Tuesday, 29 January 2019
https://consult.gov.scot/energy-and-climate-change-directorate/draft-onshore-wind-policy-statement/user_uploads/final-version-23-january.pdf
https://www.businessgreen.com/bg/news-analysis/3070028/could-offshore-wind-soon-prove-cheaper-than-its-onshore-cousin
https://windeurope.org/about-wind/infographics/wind-energy-corporate-ppas-are-booming/
Monday, 14 January 2019
Government aims to cover up bailout in talk about 'RAB' financing of nuclear power
There's a bunch of highly misleading statements that the Government is to adopt so-called 'Regulated Asset Base' (RAB) financing of nuclear power projects. Yes, some of the mechanisms that are being proposed are also used in RAB, but the term is being grotesquely distorted to hide the fact that this is a cover for the Government risking very large sums of money to be lent to nuclear power developers. Put simply, if the nuclear power projects are as expensive as they usually are the electricity consumer will lose an awful lot of money and prices will be jerked upwards. Either that or the taxpayer takes a hit and funding of public services suffer big time.
You can see the cover up printed in the Sunday Times yesterday where, we are told that 'Ministers are expected to accelerate plans to introduce regulated asset base (RAB) financing, which is popular in the water and infrastructure sectors, for nuclear plants including the Horizon project'. Under such schemes the developers are allowed to charge consumers in advance for the capital building projects.
What Ministers are not emphasising of course, is that in industries such as water the Government does not lend lots of money to the privatised companies. They raise this on private markets. But in the case of nuclear power plants the bulk of the money needed to build them will be borrowed from the Government. So if the nuclear plant has very big delays and cost overruns (as has happened to ALL nuclear power plant built in the West this century), the Government loses shedloads of money. The Treasury is likely to insist that this gets paid for by adding the (large) sums to electricity consumer bills.
RAB has been used to try to finance nuclear power plant in the USA, in the states of Georgia and South Carolina recently. The result was disaster and the developing company, Westinghouse, went bust. But this was 'normal' RAB where the developer takes the risk of cost overruns. But in the proposed UK nuclear version it will be the electricity consumer who goes bust when the almost inevitable cost-overruns set in!
The nuclear RAB is really a cover for a nuclear bailout. So let's call it a 'nuke bailout RAB'.
This will be embarrassing to navigate through the EU's state-aid rules (assuming we don't go down in a 'no-deal' Brexit) since the scheme will be seen as blatantly favouring the nuclear industry over renewable energy schemes who will not be offered such terms.
It will also produce a strange phenomenon, where, almost certainly the UK Government will end up bailing out foreign Governments. That's because (assuming Hitachi does withdraw from the Wylfa project) the only companies likely to take the risk of building more nuclear plant in the UK are owned either by the French or Chinese Governments. French owned EDF is already angling for Sizewell C to be funded by this 'nuke bailout' RAB. It is rumoured that CGN, the Chinese state owned nuclear developer (who want to develop a plant at Bradwell) could also take up Hitachi’s current option at Wylfa.
But private companies now want nothing to do with British nuclear power (or any for that matter) unless the Government agrees to underwrite all costs overruns. Under the Treasury approved version of nuke bailout RAB only the Government's liability for costs overruns is limited to the amount that the Government lend (which did not satisfy Hitachi). Hence only Government owned developers will be able to get some of their losses paid for by the British Government.
You can see the cover up printed in the Sunday Times yesterday where, we are told that 'Ministers are expected to accelerate plans to introduce regulated asset base (RAB) financing, which is popular in the water and infrastructure sectors, for nuclear plants including the Horizon project'. Under such schemes the developers are allowed to charge consumers in advance for the capital building projects.
What Ministers are not emphasising of course, is that in industries such as water the Government does not lend lots of money to the privatised companies. They raise this on private markets. But in the case of nuclear power plants the bulk of the money needed to build them will be borrowed from the Government. So if the nuclear plant has very big delays and cost overruns (as has happened to ALL nuclear power plant built in the West this century), the Government loses shedloads of money. The Treasury is likely to insist that this gets paid for by adding the (large) sums to electricity consumer bills.
RAB has been used to try to finance nuclear power plant in the USA, in the states of Georgia and South Carolina recently. The result was disaster and the developing company, Westinghouse, went bust. But this was 'normal' RAB where the developer takes the risk of cost overruns. But in the proposed UK nuclear version it will be the electricity consumer who goes bust when the almost inevitable cost-overruns set in!
The nuclear RAB is really a cover for a nuclear bailout. So let's call it a 'nuke bailout RAB'.
This will be embarrassing to navigate through the EU's state-aid rules (assuming we don't go down in a 'no-deal' Brexit) since the scheme will be seen as blatantly favouring the nuclear industry over renewable energy schemes who will not be offered such terms.
It will also produce a strange phenomenon, where, almost certainly the UK Government will end up bailing out foreign Governments. That's because (assuming Hitachi does withdraw from the Wylfa project) the only companies likely to take the risk of building more nuclear plant in the UK are owned either by the French or Chinese Governments. French owned EDF is already angling for Sizewell C to be funded by this 'nuke bailout' RAB. It is rumoured that CGN, the Chinese state owned nuclear developer (who want to develop a plant at Bradwell) could also take up Hitachi’s current option at Wylfa.
But private companies now want nothing to do with British nuclear power (or any for that matter) unless the Government agrees to underwrite all costs overruns. Under the Treasury approved version of nuke bailout RAB only the Government's liability for costs overruns is limited to the amount that the Government lend (which did not satisfy Hitachi). Hence only Government owned developers will be able to get some of their losses paid for by the British Government.
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.
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
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.
Friday, 14 December 2018
Tuesday, 11 December 2018
ONR and EDF in standoff over nuclear power repairs
https://www.reuters.com/article/us-france-energy/edf-restructuring-expected-as-france-reduces-reliance-on-nuclear-idUSKCN1NW14U
Saturday, 8 December 2018
Why 'no deal Brexit' now seems by far the most likely option
It is with heavy heart and forboding for the country's future that I believe that now realise that a 'no deal' Brexit is now by far the most likely option. Why?
Well essentially, short of some astonishing fracturing of the Conservative Party and some equally astonishing agreement by a Tory rump with Labour (ever more twists on the improbability drive required here), the Tory leader (whoever that is) will
Well essentially, short of some astonishing fracturing of the Conservative Party and some equally astonishing agreement by a Tory rump with Labour (ever more twists on the improbability drive required here), the Tory leader (whoever that is) will
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