Wednesday, 27 June 2018

Wave power - new bottom up development?

One of the new designs for wave power is looking to enter the energy market via small scale scale applications - as such it is a different approach to the stand-alone mode often proposed for wave power devices - a strategy that seems to have faltered in recent times.

The new approach is about developing the technology in a bottom up fashion by finding 'local' markets rather than sending power into the grid. That means the technology can start off small, and then grow, which is how innovation usually develops

The technology company is called 'Resen Waves'. The device is designed to be a small device (initially 300W) that could provide power for sensors and other small power applications in the offshore oil and gas market - well, that's one way that the oil industry could give renewable energy a break! But its still needs some partners and demonstrations schemes to get it going.

Per Resen Steenstrup, the founder of the Resen Waves company which is now active in Aberdeen, tells me that it is in the Danish renewable energy tradition of incrementally building up from small beginnings. That's right of course - the wind power industry started in Denmark in its modern form at the end of the 1970s and early 1980s using small machines. The concept behind Resen Waves is that it can build up from small beginnings by finding and developing niche markets.The company behind the technology says that it is 'the first company in the World to provide continuous power and real-time data connectivity to autonomous instruments and machinery in the sea, as a plug and play solution'.

You can read more about Resen Waves at

Friday, 22 June 2018

How the Committee on Climate Change gave the Government dud advice

The Climate Change Act has been celebrating its 10th anniversary, but there is surprisingly little to celebrate in the earlier advice of the Committee on Climate Change (CCC). The CCC is the body created to advise the Government on the achievement of the carbon reduction commitments (80 per cent of 1990 levels by 2050). You would expect the advice of the CCC to speed the Government's low carbon programme, but in the crucial aspect of electricity supply policy it has (in the past) actually damaged it!

Looking back on its past, it looks like the Committee gave completely the wrong advice to the Government, advice which, alas, they still seem to be following now. 

In particular, in the 'Renewable Energy Review' issued in 2011 (1) (which I criticised at the time), the CCC, urged the Government to cut back the targets for offshore wind and instead focus on nuclear power. They told the Government not to be put off by the Fukushima disaster that had happened earlier that year. According to the Times Report on May 9th 2011 ''The Committee on Climate Change says heavy reliance on offshore wind could result in unacceptable increases in fuel bills.' (2) David Kennedy, the then Chief Executive of CCC said that 'Nuclear looks like it will be the lowest cost for the next decade or two'. Indeed the Review stated that nuclear power was currently 'the most cost effective of the low carbon technologies' (1). That conclusion, given the cost of onshore wind, was highly challengable at the time, especially as given the existing record of nuclear power plant that had been built in the UK and the roll-out of onshore wind. Whereas the deployment of renewable energy has soared ahead, despite the best efforts of many in the Conservatives to block it, nuclear power plans set out in 2010 have proved to be fantasy. And, of course, offshore wind costs have tumbled rapidly making the CCC's earlier pronouncements looking especially silly.

As the Times report of May 9th 2011 stated ''Before the Fukushima disaster the Government had been planning to build 12 new reactors on seven sites by 2025'.  Of course there is no chance that there will be even one reactor by then, let alone 12. The only deal signed so far, Hinkley C, has been achieved at great cost to the British electricity consumer. The scheme only survives because the French taxpayer already has stumped up several billions to subsidise the deal. No doubt more will be needed further down the line more as cost overruns escalating as they always do (and no doubt British taxpayers ending up with further commitments to finish the job). A deal is being discussed for the Wylfa project with Hitachi that will see British taxpayers 'invest' in the project (as well as paying high premium prices for the power in their electricity bills) that will make them liable for a large chunk of the almost inevitable costs overruns.

Yet onshore wind and solar pv projects that can be delivered at no extra cost to the consumer are being denied  contracts for differences that would deliver the power much, much more cheaply for taxpayers and electricity consumers than nuclear power. The Government seems in no hurry either to prepare for new offshore windfarms which are now much cheaper to deliver than new nuclear power.

The UK has been relatively successful in reducing its carbon emissions. Indeed, according to Carbon Brief (3) the UK has reduced its emissions by 38 per cent compared to 1990. That is due to a reduction in electricity use this century (partly a result of energy efficiency policies), more energy efficient buildings, and a switch away from coal to gas and renewable energy. Renewable energy has grown, as a proportion of electricity supply, from 1 per cent in 1990 to around 30 per cent today. By 2020 this will be close to 35 per cent. Most of this increase has occurred this century having being kickstarted by the last Labour Government, especially under Ed Miliband who set out some ambitious plans for offshore wind which were later cutback in the context of the disastrous advice from the CCC.  

In more recent times, at least, the CCC, has been a bit more positive for renewables, and indeed Lord Deben, the Chair, has recently chided the Government on its lack of incentives for onshore wind. The CCC has a new CEO in the shape of Chris Stark whose previous job was Director of Climate Policy for the Scottish Government. At least we shouldn't get any disastrous advice from him!

(1) Committee on Climate Change (2011) 'Renewable Energy Review',

(2), Webster, B., (2011) 'Set Aside fears and build reactors not wind turbines says climate watchdog', Times, May 9th 

(3) Carbon Brief (2018) 'Analysis: How UK carbon emissions fell to their lowest levels since 1890',

Monday, 4 June 2018

Wylfa: How the Tories are deliberately forgetting their nuclear lessons

For the sake of artificially massaging down the price paid for electricity from the proposed Wylfa nuclear plant  the Government is about to commit the country to pay for billions of pounds of almost inevitable construction cost overruns. In doing so the Tories will be junking their opposition to doing such a thing. In 2010 The Conservative Party election manifesto stated that: ‘we agree
with the nuclear industry that taxpayer and consumer subsidies should not and
will not be provided – in particular there must be no public underwriting of
construction cost overruns’(1)

There was a very good reason for this manifesto commitment. None of the nuclear power plant currently operating in the UK were constructed according to their original cost estimates. They were built during the time when electricity was nationalised, and so the costs were spread around all consumers and there was limited transparency about the economics of building nuclear plants. The Tories decided that there should be no more wastage of public money on nuclear plant which soaked the public purse. They wanted competition in electricity generation.

According to the Electricity Market Reform law (initially proposed at the end of 2010) nuclear power should only have the same incentives as other low carbon fuels. But it has emerged that if this was done literally, there would not be any nuclear power stations built since various other low carbon options are much cheaper. But now that memories of the past problems with building nuclear power plant have receded from, or been airbrushed from, political memory, this principle has been gradually stripped away to return us to the past. The past of the nuclear blank cheque.

Nick Butler in the Financial Times has made some perceptive comments on this peculiar deal (2). He is one of the few who has done some serious thinking about how it can possibly be the case that the Wylfa project will be sold on a 'cheaper' price than Hinkley C (£92.50 per MWh in 2013 prices) despite the fact that the projected cost of building Wylfa is actually higher than Hinklrey C per GW of capacity (see my previous blog post). Prices around £75 per MWh have been kited as the suggested price tag for Wylfa for electricity consumers.

The price of the contract given to EDF to build Hinkley C was seen to be very large. So there was great political pressure to reduce this price. But the nature of nuclear power is that it is very expensive, so all the Government could do was to fake the price by giving 'below the counter' financial incentives. Of course this price can be reduced on paper if the state takes at least part of the risk and invests and lends money at cheap rates. But in real life not only is this mechanism not being made available to other low carbon fuels, but the taxpayer will end up paying a much higher price than advertised through a different route - when the time comes for the project investors (including the Government) to pay for the almost inevitable cost overruns.

The remarkable thing is that despite this effort at price fakery, the price agreed will still be a lot higher than that available for installing large amounts of onshore wind offshore wind and solar power.

The nuclear industry appears to have lobbied successfully for this return to the past, a past where nuclear power was financed by opaque means, and its expensive nature hidden by the fact that the state effectively offered the developers a blank cheque. Of course the British body politic will find out to its disgust that there will be billions of pounds paid out when the fund initially vested in the development is exhausted - thus revealing the grotesque fakery of the allegedly 'cheaper' price of the Wylfa project compared to Hinkley C. That won't happen for quite a few years since, no doubt, despite the usual wildly optimistic projections of delivery dates, the plant will not be constructed for a number of years yet. It will be long enough to ensure that the architects of this sorry deal are out of office and unavailable for comment from their retirement mansions.

(1) Conservative Party, 2010. Rebuilding security – conservative energy policy in an uncertain
world, page 18

(2) Nick Butler, 'Stake in nuclear plant would be dramatic change of policy for UK' Financial Times, 4/06/2018

Thursday, 10 May 2018

Hitachi's Wylfa project is even more expensive than Hinkley C

A fake price for the faltering proposed Wylfa nuclear plant will obscure the fact that the project, backed by Hitachi, will be even more expensive than Hinkley C. Negotiators for the Wylfa project are clamouring for the Government to use taxpayers money and a commitment to pay at least some of the risks of construction cost overruns to massage the price of the deal down compared to Hinkley Point C. If this is done, then the combined support for Hinkley C and Wylfa projects through loan guarantees, equity support and risk underwriting could rival the size of bill the UK has to pay the EU for Brexit. But a carefully contrived fake price produced by giving a massive taxpayer funded handout to the project will obscure this terrible consequence.

Hinkley Point C (HPC), scheduled to be built by EDF, is now said to cost around £20 billion, almost exactly the same as the cost of the Hitachi-led Wylfa project. In fact both of these figures do not appear to include interest charges, and so will be underestimates of the total mount of money needed to be paid out before the plant is even built. But the interesting thing is that whilst the Hinkley C project is 3.2GW, the Wylfa project is smaller, at around 2.9 GW, which actually makes the Hitachi project even more expensive!

The costs have jumped upwards for the Wylfa project because the developers have to meet UK safety standards. Indeed this fact undermines a lot of wishful thinking and confusion among nuclear supporters who look at the costs of constructing projects in places like South Korea and the UAE and suppose that they can be transposed to the UK. They cannot, because the British public expect higher safety standards, and these are required by the Office for Nuclear Regulation.

Hinkley C is routinely quoted as having been given a 'contract for difference' (CfD) worth £92.50 per MWh payable over 35 years, underpinned by what seems likely to be a loan guarantee of maybe £15bn or more. Note that the £92.50 per MWh price is in 2012 prices, and that today this is worth just over £100 per MWh given that the contract is uprated using the Consumer Price Index (CPI). This price will be paid by electricity consumers (over 35 years) once the project starts operating. But the thing to watch over even more is the massive sums that may flow from the Treasury in taxpayers money before the project generates a single KWh. The scale of potential losses is likely to be made much worse (by comparison) under the terms of the deal that its supporters are advocating for the Hitachi project at Wylfa.

Of course the Government do not want to be seen to give a similar price for the Hitachi project as the HPC project; hence the attempt to massage down such a figure by the ruse of the Government handing over taxpayers money to the consortium long before the project is generating any electricity.

Figures of around £70 per MWh have been suggested for Wylfa, based on what is euphemistically described as the 'Government taking an equity share'. This is still a lot more than renewable energy projects such as onshore wind and solar farms (effectively banned by the Government) or even offshore wind, whose costs have been tumbling to well below £70 per MWh in recent contracts awarded in the UK, The Netherlands, Germany and Denmark. Of course all of these projects run onmuch shorter contracts than HPC and they certainly don't get any loan guarantees or 'equity' support from the governments. But expect a lot of bloated estimates of dealing with 'intermittency' to excuse such differences. But a major problem in any cost comparison is that the nuclear price of any Wylfa deal will have been faked

Of course you can reduce the contract paid for ANY power project if the Government pays for part of it! We could (supposedly) have wind and solar power for free on this basis! So this process will be just a giant exercise in fakery, but one that has large and potentially catastrophic impact on the nation's finances.

Contrary to what the Government claims, if the they do offer loan guarantees to EDF for building Hinkley C, then the Government will have to start paying out in the (extremely likely) instance that the project suffers cost overruns and is not completed on time. So the UK could be liable for up to around £15 billion on this deal alone - even before electricity consumer start paying out on the very high price that has been agreed to pay for HPC's electricity.

But it gets much worse with the proposed Hitachi deal. There the Government's liability could, in theory, be open-ended. Not only will the Government be giving an initial handout to Hitachi of several billion pounds for what is called an 'equity' share in the project, but the Government will also at least share part of the risk of paying for (again almost inevitable) cost overruns on the project. This will be on top of the loans guarantees, similar in nature to those to be offered to HPC.

To top is all of course, the reactor earmarked for Wylfa, the 'Advanced' Boiling Water Reactor, has a rather chequered operating record in Japan.

So if up to, say, £15 bn of taxpayers money is at risk through HPC's loan guarantee scheme, the same will be the case for Wylfa and top of this will be billions handed out in the public 'equity' share PLUS a share of any of the cost overruns. The cost of leaving the EU through payments to the EU Commission has been variously estimated as being £30-£40 billion, so the cost of our nuclear programme will rival, perhaps even exceed that. And that is before we include the high costs that electricity consumers will have to pay over 35 years!

Report: see:

Saturday, 5 May 2018

Why the 2018 local elections were a good result for Labour

The local election results were a good result for Labour in that if the results were simply transpositioned to a General Election then Jeremy Corbyn would be Prime Minister. Arguments saying that Labour will necessarily do worse at a real General Election don't wash.

Ok it wasn't exactly a landslide Labour surge, but Labour did improve significantly on its 2014 result. The projections made would put Corbyn into office. See

 Moreover the Liberal Democrat and Green Party vote went up as well, which, indirectly is also good news for Labour for the simple reason that a lot of these voters would vote tactically for the Labour candidate in a General Election in marginal Tory-Labour seats. Hence Labour could actually end up with a significant lead in seats over the Tories at a General Election - and remember, the Tories only need to lose 10 of their current seats and Corbyn will be Prime Minister. In theory under some scenarios the Lib Dems might go with the Tories again to keep them in power, but in reality the revulsion of Lib Dems (led by Vince Cable especially) against re-visiting this option would be likely to allow Labour to form a Government.

On the other hand comparisons with Miliband's experience of doing moderately well in 2014 and then losing in 2015 don't carry much weight. Why? Well because in 2015 substantial numbers of UKIP supporters voted tactically for the Tories in order to get the EU Referendum, which turned out (for them) to be a winning strategy. But now with UKIP collapsing UKIP voters have returned to their former folds and so by definition there won't be much UKIP tactical voting at the next election, and much less motivation to do so anyway. So, in contrast to 2014, the Labour vote is more solidly placed for the next General Election. Indeed, as I have argued, the tactical voting possibilities are actually positive for Labour at the next GE, as opposed to being rather negative for them in 2015.

Hence this is a good result for Labour. The Tories face an uncertain economic future. The UK has practically the lowest growth rate among OECD countries. The 'Leavers' in the Conservative Party may say this is not caused by us leaving the EU. - But that only puts blame on the Tory Government. So, unless there's a a major upswing in the economy thing may actually be pretty good for Labour overall.

Friday, 20 April 2018

Problems with French nuclear plant could spell final end of Hinkley C project

This week's story about problems with pipe welding at the French nuclear plant being built at Flamanville could spell the end for the Hinkley C nuclear project. Treasury backed loan guarantees to build Hinkley C have been linked to a target date for commissioning of the Flamanville plant of the end of 2020. Yet the current target date of completion by the end of 2019 has been thrown in doubt by the freshly announced problems.

The main focus of attention of this problem for Hinkley has simply been that the design of the Flamanville plant - the European Pressurised Reactor (EPR) - is the same as that to be built at Hinkley C and that the engineering problems bode ill for the British scheme (1). That is right, but it is rather worse than this. The commercial issue is that if the French plant is not commercially operating by the end of 2020 then it seems the Treasury will not be able to give loan guarantees for the scheme. According to the analyst Professor Steve Thomas, the rules agreed between the European Commission and the British Government stipulate that ''until Flamanville 3 was in commercial service, there would be a cap on the guaranteed loans effectively meaning funding would be primarily through equity' (2)

It is very difficult to see how EDF could build the plant without the Treasury loan guarantee - something like £17 billion (probably more) would be needed as a loan. EDF just won't have the ability to raise anything like £17 billion on the bond markets. Indeed the decision to go ahead with preliminary works on the site (building a jetty and a cement works) alone, without the loan guarantee being in place, was regarded as so risky that the firm's Finance Officer resigned in protest at the decision. But EDF will not start building the main parts of the power station until it has the necessary finance. Even if all went well (what are the chances of this?) the Hinkley C project would not be up and running until 2027. But if the Treasury does not give loan sanction, and the contract seems to say that Flamanville has to be running by the end of 2020 for this to happen, then the project will not be built. - Unless the whole thing is re-negotiated of course, which would seem very difficult to achieve.

Construction of the Flamanville EPR began in 2007.

It may be that a failure to complete Flamanville by the end of 2020 will give anti-Hinkley officials some relief as they will be very worried that the offer of loan guarantees will turn into a black hole. Otherwise, given the experience of building nuclear power stations, including (especially) EPR projects, it seems highly likely that the Government would have to pay the bill through the loan guarantee agreements. The notion that the 'risk' of the project lies with EDF as opposed to the British  Government is very likely to be proved wrong. Some of us have known this since the start. Others have just been kidding themselves.


(1) Vaughn, A., (2018) 'EDF warns of faults at nuclear power station it is building in France', Gaurdian, April 10th,
(2) Thomas, S (2016) 'The Hinkley Point decision: An analysis of the policy process' Energy Policy Vol 96 pp 421–431, page 427

Friday, 13 April 2018

How the memory of the first world war is driving us to the third world war

A truly toxic combination of militant nationalism and liberal opposition to chemical weapons is driving the world seemingly inexorably towards world war. We know who the militant nationalists are - people including Trump and Putin but, amazingly, the memory of World War One and the anti-chemical weapons institutions that it spawned are leading liberal opinion into a coalition of the mad hurtling towards our own collective destruction.

The horrors of gas attacks in the First War War and the desperate need to avoid them are etched in the political psychologies of western liberal opinion. The efforts to combat chemical weapons were launched through the 'idealism' of the League of Nations and the Geneva Convention which banned use of chemical weapons n 1925. More recently, we are governed by the Chemical Weapons Convention signed in 1993.
It is one of paradoxes of liberalism that it appears pacific and noble in its ideals but will plunge into self-destruction in supposed defence of the ideals that it defends. The present Syrian crisis, and those probably even worse to come, expose the paradox of liberalism. It is aggressive in support of its ideals which are supposed to oppose barbarity yet often the consequences of the actions it supports result in much worse barbarities than those which its actions are meant to defend. Such is the myopia driving much opinion towards war with Russia.

Now by hammering away at liberal idiocies I don't mean to minimise the contribution of militant nationalism - which seems to have taken hold in large parts of the world. Few people these days seem to stop to think how the notion of putting your own country 'first' means a relative gain over another nation either by soft, or hard, power. At best this means that others suffer and maybe die, but at worst this means that if an opposing power simultaneously adopts this logic then the end product is war.

With some luck we shall avoid war in the current crisis that followed the chemical attack in Douma. Probably. But in some senses war has already started between Russia and the USA. It arguably began in February when American forces at Deir al Zor in Syria killed an unknown number of Russian irregulars who were part of a force attacking a Kurdish force that was fighting with the USA against IS.

A chilling thing about this incident was that these irregulars may not have been totally under the control of the Russian Government. But what is the Russian Government anyway? Was the Skripal poisoning organised directly on Putin's orders or was it orchestrated by a faction within the GRU/FSB? I don't know, but the possibility of a militant nationalist force which dominates Russia today being partly out of control in a dangerous confrontation with the West should really worry us to our core. Especially when matched by a militant nationalist US President who does not want to seem 'weak'. Both sets of powers (US and Russia)  are driven by an ideology of militant nationalism and try to give the impression that they are unpredictable and out of control. Well, to a great extent, they are.

We may avoid a direct war in the Eastern Med with Russia this time, by some covert agreement with the Russians to tolerate some token strikes. This may pass without a war, with luck. But what happens if, probably when, there is another chemical attack by Assad's forces?

The Syrian civil war is far from over. An incident like Douma may well occur again. That may be the point when the world plunges into the abyss. With Trump we are heading towards a trade war with China and a World War with Russia. The great liberal irony is that liberalism is helping this process along, ostensibly to avoid horrors of the First War War, but in reality triggering an armageddon that could prove even worse.

Wednesday, 11 April 2018

National Grid finally comes clean on missing renewable energy generation numbers

National Grid (NG) has finally released figures of 'distributed' renewable energy - that is solar and wind power connected at the distributed as opposed to transmission level of the electricity system. These figures reveal that such distributed renewables will contribute around 7 per cent of UK electricity supply on an annual basis. This includes around 5.7 GW of wind power and 13 GW of solar power, each of which types contribute roughly the same amount of energy on an annual basis.

For years people like me have been complaining that the National Grid's transmission figures - routinely repeated by people who think they know what is going on - have greatly underestimated renewable energy generation capacities. But now the NG has come clean - apparently, though, only in the process of using the information to argue that they have the answer - batteries. See:
Of course the Government publishes annual renewable energy generation figures which includes all sources, but the NG data has always looked like (in fact was) a great underestimate of the total renewable energy capacity, which is now enough to generate around 30 per cent of UK electricity supply on an annual basis. But the new NG figures allow us to plug the rather large gap between the (misleading) NG figures for the capacity connected to the transmission network and the real total amount of electricity generation.

Of course what is really needed to deal with the 'variability' of distributed generation is a much bigger role for the electricity distribution companies in balancing their own levels of demand and supply rather than the problem simply being passed through to the National Grid. Whether the distributed electricity companies are up to the task is another question.

Perhaps it is here that greater public involvement in their management comes in. But it should be 'bottom-up' management, not a state replication of the current local distribution monopolies owned by different multinational corporations. Ideally boards of the distribution companies should be elected, and that will inject some desire to develop a sustainable energy system that responds to popular modes of generation and popular needs.

Monday, 9 April 2018

New report implies that the proposed Scottish Government Energy Company will NOT boost renewable energy

A report from Ernst and Young on the proposals to launch an Energy Company owned by the Scottish Government gives little hope that the Company will give a substantial boost to renewable energy. The report was issued by the Scottish Government in advance of consultations on the Energy Company being started.

At the time of the SNP's Conference last October (2017) Nicola Sturgeon announced the intention to start a Scottish Government owned energy company and that:

“Energy would be bought wholesale or generated here in Scotland – renewable, of course – and sold to customers as close to cost price as possible,” she told the Scottish National party conference in Glasgow on Tuesday. “No shareholders to worry about. No corporate bonuses to consider.” 

Hopes that such a company would be able to open the doors to the many possibilities for cheap onshore wind and solar farms in Scotland are likely to be dashed if the company is formed following the priorities set down in the report. The idea of 'increasing the proportion of energy from renewable sources' is relegated to 'phase two' of the agenda for the Company (see page 16). In political terms this means that whilst there may be a lot of advertising focus on how the company gets its energy from renewable energy sources, in reality little or no new energy will be sourced from new renewable energy projects - that is unless they would have been started anyway as a result of programmes funded by Westminster.

The Scottish Energy Company is likely to follow the practice of various self-styled green energy companies of saying they supply energy from renewable energy sources, even though these schemes would exist anyway (and otherwise be given supply contracts by other companies). The renewable projects come into being because of incentives from the Westminster Government (through the Renewables Obligation, feed-in tariffs or contracts for difference). It is true that Ecotricity (and to a much more limited extent Good Energy) has established a substantial amount of renewable energy projects through its generation arm, but again, this would not have been possible without the support schemes organised by Westminster.

It follows that unless and until Westminster revives some method of offering long term power purchase agreements (PPAs) to onshore wind and solar farms, it is difficult to see, under the priorities outlined by Ernst and Young's report, that the Scottish Government will procure much (if any) new renewable energy generation.

What renewable energy projects need are the offer of long term power purchasing agreements (PPAs) lasting say, 15 years. This is needed be cause unlike fossil fuels renewable energy projects are capital intensive.Even though such projects may be able to deliver energy for the consumer at the same, or lower, price than fossil fuels, they will not be built unless investors and bankers are insulated against the risk of power price market fluctuations. This can be done through the projects having long term PPAs.

Yet the priorities as outlined in the report offer little hope that the Scottish Government Energy Company will offer long term PPAs. The Energy Company seems likely to procure its electricity from short term contracts (or PPAs) from energy generators. This will preclude the possibility of helping new renewable energy projects start generating, because they will need much longer PPAs

The Energy Company therefore faces the prospect of trying to compete solely on price in an electricity market increasingly populated by many small companies all trying to do the same thing, whilst at the same time failing to deliver its promises of promoting renewable energy.

Some references:

The Ernst and Young report:

Sunday, 1 April 2018

Why Britain's distorted electricity market means that 'subsidy free' renewable energy is a myth

The media is awash with stories of the imminent emergence of 'subsidy free' wind and solar power in the UK, but the reality is that the uncompetitive nature of the British electricity market mostly undermines that prospect. In theory onshore wind power and maybe some solar power projects would be able to generate power to sell at competitive prices on the British wholesale electricity market. In practice most of the potential buyers of energy from new renewable energy projects will not be interested in buying the energy even at cheap prices simply because it conflicts with their own generation portfolios.

True, there is a limited possibility for some very large corporate consumers who are interested in buying green electricity to fund new projects by issuing corporate power purchase agreements (PPAs). But in reality this market is small, and I have heard this estimated to be no larger than 100 MW a year. That means it would take around 20 years for not quite 1 per cent of electricity to be supplied this way.

PPAs are needed for new renewable energy projects that offer the generators the certainty that they can be paid a minimum amount for each MWh that they produce for the long term. The UK Government's PPAs, called contracts for differences (CfDs), last 15 years. However they are no longer available for onshore wind and solar.

The problem is that most of the market for offering PPAs that can fund new renewable energy projects comes from the big electricity suppliers, who have been known in the past as the 'Big Six'. Only PPAs offered by really large companies will be usually taken seriously enough by banks and and other institutions to enable renewable energy projects to obtain long term loans or equity. The trouble is that the Big Energy suppliers will usually have little interest in offering long term PPAs to new renewable energy projects. For a start they can buy in power at much the same price as the renewable energy generator can offer without needing to commit themselves to long term agreements. Crucially, the big electricity companies are struggling to keep their own power stations in business, and are not going to sign up competition from other people for their own business!

It is something of a trade secret that the only reason the Big Energy companies ever did offer long term PPAs to renewable energy companies under the Renewables Obligation was simply because they could make a lot of money out of doing so. In effect, they were compensated for the losses their power plant accrued through not being able to sell so much electricity. This goes a long way to explain how it is that renewable energy has, in the past, seemed so much more expensive in the UK compared to other European countries. But now those Government incentives are no longer on offer to new renewable energy projects.

Without financing renewable energy projects cannot be set up, and financial institutions will usually only invest/loan money to companies that they think have a pretty certain likelihood of being in business for the length of any PPA that they will issue. Various smaller electricity suppliers may have a very robust future. However, unfortunately, many financial institutions may not have a sufficiently positive attitude to smaller electricity suppliers to allow them to offer cheap financing to those potential renewable generators that have been offered PPAs.

There are, of course, various green electricity suppliers who offer renewable electricity, but of course these will invariably be existing projects that have been funded already through the Government's Renewables Obligation or maybe the feed-in tariff scheme. But these options are no longer available for new renewable energy projects.

At the end of the day there are a few independent big consumers - the Googles, Microsofts etc of this world - who will be interested in offering corporate PPAs to cheap new renewable energy projects. However such companies represent a very small segment of the electricity market.

At the end of the day, there may be lots of potential for generating electricity from renewable energy at prices that are no higher than that from new gas fired power stations. But the British electricity market is skewed against this happening. Renewable energy projects are capital intensive which means that investors have to take a long term risk to support them - so we need long term PPAs to be underpinned by the Government. But despite encouraging noises coming from Energy Minister Claire Perry on this subject, there seems little early prospect of such contracts (CfDs in government-speak) being made available for onshore wind and solar.

Wednesday, 14 March 2018

How Labour can really put the wind up the Tories

Labour is well placed to embarrass the Tories by attacking the Government’s war on the onshore wind industry in the UK. Despite onshore wind now being the cheapest widely available electricity source the Government is actively sabotaging the industry by refusing to allow long term contracts to be issued to wind developers. Meanwhile large subsidies are being offered to gas, coal and nuclear power stations.

Under the last Labour Government incentives were given to build up a large increase in onshore wind power, which now supplies around a tenth of UK’s electricity supply, with offshore wind and solar farms now supplying around another ten per cent of UK electricity. But right wing English Tory pressure has prevented any move towards enabling long term contracts to be issued so that new windfarms can be financed. Meanwhile the UK risks becoming increasingly dependent on supplies of gas from places like Russia and Qatar.

The Labour frontbench is beginning to realise that young people in particular want to see green energy being given a chance, and, for example, John McDonnell has recently attacked the Tories for failing  to doing anything to revive support for the feed-in tariff scheme that helped people install solar panels on their roofs. But attention ought also to be turned to promoting onshore windfamrs. Doing so would embarrass the Government and also sow division inside the Tory ranks. More practically, it would offer hope to people who are working in the industry that they might have a future. Places like Grimsby are benefitting from offshore wind projects which are still being built, but onshore wind factories are being closed down, the latest being the Glasgow based Gaia Wind.

Independent experts say that onshore wind can be built costing the consumer less than new large gas fired power stations. However  orders have dried up because the Government is refusing to organise long term guarantees of prices paid for electricity to be generated by the wind farms. Long term contracts are needed because the technology is capital intensive meaning that while the wind is free, the money for the equipment needs to be paid for at the start of the project. Hence effective (say 15 year) long term price guarantees are needed to persuade banks to offer loans to support windfarm construction.

The majority of the capacity of UK’s onshore windfarms have been installed in Scotland. Despite the fact that the Scottish Government is keen to have more windfarms, control over what contracts are issued for electricity supply rests with Westminster. Yet it is English Tory MPs, often allied to the climate-sceptic Nigel Lawson and his ‘Global Warming Policy Foundation’, that are preventing the Government from providing opportunities for onshore wind.

The Minister of State for Energy, Claire Perry, has, in recent months, been making some encouraging noises about providing some 'contracts for differences',  CFDs as they are know in trade-jargon, available for onshore wind. They were available for onshore wind when the CfD system was launched in early 2015 but since then, while some offshore wind contracts have been awarded, onshore wind has been carved out of bidding for such contracts. Yet Perry appears to lack the required political clout to do much that changes anything, especially to overcome the vocal hostility of the climate-and-wind sceptical group of Tory MPs.

Making  a priority of embarrassing the Government over this issue should be a win-win situation for Labour. Renewable energy, including wind power, is very popular among all voters, especially with young voters. On the other hand by supporting onshore wind Labour can proclaim it is promoting consumer interests of obtaining electricity - above all clean energy – from the cheapest possible source. Attacking the Government for its failure to support onshore wind is a very good way of taking votes from the Tories. Please, John McDonnell and Jeremy Corbyn, spend some time on this! Put some real wind up the Tories!

Tuesday, 16 January 2018

Future of Energy Conference at University of Aberdeen

Some of the conference presentations and also recordings of contributions can be seen at:

Details of Conference:

The Future of Energy

A Conference presented by the MSc in Energy Politics and Law, University of Aberdeen on Wednesday March 28th. Venue: Linklater Rooms, University of Aberdeen.
9.45-10.15 Tea/Coffee and Registration 
10.15 A few words from Dr David Toke, Programme Co-ordinator of MSc in Energy Politics and Law 
10.20 Opening Address by John Scrimgeour, Director of the Energy Institute of Aberdeen University 
10.30 Rebecca Williams, Policy Manager for RenewableUK who will talk about onshore wind and other priorities for RenewableUK 
11.00 Morag McCorkindale from Aberdeen Renewable Energy Group who will talk about low carbon based transport policy in Aberdeen and the opportunities for existing oil and gas businesses in the new energy economy 
11.30 Dr David Toke, Programme Leader, MSc in Energy Politics and Law. ‘So why has offshore wind now become so much cheaper and easier to build than nuclear power?’ 
12.00 Sam Gomersall from Pale Blue Dot Energy will give a presentation about how Aberdeen is leading the hydrogen revolution  
12.30 – 1.15 LUNCH 
1.15 -1.45 Caroline Bragg from the Association of Decentralised Energy  who will talk about developing heat networks 
1.45-2.15 Professor Alex Kemp from the Economics Department at the University of Aberdeen who will talk about the issue of oil revenues. 

2.15- 2.45 David Ritchie, Head of Energy Industries in the Scottish Government’s Energy and Climate Directorate will talk about his work at the Scottish Government 

2.45-3.15 Thomas Mcmillan representing the Solar Trade Association (he is Director of Renewables at Savills) will talk about issues facing the solar pv industry 
3.15- 3.30 TEA and COFFEE 
3.30-4pm Professor John Patterson from the Law Dept at Aberdeen University who will talk about decommissioning of oil platforms 

4-4.30   Adam Ezzamel, the Project Director of the Aberdeen Offshore Windfarm (European Offshore Wind Demonstration Project) will talk about the project. 

4.30-5.15pm Expert Panel. Four experts will introduce themselves and a point of view and then answer questions raised  by the audience. These include Professor Peter Strachan, Aberdeen Business School, Robert Gordon University and Dr Daria Sharapolova, Aberdeen University Centre for Energy Law 

The Conference will be held in the Linklater Rooms of Aberdeen University, We would expect speakers to talk for 20 minutes leaving 10 minutes for discussion.