suicide.

Even the UK Treasury has long since sidled away from the project, effectively cancelling its offer for guaranteeing the bulk of the loans that EDF would hope to take out for the project. Indeed, contrary to what seems to be widely assumed, the UK Government has not even offered EDF a legally binding contract. It beggars belief how seriously one can take a project that has not even got an offer of a contract from the people who are supposed to be paying for it!
But then the project has long since departed from being based on any sense of commercial reality, and linkages with commercial reality have always been tenuous, as they will be with any nuclear power project that has to meet the sort of safety standards demanded in developed countries these days.

Whatever 'decision' will be reached at next week's EDF Board meeting, it will, as EDF clearly state, not lead to the construction of the Hinkley project being started. But it will be just a continuation of the public relations pantomime that we have been witnessing for several years now.

See EDF's press release at:
http://media.edfenergy.com/r/1127/hinkley_point_c__the_board_of_edf_called_to_consider_a

Thursday, 14 July 2016

Government abandons the economy to try to ward off UKIP

Early pronouncements from Philip Hammond and David Davis indicate that the Government is set to abandon hopes of remaining within the Single Market as the price the UK will have to pay for imposing immigration controls on EU citizens. This strategy is clearly aimed at pacifying those who prioritise reduction of immigration within the Tories and also reducing the attacks from the xenophobic right, whose 'respectable' wing resides in UKIP.

Politically this might take the shine off the electoral threat to Conservatives posed by UKIP in the short term, but this threatens to unravel in the longer term and it will be at great cost to the British economy.

It seems that Hammond is fighting a rearguard action to preserve internal market market access for British financial services, but how successful and costly that will be to the British exchequer remains to be seen. But the British economy now faces having nearly half its trade facing not only tariffs in the EU but also falling prey to non-tariff trade barriers as the EU changes its rules to which the UK will not be subject.

In terms of energy our influence in regulations governing energy markets will decline and the automatic upgrading of energy efficiency standards and labels that comes with the EU will cease. Directives on renewable energy and energy efficiency will cease to apply.

There will be a lot of talk about trade agreements with the USA and maybe others, but in reality nothing can be effected until after the UK formally leaves the EU, which, according to David Davis, is likely to be in December 2018. That implies the issue of an article 50 notice in December of this year (2016).

In the longer term (which may not be very long at all!) this attempt to feed the monster of xenophobia is likely to fail as the hard right demand more and more stricter immigration controls. The targets of abuse have already been widened from just perceived EU migrants to muslims, and soon no doubt others.

'The hopes of self-styled 'civilised' Brexiteers such as Daniel Hannan are being dashed. His 'libertarian' eurosceptical views favouring continued free movement and internal market membership outside of the EU have merely ended as being ballast to pave the way for the objectives of the anti-immigration English nationalist lobby.
http://www.independent.co.uk/news/uk/home-news/eu-referendum-tory-campaigner-admits-brexit-immigration-some-control-a7102626.html

Monday, 11 July 2016

Ways in which Brexit will help the environment

‘Always look on the bright side of life’. That was a theme associated with the ‘Life of Brian’ (as is strife within the popular fronts of the Labour Party these days of course, but I won’t go into that now). So what’s good about Brexit? Well, it might be a crushing blow to our British economy and environmental laws, but in other ways it might actually help..... 
One way Brexit will definitely help is that the green interest groups will find it easier to get their way on various environmental issues in EU institutions. The UK won’t be around to perform their usual watering-down role! Take the issue of air pollution. The UK has been an opponent of tightening up EU air pollution regulations. As the Guardian reported on June 3rd this year; ‘EU states have agreed to water down a proposed law aimed at halving the number of deaths from air pollution within 15 years, after intense lobbying from the UK that cross-party MEPs have condemned as “appalling”......Some 14,000 people will die prematurely every year across Europe from 2030 as a result, if the weakened proposal is implemented, according to figures cited by the environment commissioner, Karmenu Vella.’
Then there is the issue of chemicals which scientists say are killing bees. The EU banned farmers using neocontinoids in 2014, and bees are said now to be recovering, but the UK dragged its feet at first allowing the NFU to use the chemicals in 2015. In the USA the chemicals are still used widely and bee numbers are declining. In the UK the number of bees declined by 15 per cent in 2015 according to the Beekeepers Association, continuing a trend that has set in for many years.
Under pressure from the NFU the Government has allowed farmers to carry on using these chemicals. Of course, once more over the cliff, our British lemming friends must go!
Then there is the issue of renewable energy targets. The UK, under great pressure, accepted the 2009 EU Renewable target which was set as a mandatory commitment for 2020. We’re now set to get 30 per cent of our electricity from renewable energy by 2020, even if we haven’t met our target from energy as a whole. However the UK Government has strongly resisted a further rigorous target for 2030. Clearly, without the UK, the EU could set a stronger renewable energy and energy efficiency ambition!
Moreover, anti-nuclear greens may be cheered by news that Chinese investors in Hinkley C are spooked by financial instability in the UK and the declining value of the £ making it even less likely that the Hinkley C nuclear power development will go ahead ahead.
Now, think about it, under Brexit, the UK will have a bad environment. But at least it will be better in the rest of the EU! Progress in implementing a range of environmental initiatives in the EU will be a lot smoother and more effective! Indeed, if by some miracle the UK does remain inside the internal market, the UK will have to obey the EU environmental laws anyway, but won’t be able to have any say in making them! Ideal, you could say!
But there is one pretty sure way in which the environment is likely to benefit from Brexit, and that is reducing UK energy consumption and thus reducing carbon emissions.  That’s because the Brexit-inspired reduction in economic growth will reduce energy consumption. Indeed, the Government will now find that the need to build new conventional power stations is much reduced or even abolished with Brexit. The UK’s power demand has, in any case, been going down since around 2005. Now it is set to continue to decline with slower economic growth, or even plummet with a recession. Not only will we need less power plant and coal and gas burning but people will not be able to afford to heat their own homes as much. Less energy consumption means lower carbon dioxide emissions! Another environmental winner from Brexit. See a previous post for more details http://realfeed-intariffs.blogspot.co.uk/2016/06/with-brexit-uk-may-not-need-any-more.html

But of course there is the ‘piece de resistance’, they say, in a language now increasingly banished from English schools. That is Brexit as a means to deter any other country from thinking about quitting the EU! With so much economic and political chaos in the UK, populist politicians who where thinking about asking for referendums about EU or euro membership are now forgetting the idea or having serious second thoughts.

So as the UK descends into political and economic chaos, think about the gains, the supreme sacrifice we are making in saving the EU from the English anti-green menace....not to mention reducing carbon emissions!......

Thursday, 7 July 2016

Dutch tender award for offshore wind plant is 25% cheaper than Hinkley C contract


The Dutch Government has awarded a contract to build two 350 MW Borssele offshore windfarms for 87 euros per MWh (£74 per MWh), some 25 per cent cheaper than the current value of the contract for Hinkley C. The contract has been awarded to DONG, in which the Danish Government has a majority share.

This price for Borssele 1 and Borssele 2 includes transmission costs but, unlike the case of the proposed Hinkley C nuclear power station, the price does not include any offer of loan guarantees from the Government. Hinkley C is routinely reported as being paid £92.50 for a 35 year contract, but this is in 2012 prices. The current (2016) price is £100 per MWh, which puts it as being a lot more expensive than the Borssele offshore wind project.

Offshore wind prices have been tumbling in the past couple of years compared to earlier contracts awarded in the UK. Last year Vatenfall won a contract with the Danish Government to build the 400 MW Horns Rev plant at 103 euros per MWh (£88 per MWh) although this figure does not include transmission connection costs.

So why have costs for offshore wind been falling so much, and how come the costs appear to be so much lower than the UK's, whose last (2015) auctions revealed prices for offshore wind of around £120 per MWh?

According to DONG, their cost reduction can be ascribed to: 'The reduction of cost of electricity is driven by cross-industry collaboration, ongoing innovation of wind turbines and blades, continuous improvements of foundation design and installation methods, higher cable capacity, a growing and competitive supply chain and not least the synergies from building large-scale capacity sites such as Borssele 1 and 2. In addition, the Dutch sites offer good seabed conditions as well as good and stable wind speeds, which contribute to high output from each turbine.' http://www.dongenergy.com/en/media/newsroom/news/articles/dong-energy-wins-tender-for-dutch-offshore-wind-farms


It should be noted that both the Danish and the Dutch tender processes are much superior to the relatively 'laissez faire' approach of the British, an aloofness that increases uncertainty and thus investment costs. In the Dutch and Danish cases the sites have been carefully evaluated for technical and planning considerations before the tender, and permits have been assured. In the case of the UK, developers are left to bear the risk of these factors.

Although the UK Government has said it wants to give contracts for more offshore wind schemes, timing of this has been thrown into uncertainty by recent political events. It is now far from certain that the (new?) ministers at the Treasury and the Department of Climate Change will adhere to agreements about issue of future 'contracts for differences' (CfDs) that have been made between Osborne and Rudd.
Nevertheless, RenewableUK calculates that offshore wind schemes, including those which already have finance and planning in place for construction, will provide 10 per cent of UK electricity supply by the year 2020. However, the UK Government is refusing to make any contracts available for the cheapest electricity power option, onshore wind, which is currently being installed under the Renewables Obligation for around £70 per MWh.

For further information see also:
thttp://www.climatechangenews.com/2016/07/06/dong-passes-offshore-wind-cost-milestone-three-years-early/
https://www.rvo.nl/sites/default/files/2015/09/33953992.pdf

Tuesday, 28 June 2016

With Brexit UK may not need any more power stations as electricity demand falls still further

One largely unintended consequence of 'Brexit' is that the economic uncertainty and reduced economic growth are likely to produce a further fall in electricity demand which may mean we do not need any more big power stations other than those already being built.
Lost behind the usual blizzard of insistence that blackouts will result if we don't build more gas and nuclear power plant is the fact that electricity demand has fallen over the last decade. According to Government figures (see DECC energy statistics) electricity demand fell from 406 TWh in 2005 to 359 TWh in 2015. Even since the economy began to grow again after the crash consumption fell from 384 TWh in 2010.

The reasons for the decline are threefold. First electricity prices have remained high. A lot of this is because we are having to import increasing quantities of natural gas from abroad,  and that gas is more expensive than what we have enjoyed coming from the now depleting North Sea fields. Grid costs have increased and green levies such as the carbon floor price have put prices up. Second, energy efficiency policies (including energy efficiency standards introduced by the EU) have repressed demand, and thirdly economic growth these days is much less energy intensive than it used to be (even in the 1980s) because of a switch from industrial production to services.

But now Brexit seems likely to reduce economic growth to at best a few points of a per cent in the near and perhaps more prolonged future. Consensus Economics, for example, has predicted UK economic growth to be down to 0.4 per cent in 2017. Any rate of economic growth below 2 per cent per annum seems likely to see falling electricity demand on the basis of recent experience.  In addition, as Cornwall Energy Associates have pointed out, electricity prices are going to keep on rising. Ok, perhaps by not as much as an increase in the longer term as if we had Hinkley C (which seems now even more likely to be cancelled), but they will still rise.

If you put all of the factors together electricity demand seems likely to fall, perhaps quite substantially. Aurora energy have already been projecting (before Brexit) that our new power station requirements for the medium term would be modest.

The Government has yet to make good use of its levers to make the electricity system more flexible. The National Grid has been criticised by the House of Commons Energy and Climate Change Select Committee for alleged conflicts of interests which deter it from making optimum use of demand side response and other demand reduction techniques. There is only a snails pace response by the Government to encourage the more widespread adoption of electricity storage techniques. In addition to that the National Grid already has, through the 'Supplementary Balancing Reserve' the means to take-up supply from power stations that might otherwise be closed down.

In the 2030s we are likely to see an increasing demand for electricity to power electric cars. Yet such demand has great potential to fit into an electricity regime increasingly dominated by fluctuating renewable energy sources. ''Grid to vehicle' and 'vehicle to grid' electricity systems will act as a crucial means of matching demand to supply.

I do also disagree with arguments suggesting that the alternative to Hinkley C is gas fired power plant in the quest for decarbonisation of our electricity supply. It is not. It is renewable energy, and the Government is ignoring vast resources of cheap onshore wind and solar power, in addition to the resources of offshore wind. All of these options are going to be a lot cleaner, cheaper and certainly much more deliverable than new nuclear power.

Monday, 27 June 2016

UKIP set for major boost as Johnson forced into humiliating u-turn on freedom of movement

As predicted in earlier posts on this blog the UK is heading for the worst of all worlds compared to retaining full membership of the EU. Boris Johnson, in a staggering u-turn, has effectively accepted a 'Norweigian' solution whereby we are bound by the EU's rules (including free movement of labour) except that the UK will have no say in making the rules to which we will be subject! See http://www.bbc.co.uk/news/uk-politics-36637037

But at least the British experience will dissuade others from trying the same!

Of course the protection of the economy and the rights of free movement of people are important, vital, objectives, and indeed this concession may take some of the sting out of the Scottish Government's challenge (see previous post). However papering over the cracks torn in the national fabric created by an unnecessary and ill-fought referendum will now be achieved at a terrible political cost. Besides the evisceration of UK influence in and outside the EU, UKIP will be given a major boost as that they will now claim that they have been sold out by Boris Johnson and others in the new Government.

Of course Johnson is trying to make out that somehow Britain will increase controls over migration into this country. This surely must be cloud cuckoo land. The idea that the EU is now going to give into British demands now that they are not in the EU to a greater extent than if we are members is itself nonsense. To imagine that the EU are now going to concede to the Swiss in their arguments with the Swiss over immigration controls and anybody else order to agree terms with the UK is the most fanciful of all proposition. The EU are not about to change the whole basis of the original  Maastricht Treaty in 1992 for the sake of some trade deal with the British.

'Open Europe' have given a simple explanation of Norway and Switzerland's position at http://openeurope.org.uk/intelligence/immigration-and-justice/norway-and-switzerland/

But now we face the whirlwind of rising xenophobia. UKIP represents the 'respectable' face of this movement, while in the wings the English Defence League and other far right movements harass people perceived be a 'foreigner'. But as we go into the General Election UKIP will now be presenting itself as the 'guardian' of the Leave vote. Many right wing Tories will be torn between supporting them and the Tory leadership. The result looks like the UK is turning in a very short period from being a tolerant country to just another state with a rising tide of racism and xenophobia.
As UKIP's influence expands, so does their influence over policies, such as green issues, over which they have little real support among the population, but which damage society and the environment.

The terrible irony is that one of, perhaps the main, architect of this situation, Boris Johnson, is set to take over the leadership of the country!

I hate to say 'I told you so' but check out what I wrote near the end of March at http://realfeed-intariffs.blogspot.co.uk/2016/03/how-brexit-could-make-ukip-largest.html
UKIP is successfully hijacking the support of many poorer sections of the population on the basis of the age-old technique of 'blame the foreigner'.

A few days ago I was reading a good popular account of British history written by the archaeologist David Miles (The Tribes of Britain, Phoenix, 2006) and on page 340, he describes conditions in England in the late 17th century. That period saw the arrival in the UK of many 'Hugenot' people fleeing persecution in France.  He wrote on page 340:

'The arrival of Hugenot workers did not meet with universal approval. People complained that they worked too cheaply, drove up the rents and the prices of timber and coal, polluted rivers, ate strange food - such as garlic, snails, oxtail soup and root vegetables. The number of refugees was exaggerated. Popular prejudice blamed them for the Great Fire of London in 1666, and illogically assumed that they were papist agents of the powerful french state'.

So what's new today?

Well, a new twist is that the power and influence of Germany is increasing, ironically, precisely at a period when the Germans want to be part of a democratic Europe. In effect they are being forced to take a leadership position they do not want.
We read about how there are a stream of countries lining up to have referenda about leaving the EU. Well, usually far right parties are saying that - will they get into power? Will any other EU political leader do a Cameron? Maybe not after the growing chaos and ludicrousness that is represented by the British example.

But there would be a growing absurdity if this happened. Like the UK, they would leave, then come to a trade agreement with the EU that would mean they would have to accept EU rules over which they had no control. Imagine it, an increasing number of countries leaving the EU and economic decision-making to Germany!

It's ludicrous, I know.

The reality is that Europe is now so interconnected that it is extremely difficult for one country, even as big as the UK to simply walk away. But, now we have three important countries, Norway, the UK and Switzerland who have decided to give away their effective sovereignty over wide ranges of policy areas to a body over which which they have no control leaving a reluctant Germany to make decisions on their behalf!

Germany - the sovereign power in Europe by default!









Sunday, 26 June 2016

Are we heading for constitutional crisis as Sturgeon threatens to 'veto' Brexit

We can see in the headlines that Nicola Sturgeon is threatening to 'veto' Brexit on the grounds that consent from the Scottish Parliament is required to stop Scotland being subject to EU laws. See http://www.bbc.co.uk/news/uk-scotland-scotland-politics-36633244 Are we heading for a full blown constitutional crisis with Scotland simply refusing to withdraw from the EU?

Well, probably not in that sense, but the upshot is likely to be in a sort of quid-pro-quo that the Scottish Government's desire for a another independence referendum will be granted before the UK leaves the EU.
As is argued in a legalistic explanation which you can see at: https://waitingfortax.com/2016/06/25/can-the-scottish-parliament-block-brexit/ (and thanks to Paul Cairney for pointing this commentary out), it is the case that for 'normal' legislation the consent of the Scottish Parliament would be needed if Westminster wishes to amend the 1998 Scotland Act. And this Scotland Act specifies that Scotland is subject to EU law.

The apparent downside for the First Minister's strategy is that Brexit is hardly 'normal'! In practice Westminster could amend the 1998 Scotland Act and assume, with some confidence, that the judiciary would uphold Westminster's version of the law. Despite what some of the more excited supporters of Scottish independence may be tempted to suggest, the Scottish Government is not going to make a unilateral declaration of independence under these circumstances.

But then I strongly suspect Nicola Sturgeon realises the likely legal outcomes but is highlighting this issue as part of the pursuit of a strategy to induce the Westminster Government to grant a further 'indyref'. Failure by Westminster to give this concession, and an attempt to disarm the SNP Government by staging, and winning, a new referendum on Scottish independence, is likely to have increasingly problemmatic political consequences. Indeed as tempers rose in the years leading up to the 'Brexit' legislation being passed by Westminster the stage could be set for mass demonstrations, especially one timed for the day that Westminster passed the amendment of the 1998 Scotland Act. Thousands of demonstrating Scots arriving at Westminster..........etc etc

No, the most likely outcome is that Westminster will agree to another indyref to take the sting out of this. The problem for the Westminster Government in dealing with this is that now the ranks of nationalist voters are being supplemented by former unionists who are changing their tune after  their votes to remain in the EU have been frustrated. And there are some quite surprising shifts taking place.
For the moment the Scottish Government's storyline is to keep Scotland in the EU, as well as preparing the way for another referendum on independence. In this they will have the support of the Scottish Greens, giving the strategy a majority in the Scottish Parliament. Even the Scottish Liberal Democrats appear to be showing some sympathy with this and Kezia Dugdale is sounding pretty ambivalent.

Whatever people may say, however, Scotland can't stay part of the EU and part of the UK if the UK leaves the EU. Apart from anything else, the EU will not entertain an application from just a part of another country. Scotland will have to leave the UK first, and then apply to join the EU. But in that case the EU is likely to be a lot more helpful to Scotland than they were in 2014. Many in the EU would want to reward Scotland. Meanwhile many in the EU want to punish  the UK with poor trade terms in order to stop other countries (eg the Swiss) picking and choosing rights such as immigration controls.
The Institute for Fiscal Studies  say there would be big economic penalties for Scotland in leaving the UK. Certainly public finances may suffer very substantially as long as oil prices stay relatively low. But in the current uncertain economic circumstances facing the UK (or reduced UK), such arguments may not carry as much weight as you would think, especially with bravado from Holyrood being spread about possibilities for Edinburgh replacing London as an EU financial centre etc. Besides, how seriously did the people who voted to leave the UK in our recent EU referendum take the predictions of economic disaster? Identity politics seem to be ruling the roost in today's world, like it or not.

Of course it is possible that this strategy could be undermined if Marine Le Pen won the French Presidency next year and talked about 'Frexit'. But it doesn't look like she'll win at the moment. It is beginning to look like it will be a struggle for a divided 'rest of UK' and a weakened unionist position within Scotland to hold the unionist line in another indyref which is may occur as early as a year or 18 months time. Yes, the break-up of the UK is looking now like a very plausible proposition. In that way then, we are heading for constitutional crisis.