Monday, 29 July 2013

Energy Security is what dominant interests want it to mean says academic study

A wide-ranging study of the relationship between energy security and climate change concludes, among other things, that there is little consistency between notions of energy security in different countries. Climate change objectives appear to be subservient to dominant conceptions of energy security.

These discussions are contained within a Special Issue of the leading academic journal 'Environmental Politics' which is edited by David Toke (me!) and Eleni Vezirgiannidou. I author a paper looking at the evolution of current British electricity policy and  electricity market reform. The paper examines British 'securitisation' of energy policy, something that is framed to give priority to nuclear power. There was not enough room in the paper to comment on the historical background to the elite construction of the notion of 'security' in Britain. However, it is worth commenting that in the context of Britain, with its emphasis on maintaining an 'independent' nuclear deterrent, this 'security' carries with it the baggage of the nuclear weapons-inclined British establishment. The language itself suggests a priority for nuclear power. Public opinion, which gives greater priority to energy efficiency and renewable energy, is downgraded in favour of elite conceptions of 'security'.

Rather, we should have a discussion about what measures can best achieve 'climate change' objectives. Renewables and energy  efficiency are  a much better bet on grounds of innovation and increasingly on cost.  'Security' is something that can be defined in many ways. Ironically the spread of nuclear power also encourages nuclear weapons proliferation, which reduces our security in international terms (we're telling the Iranians not to have nuclear power!). So let us not start using 'security' as a criterion that boosts nuclear power.

I must say that this makes me very sceptical about pressing climate change objectives in terms of 'climate security'. As Rita Floyd has indicated in her book 'Security and the Environment' (on policy in the USA), environmental security discourses tend to put the military in the box seat to say what our environmental policies should be. The notion of 'security' can carry with it notions of secrecy and top-down control and what the 'establishment' (usually older males) knows best.

You can see the Special Issue on the Politics and Energy Security and Climate Change at

Saturday, 20 July 2013

Public prefers reductions in room temperature to nuclear power as an energy solution says key survey

A comprehensive survey published by the UK Energy Research Centre (UKERC) of attitudes of the British public has found low support for nuclear power as a solution to the UK's problems compared to energy efficiency and renewable energy. Indeed, when ranked as a solution to the problems of energy security, climate change and affordability, nuclear power was perceived as being less preferable than reducing the heating temperature inside the home.

 The research was funded by several research councils and even involved officials from the Department of Energy and Climate Change. The results show that just about any energy solution is preferable to nuclear power. By contrast, the Government is giving nuclear power clear priority when it comes to allocating key financial incentives over and above solutions, whether they be onshore of offshore wind, energy efficiency, or other options that are clearly preferred by the British public.

 See in particular Figure 1 page 11 of the report on

In recent times the Government has announced £10 billion of Treasury guarantees to EDF to build Hinkley C nuclear power station. Ed Davey has said (see two blog posts earlier) that nuclear power will receive premium rate payments for 35 years while his Government has just announced that the premium price contracts for renewables will be cut from 20 years under the Renewables Obligation to just 15 years under the proposals for ‘Electricity Market Reform’ . One could list other things, but it is already clear that the Government strategy is completely out of step with the priorities of the electorate. If the Government is going to give such massive help to nuclear power, then why not offer state guarantees and premium prices to companies that can go around persuading people to lower the temperatures on their heating thermostats next winter? - That would be closer to popular priorities than the support being given to nuclear power (!) Of course, the Government is going to do no such thing of course, even though it would be more popular and rather more practical than giving out more and more money for nuclear power. I am talking a bit tongue-in-cheek here. We need to support various types of energy efficiency and renewable energy as a priority, not nuclear power.
The survey, which was led by a team based at the University of Cardiff, was based on the attitudes of a total of 2441 people. In fact plenty of other surveys have turned up results which are complementary to this - they all show that renewable energy and energy efficiency are much more popular with the British public than nuclear energy. However, you would not understand that from the press releases generated about such surveys by pro-nuclear organisations.

So how is it that nuclear commands such support from within the establishment? One clue can be found from survey evidence itself which tends to show that the most pro-nuclear parts of the population are older people and males, and the least supportive of nuclear power (and most supportive of real green energy solutions) are young people and females. But guess which general type of person makes up the scientific and engineering establishment? Well, older males of course. Indeed you will often find these older male scientists appearing on the media asserting that they know best because they are scientists, and leading scientists support nuclear power. Now, I don't want to do injustice to those older male scientists who are not so sure about nuclear power (after all I am an older male myself!), but could the fact that the scientific and engineering establishment is so supportive of nuclear power have nothing to do with the fact that they are scientists?
The Government is set to announce the ‘strike price’ for nuclear power in the next couple of weeks. This will suggest what level of subsidies that nuclear power generators will be paid. Prepare yourself to be bombarded by truly elaborate public relations on this issue.

Wednesday, 17 July 2013

DECC to give Big Six 'license to skim' off renewable independents

In an attempt to defuse the problem that independent renewable generators will not be able to obtain 'contracts for difference' (CfD) under arrangements set out in electricity market reform, the Government is proposing a compromise that will favour the Big Six.

Under the so-called 'Backstop PPA' proposal as mooted in House of Lords amendments by Lord Teverson to the Energy Bill, electricity suppliers will be required to offer power purchase agreements (PPAs) to independent developers, and things will be made easier for small electricity suppliers. See
However, the price of this compromise is that inevitably the Big Six will give PPAs to the independents that are worth rather less than the value of the CfDs  are to the Big Six. In effect, the Big Six will be able to extract an economic rent for themselves of 10 per cent or more.

This system will mean that the Renewable Energy programme will work with less cost-effectiveness for the consumer and will deliver fewer renewable energy projects than if a system was used that allowed independent developers to earn more-or-less the same amount of money from renewable energy projects as the Big Six. This would happen under a 'fixed' Feed-in Tariff system (see the report which I wrote for Friends of the Earth), or also the GPAM proposal. The GPAM proposal, still supported by some Lords in their amendments would work in the context of the CfD system and would be a more efficient system of making the renewables programme work under a 'CfD' system. See
However big electricity suppliers may not like this (GPAM) system since they have very little opportunity to extract premiums from the PPAs which would have to bought and sold on a competitive 'auction' basis. This is just like the Government used to sell old 1990s renewable energy contracts to its own Renewables Obligation to raise money for the Treasury (via the Non-Fossil Purchasing Agency) rather than give money away to the electricity suppliers.  But now the Government appears to have caved in to the demands of the electricity majors and given them a system that they want rather than one which would allow independent generators to build more projects for the same cost to the consumer.

In many ways this is something of a return to the inefficiencies of the Renewables Obligation, wherein in order to obtain a long term power purchase agreement, independent developers have to give away part of the value of the renewable obligation certificates (ROCs) to the electricity suppliers.

In fact independent developers are becoming increasingly important and in the future are tipped to develop the bulk of renewable energy. This is because the major electricity companies are very short of money to invest in equity, and so will leave it to others to invest in new projects as much as possible. With the 'Backstop PPA' the electricity majors can earn lots of money out of the renewables programme without having to invest anything!

Sunday, 7 July 2013

Davey denies offering EDF a nuclear blank cheque

Energy and Climate Change Secretary of State Ed Davey has denied that the Government is offering EDF a blank cheque for Hinkley C nuclear power plant. He is reported in the Guardian as putting his reputation on the line (' a personal test'), saying that "I am determined that the consumer or the taxpayer will not bear the risk of construction over-runs. Nuclear will get no preference in comparison with other low-carbon technologies."

 Now the first part of the sentence is more important than the second, assuming the Government does stick to that position, because the Government appears not to be keeping to the second part. Nuclear power is being offered much more favourable terms compared to renewables since nuclear, according to the same (Guardian) article, is being offered a 35 year contract for premium prices. Moreover, the Treasury announced ten days ago that EDF would be offered £10 billion worth of loan guarantees. Meanwhile contracts offered to renewable generators are only to last for 15 years, a reduction compared to the Renewables Obligation where the premium prices last for 20 years. And of course, renewables have not been offered £10 billion of loan guarantees! See

 But that still leaves the point that the Government still says that it will not underwrite EDF's construction costs. That is very significant and barring some incredibly high 'strike' price, is enough to stop the project. Why? Well, nuclear power is so very uneconomic partly because of the tremendous uncertainty over how much the plant will cost and how long it will take investors to get their money back. So the city will downgrade any investment that is dependent on hopeful cost estimates for construction costs. That is why 'underwriting' is so important for new nuclear power. It seems the Government has not offered (yet) to guarantee to pay for any construction costs overruns. Barring some national French Government priority being made for Hinkley C (that seems unlikely) investing in Hinkley C looks like a very unattractive prospect for EDF unless the construction costs are underwritten. This is in addition to being offered a higher strike price than the Government are apparently considering. The gap between the £10 billion offered by the Government and the £14 billion (or more??) that the project is set to cost according to EDF has to be filled by somebody, and banks will not do it without guarantees. Other sources of capital will not lend their money without very big profits being assured, and no assurances are on offer even if the prices offered by Government were good enough.

The strike price is another issue, with Hinkley C being unattractive at less than around £100 per MWh even with the 35 year contract and £10 billion worth of loan guarantees. The Treasury has been talking about around £80 per MWh. There is more to come as well. Renewable generators have been offered a deal based on the 'consumer price index' (CPI) being used to uprate the contract-for-differences (CfD) strike price which (as discussed in a recent blog post) is inferior to the retail price index (RPI). This matters to EDF since its future income stream would be much less using CPI as an inflation adjustment as opposed to using RPI.

 All in all, Hinkley C looks, on the basis of the Government policy, to be an unattractive investment. That is not because the Government are giving preference to renewables - quite the contrary since nuclear is being offered a better deal on key issues - but it is a measure of just how uneconomic nuclear power is. Indeed, some people are even calling for electricity to be part re-nationalised so that we can have nuclear power. See

Given that the UK is so firm on the notion that liberalised, privatised markets are the best way to achieve best value for the consumer in industries like electricity, why is it suggested that state ownership is the way forward for nuclear power? Could it be precisely because nuclear power does not represent good value for the consumer?

 You would think that no other country in the world could get by without building more nuclear power stations! Why do some British people think we need them so bad? Maybe it is a feeling for the old times - after all, the UK was the last country to phase out steam engines from mainline railways!
 I respect Ed Davey for announcing his refusal to budge as a personal test, but the Government has already shifted its ground so much towards offering nuclear power better terms than renewables, that Ed had better watch out before he risks getting a lot of egg on his chin. After the Lib Dems debacle over tuition fees, anyway, their credibility on sticking to cast iron commitments is not exactly riding high!
 But the point is that if Ed is telling us the truth, and he’s not going to budge, why not give the loan guarantees to renewable schemes.....tidal stream and offshore wind projects could do with that £10 billion, and we would get more renewables going as a result.