Wednesday, 9 April 2014

Will Hinkley C be approved by the European Commission?

Stories of desperate lobbying by Department of Energy and Climate Change (DECC) Minister Michael Fallon are emerging as he struggles to justify the Hinkley C deal to the European Commission. In recent times Michael Fallon has variously been reported annoying both renewable energy interest groups by asking them to support the application to the EU Commission for state-aid to Hinkley C and annoying the Scottish Government. See and also Indeed Alex Salmond has written to David Cameron to complain about being leant on by his Government. See file:///C:/Users/User/Downloads/Letter%20from%20FM%20to%20PM%20re%20Hinkley%20Point.pdf

Both sets of interests (renewables and the Scottish Government) have reason to fear the Hinkley C deal as it would plainly greatly reduce incentives available to renewable energy after 2020 given that the Treasury employs a formula called the 'Levy Control Framework' to reign in low carbon support payments. The Scottish Government fears that the Hinkley C deal would allow nuclear power to compete unfairly with renewables. Given that Hinkley C involves contract lengths that are more than twice as long as those to be offered to renewable energy and involve loan guarantees that will hardly, if at all, be available to renewable energy schemes, such arguments are very plausible to many observers.

Then again, Conservative policy (with the Liberal Democrats being carried a long way with them), seems to be turning green politics-as-we-know-it in the rest of the world on its head. Nuclear power is now 'green' according to Britain, whereas, according to the Conservative Party onshore windfarms 'are no longer environmentally friendly'. See

Incentives for onshore windfarms will be scrapped just as they start for Hinkley C in the early 2020s (if all goes well for the constructors), according to Conservative Party policy.  Conservatives claim that onshore windfarms are 'unpopular' - although opinion polls have suggested they are still more popular than either new nuclear power or fracking which the Conservatives support, and the Hinkley C deal was hardly received by public opinion as a major triumph. Conservatives seem open to promoting offshore windfarms in theory, although there is great doubt whether they will provide sufficient incentives to get many (or any) more built after 2020. Similarly they are supportive of solar panels on rooftops, but not so much on the cheaper ground based solar farms. Tory policy is vulnerable to the charge that it stops cheaper renewable schemes on the grounds that they are 'unsightly', yet greatly limits offshore and rooftop systems because they are too expensive, and yet again the 'economic' objection does not extend to new nuclear power stations.

Meanwhile metaphorical trench warfare has erupted around the efforts by the UK Government to get the Hinkley C deal approved by Brussels. Among the objections sent in by British groups are the 'Nuclear Consulting Group' (to which I am a signatory) and also Friends of the Earth. See

A commentary in 'Nuclear Energy Insider' gives a detailed account of some of the issues in the negotiations. See

Meanwhile renewable energy interests are held hostage to the application since the Government decided to submit the applications for the Hinkley state aid application and the renewable energy state aid application concurrently. The renewable energy application would not be subject to such delays if it was submitted separately.

What is the likely outcome? Certainly it is obvious that Michael Fallon is sufficiently uncertain about the outcome that he is pulling out all of the stops to get the Hinkley C state aid application approved. Certainly it has always seemed apparent that the Hinkley C application would take a long time to be resolved by the Commission. Personally, my own impression is that the usual horse-trading in Brussels would see the UK Government get the deal in exchange for a concession on another issue, although the somewhat strained public relations between the Commission and the UK Government may, superficially, at least, make this look problematic. A complete rejection of the Hinkley C state aid application seems unlikely. What still may be possible is that, initially at least, the Commission could ask the UK Government to think again about the length of the (35 year) contract. That would indeed be a deal-breaker, but for that reason, if no other, even this is less likely to stick. I suspect that Michael Fallon has a slightly easier wicket to play on than one infers from his 'desperate' efforts. The depth of  concern in DECC may be much to do with efforts to impress other parts of the UK Government to smooth the path towards acceptance and also in terms of 'expectation management' to bolster the department's claim to brilliant statecraft skills in the event of the likely approval of Hinkley C.

But we continue to live in hope that the deal will fall apart and that renewables funding will benefit as a result. However hope, in terms of what green groups wish for in British energy policy, is now in relatively short supply.

Monday, 7 April 2014

Are Tory plans to curb onshore wind a boost for Scottish Yes Vote?

You would almost think that the Government's, especially the Conservative's, succession of energy policy announcements over the past 10 months were almost designed to boost the 'Yes' campaign in the Scottish Referendum on independence. More support for the policy that the Scottish Government does not like (new nuclear power) and less support for the policy they want (renewables). What timing as well!

First, in the summer of 2013 came an announcement of 'strike prices' for renewables that were underpinned by a significant reduction in support because of the reduced contracts length (15 rather than 20 years) and inferior inflation proofing (CPI rather than RPI). It was bad news for offshore renewables in particular.

Then in October came the Hinkley C  announcement of what would have seemed inconceivable in previous times - guaranteeing to give the project more than twice as much incentives per unit of energy generated than is to be guaranteed to onshore wind (over 35 years) with a 65 per cent loan guarantee on top. This is directly against the non-nuclear Scottish policy. Previously people like me had been predicting that Scotland would have to pay much higher prices to reach its 100 per cent renewable energy target in an independent state compared to staying in the union. But now, the UK Government were predicting three twin reactor projects by 2030, most likely with similar incentive support as Hinkley C, and this will put up electricity prices by around 10 per cent for 35 years. On the other hand, with relatively cheap onshore wind deployment in Scotland going ahead at a rapid pace, it looked like Scotland could actually reach their 100 per cent renewable energy target more cheaply under independence if it relied on onshore wind to reach most of its target. The fact that the UK Government were now unlikely to fund much Scottish offshore renewables would not seem to make much difference to whether the Scots could reach their renewable energy target.

But things got worse. The Government has refused to come up with any ideas of how renewables will be funded beyond 2020 (certainly no renewables target for 2030). Then came the budget announcement that the carbon floor price would be 'capped'. The carbon levy itself makes little difference (it is mainly  tax revenue for the Treasury and a boost to EDF's nuclear income), but the problem for renewables is that the amount of money that will be paid to renewables is fixed by the Treasury, so the fact that the price of wholesale electricity will be less than expected (because of the cancellation of planned increases in the carbon floor price) means that there will be fewer incentives for renewables. This means less windfarms.

The final cut (to date) is of course the Tory promise that they will stop more onshore windfarms after 2020. Just in time to throw UKIP another sop before the local elections. This means that in the space of one year the renewable energy case for Scotland has gone from it looking like independent Scotland would face much higher power prices to fund their renewables targets to one where if they stay within the union they will have to pay much higher electricity prices to pay for nuclear power and will not achieve their renewable energy targets anyway!

Now don't get me wrong, I don't want Scotland to vote 'Yes'.  I would prefer a 'No' vote because of the rightward political shift that Scottish independence would mean for the rest of the country, and also because I believe there are too many nations and nationalisms in the world today as it is without adding one more. Alas, it now seems that David Cameron, a nice man really, may well go down as the man who not only 'lost' Scotland from the UK but who also paved the way for a referendum in 2017 that sees the UK exit from the EU. Cameron and the Conservatives have decided that it is much more important to listen to UKIP policies than to worry about the effect on Scotland or to risk the future of the UK in the EU. That indeed is the road to a literal little England, upon which the Conservative policy on windfarms is but a small, but very indicative, marker.

Monday, 31 March 2014

Friends of the Earth: DECC assumes a tailing off in growth in renewables post 2020

In a damning and succinct demolition of the UK Government's case for state-aid for Hinkley C nuclear power station UK Friends of the Earth (FOE) has pointed out how in its central projections  'DECC assumes a tailing off in growth in renewables post 2020'. Such projections are out of step with reality around the world as installation of wind power and solar power accelerates and nuclear electricity production actually falls. However, the British Government appears to want to favour nuclear over renewables as it commits the consumer to paying massive bills for Hinkley C (from 2023)  but has no plans for any premium prices for renewables after 2020. It seems that the UK Government doesn't expect renewable costs to fall, but that nuclear costs will!

How very mid-20th century! Maybe the Brits will re-invent steam engines to run the railways next! (why stop at the 20th century in our 'back to the past' drive!)

There is an apparent difference between between the Coalition parties given that Nick Clegg is said to have 'vetoed' Conservative proposals for a moratorium on future onshore windfarm consents.  See . But given that the Coalition don't propose any funding for any renewable energy after 2020, it is debateable how much real difference there is - both agree, in effect, that there should only be plans for funding of nuclear power after 2020 in pursuit of low carbon targets.  The Government seems to want to ignore what is happening in todays energy technological trends and take us back to some rosy English summer of the 1950s when Britain appeared to lead the world in jet engines and nuclear power - sounds a bit like UKIP all over!

See the 2013 version of the 'World Nuclear Status Report' for details of the global nuclear decline versus rapid expansion of onshore wind and solar pv:

In a submission to the European Commission's investigation as to whether the British Government should be given permission to offer the Hinkley C developers £92.50 over 35 years with a £10 billion loan guarantee, FOE dismisses the notion that this could be justified on environmental grounds. They say that the Hinkley C deal 'represents extremely bad value for UK citizens' and point out that the cost of various renewable energy technologies will 'be far cheaper, and (costs) falling fast'  by the time that Hinkley C is deployed.

A full version of the text of FOE's submission to the European Commission is printed below. You can see the actual text on It was sent in by Simon Bullock, from FOE's Climate and Energy Campaign:

Friends of the Earth supports interventions in the electricity market to drive decarbonisation. This is appropriate because existing policy measures, such as the EUETS, are not sufficient to deliver climatechange objectives at either global, EU or UK levels. Existing measures are not compatible with a high chance  of avoiding the EU-agreed global target of preventing 2 degrees of global warming (i). In addition, fossil fuel  production and consumption continue to receive enormous implicit subsidies through not paying the full cost of the damage they incur on people and the environment, and explicit subsidies through, for example, tax breaks to develop shale gas and North Sea Oil and Gas (ii)
In this context, measures such as the Contract for Difference (CfD), feed-in-tariff mechanisms or other policy supports are an appropriate response for Member States to help ensure decarbonisation of economies compatible with tackling climate change. We see measures such as CfD as clearly being State Aid, and that State Aid is appropriate and necessary in many circumstances.
However, although nuclear power has lower carbon emissions than coal or gas power, we contend that there are two main reasons why measures which support nuclear power should not be compatible with the EU’s rules on state aid:
Other environmental impacts.
As section 8.1.1 of C(2013) 9073 points out, “while certain generation technologies emit less carbon emissions, their impact on the environment might nonetheless be considered substantial”. Nuclear generation entails the production of radioactive waste which needs to be managed and stored for many centuries; there is still no robust plan for how that waste can be safely managed on such timescales. There are also small risks of very high impact events – such as at Fukushima and Chernobyl. We contend that these are unnecessary impacts and risks given that there are multiple other pathways to decarbonisation, at similar or lower cost, which do not involve new-build nuclear power. The environmental grounds for providing State Aid do not therefore in our view apply to nuclear power.
 Mature technology
Subsidy or State Aid should not exist indefinitely. In the UK, the subsidy given to solar power is falling rapidly – reflecting economies of scale, and general falling costs. However nuclear power is a six decade-old technology whose costs are still not falling (iii), and which is propped up by multiple existing subsidies such as limited liabilities for nuclear disasters and looking after nuclear waste, even before CfD is considered. The amount of subsidy available overall is limited – it should go to technologies which are on a down-ward cost curve, not technologies which require 35 year guaranteed prices six decades after starting commercial operation. We also dispute the UK Government’s claims that support for nuclear energy supports the EU common objectives of decarbonisation, security of supply and diversity of generation:
In the UK, the amount of new-build renewables plus nuclear is limited by the Treasury’s Levy Control Framework (LCF). If Hinkley is built, then from 2023 (or later) it will be competing directly with renewable generation for that limited pot. DECC’s analysis and that of others show multiple routes to decarbonisation – these objectives can be met with more renewables and less nuclear. We note too that DECC’s central projection for electricity generation to 2030 assumes a tailing off in growth in renewables post 2020, and a rapid growth in nuclear post 2025 (iv). The renewables projection merely reflects the lack of agreed policy on renewables post 2020 – it would be more realistic to assume continued growth in UK renewables capacity on a similar or faster growth trajectory, given the falling costs of the main renewable technologies.
Security of supply
It is suggested that new nuclear helps with falling capacity margins, and the UK being able to withstand external shocks. However, falling capacity margins will occur before 2020; new nuclear cannot address this, not being ready until 2023 at the earliest. In addition, nuclear is associated with unpredictable shocks which require large amounts of back-up (in contrast to the variability of wind which is to a large degree predictable in advance). For example, in 2012, the UK on at least three occasions saw sudden drops of 600-1000MW as nuclear reactors had to shut down quickly (v).
DECC’s 2050 pathway calculator (vi) allows scenario-planning to see whether the electricity system could cope with a 5 day winter low-pressure system (when wind and solar generation would be low). No-new-nuclear scenarios deal with such situations with a combination of demand-side response, interconnection with Europe, increased electricity storage, and reliance on back-up gas-fired power plants. In our view, the UK  Government is not putting enough effort into the first three of these options.
Diversity of generation
To 2030, there would still be some nuclear on the UK power system, while it is gradually phased out. By then, the UK could have a very diverse power system compared with the current mix which is heavily reliant on just two technologies – coal and gas. A decarbonised UK power system by 2030, without new nuclear, would rely on a very diverse mix of 7-10 renewable technologies, some gas, some CCS and a focus on demand-side response, electricity efficiency and greater interconnection with Europe(vii). New nuclear would if anything mean a less diverse power system, as it crowds out a wider range of renewable technologies.
Finally, we believe that the CfD for nuclear represents extremely bad value for money for UK citizens. By the time Hinkley is in operation, solar and on-shore wind will be far cheaper, and falling fast, and it is likely that off-shore wind will be in a similar position. The index-linked 35 year price guarantees, plus loan guarantees, will be bad value in 2023; it will become worse with every passing year.

i Requires at least 80%+ cuts in EU by 2030. Friends of the Earth, 2010. Reckless Gamblers. December
ii Friends of the Earth, 2013. Fossil fuel tax breaks in the UK. February.
iii ICEPT, 2012. Costs estimates of nuclear power in the UK. ICEPT Working paper.
iv DECC, 2013. Updated energy and emissions projections. September. Annex E
v References in Friends of the Earth, 2012. Wind power – helping keep the lights on. November.
vi DECC. 2050 calculator.

Sunday, 23 March 2014

How Hinkley C deal will cut consumption of solar pv not fossil fuels

The Hinkley C nuclear power plant deal that gives the nuclear developers a £92.50 per MWh premium price for 35 years will give nuclear power a clear competitive advantage over solar pv in what will be a growing electricity for motor vehicles market.  The combination of declining costs of solar pv and the growth of effectiveness and use of electric vehicles (EVs) will mean that within 15-20 years (maybe even sooner) solar pv, operating by then without any guaranteed premium prices at all, will be attracting large portions of the electricity market.

However, the premium prices paid to Hinkley C under the deal agreed by the UK Government will mean that the prices that can be offered under the 'night time' tariff that will be used to charge EVs will be relatively lower compared to what prices would be without the deal. This means that whatever electricity is generated during the night (nuclear plus other non-solar) will have a relative competitive advantage over solar pv used to charge EVs during the daytime.

Today this sounds like an esoteric argument, but in the future, whilst the Hinkley C contract is still in its earlier stage (it will last until 2058 assuming a 2023 start), this will be a very real issue. What we are doing now is  ensuring that in an important part of the future electricity market that nuclear, and whatever else is in the night time mix (including fossil fuel based power), is given a state-backed commercial preference in the energy markets over (day time) solar power. To those who argue that the system is built to favour the major energy utilities this sort of outcome would not be a surprise. To those who give the benefit of the doubt today to the Government's argument as to why Hinkley C needs such a long term contract, this may cause dismay.

In the US companies like Tesla are already promoting the use of solar pv to power EVs. See Also see

100,000 'plug-in' EVs were sold in the USA last year. The UK's skies may be a little less sunny than California or Pakistan, but in fact the difference in annual output is not actually as great as one might think, and solar prices are hurtling down..... See (scroll down the page on this one to see the chart from Bloomberg).

This trend will only grow and grow as a) solar pv prices continue to fall b) cost of EVs falls and range of the vehicles increases and c) increasingly commercial operators will offer daytime charging facilities (and later nightime stored) fuelled directly from solar pv.

The economics of this are already close to being attractive. Commercially sized solar schemes can already be put together for little more than £100 per MWh (10 p/kWh) even in the UK, and this is already close to commercial grid rates for commercial sized supply of electricity. So in fact the development of the solar-EV market is held up more by the rate of development of EVs than the price of solar pv itself.

So, flash forward to 2030 when a lot of EVs are humming around and Hinkley C, which, if all goes as projected (with a 2023 generation start-up), will be in its 7th year of its premium price contract. It will have another 28 years of unfair competition with solar pv, and of course, whatever other renewables (produced at day or night) are being generated. It is even plausible to argue that by sometime in the 2030s homeowners in energy efficient households with a developing generation of cheap efficient battery systems will not need the grid at all. A major hurdle in achieving this of course will be the 35 year premium price contracts (with loan guarantees assuring low interest bank loans) handed out for Hinkley C and whatever other similar contracts our governments decide to grant the nuclear developers.

Wednesday, 12 March 2014

Why are we supporting a Ukraine Government with far-right ministers?

Why are we giving what amounts to unqualified support to Ukraine when its Government contains six members of a far-right party? see

The 'Svoboda' (Freedom) Party is a barely reconstructed neo-Nazi party whose leadership has a strong anti-Semitic past. I, along with most people in the West, oppose the Russian invasion of Crimea, but does that justify giving 100 per cent backing to a partly far-right Government? In the matter of policy substance, does this Government have a good record so far in promoting national reconciliation? I doubt this, and I do not see how it is going to succeed with its make-up.

It was in 2000 that the EU struggled with the crisis in Austria when a far-right party (also called 'Freedom') entered a coalition Government. There were even diplomatic sanctions imposed on Austria for a few months for that. There was controversy about the sanctions policy in the EU, but at least the EU did not appear to actually give the Government support! See

But how things have now changed. Far right parties on the march across Europe, including the Roma-baiting 'Jobbik' in Hungary and a resurgent 'Freedom Party' in Austria. And it seems the EU does not object too much to the make-up of the Government in Ukraine.....

I must say, whilst I was appalled by the undemocratic tendencies of the Yanukovich Government which fell last month, I was worried when I saw the first pictures of the protestors 'protecting' the Ukrainian Parliament after Yanukovich was voted out of office. This action, which undermined the agreement which had been signed a few hours earlier was indeed a revolutionary one, but revolutions often lack legitimacy. A power vacuum is created into which extremist forces step and seize power. Perhaps we should remind ourselves about the French revolution. The French Parliament, the Convention, was elected and also 'protected' by the revolutionaries who had stormed the Bastille. But these revolutionaries came to be known as the 'mob', and the French Government became associated with ever more repressive measures......

Now I don't wish to attack the many ordinary and liberal minded people who formed protests against the Yanukovich regime and who camped out in Maidan Square. But amongst their number are less savoury political tendencies who have now captured part of the Government. Yes, let us condemn the Russian action, but let us have some criticism also of the questionable credentials of people in the Government of the Ukraine. That way also, perhaps, helps us move towards a hope of peaceful resolution of the crisis.

Monday, 3 March 2014

UK taxpayer now even more likely to bail out Hinkley C

As construction delays for the French and Finnish EPR nuclear power schemes lengthen, the odds that the British taxpayer will end up bailing out the EPR planned for Hinkley C in Somerset are rising higher and higher. Put simply, if the British scheme experiences similar delays, then the British taxpayer is bound to pick up the tab, over and above the already high price that we will be paying for the plant's construction. Reports from Reuters indicate that the EPR being built in Finland will now take at least 13 years to build, and also the reactor being built in France is becoming more and more behind schedule. See

The Hinkley C project is scheduled to be built in eight years, starting in 2015 (assuming an early positive go-ahead from the European Commission). The UK Government's deal for Hinkley C involves not just paying them £92.50 for 35 years in 2013 prices (increasing in line with CPI - so much higher by 2023), but also that the Government will provide £10 billion of loan guarantees. The Government insists that there will be no taxpayer subsidies, and that the loan guarantees will allow the project to access much lower interest charges (unlike renewable energy of course which does not get loan guarantees). However, that depends on the plant generating electricity, and income, before the loan repayments are due. If the constructors take out loans with an eight year maturity, it follows, that if the plant is not complete then the constructors will call in the loan from the Treasury.

Let us not stand for any nonsense from the Government that the constructors will have to foot the bill. The Government will be under great pressure to allow a partly build nuclear power station to be completed. Perhaps the Government will cover its embarrassment by making the electricity consumer reimburse the Treasury, but that will simply increase the price of the project for the electricity consumer even further. Indeed, this is precisely what happened with the last nuclear power station that was built in the UK, Sizewell B. This was still being built when the electricity industry was privatised in 1990, and the new private electricity companies would not fund its completion. So the Government stepped in and it was completed with support from the 'fossil fuel levy' on consumer electricity bills.

Meanwhile the Daily Telegraph is busy crowing about reduced incentives being made available for wind power. They are perhaps (from their point of view) being over-hopeful about the proportion of projects likely to be abandoned under the Government's 'competitive' scheme for awarding contracts to onshore windfarms. However the Telegraph completely misses the irony that windfarms are going to be built at much lower prices than Hinkley C, with much shorter 15 year contracts and without the benefit of any loan guarantees. See
See also last but one blog entry 'Does Caroline Flint need Maths lessons?' on relative payments to nuclear and renewables

Could Ukraine conflict trigger Euro gas supply crisis? - or worse?

The tragic events unfolding in Ukraine could trigger a crisis in gas supplies to central and South eastern Europe, and in the worst case scenario also to Germany and Scandinavia. The UK is unlikely to be directly affected by supply cut off per se since the UK does not contract to receive gas from Russia. However, British consumers are now highly likely to experience increases in gas prices, first as gas markets react to increasing geopolitical uncertainty, and later on if gas supply is actually disrupted.

Disputes between Ukraine and Russia have led to gas supplies being disrupted before, notably in January 2009 when swathes of Southern and Eastern Europe suffered terribly as gas supplies were cut off in mid winter. Some are more laid back about prospects than others. Bloomberg is correct in saying that Europe is much better prepared than 2009 to deal with such a crisis, with the Nordstream gas pipeline now taking gas direct to Germany and Scandinavia from Russia rather than through Ukraine. But that leaves several European countries still exposed to crisis, and although contingency measures are much better prepared than in 2009, it has to be remembered that the disruption in 2009 only lasted two weeks. This time the disruption could be rather longer.

Of course, in the absolute worst case scenario, the price of British gas could be one of our lesser worries. The warmongers of a variety of different sorts are already working hard to produce a global catastrophe. Leading them of course is the corrupt authoritarian regime in Russia whose irresponsible acts have no justification, but others are rushing towards the abyss. The Government in Kiev seems itself driven as much by the nationalistic zeal of its protestors surrounding the Parliament as a concern for national unity and international peace. Meanwhile, in the UK, the right wing is already talking about 'war with Russia'.

How many millions will have to die to satisfy these people?

See the links below: