Friday, 12 December 2014

Renewable Energy near top of SNP shopping list in case of minority Labour Government

The left's hopes of keeping the Tories out of office rose significantly when Alex Salmond implied that the SNP Westminster MPs would support a minority Labour Government after the May General Election, assuming a 'hung' Parliament. But the SNP would be demanding concessions, including some key renewable energy demands, for this to happen. Of course if the SNP is to be seen to be seriously about keeping the Tories out of office it has to make demands that Ed Miliband and his team might accept. Giving concessions on renewable energy policy would seem to be high on the list of 'plausible' demands. And of course this agenda would overlap mostly with that of the Green Party. But what sort of issues could that include?

An obvious one would be to make sure that reasonable incentives continue to be available for onshore wind, but, in contrast to the Tory/UKIP hatred of onshore wind, the SNP would be pushing at an open door as far as Labour is concerned - so this would not really count as a concession. Labour would continue to support onshore wind anyway. But the position on other issues is not so clear.

First the SNP is likely to demand a scheme to ensure there is 'proactive' investment in electricity distribution networks in Scotland. At the moment many wind schemes are stalled are stymied because of high costs and/or long waiting times to be connected to the grid. Smaller and community owned schemes are especially vulnerable here.

Second on the nationalist/green shopping list is going to be grid connections for renewable energy schemes on Scottish Islands. Currently there is an impasse on this, with transmission charges to high for the projects to pay and no wires to carry the power to the mainland anyway.

Third is support for Scottish offshore wind power. SSE has been given a contract for difference (CfD) for the 500 MW 'Beatrice' windfarm, but are the terms good enough to execute this project? SSE seems to be waiting until the election to find out and negotiate further.

Fourth is the issue of support for marine energy, wave and tidal power. There is quite an astonishing contrast between the sort of loan guarantees offered for nuclear power and the limited support offered for marine energy projects by the UK Government. The Scottish Government is having to bear the responsibility of funding much of the R&D for marine energy out of its discretionary funds. So the UK Government will be expected to come up with more support here.

Fifth will be more influence for the Scottish Government generally on renewable energy policy. Although the Scottish and Westminster governments have been actively cooperating on issues that directly affect Scotland, the trouble is that a lot of the main policies underpinning Electricity Market Reform have been discussed and implemented with little account being taken of the views of the Scottish Government. Given the fact that Scotland sites such a large proportion of UK renewable energy this sounds strange. This must change.

Of course we don't know if the Parliamentary arithmetic will allow such pressures to bear fruit. But if the arithmetic does suggest that a Labour Government is plausible (and this is highly likely to be a minority one) then the pressures on both the SNP and Labour leaderships to come to a deal, even though it will be a 'supply and confidence' deal, will be immense. The renewable energy demands should be obvious parts of an agreement between Labour and the SNP.

Sunday, 30 November 2014

New study highlights enthusiasm of British farmers for renewable energy



A new study published by 'Forum For the Future' highlights the enthusiasm for investing and deploying renewable energy by farmers on their farms. This comes out at the same time that the Government is trying to stop farmers installing solar pv on their farms in an effort to throw a sop to UKIP.

'Forum For the Future', in collaboration with Nottingham Trent University, blow away the alleged conservatism of British farmers by indicating how large quantities of British electricity supply (much larger than that provided by Hinkley C) could be installed by 2020 - And integrated with existing levels of food production and increased biodiversity protection.

Yet Environment Secretary Liz Truss is keen to stifle such moves. She has orchestrated the removal of farm subsidies from land that is used for solar pv. Meanwhile the Department of Energy and Climate Change has said that solar farms must compete with large scale. windfarms for the same limited pot of money for long term contracts.

The report can be be seen at:
http://www.forumforthefuture.org/sites/default/files/Farm%20Power_Size%20of%20the%20Prize%20report_Nov-2014.pdf

As Jonathon Porritt (the founder of Forum for the Future) says on his blog:

'The National Farmers Union loves it – and you can’t say that very often! It’s true, of course, that wind has fallen out of favour with your coalition partners, who are competing furiously with UKIP to see who can more effectively trash our wind industry while simultaneously hammering the rural economy.
Despite the media and political spin, the majority of Brits like wind power. But solar power is really very popular. Not just on roofs (farmhouses and farm buildings have lots of roofs pointing in the right direction, or so I’m told!), but mounted on the ground.' 
The blog entry from which this quote is drawn can be seen at:  http://www.jonathonporritt.com/blog/some-friendly-advice-secretary-state


Friday, 28 November 2014

Government implies it may not sign Hinkley C deal before General Election


The Government has refused to confirm that it it will sign a contract with EDF allowing Hinkley C to be built before April 2015, which is only a few weeks before the General Election. This can be seen in the text below which contains an answer to a Parliamentary Question tabled by Caroline Lucas. This evasive response underlines the shaky status of the Hinkley C nuclear project. See the text below:

The Department for Energy and Climate Change has provided the following answer to your written parliamentary question (215723):
Question:
To ask the Secretary of State for Energy and Climate Change, whether he plans to sign a contract with EDF for Hinkley C nuclear power station before April 2015; and if he will make a statement. (215723)
Tabled on: 24 November 2014
Answer:
Matthew Hancock:
The Government is continuing to negotiate with EDF on both the Contract for Difference and the UK Guarantee for Hinkley Point C, and plans to sign a contract in due course.

The answer was submitted on 28 Nov 2014 at 13:36.


The project was supposed to be backed by investments from AREVA and also Chinese state owned nuclear companies, but investment from both of these sources (around half of the total equity capital) is now under question. AREVA, the state-owned French nuclear constructor and parent of the failing EPR reactor design,  is going bust and cannot afford the Hinkley C investment on its current balance sheet. The Chinese nuclear companies apparently want a greater share of the work on the project than EDF is willing to give. This underlines the core of the surviving French interest in the project - the interest of powerful nationalised French corporations to preserve their jobs in a declining industry. They have the power of the state at their disposal, ranged against the political inclinations of the Hollande Presidency to try to stop the nuclear dinosaur that controls the French state from eating up so much of its resources.

Now EDF are courting the Saudis and the Qataris for equity investment. It seems very doubtful, given the catastrophic nature of the EPR building programme so far in France and Finland, that these oil states would consider investing in Hinkley C as an attractive money-making venture. France does have good relations with these countries through arms sales that it makes to them. But, logically, it may be the case that such investments may only be procured if the French (or/and British state) agrees some formula to 'guarantee' the investments made by Qatar/Saudi Arabia.

The UK has already agreed to guarantee two thirds of the notional cost of the project so that EDF can take out a bank loan, (note the word 'notional' as if many people still believe this window dressing). As discussed in other posts, the UK will doubtless be horribly burned for a lot more money than has even been committed now if, as seems all but certain, the project goes wrong. But some guarantee from the French state will also be needed. Has Hollande been bludgeoned into agreeing this? Will the Treasury be suckered into also effectively guaranteeing  part or all of the cost overruns in the likely future debacle? The resources of the British and French states are needed to preserve the French nuclear dinosaur!






Thursday, 20 November 2014

The real secret letter from the Treasury about disastrous Hinkley C is revealed

Hot on the heels of news of further escalations of delays (and thus)  costs for EPRs being built in Finland and France there is news that the Treasury is conducting a 'secret' review of the EPR project that is scheduled to be built at Hinkley C.

See http://www.thetimes.co.uk/tto/business/industries/utilities/article4272779.ece

This is more pantomime nonsense broadly similar to all the facile Parliamentary deliberations about whether the £92.50 per MWh price to be paid over 35 years with a £10 billion Treasury loan guarantee is 'value for money'.....not to mention the EU Commission's irrelevant statements about 'protecting' UK consumers by saying that the developers should return money if the project ends up costing less than projected.

Costing less than projected! Costing no more than £92.50 per MWh over 35 years! And this £10 billion Treasury loan guarantee being just a notional sum that the UK consumers will not have to pay out!

All nonsense! It is isn't even self-deluding any more. The Treasury will now know full well that the only way the project will be built is if the Government gives full underwriting of all and effectively any costs involved in the project. Whether or not they admit or agree formally to that happening now is irrelevant, it is what will end up happening to get the plant finally built. The electricity consumer will be made to pay out far beyond the nominal prices so far agreed (see previous posts on this). The nominal price tag (£92.50 per MWh etc) mentioned in the Government's press releases is a fig leaf to hide the fact that the real price, costed on a commercial basis will be much, much, higher. As I have said in the past, in reality the project would be priced at being higher than that of an offshore wind project if it was costed using comparable criteria.

The Treasury, who actually have some financial analysts who have at least a passing grasp of energy economics and the realities of nuclear power economics, know full well that the Hinkley C scheme is a slow moving car crash.The latest leaked piece of news that there is a 'secret' review (if it was secret, why is it being announced to the press?) is merely another piece of apologia, a part of a cover story that will be reserved for roll-out in front of an inquiry some years later into what went wrong with the Hinkley C project. No doubt this inquiry will declare that there was good will on all sides, just a few well meaning mistakes made, and that the next nuclear project will work out as cheap as chips!

What is the 'real' secret letter likely to be from the Treasury:

'Dear Ed,

Given the worsening prospects for the Hinkley C prospect, including the virtual bankruptcy of constructors AREVA, the political meltdown surrounding EDF and the near certainty that the Hinkley C project will turn out to be much more expensive that even the price we have agreed, we do feel it is necessary somehow to signal that we have not been totally stupid in not noticing the sheer insanity of this project. For our part we want to emphasise that we are only going along with this project because of pressure from Number 10 to satisfy political pressure that 'nuclear power must be built', We also understand that you would prefer not to have to take responsibility for this fiasco, but you also know that your job depends on keeping up appearances about the project. So, we can circulate a story that we are conducting a 'secret' review into the project. This will demonstrate our concern, but allow some cover for us when the inquiry is organised in a few years time over how the project turned out to be so big a turkey without anybody in government appearing to notice.

We can all blame pressure from the PM's office to ensure that the deal was made for Hinkley C when that happens. Hinkley C construction is likely to begin to have problems before DC leaves office in 2019 or whatever, but the inquiry about the failures will take longer to appoint, and even longer to report, so he will be safely retired by the time blame is apportioned for the catastrophe. He can blame the French anyway.

It is still a shame, though, that it is the British electricity consumer who will have to pay out the countless billions of pounds of costs for overruns until probably at least the 2060s to get the power stations completed. But at least the money will not be available to spend on all of those awfully ugly wind and solar farms that your erstwhile green friends are so keen on !

Best Wishes,

George

Friday, 31 October 2014

pro-nuclear analyst calls for Hinkley C to be abandoned

Chris Goodall, one of those pro-nuclear greens who saw the radioactive light a few years ago but who didn't notice the sheer uneconomic nature of nuclear power has now realised that the Hinkley C project is such a shambles that it ought to be abandoned. He reports the comments of a nuclear engineering expert as saying that the Hinkley C EPR design is 'unconstructable'.

Goodall fears for the future of nuclear power if the project goes ahead. But then all EDF has to do is to take the UK Government for the complete suckers that they are since they have given the project a blank cheque in all but name to pay for what is all but certain to be a colossal financial disaster. It will be the UK Government, or more precisely, UK electricity consumers who will pay dearly, most likely well over and above the the facade of the £92.50 per MWh over 35 years price tag, complete with £10 billion of loan guarantees.

He says: 'by focussing on the increasingly unpopular EPR design, the country may have saddled itself with an unmanageable and hugely expensive construction project that will sour the prospects of all other nuclear technologies for another generation.
Perhaps those of us who still believe in the value of nuclear power should pray that sceptical investors refuse to commit their funds to the Hinkley project.'
I'm sorry Chris, but those of us who thought more deeply about nuclear  a long time ago realised the project was doomed in the post 1950s world. Goodall's article comes out with gems such as the notion that engineers could learn from one large nuclear power project to another is false since each project is unique for a given site so that there is little transferable learning. Well I'm sorry, Chris, but I remember Steve Thomas (now at Greenwich University) telling me precisely this way back in 1991 when I went to visit him when he was working at the Science Policy Research Unit at Sussex.

You're really not telling us anything we don't know already.

But now Chris is giving credence to the gathering nonsense about small 'modular'  nuclear reactors. Oh give me strength! Please........I know people go on about small PWRs in nuclear submarines. These things cost billions to build, not all on the reactors of course, but it looks like it cost hundreds of millions of pounds just to build a reactor that generates a few megawatts of electricity! And that's with an easy, implicit solution, to coolant supply problems.

What the latter day 'green converts' to nuclear power should recognise quickly is that the very nature of nuclear power, requiring expensive containment and other safety mechanisms to meet 21st century standards makes it a very unlikely possibility for solving the 21st century's problems.

You can see Chris's article at:
http://www.theecologist.org/blogs_and_comments/Blogs/2605273/unconstructable_hinkley_c_could_end_uks_nuclear_dream.html


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.