What's especially shocking about the coronavirus outbreak in Italy - a lack of testing

The news from Italy today is especially tragic given that the daily death toll rose to 133. But there's something that makes this look even more awful - and that's the very high ratio between deaths and confirmed cases in Italy. This suggests that a large proportion of the C virus cases in Italy have not been discovered - and therefore that the fact that the outbreak is, currently, dangerously out of control is related to this lack of discovery. This may well signal a very big lack in testing for infection in Italy, if not elsewhere.

In fact, according to the official statistics the fatality rate of confirmed cases in Italy, at 5 per cent, is rather higher than than the fatality rate of China, which is 3.8 per cent. Indeed the death rate among Italian cases appears to be getting higher.

Now, once one has excluded the possibility that the virus circulating in Italy is more virulent that the one circulating in China (elsewhere in Europe the death rate is much smaller than in Italy, so this seems unlikely) the one very concenring conclusion is that a very large proportion of the C virus cases in Italy have not been discovered. This has serious implications for controlling the spread of infection. The difference between the death rate in Italy and China may be partly or wholly concerned with the significantly higher average age of people in Italy compared to China. However, even if this explains all of the difference (I would be surprised if it did), Italy (and most other countries to a greater or lesser extent) are still falling well short of 'best practice' in testing, which is set by South Korea at the moment.

If we want to look for a country where a comprehensive testing programme has been conducted, we should look at South Korea. There has been a similar number of confirmed cases in S. Korea as in Italy. However, whilst, as of February 8th, there were 266 deaths in Italy, there were only 50 deaths in South Korea. Again, if we dismiss the idea that there is a different virus circulating in one of the two countries we can only assume that the death rate compared to confirmed infections is, using the S. Korean statistics, around 0.7 per cent.

The South Korean figures (garnered as a result of mass, often random, testing, as opposed to the much more apparently limited Italian testing) offer a little crumb of comfort in that the death rate is lower than some fears. However it also highlights the yawning likely gap between Italian official data and the much larger likely scale of the epidemic in Italy.

People have been discussing the implications of the rapidly increasing scale of the outbreak in Italy, but one lesson seems obvious to me. There needs to be a big increase in testing, most of all in Italy, but also in all other countries. If you don't know who has the disease, you don't know who their contacts are, and you cannot easily close off the disease.

Michel Foucault said that 'power is knowledge'. He is certainly right there, and at the moment we do not have nearly enough of the knowledge that is gained through testing

Source of medical data
https://www.worldometers.info/coronavirus/

https://eciu.net/blog/2020/onshore-wind-back-with-a-bang

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/869788/contracts-for-difference-ar4-consultation-impact-assessment.pdf

Solar pv cost plunge presages surge in UK subsidy free solar projects

All over Europe there are reports of a plunge in the prices of solar pv projects, and in the UK a leading solar analyst has predicted that over 1 GW of solar pv will be deployed in the UK in 2020.

Solar pv prices have been hurtling ever lower for many years. and some crazily low prices for solar pv projects have been reported in Middle East in contract auction contests such as in the UAE and Qatar. But this trend is now even affecting not-as-sunny parts of Europe. Solar pv costs - what finance geeks call 'levellised cost of energy' (LCOE) - and which indicate what projects investors and banks will support - are dipping below wholesale electricity prices in more and more countries.

That means that solar pv schemes, big ones that can be built efficiently using higher power outputs compared to rooftop solar projects, are now coming forward on what is called a 'subsidy free' basis in the UK. That is without Government based incentives such as feed in tariffs that launched the first markets for solar pv (before being scaled back in recent years).

Even in often rather cold Finland the cost of solar pv is now below that of the wholesale power price. In Germany, which still gives some feed-in tariff support for what is now a booming rooftop solar pv market (increasingly associated with home batteries) the Government is giving out contracts to large schemes through auctions which deliver low prices. Nearly 4 GW of solar pv was deployed in Germany in 2019.

The surprise is that in the UK, which no longer has a Government backed system of awarding contracts to solar pv schemes,  increasing quantities of 'subsidy free' solar pv schemes are in the development pipeline. According to Finlay Colville, Head of Market Research at the Solar Power Portal, around 6.6 GW of solar pv capacity is currently at various stages in the pipeline, with over 1 GW said to be deployed in 2020. These projects are dominated by (what is for solar pv) very large projects, many being 40 MW or bigger in size. Of course this pipeline is, on this trend, likely to grow in the future. 6.6 GW of utility solar projects would generate around 2.4 per cent of UK electricity on its own on an annualised basis.

There have been so far, in the UK, a small number of 'subsidy free' solar projects that have been deployed in particularly favourable circumstances (eg alongside already available grid connection equipment, or as extensions of battery projects). However this new crop of what can be called 'utility scale' projects represents a new development that will make a substantial addition to UK generating capacity.

There are also various plans for 'subsidy free' onshore wind projects (including projects being taken ahead by Scottish Power and SSE). Around 500 MW of what will be 'subsidy free' wind projects are registered for the capacity mechanism for the 2022-23 year, but the capacity of solar pv projects threatens to move well ahead of wind power in the subsidy-free development stakes (note: for comparison a MW of wind power will generate roughly twice as much electricity per annum as a MW of solar on average). Although wind projects on the best sites offer very cheap prices, a big constraint on renewable energy projects is the availability of sufficiently low cost grid connection options. Solar pv may have an advantage here. Whilst high windspeed sites are tied to specific limited locations, there is an even spread of sun resources around the country. Hence solar pv may have more of a chance to pick up good grid connection possibilities.

Of course when it comes to offshore wind power, things are different.There are very, very large areas of good windspeed locations offshore, and grid connection costs for schemes can be calculated down simply by building ever more massive windfarms. But that's another story, albeit a very big one!

Reference links:
Solar Power Portal
 https://www.solarpowerportal.co.uk/blogs/uk_utility_solar_sector_starts_gw_plus_deployment_roll_out_for_2020
also LCOE analysis at
https://onlinelibrary.wiley.com/doi/full/10.1002/pip.3189

Why EDF's argument that they cut costs with early start to Sizewell C is nonsense

As reported in 'The Times' EDF is now pressing the Government for an early decision to fund Sizewell C nuclear power plant through what is effectively a blank cheque financial model. EDF say they want to start building Sizewell C in 2022 because they will save money through transferring staff from building Hinkley C.

To me this sounds a very dubious argument for the simple reason that building another two units of their 'Euorpean Pessurised Reactor' (EPR) at the same time as Hinkley will put even greater pressure on staff resources - which  are very scarce in the highly specialised nuclear industry - and lead to increased problems and costs, not savings. The argument posed by EDF annoys me especially as I have been (for some time) researching a book for Routledge about the factors that have led to the nuclear power construction cost overruns, and  big factor appears to be precisely the fact that there is just not enough specialised nuclear staff in the West to build nuclear power plant. So this argument about 'transferring' staff seems to me to be especially tendentious.

EDF claims they are going to 'transfer staff'. Planning to transfer staff could produce even bigger delays as construction fell behind schedule, the staff couldn’t be released on time  and building at Sizewell has to be halted leading to  even greater costs as other staff sit around doing very little.

Really the whole argument seems to me to be a clever way of distracting from the obvious point that they cannot build more than two units at once (indeed, cannot even do that on time). To say that there is some sort of cost-saving in this seems bizarre. But then, in reality, we shall find that the real start of construction at Sizewell C will be pushed back and back.

But EDF have an big incentive to pre-commit the UK Government to an early start for Sizewell C (which may in practice be no more than some light work in advance of serious construction) because of three possibilities.

The first is that bad news continues to come about the longer and longer delays with building EPR reactors in France and Finland. The second is that bad news could soon be also coming concerning more delays with Hinkley C itself. The third is that EDF are in big financial trouble having to fund Hinkley C on their own balance sheet while suffering losses with their construction at Flamanville and would be given considerable succour with an open-ended committment to pour money into the company for another twin power plant. (See my earlier blog post on the massive losses EDF are suffering with Flamanville). The quicker they can get a decision from the UK Government then the less chance that the Government will be put off by continuing bad news from Flamanville and Hinkley C itself.

EDF have been consistently arguing for arrangements that they say reduce costs, while the outome is that costs increase. This is most likely to be the case with the arrangements that they have promoted to build Sizewell C. They have claimed that it will be cheaper because using Government money is chreaper. But the reality is that the Government will be committed to paying for any cost overruns of the project - so how is this project going to be built cheaper when the company doing it has no contractual incentive to keep costs down?

The reality is that every nuclear power project being built in the west over this century is costing at least double (probably even more than that eventually) than they were supposed to cost in the first place. The cost of building Sizewell C under the proposed 'Regulated Asset Base' is likel;y to be much higher for the energy consumer compared to even Hinkley C - even if it is cheaper for EDF! And EDF are rushing the public into accepting the inevitable high public costs before there is further mouning bad news from the construction of their power plant at Flamanville and Hinkley C.

Why the UK Government may be encouraging greenwash in its announcement about 'hydrogen ready' boilers

The Government's announcement that from 2025 gas boilers will have to be 'hydrogen ready' could presage the start of one of the greatest pieces of greenwash that have been committed in the UK. It seems likely to result in carbon emissions being substantially increased compared to the present use of natural gas in boilers to heat homes.

The oil and gas industry is promoting so-called 'blue hydrogen', that is hydrogen produced by 'reforming' natural gas, and capturing the carbon dioxide that is produced. Yet currently most hydrogen is produced by reforming natural gas and not capturing carbon dioxide, a process that will dramatically increase carbon dioxide emissions if hydrogen is used to heat homes. The efficiency of the gas reformation process is only around 65 per cent meaning that much more carbon dioxide is generated to produce the hydrogen as fuel compared to simply burning the natural gas. Any claims that the process will be done using carbon capture and storage, beyond that is a few demonstration projects supported by public grants, should be taken with a wagon load of salt.

But the sad thing is that even if 'green' hydrogen for heating homes was to be generated by renewable energy (through electrolysis of water) it would still be a grossly inefficient way of using that renewable energy. Renewable energy is normally distributed through the electricity system where it can power heat pumps in homes (either individually or through district heating systems) to much much greater effect. The heat pumps use electricity much more efficiently compared to any hydrogen boilers, no matter how the hydrogen is produced. Indeed a heat pump may increase the efficiency of the use of renewable energy by approaching fourfold compared to using 'green hydrogen' in a boiler.

Not only does the heat pump multiply the heat from the electircity by around threefold (by using heat in the surrounding environemnt) but it avoids losing energy through electrolysis,

So, in terms of reducing carbon emissions we will need FOUR times the amout of renewable energy to produce the same heating effect in buildings if we turn it into hydrogen  - compared to using the renewable energy delivered through the electricity system and used in heat pumps.

So the Government should be looking at ways to ensure heat pumps are used as a rule in new buildings and giving incentives to have existing buildings retrofitted with heat pumps. This is as opposed to being hijacked by the oil and gas lobby to pass off business as usual under a greenwashed cover story.


 https://www.carboncommentary.com/blog/2017/7/5/hydrogen-made-by-the-electrolysis-of-water-is-now-cost-competitive-and-gives-us-another-building-block-for-the-low-carbon-economy




https://help.leonardo-energy.org/hc/en-us/articles/203047881-How-efficient-is-a-heat-pump-

Small modular reactors - a Fantasy policy?

https://www.chroniclelive.co.uk/business/business-news/newcastle-company-forefront-technology-small-10869984

Rolls Toyce https://www.ft.com/content/ba08f298-8b6e-11e8-b18d-0181731a0340

https://www.namrc.co.uk/intelligence/smr/

 Smaller reactors are still at an early stage of development and their benefits remain speculative. It is estimated that the end-to-end deployment process will take 12-14 years for the first small modular reactor, page 41, https://www.nic.org.uk/wp-content/uploads/CCS001_CCS0618917350-001_NIC-NIA_Accessible.pdf

https://ec.europa.eu/commission/sites/beta-political/files/study-residential-prosumers-energy-union_en.pdf

http://www.greenbuildingpress.co.uk/article.php?article_id=1930

The secret massive losses EDF is suffering in building Hinkley C

EDF faces massive financial losses as they continue to fund the building of Hinkley C. This is because they are paying for the power station from their balance sheet rather than use much cheaper UK Treasury loans that were originally agreed with the UK Government. In short, paying for the construction costs out of shareholders' dividends is very costly, something that depresses share prices and in effect loses tremendous amounts of money for the main shareholder, the French Government.

Originally when the contract to build Hinkley C was signed off by the UK Government and then approved by the EU Commission (required under 'state aid' rules), the plan was that the bulk of Hinkley C construction costs would be paid for by loans from the Treasury, which would be lent at relatively low rates of interest. But the Government insisted on a proviso for this to happen.This condition said that the successful commercial operation of the same nuclear technology (the European Pressurised Reactor or EPR) being built in France at Flamanville had to be demonstrated by the end of 2020 (1).

However EDF has never taken up the offer of loans from the UK Treasury, and the obvious reason for this is simply that the completion date for the Flamanville EPR has been pushed back and back - so much so that the earliest it can even begin its test cycles will be 2022. EDF cannot possibly meet the conditions enabling it to take up the loan guarantees. EDF has made a 'virtue' out of this necessity and declared it will not take up the Treasury loans.

Hence, in order to complete Hinkley C EDF can only do so by issuing its own bonds, and thus accumulating debt that rests on its balance sheets. Such mounting debt reduces the possibility for issuing dividends to shareholders and thus depresses share prices.

EDF's notional profits from the Hinkley C deal (attacked at the time for being too high) have only recently been hit by the announcement that there will be up to around £3 billion costs overruns on the projects (I'm sure there will be more such announcements to come), but really these costs overruns are relatively small compared to the losses that EDF is taking by financing the project on its own balance sheet.

The rate of return on the project was estimated to be around 9 per cent in 2013 (less now given the announced cost overruns) and borrowing costs would be less than this if it was mainly financed by (relatively) cheap Treasury loans. Yet the borrowing costs of financing the project on its balance sheet are, according to accountancy conventions, more like 15 per cent. Hence EDF faces a big loss, in accountancy terms, even if the project is finished on time and even if it then sold the project onto someone else (probably unlikely).

In fact way back in 2016 EDF's Chief Finance Officer Thomas Piquemal resigned after the EDF CEO refused to postpone making a decision about whether to go ahead with building Hinkley C. There were increasing concerns about the length of delays in building the EPR at Flamanville  - and because of the loan conditions set by the UK Treasury for funding Hinkley C such delays had a direct financial implication for EDF's finances if it went ahead with Hinkley C. Piquemal thought that a hasty decision could jeopardise EDF's finances (2).

In fact 85 per cent of EDF's shares are owned by the French state. EDF share prices have been depressed in recent years- they are now worth less than  third of what they were ten years ago, for example, but the Macron Government has long signalled that it is prepared to put state money into defending the project (3). Some might see this as a bizarre outcome that the French taxpayer is in effect bailing out what would otherwise be a huge loss making project in order to build a power station in another country - the UK. Many said that the 35 year contract granted to EDF for the project for £92.50 per MWh (2012 prices) was too much. In fact this seems to be proving very cheap compared to what a fully private company could afford to take on.

Some with expert knowledge have wondered how on earth EDF can still go forward with a project that looks like financial insanity for its own accounts. But at the end of the day this seems to be all about the politics, and national identity, which the elite French administrators appear to see bound up in the EPR technology - no matter how much it costs.

Just how damaged this identity will be depends in part on just how disastrous a construction project Hinkley C proves to be. Given that it is scheduled to be built in no more than 6 years, and that no currently operating British nuclear reactor has been built in the less than 8 years, the cost overruns seem only likely to mount.

But, the French Government may have the last laugh (or t least the next laugh) in that the British Government is now poised to fund the next EPR (at Sizewell C) under an opaque mechanism called the 'Regulated Asset Base'. This is alleged to offer cheaper means of financing. It will be cheaper for EDF of course, but in fact it transfers the risk of the inevitable cost overruns onto the British Government and our taxpayers. A fake price will be used to cover what is a blank cheque to be offered to EDF to build the power plant.

EDF may be burning up French taxpayers money for the lossmaking Hinkley C, but it will be the British taxpayers who will be paying the massive price of the next EPR project at Sizewell C. There are, of course, much cheaper options to produce ow carbon power, but EDF and the British and French Governments are not rabidly keen to advertise such options.



(1) For further details of this, see my earlier blog at https://realfeed-intariffs.blogspot.com/2019/02/new-funding-crisis-looms-for-for.html

(2) See report in the Financial Times 'EDF chief quits over decision to push on with Hinkley Point'
by Michael Stothard, March 7th 2016 https://www.ft.com/content/ef9d4de8-e3e9-11e5-ac45-5c039e797d1c

(3) See report in Guardian, 'France agrees bailout to pay for Hinkley C' by Terry Macalister, March 17th 2016, Guardian, https://www.theguardian.com/uk-news/2016/mar/17/french-government-edf-united-front-hinkley-point-money-nuclear-plant-union