Thursday, 20 December 2018

Why a referendum seems the best bet for getting Mrs May's deal adopted

Politics is full of ironies, and a big irony for the Prime Minister today is that it seems her best chance for getting her deal adopted is to do the very thing she now strongly rejects - postpone Brexit and hold another referendum on relations with the EU.

It does seem that despite her attempts to frighten people with the terrible consequences of a 'no-deal' exit on March 29th next year, the prospects for her deal being passed by the House of Commons still look very thin. One problem she has is that many people simply do not believe that Parliament would allow a 'no deal' Brexit to happen. Let's deal with that issue first, then we can go on to look at the referendum issue.

A 'no deal' exit at the end of next March would be truly horrendous. The 'no deal' guidelines issued by the EU Commission give little comfort. Whole UK industries would be decimated in one swipe and much of the rest forced into a recession. I have heard people comment that things can't possibly be that bad since we got on quite well without the EU before 1973. Now, without wanting comment on what life was like before 1973  the key point is that today, after 45 years, the complex fabric, with millions of strands and networks, both regulated and informal, of life in the UK has been developed on the basis of relationships with the continent. Our economic development since 1973 rests on such relationships, and tearing them out in one thrust will immediately cancel much of such development. To suddenly tear that up now will have very serious repercussions, much more than we can imagine now.  There will be no direct loss of life, but in other respects the dislocations will resemble war.

Edmund Burke, the 18th century Tory philosopher, counselled against the type of revolution (in his case the French Revolution) that (ironically) many Tories now promote in the sense of a 'no deal' Brexit. He said, for example:

 'it is with infinite caution that any man ought to venture upon pulling down an edifice which has answered in any tolerable degree for ages the common purposes of society'..............'The nature of man is intricate; the objects of society are of the greatest possible complexity; and, therefore, no simple disposition or direction of power can be suitable either to man’s nature or to the quality of his affairs. When I hear the simplicity of contrivance aimed at and boasted of in any new political constitutions, I am at no loss to decide that the artificers are grossly ignorant of their trade or totally negligent of their duty' (see page 52 at https://socialsciences.mcmaster.ca/econ/ugcm/3ll3/burke/revfrance.pdf)

But to get back to the point, which is the condition under which May's deal seems most likely to come to prevail. That is if, following what look now the inevitable defeat of May's deal in the Commons in January, Brexit is postponed by revoking Article 50, and a referendum called. As has already been mooted by civil servants (I recall reading in The Times) the referendum ballot paper could have two sets of options. First, the remain/leave option and second (which would count if leave won) the choice between May's deal and 'no deal'. In this contest no doubt many would urge a 'leave' response in the first ballot (although I would opt for 'remain'), and they may be successful, in which case the vote hangs on the second question which almost certainly would give May's deal victory.

Of course the road to this being achieved is difficult. It would require a lot more than one or two  simple votes by the Commons. Legislation would have to be organised, not only to postpone Brexit, but also to organise the referendum, and that could only be passed by consistent cross party collaboration, and possibly a serious division in the Conservative Party. This will be difficult to achieve. But then I don't really see much alternative. It is too late to negotiate something else, and anyway it would require a determined Government to do so, which does not exist.

But the alternative is bleak indeed.

Sunday, 16 December 2018

Office for Nuclear Regulation demands major design improvements for Chinese nuclear reactor

The UK's Office for Nuclear Regulation (ONR) has requested a long series of safety improvements to the proposed design of the Chinese HPR1000 ('Hualong') reactor proposed to be built at Bradwell in Essex. Previous experience suggests this could presage a big increase in costs for the plant which is likely to cost a lot more than similar plant built in China. The HPR1000 design is based on one being built in China by China General Nuclear Power Group (CGN). CGN will own around two-thirds of the project, with EDF owning the remaining share.

In a judgement issued last month the ONR rapped the CGN/EDF developers for the 'slow' development of the safety case and said that their 'response revealed a number of potential shortfalls related to the status of the safety case planning and arrangements (including organisational)'. Most tellingly, the ONR has given the developers a large number of 'follow-up' points to which they need to adequately respond before they can be given the go ahead after the later stages in the 'generic design assessment' (GDA) process run by the ONR

Although the ONR has stressed that there is nothing fundamentally wrong with the developer's proposals, the evidence is that the sheer extent of 'follow up' point materials must severely question any financial estimates of the plant's costs that have been based on the plant being built in China. This is the 'Fanggchengang 3' power plant being built in South China. 

This conclusion is based partly on the experience of the last GDA process which involved the approval of Hitachi's ABWR plant which is earmarked for development in Wylfa. The construction of the Wylfa ABWR plant is now doubtful following reports that Hitachi cannot find investors. This failure has been ascribed, at least in part, to extensive cost increases racked up as a result of safety improvements needed for the plant. The cost of building the plant increased by more than a third after the ONR's GDA was completed in 2017.

Yet the ONR's commentary comprising its  'follow up' points for the HPR1000 is 50 per cent longer compared to those given to Hitachi in the same stage of the GDA for the ABWR. On this basis the cost increases for the Chinese plant could be even larger, proportionately, than what Hitachi's proposal suffered compared to any prior expectations based on plants built in the East.

Some western commentators have been keen to exclaim how quickly and cheaply the Chinese can build reactors (although recently the reactor rollout in China has slowed markedly compared to expectations) but the arduous passage of the proposed Hualong reactor design through the GDA is one reason why costs and practices in the East should not be so easily used as a basis for what happens in the West. As the  developers put it themselves in their own GDA submission, perhaps with a bit of an understatement: '
‘The HPR1000 (FCG3) design has evolved under the Chinese regulatory system, which is acknowledged to be possibly different from that of the UK in requirements and relevant good practices, including Codes of Practice’.
The GDA process is likely to be completed in early 2022.

Thursday, 29 November 2018

Lobby launched in support of revolutionary wave power device



A company with plans to manufacture a revolutionary new wave power device has held a series of meetings with MSPs to secure funding to allow testing and demonstration of the technology. Resen Waves, the Danish company behind the Resen Wave technology, is planning to open an office in Aberdeen soon. It is a novel approach since it hopes to go directly to market to provide wave-powered buoys to supply off grid sensors and instruments on the seabed and real-time data communication with the sensors. 
After completion of a successful two-year test and demonstration (T&D) programme the company intends to base manufacturing in Aberdeen to fulfil orders arising from industries such as offshore oil and gas decommissioning, geotechnical surveying and offshore wind. It is planned to do the T&D at the European Marine Energy Centre EMEC in Orkney, and the Scottish Government is being asked to grant £250,000 to fund this.
Per Resen Steenstrup, the Managing Director, after whom the technology is named, said” The approach behind Resen Waves is different to what has been tried before with wave power. It is a bottom-up method where we start with a small device for a specialised off grid market as opposed to the top-down methods tried before to supply big scale power to the grid. We are trying an incremental market method in smaller scale rather than starting off with big machines, which requires feed-in tariffs, which are not available.
The Resen Wave machine has few moving parts, no complicated hydraulic systems and a low weight to power ratio. The machine has been developed over 7 years and includes a long-life carbon fibre spring designed with the help of a Danish technological institute. Steenstrup was previously Managing Director of the Wavestar wavepower project, which was an attempt to develop a large-scale wave power device.  He further commented: “I’ve learned a lot from Wavestar and now have a model that can go directly to market. But we need some support from Government for business development through testing and demonstration to give us credibility and publicity to get orders for machines. At the moment the Scottish Government’s wavepower programme is only funding technology rather than business development.’
Dr David Toke, a renewable energy expert from the University of Aberdeen who is helping (on a pro bono basis) to promote the efforts to gain Government support said: ‘The Resen Wave concept is revolutionary. It fits in exactly with innovations theory in that revolutionary innovations start in niche markets and then optimise. This happened with wind power and solar PV which started off filling small-scale off-grid needs, and then spread to mainstream markets as costs fell. A big advantage of the Resen Wave concept is that it can get orders without the need for feed-in tariffs set by Government.’
 Details of the Resen Wave technology can be accessed at the webpage http://www.resenwaves.com/

See coverage in 'Energy Voice'; https://www.energyvoice.com/otherenergy/187149/danish-firm-look-to-make-waves-with-new-aberdeen-premises/

Wednesday, 14 November 2018

Clark's plan to underwrite losses on Wylfa nuclear project will likely lead to an embarrassing state-aid plea to the EU Commission

Now that it seems, short of an extended 'no-deal' Brexit scenario, the UK will remain within EU state-aid rules for a long time to come, Greg Clark will have to oversee an embarrassing state aid case in support of his proposals to underwrite the (almost certain) losses from building the Hitachi-led Wylfa nuclear power plant.

I have already discussed how the taxpayer (and/or electricity consumer) is exposed to almost certain multi-billion losses as a result of the plan that Clark is touting here and in Japan. See my previous post at https://realfeed-intariffs.blogspot.com/2018/11/how-greg-clarks-hitachi-deal-could-lead.html

The last time that the UK applied for what amounted to an exemption from EU state aid rules for nuclear power was in late 2013 when Ed Davey led the plea for the Hinkley C deal. The state aid was granted in October 2014 after the Commission ruled that the Hinkley C deal was a reasonable way to avoid 'market failure'. Any application for state aid for Wylfa would be a tougher challenge. Indeed the very proposal whereby the state will take at least a half equity share in the project and take responsibility for cost overruns is an action that in itself creates market failure if curbing carbon emissions is the objective!

The Government's cover story  in 2013 was that support for Hinkley C was on the same level available for renewable energy since renewable energy schemes were also being offered CfDs (as well as very extensive loan guarantees that most renewable energy schemes could not get from the Government of course). The European Commission seemed to buy into this line stating 'The aid would not have a negative impact on other low-carbon sources, given that they are also supported by the UK, and there is no discrimination against renewable technologies'

See para 284 in the Commission decision https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2015.109.01.0044.01.ENG&toc=OJ:L:2015:109:FULL

But this time the type of support available for Wylfa (Govt equity support plus underwriting potential losses) is certainly not on offer to renewable energy schemes. Indeed nowadays onshore wind and solar are not eligible for even CfDs.

It will be interesting to see what happens with this (Wylfa) state aid application. No doubt we'll get Brexiteers complaining about the role of the Commission (who might save the UK from the harm the project does to the country!). The voting will be rather less favourable to the British application than last time, where only 4 out of 28 Commissioners objected to the granting of state aid for Hinkley C. The UK will have less (no?) insider influence, and there will be much less sympathy for Hitachi as a developer compared to EDF, the (French, state owned) developer of Hinkley C.

No doubt we'll hear lots of stories about how Hinkley C is important for carbon reduction - despite the fact that the Government is not even asking the Crown Estates to look for any more offshore wind sites off the English and Welsh coasts - and stories about the need for firm capacity - despite the fact that small peaking gas plant would be at least 20 times cheaper (again see last post).

Greg Clark seems to have set his store, in terms of ministerial role  as being a 'consolidator' as opposed to an innovator in his role at BEIS. Well, he'll need to be pretty innovatory to get the Wylfa proposal approved in an EU state aid case!

Sunday, 11 November 2018

How Greg Clark's Hitachi deal could lead to a £20 billion plus loss for the Treasury

Greg Clark looks likely to go down in history as the Minister who signs off on a nuclear construction deal with Hitachi for the proposed Wylfa power plant that led to a stupendous loss for the taxpayer. That loss might be £20 billion or more.

Clark has apparently put no discernable effort into the objective of securing 'subsidy' free contracts for onshore wind and solar. However, he has been spending a lot of time concocting a plan to finance the Wylfa nuclear power plant that will, on the basis of past performance, generate huge losses for the public purse years down the line. All the talk from BEIS (the energy ministry) is of the new 'Regulated Asset Base' (RAB) financing of nuclear power plant. Except that what's really happening is not really an RAB model at all. It's a piece of brownwash to obscure the reality of Government blank cheque to cover whatever it costs to build the nuclear plant.

That's because the whole plan hinges on the constructors being able to pass on cost-overruns onto the Government. And that's the point. Nuclear power stations being built in the west have almost always tended to have large cost overruns. Recent ones have ALL suffered horrendous cost overruns - in the USA (4), France (1) and Finland (1).

Yet, some otherwise sensible, financial analysts seem to ignore this fact as they extol the virtues of RAB financing. They implicitly assume that Wylfa will proceed precisely on target, in which case, they say the Government will deliver the project at a 'cheaper' price than Hinkley C through the provision of Government loans with low interest rates. Sure, the headline price that will be paid by the electricity consumer, over 35 years, will be a bit cheaper. But that's likely to be at one hell of a cost to the taxpayer.

In fact, real RAB modelling as applied to nuclear power construction in the USA has actually bankrupted Westinghouse, and nearly bankrupted Toshiba who owned it. The model operates in the USA whereby consumers pay in advance for the power stations. They cover the costs while the power plant are being built through an addition to their electricity bills. That would be good for the company constructing the plant who is guaranteed to get their money back, provided of course, the project comes in at or below planned costs. But while that might work for other infrastructure, it doesn't work for new nuclear. Nuclear power plant take longer to build than planned meaning that the workforce has to be kept on and paid and also extra interest charges accrue on loans - If a nuclear plant is supposed to be finished in 7 years, but takes 12, the costs double in that time.

The trouble is that nuclear power plants have horrendous costs overruns, as they have in the USA with the Vogtle 3&4 and Virgil Summer  2&3 plants being built in respectively Georgia and South Carolina. The constructors, in effect Westinghouse, has to cover the costs themselves. Result: bankruptcy. Indeed Summer has been abandoned and Vogtle only staggers on with the help of a 12 billion dollar Federal loan and continued payouts by consumers.

But then  Mr Clark is not considering the (real) US system - Hitachi would never buy into that because they don't want to go bankrupt. Instead the Treasury will take the hit on cost overruns. A very big hit, it's likely to be too. The 2.9GW Wylfa project is slated to cost £20 billion. If there is a 5 year construction overrun that means the costs will jump to £40 Billion. That means the Treasury will be on the hook to pay the extra £20 billion. The costs, pro rata, for the only western nuclear constructions going in (in USA, Finland and France) look even larger than this. Yes, the Treasury could end up paying a lot more than £20 billion extra for this project over and above the large amounts electricity consumers will have to pay for power from he project.

I'm sure we'll get a lot of brownwash about the marvellous tried and tested nature of the Hitachi 'Advanced Boiling Water Reactor' (ABWR) in Japan. Rather, what is proposed is a pretty new design that includes a lot of features demanded by our nuclear regulators to bring the power plant up to present required safety standards. I can assure you that there's a long list of changes. So, we're in the forever 'First of a kind' land of nuclear power. Besides which nuclear power plant are always unique to each site.

We're told how important it is to have 'firm' power in the shape of nuclear plant to compensate for renewable energy variability. But in practice nuclear power plant are not shut down to make way for wind or solar plant, rather the renewable energy is wasted. On top of this even if the plant 'only' cost  £20 billion to build, that is an awful lot to pay for providing generating capacity. If you provide it with basic, 'peaking', gas fired plant (open cycle and reciprocating engine) you can get 3 GWe for little more than £1 billion. That's likely to be very roughly a £39 billion saving if you don't build Wylfa.  In fact the nation's plans are awash with too much combined cycle gas plant already, which are really not the first choice technology for balancing renewables anyway. But that 's another story. The story here is that far from the Wylfa project looking to be cheaper for the consumer than the Hinkley C deal, it is likely to be far, far worse.


https://www.thetimes.co.uk/article/97c7a1de-e514-11e8-aa8a-1a554b586cbd

https://timera-energy.com/investment-in-uk-peaking-assets/

https://sandbag.org.uk/wp-content/uploads/2018/05/Coal-To-Clean-May-2018.pdf

Thursday, 8 November 2018

Why is Michael Liebreich attacking Tim Jackson? - the debate about carbon emissions and economic growth


Twitter has recently advertised a clash of opinions between two supporters of renewable energy, the Conservative growthist Michael Liebreich and the allegedly 'degrowthist' Tim Jackson. To what extent are Liebreich and Jackson right in their arguments?

I must say, I've always had doubts about arguments for 'zero' economic growth. This is  partly because I don't believe that practical measures to reduce greenhouse gas emissions reduce economic growth. Also I doubt whether the complex interaction of factors that generate greenhouse gas emissions can be represented very well in theories about the 'steady state' economy.

But I do very much doubt whether people who advocate such a view, ie essentially that there are more important things that economic growth, can be regarded as any sort of a threat. In practice whatever their philosophical leanings, these people recommend doing things like conserving resources and using renewable ones. These are not even activities that necessarily threaten economic growth provided they involve a decrease in use of material non-renewable resources.  They are, in general, peace loving and anti-exploitative. If everyone was like that the world would in fact be a much better place!

So why does Liebreich spend time attacking Jackson et al? Really it's about arguments in the Conservative Party between people like Liebreich who argue correctly that people can make a lot more money from renewable energy than they can from fossil fuels and nuclear power, and atavists like Nigel Lawson and the Global Warming Policy Foundation who do not recognise the challenge of climate change. But in order to conduct this argument Liebreich thinks he can impress his Tory colleagues by bashing the (much Tory hated) leftist museli gobblers.

But. more seriously, the theorists that Liebreich promotes have their own shortcomings. He praises the works of people like William Nordhaus who thinks that carbon taxes can solve the world's climate problems much better than regulations. This appeals to some US audiences on an ideological level, but again, misses out the practical measures that need to be taken. Carbon taxes of course can be useful, arguably essential in some form, but miss the point that in order to promote technological innovation you have to have some regulatory measures to encourage 'bottom' up' technological innovation. Innovation requires niches supported by relevant incentives/regulations.

This is as opposed to solely  relying on a one-size-fits-all carbon tax that encourages mainly existing large scale technologies -  and which, moreover, will encounter political resistance from the very people (business interests) that Nordhaus and Liebreich want to please. This is because if carbon taxes are applied as the ONLY measure on the level necessary to achieve big carbon reductions they will cause  political rebellion on a much greater scale than anything attending the regulatory and incentive measures promoted by  the renewable or energy efficiency trade associations and other NGOs.  We need lots of different methods; incentives, regulations, carbon taxes, local cooperatives....whatever. Existing big business, on its own, won't deliver technological change. We need a bottom up approach that delivers innovation. Then, after some success in this pattern the big companies will decide to change what they are doing. Or go out of business.

Liebreich and Jackson trade blows on carbon dioxide figures. Jackson is right to point out that recent carbon emission reductions are overstated once 'embedded' emissions from imported good are taken into account. But then if you look at the last 20 years (since 1997) you can see that whilst total carbon emissions have been stable over this period the UK population has increased by 14 per cent. So per capita reductions in emissions have been occurring even when you take into account imported emissions. Yes, we've only scratched the surface so far, but it may be simplistic to argue that the problem is economic growth, especially when you look at the world as it is and see that population growth  seems to decline as economic growth increases incomes.  In fact Jackson himself recognises that his favoured 'entropy' law is not something  that 'immediately rules out some form of growth'. But this sort of argument is lost in the ideological positioning that Liebreich has engaged.  


Michael Liebreich's view

http://ifreetrade.org/article/the_secret_of_eternal_growth_the_physics_behind_pro_growth_environmentalism

Tim Jackson's view

https://www.cusp.ac.uk/themes/aetw/blog_tj_how-the-light-gets-in/

UK greenhouse gas balances
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/704607/Consumption_emissions_May18.pdf

Saturday, 20 October 2018

Renewables lobbies fight to stave off Treasury massacre

UK Renewable trade associations are fighting for the survival of the renewable industry against an onslaught led by the Treasury. If the Treasury gets its way almost all future development for renewable energy in the UK will be stopped. Continued incentives and tax breaks for nuclear power, shale gas and conventional power stations will, however, remain in place.

The Treasury is pushing for:

a) An end to the policy of issuing CfDs as part of the scheduled review of electricity market reform which takes place next year. This will leave next year's auction for long term power purchase agreements giving set prices to be paid for developers (contracts for difference - CfDs) as being the last. Although it is expected that a substantial amount of capacity will be awarded to offshore wind developers next year onshore wind and onshore solar projects are not allowed to compete in these auctions. The only exception will be Scottish island inshore wind schemes, a minority of which will actually be built because of the cost of connecting them to the mainland. But the Treasury want all CfD auctions (offshore wind included) to be scrapped after 2019. This would be the biggest act of demolition of the renewables expansion programme of course, but other cuts are said to be discussed including:

b) The ending of all incentives to solar pv, including for solar power exported to the electricity distribution system. Domestic solar generators will receive nothing for this energy in future under plans preferred by the Treasury. This will be a unique humiliation for solar generators who will be the only class of generators in the country who will not be paid for the electricity they send into the grid. It will also  be humiliating in international terms. Even the most conservative US states have rules which mean that solar pv generators must receive basic levels of payment for their exported energy.

c) The ending of the carbon price floor which makes fossil fuel more expensive and non-fossil sources relatively cheaper. The Treasury is considering replacing this with an increase in the climate change levy. This raises the price of energy for larger energy users but since 2015 has been levied on energy from renewables as well as other sources. Getting rid of the carbon price floor would shift the balance in electricity generation towards coal and away from non-fossil fuels.

Meanwhile the Minister for Energy Claire Perry is said to be arguing against the Treasury's atavistic tendencies. She has even been arguing for months that CfDs might be offered to onshore wind in the future, although there is absolutely no sign of this happening in terms of Government instruments. I do not doubt her intentions, but alas she seems to be fulfilling, in practice, a role of putting a green facade on Government policies which are heading back towards conventional energy sources. As a minister of state she has little influence on her own, and even if Greg Clarke, her Secretary of State were to wade in to give her more public support (so far he hasn't stirred much), the attitudes of the Treasury still have to be overcome. The Treasury continues to support the preference being given to conventional energy sources.

The incentives offered for Hinkley C are very high - and even more Government guarantees are being discusssed for the Wylfa nuclear project. Meanwhile conventional power plant can bid for annual rounds of 'capacity mechansim' payments, a facility which suits conventional power plant much better than variable renewables. On top of this shale gas entrepreneurs are being offered generous tax breaks not available to renewable energy developers.

Some references:


https://www.pv-magazine.com/2018/10/15/germany-tendered-pv-projects-need-no-public-subsidy-in-august/?utm_source=dlvr.it&utm_medium=twitter

Many windfarms given contracts in recent auctions are also 'subsidy free' on the same basis, with average prices ranging from 47 euros/MWh to 61 euros per MWh. See
https://cleantechnica.com/2018/08/24/average-price-hits-e61-6-mwh-in-latest-german-onshore-wind-auction/

The Government talks vaguely of 'refinements' being made to the CfD round in 2021. Some see hope for allowing bids from onshore solar and wind, but others are very sceptical. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/748296/delivering-clean-growth.pdf

https://www.businessgreen.com/bg/news/3064822/budget-chancellor-urged-to-retain-and-strengthen-carbon-price-floor

https://utilityweek.co.uk/onshore-wind-farms-embargo-national-planning-review/

https://www.telegraph.co.uk/business/2018/10/17/british-energy-giants-defend-carbon-price-against-treasury-cull/

Friday, 12 October 2018

Green surge in Bavaria puts AfD in the shade

The Green Party has surged in the polls to 19%, potentially depriving the CSU of their state Parliamentary majority. They are putting the AfD in the shade who are polling a mere 10 per cent in the latest survey. The CSU is polling on 34 per cent. The state elections in Bavaria occur on Sunday 14th October. The Greens' standing in second place in the polls put them in a prime position to enter a coalition, either with the CSU themselves, or a multi-party coalition which excludes both the CSU and the AfD.

To Brits of course, who live in a parallel reality where the far right sweeps all before them and the EU is perpetually about to split up, this is not news. It hasn't been reported. We heard earlier in the year (in the British press) about how Horst Seehofer, the Federal Interior Minister, had threatened to close the Bavarian border in a policy duel with Angela Merkel in a drive to stem the rise of the AfD. But now we hear absolutely nothing about the rise of the Greens in the polls. In fact the Greens have been leading the opinion polls in Bavaria for the last 3 months, yet still this fact is routinely airbrushed from the news.

Take the Daily Express which reports on how the CSU is about to lose its majority in the state Parlaiment but which fails to mention the Greens but does mention the CSU's fear of losing ground to the AfD. To the extent that the CSU has 'toughened' its anti-immigrant rhetoric, a bigger trend in Bavaria recently has been that the CSU appears to have lost votes to the Greens (Die Grunen).

Of course, nationally, the AfD has gained ground in the last year, but reality again is much more complex than the British want to hear. In fact, far from being the unrivalled second place party that you hear in the press, it is fighting with both the SPD and the Greens for second place, these three parties polling in the 15-20 per cent range.

Green gains in Bavaria in particular are likely to positively enhance the drive for renewable energy and energy conservation of course. In particular the Greens may be able to water down the strict rules on building windfarms which are in place in Bavaria. This has meant that there are few windfarms in Bavaria compared to the rest of Germany.



https://www.express.co.uk/news/world/1029745/Bavaria-election-2018-polls-who-will-win-Bavaria-election-Angela-Merkel-germany


https://www.zdf.de/politik/politbarometer/csu-bleibt-im-stimmungstief-gruene-legen-weiter-zu-100.html

http://www.wahlrecht.de/umfragen/landtage/bayern.htm

Saturday, 29 September 2018

Why another EU referendum is becoming inevitable


The Conservative Party led us into the EU Referendum in the expectation that one way or another, the issue of EU membership would be resolved. It hasn't been. The exercise has been a disaster and now the only two plausible scenarios that seem to hold at the moment is that either the UK will leave  the EU in what will be (at best) a continuing fog of uncertainty next March or that the UK's withdrawal will be cancelled.

What is pretty clear to me is that whatever the arguments may be about what we did or did not vote for as an alternative to EU membership, people did not vote either explicitly, or implicitly, for 'no deal'. Yet that is precisely the fate that awaits us at the end of March 2019.

Hence we need a further vote to determine whether the UK wishes to leave the EU without a withdrawal agreement.

The Leave campaign seemed pretty clear upon what it saw as the consequence of leaving when it said: 'It is overwhelmingly in the EU’s - particularly Germany’s - interests to agree a friendly UK-EU free trade deal.'   http://www.voteleavetakecontrol.org/briefing_trade.html


Well, it looks like it's not happening. No doubt many Tories will blame it on the EU, but whatever the cause (after all the UK is the country that wanted to leave), the point is that a central part of the case for Leave has collapsed. The notion of a 'friendly free trade deal' doesn't exist as a practical political proposition , or at least short of major shifts by the parties involved, it seems very unlikely to exist. The Leavers simply didn't base their argument on there being a 'no deal' - what they did do instead was base the argument on there being some sort of free trade (maybe with a lot of pluses) with the EU. The voters have been short-changedThis democratic deficit need to be urgently repaired.

At root the flaw in the Leavers position reflects a fundamental problem with the turn to nationalist-identity politics. They expect the EU to follow the same 'rational' economic logic that the nationalists have decided to ignore in favour of promoting their own sovereign identities.  What this doesn't take into account is the fact that the 'other' (in this case the EU) want to preserve their own identities, a strategic goal which ranks much higher than the prospect of tactical economic losses which are, in any case, relatively much bigger for the UK than the EU. Even states such as Austria, Poland, Hungary, most influenced by the so-called eurosceptic right in fact want to keep the UK in the EU partly because they want the UK as an ally within the EU.  

I cannot think of any plausible scenario whereby Mrs May can now deliver a withdrawal agreement with the EU. Briefly, the available options have been:

A) The 'Chequers' Agreement. The EU will not touch this with a barge-pole as it would threaten the integrity of the EU. It is a fundamental 'identity' issue for the EU that countries cannot 'pick and choose' elements of the customs and/or single market arrangements. The only value of Chequers has been to preserve the Government's notion that they have a plan. Apparently a bad plan is better than no plan!
B) The so-called 'Canada free trade deal'. This may well be acceptable to the EU provided the UK was willing to treat Northern Ireland as a separate customs zone. But this is  a non-starter for two key reasons. First because the DUP would not vote for it, scuppering any Withdrawal Agreement, and second because it is such a pale version of the current economic relationship with the EU that many Conservative MPs would not vote for it either in the Commons.
C) Staying in the EU Customs Area. This is more-or-less the Labour position, and which comes closer to solving the Irish border issue. But this is unacceptable to too many in the Conservative Party, especially as after negotiation it may resolve into the UK also being effectively in the Single Market as well. 
C) No agreement. In practice contingency measures would be put in place by both the UK and the EU so that there would be little, if any, immediate catastrophic impact at the end of March 2019. But after then it would be death by a thousand cuts as the necessary bureaucracy of VAT return forms, standards certification and so on are implemented, all proceeding in a fog of uncertainty which would dramatically reduce the UK's ability to negotiate with anybody about many things and put off anybody who wants to make long term plans about the UK.

If there could be an agreement about Ireland then possibly a Withdrawal Agreement and, maybe, a vague agreement on the future relationship could be signed between the EU and the UK and the details sorted out in the 'transitional' period which lasts until the end of 2020. But the EU, it seems, has had enough of vaguery, especially on the Irish subject.

The Leavers hopes of finding suitable allies inside the EU so that they could divide and conquer has failed miserably. If we treat this as an identity clash then clearly the EU will win and we will lose. Even the Irish (whose economy is now expanding rapidly) will lose much less with 'no deal' than us since only 13 per cent of their exports go to the UK. On the other hand well over 50 per cent of the UK's exports are dependent either on direct trade with the EU or on trade concessions organised through the EU, and which will not be available if we 'crash out' without agreement.

So we need a vote on this reality. A straight referendum choice between the only two clear options available at the moment: 'no deal' or Remain seems the best option, since these are the only certainties available.  The Brextieers for their part, now say that a 'no deal' is 'no problem'. They can say that if they want, but that was not what appeared to be the choice in 2016. Let's now put it to the voters. The Brexiteers have failed to generate a different option that can be implemented in the real world. The rest of us need to get on with life.

Some relevant references:
http://www.legislation.gov.uk/ukpga/2018/16/contents/enacted

https://uk.reuters.com/article/uk-britain-eu-ireland/eu-could-tweak-irish-border-backstop-to-win-britains-approval-lawmaker-idUKKCN1LK25C

https://www.qub.ac.uk/brexit/Brexitfilestore/Filetoupload,812529,en.pdf

https://theconversation.com/backstop-option-for-irish-border-after-brexit-the-difference-between-eu-and-uk-proposals-explained-97963

https://www.accountancyage.com/2018/03/28/uk-exit-eu-vat-regime-january-2022/

https://www.politico.eu/article/theresa-may-caves-in-on-brexiteer-amendments-to-head-off-rebellion/

https://www.irishtimes.com/opinion/a-no-deal-brexit-need-not-be-a-disaster-for-irish-exports-1.3636084

https://www.bbc.co.uk/news/business-43212899

https://www.bbc.co.uk/news/uk-politics-44845933

https://twitter.com/faisalislam/status/1018859164662190080

Thursday, 27 September 2018

Labour's green energy plans are the surest sign yet that they are heading for Government

Labour's low cost and practical proposals for expansion of onshore and offshore wind, solar power, energy conservation and increases in renewable heat are the surest sign yet that they are the competent choice for Government. Their proposals need some elaboration in places and some work on detail, but seem to be in a different dimension compared to the Tory Government who seem increasingly certain to be heading for self-destruction on the anvil of Brexit.

Rebecca Long-Bailey is aiming for 85 per cent of electricity to come from low carbon power by 2030. This is an easily achievable target, and will be done at low cost if simultaneously Labour cancels the disaster-in-waiting project at Wylfa, and some way can be found to avoid Hinkley C being built.

As I indicated in a recent post, there's already enough offshore wind in the pipeline to ensure well over 50 per cent of electricity coming from renewables by 2025. See http://realfeed-intariffs.blogspot.com/2018/07/renewables-generated-close-to-30-per-of.html

Labour's plans for boosting offshore wind, onshore wind and solar pv will meet its 85 per cent of low carbon power by 2030, and, in doing so, also accommodate a substantial increase in transport and heating demand provided through electricity.

The Government could revivify the buildings insulation programme, reinstating the programme started by the last Labour Government but short-circuited by the useless and self-defeating so-called 'Green deal'.

Of course the Government will need to engender some much smarter thinking and regulation than is happening at present to integrate the coming expansion of electric cars. But this requires imagination rather than cost increases.

Although some see the target of providing over 40 per cent of heat demand from renewables as being problemmatic, we could go at least along way towards this target in a way that rests heavily on Labour's ideological strength in promoting municipal green socialism. Waiting in the wings is the developing technology in the form of industrial heat pumps. This, like a lot of other green technologies is one that is declining in cost. A Labour Government could empower local authorities to start up local green energy companies who would have a focus on developing community heating networks to be supplied with heating by industrial heat pumps. This technology, already being demonstrated in Denmark, operates by using electricity to turn energy in the air, ground or water into heat. The heat can be stored in hot water tanks so that it can be delivered when needed.

In short, there's still some loose ends in Labour's green energy proposals but the outline is good and getting to look more and more plausible in terms of practical measures.

Friday, 7 September 2018

Plans for breakthrough wave power device to be unveiled in Aberdeen this week

Hot on the heels of the opening of the new offshore windfarm in Aberdeen, cutting edge renewable energy activity continues at a meeting at the University of Aberdeen this Thursday, 13th September.

As the promotion says on the Aberdeen Renewable Group diary says:

The University of Aberdeen is set to host a speaker meeting with Per Resen Steenstrup from Resen Waves, the wave energy engineering firm. The event, which will be held at the University’s Old Aberdeen campus in Room KCS15 on Thursday September 13th at 4pm, will give delegates the opportunity to hear about some of the challenges facing the wave industry. Resen will also showcase its innovative Wave Power Buoy which could replace conventional diesel generators in the oil and gas and renewables industries. If you are interested in attending the event, please contact Dr David Toke at d.toke@abdn.ac.uk

This is an exciting new  'bottom-up' approach to wave power. You can read more about this on a previous blog post at:
http://realfeed-intariffs.blogspot.com/2018/06/wave-power-new-bottom-up-development.html

I hope to see you at the meeting!

Sunday, 2 September 2018

Why rooftop solar pv will be failed by the Government's so called market based approach

It's rubbish for anybody to claim that rooftop solar pv arrays  will be given a decent reward for the sale of electricity that they send onto to electricity distribution system through the competition existing, or likely to exist, on electricity markets.

Yet that would appear to be the direction in which the Government are heading, under an argument that the market will reward the small generators for the power they supply - Under the feed-in tariff regime small generators have been guaranteed around £35 per MWh for this 'excess' generation - on top of the feed-in tariff payments for all of the generation. But. it seems, this guarantee is  to be removed.

Feed-in tariffs are over for new schemes, and, so, barring a successful pushback by the solar lobby - will be guaranteed payments for excess (to home consumption) sent to the grid.

As the Government gets down to considering the response to its consultation about arrangements to follow its ending of feed-in tariffs for solar pv and other renewables, we need to call out the so-called market competition nonsense rolled out by the Government to justify its apparent wish to end all guaranteed payments for excess power sold to the grid.

For a start even £35 per MWh is a low price compared to the £45 per MWh or more that we have seen in recent times as the price of power on the wholesale power trading market. Even accounting for the costs of the variability of solar power this remains the case as the cost of such intermittency for the system is estimated to be less than £5 per MWh even in (hopefully) in the future when there is a dramatic expansion of solar pv. See the analysis at http://www.solar-trade.org.uk/wp-content/uploads/2016/10/Intermittency-and-the-cost-of-integrating-solar-Aurora-Energy-Research-September-2016.pdf

Under the way the grid is organised generation onto the grid by solar pv is counted as reduced consumption and worth nothing on power markets. Only if there is an arrangement whereby it is metered or 'deemed' - and then for the generation to be given the status of a tradeable commodity (which it would have to be if any electricity supplier could make money out of it) would the exported solar generation have market value.

 But even if electricity  suppliers could trade electricity generated by rooftop solar pv panels, there is no reason to think that they will give small solar pv generators much (if anything at all) for it. That's because the solar pv producer is also beholden to the electricity supplier's tariffs.

 It might just happen that an electricity supplier (let's call them 'Green Energy') might offer a tariff for solar pv exports, but the solar pv generator will also be an electricity consumer. It will be very difficult to tell whether the tariff that they are put on for their electricity consumption (when they are not using the solar pv generation) is inflated so that the suppliers claws back any money they get paid for their own generation.

Quite possibly, even if electricity suppliers claim to be green by offering tariffs to solar generators to sell electricity to the grid, the home-based solar pv owners will probably have no clear way of knowing whether they are actually getting paid much for that power - That is because the electricity supplier may well in effect charge the solar pv generator a higher bill for the privilege of being given the impression that they are being paid for the power they sell to the grid. The rules simply favour the electricity suppliers. If they can, the electricity suppliers will use a bit of greenwash to get the generation for free - and the system is opaque enough for them easily to do this.

The electricity suppliers won't pay out to anybody unless they have to. They don't have to in this case, so they won't.

The competitivity of the market depends on the rules, and their transparency, and there is little chance of the rules being effective in giving solar pv payments for their exports that reward their value to the electricity system - that's because the rules are designed for the big players, not the little ones. That wouldn't matter much if it wasn't for the principle - which the Government is supposed to buy into - that clean energy should be favoured - or at least be given an even break under the rules.

Hence the only way of giving solar pv generators a reward that reflects their value to the market is for the Government to continue the current system whereby solar pv generators are guaranteed a payment for power sent to the grid. That is the system employed by other Western states to reward solar pv generators.

Now the official consultation on this subject has (just) closed, the best way to argue on this subject is to write to your MP about it asking for a reasonable guaranteed sum to be paid for energy generated by rooftop pv producers

Tuesday, 7 August 2018

New nuclear plan means that consumers will foot bill for unlimited spending by nuclear contractors

So finally the Government has, after I feared so long it would, chosen the doomsday option to fund new nuclear power stations - one that will be disastrous for the consumers and taxpayers. After years of swearing that they would not offer subsidies to nuclear power, and saying that in the future the terrible drain of (historical) over-spending on nuclear power would stop, the Government has gone back to square zero. Essentially, under the Government's proposals for so-called 'Regulated Asset Base' (RAB) of funding nuclear power (described in a recent article in 'Unearthed', a Greenpeace publication), the nuclear developers will have no real limit on what they can spend to build the power stations. It is a recipe for national disaster.

No private developer is willing to take the construction risks of funding nuclear power in the UK, whatever 'strike price' is offered for the electricity that might be generated in future. Doesn't that tell you something? So EDF stepped up to the mark. EDF, the French state-owned company, may be starting the real part of the construction of Hinkley C in 2019/2020. The French state will pay for the inevitable cost overruns that come along with building the plant, combined quite probably, with an out-of-contract bailout by the British Government when the going gets tough.

But now the Government is casting around for another nuclear power plant to be built, - Wylfa or Sizewell C - but neither developer (Hitachi or now EDF) wants to take the risk of paying the almost inevitable losses on the project.

So enter the Government's new proposals which will no doubt be promoted as a simple accountancy trick to lower costs, but hide the fact that the state will take the losses, to be divided up between us as taxpayers (loss of guaranteed loans and construction risk guarantees) and electricity consumers (advance payments on top of electricity bills). And, note this, whatever ministers may say, the exposure by taxpayers and consumers in UNLIMITED.

Under the RAB arrangements electricity consumers will start paying extra on their bills from when construction starts, which could be anything from 7-10+ years ahead of any energy being generated.

This system has a lot of similarities with what has happened in South Carolina and Georgia where  nuclear power plant (around 2.2GWe each case) began construction in 2009 and have been subject to mounting delays and problems - so much so that in South Carolina the project was cancelled, part built. But consumers in South Carolina have been paying around $250 a year on average for the nuclear power plant. In Georgia consumers are paying around $100 a year.

Now remember, this is without a single KWh of electricity being generated.

In Georgia the project to build two reactors has only been saved because the Federal Government has agreed to lend $12 billion in loans to the project to build two 1100 MW reactors.

This looks like the shape of things to come in the UK.

Now how much renewable energy could you get online from the sort of spending the Government will end up ploughing in to the nuclear black hole for one nuclear scheme? Probably enough to supply most of UK electricity with plenty of any back up needed thrown in!

The recent Greenpeace research was well done - I must add however that I remember commenting to Doug Parr (of Greenpeace) several years ago that consumers could end up with a system like in the USA where consumers where locked into paying for the nuclear build in advance. The end result will very likely be the debacle we are witnessing in the USA right now! - Or, perhaps, what has happened at Sellafield with decommissioning contracts organised on a cost-plus basis. What's to stop people just chalking up whatever bills for the work they like? Well, under the RAB/cost plus system, not very much!

References

https://unearthed.greenpeace.org/2018/08/06/new-nuclear-plants-funding-regulated-asset-base/

http://www.governing.com/topics/transportation-infrastructure/gov-south-carolina-nuclear-reactors.html

https://www.myajc.com/business/georgia-power-customers-pay-139-million-less-toward-vogtle/jVuUQgzxG7EAyYvXf17DTM/

https://core.ac.uk/download/pdf/111605945.pdf

Tuesday, 31 July 2018

New report: How Scotland’s new energy company could revive renewable energy in Scotland


New report:  How Scotland’s new energy company could revive renewable energy in Scotland
In a new report published by Nuclear Free Local Authorities, Dr David Toke of the University of Aberdeen argues that the best business strategy for the Scottish Government’s proposed Energy Company will be to enable new renewable energy schemes to be established. To do this, the Scottish Government needs to offer long term guarantees of minimum electricity prices for electricity from new renewable energy schemes.
Dr Toke said “The Scottish Government has a great opportunity to become the UK leader in the supply of green energy. It can achieve this if its proposed Energy Company is able to offer long term power purchase agreements for new onshore wind and solar projects. But if the SG’s new Energy Company relies on the common practice of electricity companies of sourcing renewable energy from projects that have already been established on the back of Westminster based incentives then it will fail to impress – and also miss out on a great opportunity to steal a march on its energy supply competitors. The Scottish Government needs to offer guaranteed long term pries for electricity generated from new renewable energy schemes”
Executive summary
The Scottish Government’s commitment to start an energy company could re-energise renewable energy in Scotland and deliver electricity at competitive prices for the consumer. The key objective for a new Scottish Energy Company (SEC) must be, in marketing terms, to demonstrate how it can offer a superior product compared to its competitors at a price that is no higher than that offered by its competitors. The SEC could out-sell rival competitors by giving long term power purchase agreements to new renewable energy schemes. This will achieve a ‘quality’ selling point that will be unmatched by other electricity suppliers. Although various electricity suppliers boast that their supplies come from renewable energy, usually they only offer PPAs to renewable energy schemes that have been given support on Westminster incentive schemes, the Renewables Obligation and feed-in tariff - and which thus already exist.  The Energy Company initiative should be backed by activities of the Scottish National Investment Bank to offer loans to new renewable energy projects. There are a number of potential renewable energy projects that can be implemented for prices at or below recent levels in wholesale power prices meaning that the Scottish Energy Company could give PPAs to such companies and deliver electricity to consumers at the same or lower prices than other electricity suppliers.

https://www.energyvoice.com/other-news/178109/scottish-publicly-owned-energy-firm-could-bring-cheaper-bills-expert-claims/

Thursday, 26 July 2018

Renewables generated close to 30 per of UK electricity in 2017: set to top 50 per cent by 2025

Today's UK energy statistics reveal that renewable electricity generation increased by around 20 per cent in just one year so that 29.3 per cent of electricity consumed came from renewable energy in 2017. If at least 80 per cent of the offshore windfarms now in different stages of planning (let alone other renewable energy sources) come online, as could be expected, in the next 7 years, then renewable energy will comprise half of total UK electricity generation by 2025.

In 2017 renewable energy's proportion of electricity consumed increased from 24.5 per cent in 2016 to 29.3 per cent in 2017. Making up the 29.3 per cent figure around 15 per cent came from wind power, 4 per cent from solar pv, 2 per cent from natural flow hydro and 8 per cent from various biomass sources. All other major categories fell, with natural gas supplying around 40 per cent, nuclear 21 per cent, and coal just 7 per cent.

As if the massive and continuing increase of renewable electricity (up from around 3 per cent in the year 2000) wasn't enough of a slap in the face for the industrial establishment's earlier sneering at green energy projections, electricity consumption fell once again in the year 2017 compared to 2016. Electricity consumption is now 9 per cent less than it was in 2010.

Meanwhile over 20 GWe of offshore wind are in various stages of planning and construction. In total these would generate around 25 per cent of UK electricity. Since the Government are saying they will hold auctions for offshore wind and some other renewables in 2019 and 2021 this means that a lot of them will be built by 2025. Of course we are going to have substantially more onshore wind and solar by 2025 to buttress these figures (although the Government are doing very little to help) meaning that electricity generated from renewable energy will top 50 per cent of total consumption in 2025/6.

See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/729379/Ch5.pdf

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 http://www.resenwaves.com/

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', https://www.theccc.org.uk/publication/the-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', https://www.carbonbrief.org/analysis-uk-carbon-emissions-in-2017-fell-to-levels-last-seen-in-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 https://www.ft.com/content/7ba55ce6-63f3-11e8-90c2-9563a0613e56



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:
https://uk.reuters.com/article/uk-britain-nuclear-hitachi/hitachis-u-k-nuclear-project-to-get-guarantees-from-government-media-idUKKBN1IA0IV?rpc=401&

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 https://twitter.com/JohnRentoul/status/992487750661279745

 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.

References


(1) Vaughn, A., (2018) 'EDF warns of faults at nuclear power station it is building in France', Gaurdian, April 10th,  https://www.theguardian.com/business/2018/apr/10/edf-warns-of-faults-at-nuclear-power-station-it-is-building-in-france
(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:
https://www.ft.com/content/5381b45a-3caf-11e8-b7e0-52972418fec4
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:

https://www.theguardian.com/politics/2017/oct/10/sturgeon-proposes-cheap-state-owned-energy-for-scotland

http://www.bbc.co.uk/news/uk-scotland-scotland-business-43692809

The Ernst and Young report:

http://www.gov.scot/Resource/0053/00533962.pdf