See a detailed analysis by Aurora https://www.auroraer.com/wp-content/uploads/2019/08/Initial-Thoughts-and-Analysis-on-the-Power-Outages-on-9th-August.pdf
Tuesday, 13 August 2019
No it wasn't the wind turbines that caused the blackout but batteries are likely to benefit from reaction
See a detailed analysis by Aurora https://www.auroraer.com/wp-content/uploads/2019/08/Initial-Thoughts-and-Analysis-on-the-Power-Outages-on-9th-August.pdf
Monday, 12 August 2019
The Government has issued a press briefing mentioning 'Sheffield City, Cumbria, Lancashire and Cheshire' as sites for the SMRs. Like many of Boris Johnson's schemes, this particular promotion has little grounding in reality and the promotion of these sites seems to have more to do with a cynical election ploy than serious planning of a nuclear power programme.
The UK's SMR programme, such as it is, is neither modular or small or, for that matter, much in existence. The Government are backing plans by Rolls Royce, and have promised an initial £18million, but in reality even to build one prototype plant would require Governmen to commit to spending over a billion pounds. This is because even if the cost of the reactor were to turn out close to what Rolls Ryce claim (£500 million) it would require an additional several hundred £million for the rector design to go through the required 'General Design Assessment' (GDA) required of all new reactors (by the Office for Nuclear Regulation). As if this was not enough, I understand that Rolls Royce have demanded, as the price of going through a GDA, a Government commitment to effectively underwrite several reactors requiring a Government commitment to raise several £billions before there is any chance of any power ever being generated.
This financial background alone suggests that this SMR plan is a fantasy that is even less credible than Boris's plans for a Thames Estuary airport or even a bridge between Scotland and Ireland.
However, basic engineering questions also suggest that that the SMR plans will go nowhere very slowly. The idea of building what is, in historical terms, a medium sized nuclear power plant (440 MW), defies the logic of nuclear power development since WW2. This has involved building steadily bigger reactors in order to, apart from anything else 'calculate down' (in the words of Mycle Schneider) the costs of nuclear safety measures. Smaller(er) reactors may (or may not) reduce expensive delays in construction time, but they are counterbalanced by the lack of economies of scale. Indeed the size of the proposed Rolls Royce SMR is roughly the size of the UK's first grid connected 'Magnox' reactors. The number and scope of safety measures required for new reactors has increased dramatically since the 1950s (extra containment, redundancy in primary and secondary safety injection systems, back up diesel generator sets etc), so intuitively a smaller reactor does not seem the way to go.
We can expect a lot more of this bull and fantasy in September when Boris's notion of 'green energy' is launched. Like many of his other pronouncements they are oriented to to seduce people by their apparent simplicity, but in reality are fatally undermined by their impraticality. Such is the dark allure of populist politics.
Rolls Royce plans:
Wednesday, 31 July 2019
If it does become the case that Greens back the Lib Dems ahead of Labour in seats where Labour are the leading contenders with the Tories then I suspect that many Green Party members will wonder why they joined the Green Party in the first place. Even a deal involving Greens stepping aside to back the Lib Dems in contests with Labour could have disastrous impacts on the Green Party.
Now I want to make it clear that 'Remain' is my first option. However, simply having a general alliance between avowed Remain parties at the coming General Election may well play into the hands of what could well turn out to be a soft electoral alliance between Brexit Party supporters and Conservative candidates committed to tolerating 'no-deal'.
There was an effective soft alliance at the 2015 election between many UKIP sympathisers and the Conservatives; indeed it was a successful strategy so that where the Conservatives (committed to holding a referendum). were in close contention with Labour, including many northern seats, UKIP sympathisers often voted tactically for the Conservatives. Cameron won an overall majority. The danger of the current situation is that this general pattern could be repeated (with the Brexit Party replacing UKIP of course), this time in support for 'no deal'.
Ironically, as much as Jo Swinson may declare her dislike of Corbyn, the main chance of getting another referendum is to get a (almost certainly minority) Government led by Corbyn to organise a three way referendum. This would be about whatever 'deal' he cooked up with the EU, remaining or no-deal. It is fairly transparent nonsense for Lib-Dems to claim that they will refuse to support a minority Corbyn Government (in confidence votes) so long it is following such a path. No, the Labour Party is not going to ditch Corbyn as leader in the week following a General Election at which the Conservatives have lost their majority. It strains credulity to think that the Lib Dems are going to (or even be allowed to) call another election in short notice (it could be very bad news if they did). Given that the Lib Dems cannot do a deal with Bojo, that doesn't leave many other options.
The Lib Dems were willing to be a full coalition partner in a five year austerity Cameron Government, tolerating xenophobic immigration initatives, Hinkley C, shale gas and so on, but are they seriously saying they won't even back a minority Corbyn Government on a short term basis? If they won't back Corbyn what would they do? Have another General Eection quickly so that Bojo could drive us into a no-deal Brexit? And the Green Party is going to be at their side when this happens?
Having a pure Remain Alliance may work well in a place like Brecon where the Lib Dems are the most credible alternative to a 'no-deal is tolerable' Conservative, but it would be disastrous in a place like Peterborough where the choice was between a 'no-deal' candidate and Labour. There was, in Peterborough, a wise decision not to have a pure-Remain alliance, but instead, to have an implicit soft tactical voting alliance to support the Labour candidate. That's the pattern we need. If, on the other hand Greens agree to back Lib Dems in battles where lib Dems and Labour are the leading contenders then whatever benefits the Greens get in return, strategically the Greens will then be dismissed as a an adjunct of the Lib Dems, and will lose left wing support.
If as seems very likely, there is a pattern of tactical voting between the Brexit Party and the Conservatives, then there needs to be an equivalent pattern of tactical voting between the anti-no-deal parties. Indeed, there ought to be one anyway, regardless of what Brexit Party voters do or not do. We desperately need to stop a no-deal? Comprendi? That's what I call a Progressive Alliance.
Sunday, 28 July 2019
Ironically, support for this no-deal outcome seems to be rising under the argument that it is getting Brexit 'over and done with'. One is tempted to make a comparison with the metaphor of the condemned person about to be executed who wishes it all to be over quickly. The trouble is that this metaphor is erroneous, since, it seems, a lot of people actually believe that it is worth suffering some short term economic pain (greater or lesser) for a what they assume will be a political settlement, at least of sorts.
But there will be no prospect of a political settlement. Indeed all we will get is an acceleration of political breakdowns. Really it is more like a descent into prolonged purgatory,
The Euro-experts, Arnand Menon and others, have pointed out that if there is a no-deal, exactly the same issue of the Irish border will remain to be settled (as well as all the trade issues), with all of the post-Brexit options still to be decided. The only substantive difference is that a political settlement with the EU will be made much more difficult by the political dislocation between the UK and the EU. The Brexiteers victory will be purely symbolic, and very pyrrhic
It should be (but apparently isn't generally regarded as) an obvious fantasy to believe that if the EU haven't dropped, or amended the backstop and the Withdrawal Agreement, before the 'no-deal', then they should give way any more afterwards. If we wouldn't give way why would they? Indeed, the more a British Government turns this into some sort of rhetorical war (for domestic political purposes) the more unlikely any 'blinking' on the EU's part will be.
Indeed the more the 'war' rhetoric continues, the more the UK will be hostage to whatever restrictions on goods and services entering France and other countries these nations seek to impose. Wars of any type (in this case trade and business) can't be stopped by threats unless you have overpowering advantage over your opponent (and not even always under this situation). We don't have an overpowering advantage. Anything but.
Really, the outcome of the Irish border issue hangs on the Irish Government, especially since they will have a veto over the long term agreements with the UK (done by a unanimity rule in the EU). The Irish are unlikely to be in the least phased by the talk of 'war' (read some history books on this one). Indeed the prospect that the number of people in the North favouring a united Ireland will increase will almost certainly make the Republic feel that their political strategy is making progress. They will be emboldened to keep a tough line with the UK.
Any thought that we are going to be rescued by a fast track Trade Agreement with the USA is very illusory. Apart from anything else, the Democrats appear hell-bent on stopping any UK-US trade agreement until, in effect, the Irish border issue is resolved to the satisfaction of the Irish Republic. Hence there is no prospect of a 'fast track track' trade agreement without the approval of the Democrats, so long as they control the House of Represenatives. The UK Government, would, under this scenario of putting more priority on a trade agreement with the US rather than the EU, become a political captive of the Trump Government. It would be captive sine the UK Government would need Trump not only to win the 2020 Presidential election, but assure a Republican majority in both Sente and the House.
And then there is Scotland............Faced with this political slide many more Scots are likely to plum for independence. Sure, Westminster can refuse to sanction another referendum, but we shall still live in a democracy, and a strong call for another Scottish referendum, in practice, cannot be resisted for very long. Under such circumstances the Unionist campaign to oppose independence in another indyref will be a shambles compared to the last effort in 2014.
At the end of the day a no-deal Brexit and, by extension, the whole Brexit project, is based on a failure to understand that it is not membership of the EU that limits UK sovereignty, but the very existence of the EU. Hence the logic for being part of a powerful bloc rather than a supplicant whose interests are by defintion treated as second order compared to those of its members.
Tuesday, 23 July 2019
The Government's proposed new 'Regulated Asset Base' (RAB) means of funding nuclear has just been published, and it is living as far down to its expectations as could be expected. I've ploughed through the sometimes (deliberately?) convoluted description of the scheme and translated a few key passages to help you understand it all.
The Government failed to learn from the days when nuclear power were constructed from the 1950s to the 1990s. In those days nuclear power was very expensive, but the Government was able to con the public into believing that it was cheap. They did this by making sure the public could not understand the vaguaries of nuclear power funding and by putting all of the cost overruns that building the power stations involved onto consumer bills without them noticing. Basically, we are reurning to these days when the public was kept in the dark about the cost of building nuclear power plant and the same public will be paying for the cost overruns resulting from the project.
The Government made the mistake of giving a contract price for Hinkley C. Although it featherbedded the developers EDF by giving an ultra long premium price contract (35 years) and the promise of Government lending to cover the bulk of the costs, the contract (CfD) allowed some sort of comparison to be made with competitior sources. Solar and wind power's costs have fallen well below the price given to Hinkley C (£92.50 in 2012 prices).
So now the Government, having learned this mistake, has produced the RAB. This will allow the Government, though an appointed 'Regulator' to launder electricity consumer's money to pay for the inevitable cost overruns, whilst the Regulator assures the public that this all represents 'value for money'. The project that is earmarked for RAB funding is Sizewll C, involving the same reactor type (EPR) as is being constructed at Hinkley C.
What some key passages mean:
1. 'Despite the progress at HPC, the challenges facing the global nuclear industry have meant that replicating a CfD model for further new nuclear projects has proved very challenging. Few project developers have a balance sheet that can accommodate the £15-20bn cost of delivering a new nuclear project, and financial investors have been unwilling to invest during the construction phase given the long construction period and risk of cost increases and delays. We are therefore looking to work with the sector to develop an alternative funding model for new nuclear projects that can attract private finance at a cost that represents value for money to consumers and are considering its wider applicability to other firm low carbon technologies' (page 9)
Translation: The Hinkley C contract (CfD) was a big boobie by the UK Government since it showed just how expensive nuclear power could be even if we believe the developers own (French Government backed) hopes that the project works out as planned. The nuclear industry around the world has tanked - all the projects in the West this century have been monumental disasters and even the French EPR model built in China took twice as long to build as planned. (As a rule of thumb the cost is more or less directly proportional to its construction time). So no private investor in their right minds would invest in nuclear power. So, essentially, we've got to give the next nuclear project a state-backed blank cheque and cover this up by having a Regulator publish a lot of accountancy jargon that will fool the public into thinking they're getting a reasonable deal.
2. 'A large-scale new nuclear project bears some similarities with the Thames Tideway Tunnel (TTT) project, in that it is a complex single asset construction project with a significant upfront capital expenditure requirement, long construction period and a long asset life. In developing a potential nuclear RAB model, we have taken the model used for TTT, which was also developed under a RAB, as a starting point, whilst recognising that new nuclear projects are greater in scale and face specific challenges that were not relevant to TTT' (page 11)
Translation: Nuclear power stations are not real power plant, but rather they are giant civil engineering projects involving lots of radiation when they get switched on, and thus complex measures to protect the public. However, this great complexity means they are much more prone to cost overruns compared to projects like the TTT, so we have to make sure that the consumer picks up the tab for the cost overruns, whilst pretending that this is a normal well run civil engineering project, which it isn't of course.
3. 'A target total construction cost would be set for the project company which would be used as the Baseline for incentivisation and risk sharing. If construction costs increased above the Baseline, a portion of the additional costs would be added to the RAB, such that the impact would be shared between investors and suppliers (and through them, their consumers) (page 14)...(this approach will) 'provide clarity and certainty to investors, suppliers and consumers, which is particularly important for a large single-asset project with a complex and relatively long construction period' (page 15)
Translation: The Regulator will produce lots of impenetrable accountancy jargon based on hilariously optimistic projections about construction times and costs which the regulator will swallow whole. When the inevitable happens and costs overrun the investors will still get a reasonable rate of return on their investments and the electricity consumers will pay for most of the cost overruns.
4. 'Role of the Regulator
We currently consider that the Regulator should have responsibility for protecting the interests of consumers, whilst having regard to the ability of the project company to finance the project i.e. construction and operation of the plant' (page 19)
Translation: The Regulator will have no choice but to adopt the ridiculously optimistic cost projections and construction time estimates made by the developers (EDF). They will declare the whole project great value for money for the consumer, whilst in practice allowing the developer to run up whatever bills they want and pass most of them onto the consumer. A facade of an auditing system will be set up, but since EDF have all the information anyway, the Regulator will not be able to make more than token adjustments even if they wanted to.When the time comes for the consumer to shell out for cost overruns the Regulator will not want to point this out too much as they will get the blame.
'The EPR technology has now started commercial operations in China' (pages 8-9)
Translation: So far the constructions of the EPR have been disastrous in all cases, in Finland, France and even in China. The last one is a bit of a shocker. It took twice as long as planned to get the first reactor at Taishan generating electricity - that's despite the fact that the Chinese have a massive reserve of workers and engineers compared to us, and, as our Office for Nuclear Regulation has put it, a different approach to health and safety compared to what is practiced in the UK. Of course EDF are announcing a 'triumph' of early construction at Hinkley C - yet they have only just started seriously constructing the project in March this year having spent a lot of money since 2013 acheving remarkably little. But EDF have the French Government to rely upon to fund its own (French state owned) reactor model at Hinkley. In the case of Sizewell C, through the aegis of the so-called RAB mechanism, it will be the British electricity consumer who will be paying for the cost overruns.
You can read the Government's RAB consultation and make a response at https://www.gov.uk/government/consultations/regulated-asset-base-rab-model-for-nuclear
Thursday, 18 July 2019
By making our buildings more energy efficient and embracing smart technologies, we can slash household energy bills, reduce demand for energy, and meet our targets for carbon reduction”, promised Theresa May.
Note from David Toke: I asked Andrew if I could post this article because I thought it was very important to do so. This fact is underscored by the fact that this is the first time I have EVER carried a contribution by anybody else on this energy blog!
Sunday, 23 June 2019
Now EDF want us to pay for nuclear build cost overruns - tens of £billions down a nuclear black hole?
Under this (RAB) system nuclear power is to be given a privileged postion (certainly not afforded to renewable energy plant) whereby its costs are guaranteed to be paid by the electricity consumer before the plant even starts generating any energy. But not only that, EDF wants the Government to effectively guarantee that anything above cost overruns of 30% are borne by the Government (with the electricity consumer or taxpayer footing the bill). The system is claimed to save consumers' money by allowing the project to be financed by the consumer (none of which have been asked of course). In reality, if applied to building new nuclear power plant, it is likely to do exactly the opposite and blow a great hole either in Treasury budgets, electricity consumer pockets, or both.
This means that we will be paying out increasing amounts once the construction period overruns by more than around 20 months. It should be borne in mind that construction of a similar reactor to that planned for Sizewell C (and also Hinkley C), at Flamanville in France, has already taken getting on for 12 years to build, far longer than the original plan to complete in 5 years. Flamanville already has cost overruns of over 200% compared to the original budget.
It is not too difficult to calculate the approximate minimum impact of construction overruns. This is because, on a rule of thumb basis, construction costs are akin to a multiple of the time taken to build them, plus additions to cover the cost of borrowing money to finance costs already incurred. Essentially, you have to employ a team (very large one in this case) of workers to do the job, and the longer you have to hire them the longer you have to carry on paying them.
Let's assume that EDF choose a slightly less implausible time to build the project at Sizewell C project than they did for Flamanville. Say they chose 7 years. In that case (still implausible compared to what they usually take in the West), then it would take less than 2 years of costs overruns before the Government would be expected to start carrying the can for the cost overruns.
It's going to be a very big can. Especially if, as I suspect, that EDF is projecting an implausibly short construction period. I have heard suggestions that Sizewell C's cost are going to be reduced by 25% compared to Hinkley C. How is that going to happen? It's the same design with the same highly specialised materials and parts that do not come off a production line. The only explanation is that they expect Sizewell C to be built in a short time compared to Hinkley C (whose real construction has hardly started). Another stab at doing it in 5 years? You must be joking! If they are planning on 5 years build time then the consumer will start paying for the cost overruns in under 6.5 years after the plant was started to be built.
I've been predicting for a long time that the Government would end up underwriting the costs of building nuclear power plant. It's likely to happen by stealth with Hinkley C anyway as costs mount, but in the case of Sizewell C, EDF seem to be going to get it written into the contract from the start. That could mean the state passing onto the electricity consumer tens of billions of pounds of costs for construction cost overruns.