Tuesday, 28 January 2014

Government to let energy bills soar by cutting back on energy efficiency requirements

Hot on the heels of Government tax breaks for unsustainable fracked gas supplies and loan guarantees and 35 year contracts for nuclear power stations the Government is planning to scrap rules that allow local Councils to plan for energy efficient houses.

Moving under the cover of scrapping regulations on industry the Government, in flagrant breach of its claims to have low energy bills at the heart of its concern, is planning to scrap the 'Code for Sustainable Homes'. This was introduced by the Labour Government to allow 'bottom-up' action by local councils to require developers to build houses that will result in lower energy consumption by being more energy efficient. Not only will generations to come be saddled with the consequences of exhausting natural gas supplies, having to carry on paying until 2058 for Hinkley C (assuming it actually starts in 2023 as planned), but they will now be saddled with increased energy bills associated with living in homes that will require more energy as a result of the Government's policy.

Of course the Government does not like local people being given power to protect the planet. The Government's priorities, by contrast, are to give increased powers and increase regulations and incentives to allow multinational corporations to increase energy supplies.

You can see below a statement from last November by the Environmental Audit Committee on the Code for Sustainable Homes including a call to the Government not to scrap it, and you can see a report in yesterday's Business Green about the government's latest step in its campaign against green policies.



Saturday, 18 January 2014

Easy ways to make offshore wind appear a lot cheaper which are being ignored by the Government

The Government are busy saying that offshore wind can only be implemented in the future if its costs come down - yet some very simple ways of reducing the headline prices that consumers will have to pay can be implemented, but are being ignored, by the Government.

A very simple way of reducing their headline costs is simply to extend the length of the power purchase agreement from 15 years to at least 20 years (under the Renewables Obligation the agreements last for 20 years, so why not under Electricity Market reform?). That would reduce the headline price needed for a given scheme by around 8 per cent. In addition to this the Government could also offer loan guarantees to offshore windfarms similar to that offered for Hinkley C. That would reduce costs by around a further 15 per cent.

Currently the loan guarantees on offer for low carbon energy sources seem to be focused on Hinkley C (for 65 per cent of the investment) and some biomass power plant, led by what would still be a 50 per cent coal fired Drax power station. Only one offshore project, Neart Na Gaoithe, off Fife in Scotland, has been put on the 'prequalified' list for loan guarantees for the purposes of building the turbines and bases themselves, and this windfarm has been spectacularly ignored by the Government when it issued its list of projects that will receive 'investment contracts'. See http://news.scotland.gov.uk/News/Offshore-wind-decision-must-be-reversed-7a3.aspx

Of course a more imaginative scheme for offshore wind might give them 35 year contracts (the same length offered for Hinkley C). This would reduce the headline price for offshore wind even further. Indeed, state-backed companies such as DONG (Denmark) could play a similar role performed by the putative (state owned) French and Chinese backers of Hinkley C and take a longer view on investment returns than that which appeals to privately owned companies. Certainly, in the case of offshore wind there is plenty of scope for long term thinking since after 15 or 20 years the blades and perhaps other parts can be replaced with what will be by then more updated models, whilst utilising the base infrastructure that will have been installed and paid for (a 'sunk' investment in more ways than one).

The Government has already indicated that future proposed nuclear projects will be considered for loan guarantees. Indeed we know that they cannot be built without them. So why is it not practice to extend loan guarantees to offshore wind projects as a matter of course? Or is it just that the Government prefers to see offshore wind look, in headline terms as though it will cost the consumer more than nuclear power?

You can see the list of the Government's 'pre-qualified' projects at:

Wednesday, 15 January 2014

Is Toshiba's nuclear project really cheaper than Hinkley C?

Evidence from the USA casts a lot of doubt on hopes that the AP1000 design promoted by Toshiba for the planned 3.4 GW development in Cumbria will be cheaper than Hinkley C. Toshiba, the majority owners of the NuGen franchise, and hopeful developers of the plant say they will ask for a lower price than the £92.50 given for Hinkley C. Well, good luck to Toshiba in finding investors, even though, no doubt they will (like Hinkley C but unlike renewable energy schemes) be offered a very valuable amount of loan guarantees from the UK Treasury and extra long premium price power purchase agreements that last 35 years.

Cost overruns for the first nuclear power plant being started in 30 years in the USA, in Georgia, are already mounting, and the project, now well over $14 billion for the 2.2 GWe development, hardly looks cheaper than  than Hinkley C. Indeed, given that the projected costs of building Hinkley C (not including the money already spent) is around £3.9 billion per GWe you could argue that the equivalent cost of the AP1000 Vogtle project in Georgia is already more expensive than Hinkley C, GWe for GWe!

In Georgia there is a retail monopoly and state regulations allow consumers to be charged money while the plant is actually being built - a form of automatic cost recovery. The developers get paid even though no revenue is actually generated!

There are efforts to build nuclear a nuclear plant in North Carolina (with consumers being asked to pay extra in advance as in the case of Georgia), but the much hyped nuclear renaissance is just not happening in the USA. Indeed, nuclear generation is actually falling in the US. The reasons given for all of this is that natural gas prices have fallen, dishing plans for new nuclear reactors. However the decline in natural gas prices in the USA does not seem to have stopped the continued expansion of building of wind power and solar pv across the USA. Georgia appears to be the only place in the USA that is clearly bucking the trend, and that may have something to do with the fact that wind and solar developers in the state cannot get hold of power purchase agreements at practically any price whilst nuclear developers get paid without producing any electricity at all!

Toshiba appear very confident about their NuGen development, but they will need investors, which may be hard to find, unless the UK Government gives a virtual 100 per cent blank cheque through a loan guarantee as opposed to the 65 per cent guarantee offered for Hinkley C. Investment from British electricity companies seems unlikely, although maybe, like EDF, Toshiba can fix up an agreement with Chinese companies........hmmmm, there's some interesting politics there that may make it a long shot! But even then, with a project that may (especially after more experience building the project in Georgia) not be plausible with a much reduced price compared to Hinkley C, this looks quite shaky.

See extended version of this article on http://www.theecologist.org/blogs_and_comments/commentators/2240101/toshibas_nuclear_project_cheaper_than_hinkley_c.html

You can see coverage of these issues on the following sources: