Tuesday, 28 October 2014

If Hinkley C is cheaper than wind power why does it need loan guarantees?

As the pro-nuclear establishment is now keen to justify EU state aid for Hinkley C it is trying to argue, against the forces of reality, that the deal makes nuclear power cheaper than onshore wind. Hinkley C is getting £92.50 for 35 years with 65 per cent (£10 billion) loan guarantees. Onshore wind, from 2017, is getting at most £90 per MWh for 15 years with no loan guarantees. How can Hinkley C possibly be cheaper?

 Look at the further details and the notion that nuclear is cheaper looks even shakier. The Department of Energy and Climate Change (DECC) is conducting 'auctions' for wind power contracts under electricity market reform (EMR) which means that in practice the windfarms getting contracts will be paid less than £90 per MWh. If these schemes got loan guarantees then they would be even cheaper since the cost of borrowing would be much less. And then there is the difference in contract lengths, (15 versus 35 years)  for which the justifications are dubious. See my earlier blog post http://realfeed-intariffs.blogspot.co.uk/2013/10/wind-power-history-blows-away-ed-daveys.html

Of course in reality the likely cost overruns for Hinkley C will make the plant in practice rather more expensive than this 'deal' implies, and clauses in the contract that allow the Government to 'vary' prices paid to the nuclear operators will most likely be invoked to give the operators more money than the current 'deal'. In addition the British taxpayer is highly likely to have to pay out on the loan guarantees. The European Commission has done absolutely nothing to protect British electricity consumers and taxpayers from these problems. Far from protecting consumers, the whole point of the deal is to protect the developers. They know that once the project is started the UK Government will feel obliged to make sure the project is completed. See my post at http://realfeed-intariffs.blogspot.co.uk/2014/10/european-commission-issues-smokescreen.html

I hope to see the day that Hinkley C is completed. Now that is not because I want to see the plant built (far from it), but simply because I hope to live for many years longer!

So.......Its not just that onshore wind is cheaper than nuclear power, there's just no comparison between them.

Monday, 13 October 2014

Hinkley C deal likely to wipe out UK renewables spending

A comparison of the payments schedule for Hinkley C and government projections of renewable energy spending plans suggests that from 2023 spending on first Hinkley C, and later other nuclear power stations, will obliterate spending on renewable energy.

As can be seen from the National Audit Office's (NAO) report on the 'levy control framework' (LCF) , a device used by the Treasury used to monitor and control renewables spending, spending on renewables (paid from consumer electricity bills) rises by an average of around £500 million a year from 2014-2021. Yet, assuming that the projected 3.2 GWe Hinkley C runs at 90 per cent availability, and assuming recent wholesale power prices of around £50 per MWh, consumers will be paying just over £1 billion a year extra to pay for Hinkley C - over 35 years. This is TWICE the annual increment for new renewables allowed under the LCF at the moment. In addition to this electricity consumers or taxpayers will also be liable to pay for construction cost overruns because the Treasury is underwriting £10 billion of the loans for the project.

If one assumes that the Treasury continues to apply the same cap on 'low carbon' generation spending as it is doing at the moment the spending on Hinkley C would mean that there would not be any spending on new renewable energy schemes possible until 2027. The payments under the Renewables Obligation to renewable generators come to an end in 2027, releasing around £3 billion under the cap. Yet, after 2027 spending on new nuclear is likely to gobble up all or most of this budget.  Assuming the same cap on total spending remains, even after 2027 renewables spending is likely to be little or nothing. This is because spending on two further 3.2 GWe nuclear projects (Sizewell C and another nuclear project) will take up most (or quite possibly more than all) of the £3 billion 'cap' on spending on renewables released through the end of the renewables obligation.

The details of the NAO's report on renewable energy spending can be seen at http://www.nao.org.uk/report/levy-control-framework-2/#

It should be noted that the Treasury actually projects spending on renewable energy to end by 2021. Within that spending on the 'feed-in tariff' for new small renewable projects tails off to almost nothing by 2018. See page 32 in the NAO report.

What this does reveal is that the Government effectively occupy a sort of 'through the looking glass world' where after 2021 renewable energy is expected to be a mature set of technologies not needing any premium price support whilst nuclear power is a 'new' (??!) technology that needs support for 35 years per project, along with state underwriting. The fact that renewable energy sources are much more popular than nuclear power (according to the Government's own polls as well as independent polls)  cuts no ice with this view.

The biggest joke on the consumer will happen when, as is perfectly likely, oil and gas prices fall back to the levels that have been common outside of oil crisis periods. Then consumers will have to fork out staggering sums for 'new' nuclear power stations, and certainly a lot more, each year, than the annual cost paid to renewables under the Renewables Obligation - for Hinkley C until at least 2058, even longer when other new nuclear power stations come on line.

Tuesday, 7 October 2014

How more nuclear will waste wind power

As noticed by Chris Goodall, in his column in the Guardian environment network, wind power production has for the first time exceeded nuclear. See http://www.theguardian.com/environment/2014/oct/06/uk-wind-power-bests-nuclear-power-for-a-few-symbolic-minutes

But what Goodall misses, it seems completely, is that building more nuclear power stations will simply waste more wind power. He seems to claim that 'all' the investment in wind power will be 'wasted' unless we build a lot more interconnectors etc to accommodate fluctuating wind power supplies. Well, we do need more balancing of a variety of types, including demand response, interconnectors and as it gets cheaper, various types of storage, but it is an exaggeration to say that 'all' wind investment will be wasted.

The big waste comes with the nuclear investment. The problem with the ability of the electricity system to absorb more variable wind power supplies lies with the inability, and unwillingness, of nuclear operators to turn down their production when there is more wind power than can be absorbed by the grid. So obviously building more nuclear power stations (which are more expensive, MWh for MWh anyway than onshore wind for example) will only make the situation worse - more wind power will be wasted than will otherwise be the case without the nuclear power.

It would be helpful if Chris made this point - but I can see why he doesn't, because he advocates more investment in nuclear power. This is the biggest problem as far as Chris Goodall's commentary is concerned. He should clearly re-think his support for building more nuclear power before he starts to implicitly criticise wind power for its variability.

Saturday, 4 October 2014

European Commission issues smokescreen 'protection' to hide consumer exposure over Hinkley C

The European Commission, in signalling its intention to give the green light to the British Government's Hinkley C nuclear power plant deal under the 'state aid' permission procedure has failed miserably to protect British consumers against the consequences of what must be the highly likely outcome of cost overruns in building the Hinkley C plant. Instead it has issued what must be seen as a smokescreen of 'protection' to British electricity consumers by asking the British Government to introduce rules clawing back profits made by EDF. See http://www.reuters.com/article/2014/10/03/eu-britain-edf-nuclear-idUKL6N0RY3FE20141003?irpc=932

Observers might be forgiven for imagining that the 35 year contract for Hinkley C, underpinned by £10 billion of state loan guarantees paying higher premium prices (£92.50) than privately built onshore windfarms receive for only 15 year contracts, will give EDF and their Chinese partners big profits. However this impression is an artefact of the ludicrous propaganda perpetrated for many years that nuclear power stations are potentially profitable, competitive, operations. They are no such thing. Hinkley C is most likely to result in further major  commitments being made by British electricity consumers or taxpayers to bail out the near inevitable cost-overruns of building Hinkley C.  The fact that only state owned companies (French and Chinese) are prepared to undertake the risk of this project, and even then backed by what will emerge in the fullness of time as an effective blank cheque by the British state, is a testament to the sheer bankruptcy of new nuclear build as a commercial proposition.

The nuclear constructors may set dates for commissioning of the project, but in reality they have no idea when they will be finished. The firm probability is that they will take a lot longer to build the plant than what is said in the wishful thinking that passes for pro-nuclear reports on the subject. All three EPRs (the model being used for Hinkley C) being built in Finland, France and China are acknowledged by the constructors themselves as running considerably behind schedule. And we do not even know whether the plant will work very well when they are switched on!

Assurances that the British consumers will not face any further liabilities for building the plant are politically worthless. Why? because if, on the basis of experience, the plant are not build on time and (thus) cost, then the constructors are very likely to ask the UK Government for more financial support. The British Government is unlikely to say no in such circumstances, whatever the Department of Energy and Climate Change claim today. Are they going to allow a half-built nuclear power station to remain as a monument to British folly, to be mocked by people around the world? No, they will commit British people to spending more money on the project to complete the dinosaur, no doubt backed by a new application to the European Commission for 'state aid', which the EU Commission will be minded to accept (as usual). You think this unlikely? Well, it has happened almost exactly like this before. Sizewell B nuclear power station, using a relatively well known PWR design, was left financially stranded when British electricity industry was privatised in 1990 and the new private electricity industry said they could not finance its completion. The Government responded by levying a 'fossil fuel levy' on electricity consumers to pay for the plant to be completed. Indeed the European Commission went along with this on the condition that the levy ended in 1998.

It is about to start again. So is a new comedy show of building more nuclear power in the UK.

Thursday, 2 October 2014

Daft rumours spread about wind turbines and noise without any scientific basis

Anti-wind campaigners have broken completely new ground today by using a piece of research that had absolutely nothing to do with wind power to claim that wind turbines damaged people's hearing. Even though the story was nonsense, this hardly matters for the media involved. Just like the nonsensical europhobic story about capacity power auctions (see previous blog) this is an example of how there is an expanding market to cater for growing, feverish, hysteria among the backwoodsmen right wing in British politics. I reproduce part of a media release from RenewableUK, the trade association, below, which, as far as I can see, gives a reasonable summary of this affair:

RenewableUK slams false media reports claiming wind farms affect hearing

RenewableUK says media speculation that wind farms can affect people’s hearing is incorrect and irresponsible.  

Several national newspapers wrongly claimed today that research published in the journal Royal Society Open Science showed a possible link between wind turbines and deafness.

The expert who wrote the paper, Dr Markus Drexl from the University of Munich, told RenewableUK that the media had misrepresented his work, saying “It is certainly misleading and an over-interpretation of our results to state that living close to wind farms may cause hearing impairment or deafness. Our research did not include any work at wind farms”.

RenewableUK’s Director of Policy, Dr Gordon Edge, said: “Unfortunately, some reporters got it wrong - this is a classic case of Bad Science. When you actually read the scientific paper, it doesn’t make any mention of wind farms whatsoever. That’s because the level of low frequency noise that the scientists used in their tests was significantly higher than anything that anyone living near a wind farm could possibly experience.

“The Australian government published some excellent research on this last year which stated that the modest level of low frequency sound from wind turbines is actually insignificant. It’s well understood by acoustics experts that low frequency sound doesn’t pose any health risk to communities around wind farms and frankly it’s irresponsible scaremongering to suggest otherwise.”

For further information, please contact:

·              Robert Norris, Head of Communications, 020 7901 3013 or 07969 229913, Robert.Norris@RenewableUK.com
·              Adam Wentworth, Communications Officer, 020 7901 3038 or 07791 702702 Adam.Wentworth@RenewableUK.com
Notes:
1.    RenewableUK is the trade and professional body for the UK wind and marine renewables industries. Formed in 1978, and with more than 575 corporate members, RenewableUK is the leading renewable energy trade association in the UK.

Wednesday, 1 October 2014

Blind British Europhobia as Times tilts at subsidies to euro power plants

If ever there was a story that perfectly reflected the increasing frenzy of europhobia in the UK it is the story in today's Times newspaper headed ' Britons may foot bill for power plants in Europe'. The story springs from the fact that under the UK Government's new 'capacity mechanism' designed to build up power plant capacity in the UK, the auctions to procure this capacity will also have to be open, heaven forbid, to plant based outside the UK.

Never mind the fact that the only reason that this will happen is if the power plant can supply energy more cheaply than British based plant; never mind the fact that four out of six of our major energy utilities are owned by non-British companies anyway; never mind the fact that trying to build a common electricity market will actually help the UK (and every one else) achieve more secure sustainable energy supplies, it just adds to the mindless anti-EU feeding frenzy that is Britain today. The fact that such a system will help the common good doesn't cut much ice either since increasing numbers of Brits (you'd think by reading the press) would rather cross the other side of the road before helping anything called 'euro'.

See http://www.thetimes.co.uk/tto/business/industries/utilities/article4222871.ece

Of course it may not be too long before so-called 'back-up' capacity of power stations are not so important. Storage technology is developing, and some potentially revolutionary developments are in the pipeline. An HSBC report indicates that in Germany it  may not be too long before it is at least as economic to supply your power needs for solar pv using energy storage as deriving your electricity supply from the grid. See http://reneweconomy.com.au/2014/energy-storage-generators-biggest-losers-50615

In the UK, of course, this may be delayed as the premium prices awarded to nuclear power stations will allow nuclear power to supply power to supplant supplies from solar pv at least until 2058 (the earliest time that the Hinkley C power station will stop receiving its 35 year projected premium price). This decision, of course, is just about to be legitimised by the European Commission (some irony here).

Sunday, 21 September 2014

Bring down the Cameron Government to stop Tories betraying devolution 'vow'

The shameful efforts of the Tories and English Nationalist 'UKIP' to renege on the vow to give extra powers to the Scottish Parliament by linking the issue to so-called English devolution need to be countered by forcing the Tories out of government - now!

Of course it is important to discuss the implications for the rest of the country of giving more powers to Scottish Government. But to delay the solemn pledges given by the Westminster leaders just before last week's referendum vote would represent a political betrayal of historic proportions - and this can only be answered by getting a Government as soon as possible that can implement the measures to give more powers to the Scottish Government as quickly as possible.

The combined weight of the Liberal Democrats and the opposition parties is easily enough to overthrow David Cameron. If the Liberal Democrats do the honourable thing and stick to their policy of giving Scottish devolution without ties, and if Cameron feels unable to bring his party with him, then Nick Clegg should tell Cameron to resign - and resign himself from the Government before formally voting it out of office.

The Liberal Democrats have felt they have had to compromise on a whole series of issues - but surely, surely, on this issue there can be no compromise!

If the Liberal Democrats supported a vote of no confidence then the Cameron Government would be defeated by at least 328 votes to the Tories 304, or at most 312 if they somehow convinced the DUP to support them. If you look at the Parliamentary arithmetic, even if the SNP abstained on a devolution package implementing the 'vow' then this should also win a Parliamentary majority, even if the Tories still all voted against it.

Failing that we should have a general election as rapidly as possible to sort the matter out. The Tories should not assume that the English will support their stand. Sure, there is a lot of support for the notion that English MPs should have priority in discussing purely 'English' issues in Parliament, but there is likely to be much less English (and Welsh and Northern Irish) support for reneging on the pledges given to the Scottish votes through linking the two issues together. Let's find an answer to the West Lothian question - but only after we have redeemed the pledges made to the Scottish people before they voted to stay in the Union.

If you cannot do this now, Mr Cameron, resign! - and if he won't resign, MPs must vote to end his government!