Electric boats going mainstream


I did a review awhile back on various low carbon shipping options. Its interesting to note that the one option I didn’t consider was pure electric boats. This is largely because of the range issue. The idea of electric boats, isn’t anything new, they’ve been since the 1880’s, only falling out of fashion with the development of petrol powered outboard motors in the 1920’s.

However the Norwegians are now proposing the use of electric ferries around the country. Anyone familiar with Norway will know that ferries are a way of life for Norwegians, its the equivalent of catching a bus in some parts of the country. While long distance ferries aren’t suitable for conversion to electric, short range crossings, which make up 70% of Norway’s ferry fleet can be converted.

This is significant as Norway already has a 100% renewable electricity grid and one of the world’s largest fleets of electric cars. They’ve also been developing ground and water source heat pumps, some of them on a very large scale. So this is but another step in the direction of going from 100% renewable electricity to 100% renewable energy.

Posted in cars, clean energy, climate change, efficiency, energy, future, power, renewables, sustainability, sustainable, technology, transport | Tagged , , , , , , , , , , , | Leave a comment

Is Tesla really worth more than Ford?


Recently Tesla’s share prices rose to a level which valued the company higher than the value of Ford. This at first glance seems surprising. After all Ford rakes in $115 billion a year in revenue and builds over 6 million vehicles a year. Tesla makes a 1/20th that amount and has only ever made 186,000 cars in its entire life, about the number of cars Ford makes every 2 weeks. So what’s going on here.

Well firstly technology. Ford made a very foolish decision in the 2000’s. In keeping with the rest of the US auto industry, it decided to ignore the issue of climate change and pushed SUV’s extensively. Consequently it was rival firms, such as Nissan, Volkswagen and Toyota, who invested heavily in alternative power trains and smaller more fuel efficient cars. As too did new entrants to the market like Tesla. The 2008 spike in oil prices and the financial crisis that followed, along with increasingly tough vehicle legislation left Ford playing catchup. Its lost market share and has had to spend a lot of money recently bringing itself up to the same standard as its rivals. So investors have to factor in that Ford is still going backwards, while Tesla is growing. Tesla also owns a lot of intellectual property that they can sell or license to other companies.

Secondly Ford has lots of skeletons in its closet. You’ve probably heard of the Ford Pinto and its exploding fuel tanks. Or the Ford Explorer (one of those 2000 era SUV’s) which liked to go rolly polly on occasions. Both of these led to very expensive lawsuits. So while Ford has built 350 million cars over its history, that means there’s tens of millions of potential future law suits rolling around the highways. Naturally that’s a bit of a turn off for investors.

And thirdly there’s pensions and other liabilities. Ford has a massive number of retired workers on its pension plans. Indeed its often joked that Ford and GM are basically pension management companies who make the odd car. The reality is that many of the baby boomer generation didn’t put aside enough money to fund their retirement (yet they now have the nerve to whinge about millennials and migrants who are basically bank rolling their retirement). This leaves Ford with some rather large liabilities on its books. Naturally investors have to take these liabilities into account as well.

And speaking of migrants, Trump creates problems for American car companies, as they make a lot of their car parts (and do quite a bit of their vehicle assembly) in Mexico. Ironically, Japanese firms like Toyota and Honda, design and manufacture more cars in the US than the supposedly US auto companies. Yes, if you live in America and you want good American made car, buy a Tesla or a Toyota or maybe a Volkswagen.

Of course, Tesla will only justify such market optimism if it can increase its market share and turn a profit. For any tech company, that’s always been the problem. Its success will depend a lot on factors outside of its control. For example, a rise in oil prices would hurt Tesla’s competitors, while the failure of suitable charging infrastructure to materialise would scupper long term growth plans. So investors are gambling, but its a gamble that could have huge payoffs if it succeeds.

Meanwhile Ford is being punished for its failure to invest in low carbon vehicles and its poor labour management practices. This is the inevitable consequences when a company puts short term profit ahead of long term planning….which is a lesson a lot of companies tempted to jump on the climate denial band wagon might want to consider. Quite simply put, what goes around comes around!

Posted in cars, climate change, economics, energy, fossil fuels, future, sustainability, transport | Tagged , , , , , , , | 1 Comment

Westinghouse bankruptcy – Reality check time for nuclear?


This week Westinghouse, the nuclear power arm of Toshiba, filed for bankruptcy. Westinghouse was one of the last remaining element of the Westinghouse electricity company, which was founded in 1886 and was a pioneer in the mass roll out of AC electricity, working closely with the infamous Nikola Tesla.

Hardware it supplies, or components made under license via its patents, are used in half of the world’s nuclear power stations. So needless to say, this has sent shockwaves through the industry, as many worry about the fallout that this bankruptcy will have on various nuclear energy projects worldwide, including those in the UK.

In some respects I’m not hugely surprised that Westinghouse has gone under. I noticed they were pulling back from bidding in various nuclear energy projects doing the rounds. They have a relatively thin order book, so that implied they were having trouble raising capital. It seems that issues with American reactors they were building led to costly design changes, which led to losses that threatened the health of the parent company (Toshiba), who’ve thus decided to turn off the life support.

Granted companies do go bust all the time. Solar energy companies have gone bankrupt too after all. However there is a bit of a difference here. Solar power companies, while they receive some subsidies, these are tiny compared to the vast amounts of cash thrown at nuclear energy companies. As I’ve pointed out before Hinkley C is set to receive a subsidy rate of 68% of the cost of every kWh it generates. And at a price tag of £36.8 billion, means its going to cost the equivalent of £11,500 per installed kW, about nine times the current cost of wind power and seven times the current cost of solar.


US federal energy subsidies as a percentage of the federal budget over the first 15 years of subsidy

In short, nuclear energy companies don’t really live in the real world of capitalism. They can screw up on an epic scale and still stay in business. Just look at the train wreck otherwise known as Olkiluoto (8 years late and 3 times over its original budget) or Flammanville (dogged by similar problems). Imagine if a solar power company delivered its product 8 years late and 3 times over budget, would they still be in business? Not likely! Yet Areva now plans to double down on Hinkley C.

Many government have ,for various reasons, decided that nuclear reactors are something they should have. And they are prepared to do what ever it takes and pay whatever it costs to have them. They are also prepared to ignore all logic and sweep whatever obstacles get in their little darling’s way, hence why the Tories have gone from subsidising solar power, to taxing it, as they realise that nuclear is only viable if they kill off the competition.

But while most nuclear energy firms are state owned Quangos, Westinghouse was the closest thing in the industry to a vaguely private firm. Obviously the implication of its bankruptcy is that it is not possible to do nuclear energy without significant government handholding. A subsidy, even the absurd subsidies thrown at Hinkley C, isn’t enough. Governments pretty much needs to bank roll the entire project, tax or centrally plan all possible competitors out of the market and build vast arrays of diesel farms to keep the lights on while we wait for the constantly delayed nuclear plant to be completed. Indeed, one could argue Westinghouse over stretched themselves, building too many plants at once. Implying that the construction rate of nuclear reactors will continue to lag behind the rate at which they get decommissioned.

So while there are some in the anti-nuclear and pro-renewable camp who will be reacting with glee to this news, it does have some bad news for both groups. Certainly, competition with renewables has been part of the problem. Renewable costs are falling, the roll out rate of renewables accelerating, while nuclear’s costs are rising and they are having to run faster to stand still. However, the likely reaction of governments to this is that they will punish renewables for their success and reward nuclear for its failures.

And least we forget, the collapse of Westinghouse is also in part down to the fact it couldn’t compete against fossil fuels. Much of Westinghouse’s business model relied on the assumption that they would be sending the next few decades replacing America’s large network of ageing nuclear plants. However, its now obvious that instead they will be replaced by coal or shale gas fired stations. Which does not bode well for the climate. So its difficult to see a silver lining here.

Certainly thought, this bankruptcy should serve as a wake up call to nuclear energy supporters. They need to accept the limitations of nuclear power. There are things it can do, there are roles it can fulfil, but it has its limits, it is no silver bullet.

Posted in climate change, economics, energy, Global warming denial, history, Japan, nuclear, politics, renewables, Shale Gas, Shale oil, subsidy | Tagged , , , , , , , , , | 16 Comments

The flawed logic of preppers


When we said brexit could end badly……

I started writing this one a few month ago (prior to travelling long distance) and then forgot about it, but thought maybe I should finish it.

For quite some time in American there has been a survivalist movement, which grew out of fears of the aftermath of a nuclear attack during the cold war. “Preppers” believe than in the event of some major calamity of some kind they must be ready to “bug out” if things go south. Preppers come from a wide variety of different political backgrounds. Certainly thought some of the more oddball right wing elements tend to be the most vocal. Oddly enough many of these are keen Trump supporters (so there’s a certain element of a self fulfilling prophecy as a result!).However there are some fundamental flaws in many preppers (particularly the right wing ones) line of reasoning. Indeed their strategies would most likely fail and the likely course of events will be the opposite of what they assume.

First off, I’d point out that while its possible that events like climate change or peak oil could cause civilisation to collapse completely, this is very much the worst case scenario. And its not likely to get to that stage for quite sometime to come (taking into account recent election results we might have to revise that estimate!). In most cases we are are looking more at a slowly escalating crisis where things will get gradually worse and worse over a very long time period. Its more probable, we’ll just adapt to those changes and make do. It won’t be like the movie the Day After Tomorrow, where we go from New York being flooded to an Ice Age in five days. This old ABC documentary Earth 2100, which I reviewed a few years back would be a good example of how such a crisis could play out.


This begs the question, exactly when do the preppers propose to “bug out”? One could argue they should have done so along time ago, or you could argue it would never get to that stage any ways. Even with more short term or an immediate crisis, e.g. in the event of a nuclear attack when do you bug out? Do you honestly think the government is going to give you a heads up that the missiles are on their way (they’ll be too busy either crapping their pants or hauling ass to some undisclosed location to bother with any sort of press statement). Granted, back in the day, when the two super powers had only a handful of ICBM’s and most warheads would be delivered by aircraft (particularly the larger warheads aimed at cities) it was plausible that you could flee a city in good time after the first wave of strikes, but these days I’m doubting it.

One man and his gun


After the apocalypse you’ll need a gun, right?

One of the reasons given by some Americans for owning a gun is, well what if the apocalypse happens? You’ll want a gun then won’t you? I’ll admit it could be useful. Unfortunately numerous studies have shown (e.g. the UK’s Square leg) that in the event of some sort of catastrophe (e.g. nuclear war, a massive disease outbreak, environmental collapse, meteor strike, etc.) the leading cause of death will be malnutrition and water or food borne diseases. So unless you can shoot bacteria with your gun or use it purify water, its not much use. Disease or hunger will kill you long before the biker gangs get anywhere near you.

Some survivalists stockpile vast amounts of food in cabins. But unless you’ve got literally a life time supply (and cans have limited lifespan), sooner or later you’ll run out and have to take your chances. Then what are you going to do, eat your gun? Now gun nuts will then likely say, but I can use my gun to hunt for food. Okay, so your in your bunker/basement to escape the fallout/zombie plague/pollution, but the animals, who don’t know any better, are prancing around outside through said fallout/T-virus/toxic poison. And you are proposing to go out in the fallout and then shoot and eat them….you haven’t really thought that one through, have you?

Also wild animals in the woods are not like daisy the cow, carefully cared for by the farmer, pumped full of antibiotics and largely disease free. Real wild animals are ridden with tape worms, ticks, lice, infections, etc. Inevitably hunting them involves some level of risk, notably that of picking up something during the hunt or afterwards from slaughtering and then eating the meat. Prior to the availability of modern medicine people got sick more often and whether you survived largely depended on how fit and healthy you were. And your age was important. Older people were much less likely to survive getting sick than young people.

Indeed of those post-apocalypse casualties I mentioned, the children and the old would make up a very high proportion of those casualties. So high in fact that anyone over 60 has an extremely low probability of survival for any length of time in a post-apocalyptic world. A point I bring up given the tendency for people in this age group to reject action on climate change. The fact is that anyone in this age group, particularly if you actually do care about your grandkids, should have a much higher motivation to avoid any collapse in civilisation, compared to young millennial’s. And your gun will not save you.

Farming v’s the rugged individual
Also there is a fundamental flaw in the “rugged individualism” that permeates some preppers. In essence they are talking about regressing back to hunter gather tactics, ignoring the fact that this was largely superseded by farming for very good practical reasons. Even ignoring the after effects from any apocalypse, running around a wood hunting is by its very nature hazardous (sometimes you get the bear, sometimes the bear gets you!) and involves expending a lot more energy, compared to animal husbandry or cultivating crops (i.e. the EROI pay off isn’t as good). And a hunter gatherer’s food supply is much more prone to sudden interruptions and collapse, e.g. heavy winter snow stops them hunting, they kill too many of the preferred prey species and the population collapses, a disease (or a hard winter) takes down many of the animals they hunt, etc. This is why farming based cultures largely superseded those dependant on hunter gather tactics. In a post-collapse world, the same logic will play out again.

Also one has to question the wisdom that moving to rural areas is that good an idea. Experience in other countries which have gone through some sort of economic collapse, been effected by war or suffered from some extreme natural catastrophe, shows that it tends to be the cities where power, water and emergency services are restored first. Those in the countryside have to wait a good deal longer. Co-operation and communities coming together was often a key driver to success. In Argentina for example, when its economy collapsed it was local communities that organised who withstood the worst of it. The chaos in Argentina was temporary, order was quickly restored. And, as noted, this occurred in the urban areas first. By contrast in rural areas it took a lot longer for order to be restored. Indeed they actually later found the compounds of some survivalist types in rural areas which had been looted by gangs with the owners found dead inside.

Something similar played out in Cuba after the fall of communism in Europe (which wrecked the Cuban economy and cut off their main source of oil). In another example, a libertarian orientated bolt hole for preppers in Chile, essentially turned out to be little more than a ponzi scheme and a proof of why its important you have big government to protect gullible fools from con artists.

About the only scenario where retreating from the cities makes sense is in the event of nuclear weapons being used against cities, or in the event of a mega-tsunami effecting low lying areas. However these will present a temporary problem….and as noted the immediate “temporary problem” will be getting the fu%k out of dodge in time (evacuating an entire city ain’t easy, so perhaps one issue to focus on is having an efficient set of city sized evacuation plans to deal with such a crisis). But the water levels will recede, cities can be rebuilt.

And even then the destruction will not be even. For example, in the event of a nuclear exchange, the main targets will be missile bases, airbases, command and control facilities and military industrial facilities. Where these overlap with population centres is where the bulk of the casualties will occur. Other cities will take a hot dose of radiation, but others will likely be untouched. A Prepper who travels from New York or Portland Oregon to Wyoming to “bug out” would actually be travelling from a place of relative safety to a place of heavy fallout.


Fallout map of the US in the even of nuclear war, with major targets

The American Redoubt
This foolishness is perhaps best emphasised by the belief in a post-apocalyptic “American Redoubt” in the Rocky Mountain region of the USA, notably in Northern Oregon, Idaho, Wyoming and Western Montana. Many far right survivalists see this as a potential bastion where they can “do a galt” and then ride out the coming storm. Well actually, one could scarcely think of a worse place to retreat to than the Mountain region of the American Northwest.


A proposed neo-medieval fortified town one group of preppers want to build in Idaho, note lack of fallout bunkers, renewable energy or anywhere to grow food….thought they do have a gun factory!

This part of America has a particularly harsh and unpredictable climate. There is very little in the way of good arable farmland. There’s some grazing land, but that’s about it. Large parts of this region are technically classified as an arid climate, due to sporadic rainfall patterns and a very short growing season. Even those parts that get a bit more precipitation, it tends to come in sudden bursts (often in the form of winter snows) with large gaps in between. In short, there’s a reason why the population of this region was so small before Europeans showed up.


The Rockies are a great place for trekkers, but not really the best spot to try and survive an apocalypse

And then there’s those harsh winters. How do they plan on keeping warm? Can you’re gun light fires? Now if you have a well insulated home and a solar thermal collector system, this shouldn’t be a problem. This part of the world actually does get some half descent levels of sunshine. Indeed there’s a whole sub-culture of people building “earthships” in the Western US, dwellings designed to be build from locally sourced materials and heated by solar energy. But let’s assume your the Alt-right type who thinks global warming is a hoax, created by liberals and china and that real men don’t use solar panels. How are you going to heat your home without fossil fuels?

Cut down trees for firewood? Not a bad idea, but you do know that’s a lot of hard work? No chain saws will be available (they run on oil remember) so you’ll be using an axe. My advice, go try and cut a tree down with an axe, saw and chop it all up into logs suitably sized for a fire, cart the wood over a couple of km’s of rough mountain terrain back to your hut and then imagine doing that at least 2-4 times a month while up to your knees in freezing snow. Then let me know when you think solar power suddenly doesn’t sound like such a bad idea.

Also one of the other potential triggers for a global catastrophe is a supervolcano. And where is one of the most likely candidates? Yep you guessed it, Yellowstone national park, right bang under this “Redoubt”. So some preppers are literally proposing to build their shelter right on top of the likely cause of the thing they are seeking to prepare against!

By contrast those along the east or western coast of the USA, or in the great plains, will be in a much better position. Granted they will have problems, sea level rise may drown low lying cities like New York or New Orleans (or much of Florida). Certain US cities like Atlanta or LA will become very impractical places to live without oil to power cars. Parts of California will suffer from water shortages. However given the right government policy and the public will, these are solvable problems. There’s plenty of room further inland to relocate people, cities can be rebuilt on a smaller more walkable footprint. Irrigation can be used to minimise water use. And switching away from cash crops, using farming methods less dependant on fossil fuels and curbing meat production (40% of world grain production is currently fed to cattle!) could provide an adequate food supply for any survivors.

Similarly in Britain parts of the country would suffer worse than others. England would have all sorts of problems. Its not that “Britain is full or anything like that (keeping in mind migrants are only 10% of the UK’s population anyway). Is just Britain, and in particular England, is a very small place in the grand scheme of things. It won’t take the loss of a large amount of land due to sea level rise, drought or nuclear weapons strikes to create a major crisis. You would probably need to relocate people (perhaps only on a temporary basis) to neighbouring Scotland or Ireland (who had much higher populations in the past, prior to the clearances and potato famine) or to mainland Europe (eastern Europe in particular). Of course this means voting for brexit and instituting xenophobic policies is probably not a good idea. The English, in the event of such a calamity, could well find the same racist arguments they are now making about Polish people spat back at them.

The return of big government
And finally perhaps the biggest flaw in the survivalists logic is that it will mean the end of big government. Some of those who subscribe to libertarianism (or more specifically so called “third position-ism”) even see the sliver lining of such a collapse as they assume their particular brand of politics will come to the fore. Actually the opposite is likely to be true.

On at least one level the survivalists are right – the government will initially be paralysed if the balloon ever goes up, with ministers and civil servants likely running around with their hair on fire screaming OMG (as we will witness in a few weeks time with the UK government over brexit). Anyone who is expecting the government to come to their rescue or that the government knows what they are doing, you are a very naive person who is in for a rude awakening. Hence why taking some reasonable precautions isn’t necessarily a bad idea (e.g. I always argue you should have at least two weeks food supply in the house, after all what if a winter storm comes along and forces you to remain house bound for several days in a row).

However this paralysis will be temporary, as it has been in other countries that have undergone some sort of collapse. And given that a successful reconstruction programme will require greater co-operation and central planning (as noted earlier), its more likely that any such governments will shift more to towards the authoritarian left, than the liberal right. Now I’m not saying this would be good thing. Indeed the whole argument of green groups (who tend to be liberal lefties) is that by adopting certain longer term policies now, we can avoid this scenario in the first place. But chances are, if we follow through what current right wing neo-liberal parties propose, to the inevitable train wreck that follows, then a lurch towards more authoritarianism is very likely to be the end state. Its exactly what happened in Russia after the collapse of the Yelstin regime and the rise of Putin.

And if a slow recovery from an economic crash and a couple of Syrian refugees is enough to push some to vote for Trump or brexit, one has to wonder how democracy will survive when millions of climate refugees start showing up on an annual basis, or fossil fuel shortages wipes out large sectors of the economy altogether.

The bottom line for survivalists is that they need to realise they have nowhere to run too. This project we call civilisation is a collective enterprise. A “rugged individualism” policy amounts to wanting to becoming one of those very armed biker gangs who’d kill a neighbour for a bag of flour, which is a one way ticket to either starvation….or execution by the Army for looting. If you do worry about the risk of our civilisation collapsing a more effective strategy might be to try and do something to prevent it happening. And voting for likes of Trump or brexit isn’t exactly helping.

Posted in climate change, economics, energy, fossil fuels, future, Global warming denial, history, nuclear, Passivhaus, peak oil, politics, power, renewables, sustainability, sustainable, technology | Tagged , , , , , , , , , , , | 1 Comment

The Trouble with AirBnB



There’s been a massive increase in the number of spare rooms,or even entire flats, offered for rent on AirBnB, across the UK and worldwide. We’ve recently identified several within the building where I live. However this is cause for concern, because there are quite a number of issues with AirBnB. Put rather bluntly, if you are offering rooms on AirBnByou might be breaking the law and you are also possibly jeopardising your neighbours financial well being.

So what’s the problem?This clip from Adams ruins everything sums up the main arguments against AirBnB. Crackedalso reviews the major arguments against it.

But for starters, if you are offering rooms on AirBnB what kind of mortgage do you have? Because if you’ve got a owner occupier mortgage that only allows you, your family and non paying guests to stay in the property. Even with a buy to…

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Taxing the Sun


I’ve joked before that it would be just a matter of time before the Tories started taxing solar panels rather than subsidising them. Well, now its happening. To help pay for the ever increasing cost of brexit they are putting up business rates. And within this tax hike they’ve sneaked in a clause that withdraws certain exemptions to business rates meaning they will now apply to those selling electricity to the grid via solar feed in tariffs. And we’re not talking a minor increase here, a 6 to 8 fold increase in taxation is expected for some operators, effectively making some solar installations uneconomic.

This is not the first time they’ve tried to pull this trick, they tried it before prior to the referendum, but were forced to back down, when the media caught them at it. Oddly enough they blamed the EU on that occasion for forcing them to make this change, something they can’t do anymore (as I seem to recall pointing out prior to the referendum, governments often used “the EU” as the go to excuse for any policy they wanted to implement anyway, which they know will be unpopular, leaving the EU doesn’t mean they won’t implement such policies, they’ll just blame migrants, the poor, or the growing cost of brexit instead). But with brexit now dominating the headlines, Corbyn now effectively a Tory ally, they’ve been able to sneak it through without facing much opposition.

And note this applies even to public buildings, like state schools. Although private schools are exempted ( as in the places most minsters went too, taxes are for the little people to pay after all!). And since we’re talking about it, a business rates hike tends to hit small businesses harder than large corporations. So all that talk about helping the little guy at the last Tory conference was clearly BS. Yes brexit Britain is now going to tax state schools and solar panels. We’ve gone the full Monty Python already, and we’re not even out of the EU yet! I would joke about them bringing back in workhouses and the poor law, but I’d be afraid of that turning out to be true in a few months time.


Of course while Solar power, is being taxed, instead the government is offering tax breaks to shale gas drillers and effectively subsidising fossil fuel production. Noting that those subsidies go to the oil majors, anyone who fills up a car in the UK then gets hit with high petrol tax, which they blame (with no hint of irony) on the fact that fossil fuels are too cheap (perhaps if you stopped subsidising them, you won’t need to tax as aggressively).

And of course Hinkley C, the Tories little darling is going to receive about £37 billion in tax payer support along with a subsidy of about 68% of the cost of every kWh, which will be paid by UK electricity users. But even these absurd subsidies aren’t enough to make these projects viable. So having realised that cutting solar subsidies wasn’t going to do the job of eliminating the competition, they’re now trying to punish the renewables industry for its success. Like the mafia that they are, the Tories are now going around and beating up solar installers with a tire iron for daring to treat on the forbidden lawn that is the nuclear industry’s turf.


Similarly, cuts to energy efficiency measures has meant that the UK is now well behind, with some of the least energy efficient homes in Europe. One home will now need to be insulated every minute between now and 2050 just to keep pace with climate change targets.

I recall point out in prior posts that a major issue with the UK’s energy policy is that these constant reversals of policy risk impose a severe chilling effect. Basically nobody in their right mind should invest in energy infrastructure in the UK. If you invest in renewables, the Tories will try to drive you out of business. Nuclear is not without its risks, as I discussed before, its possible the Hinkley C subsidy system might not actually work. And while the Tory plan might be to shrug their shoulders when its pointed out that they’ve missed climate targets, I don’t think they’ll be allowed to get away with that indefinitely. Inevitably once the UK does start to take climate change seriously anyone in the fossil fuel industry can expect a backlash (what goes around comes around).

This is the whole reason why in Germany when the conservatives took over (about three election ago!) they retained the policies of the prior Green/left wing governments on energy. They may not have entirely agreed with them, but they understood the consequences if they implemented a dramatic change in policy. Better to have someone installed new energy infrastructure (even if perhaps its costing you a bit more than you’d like to pay), than nobody installing anything because they’re not entirely sure what’s going to happen four years down the line.

And certainly anyone who even remotely cares about the environment, who believes that post-brexit we’d be okay, the Tories are all hug polar bears now. No leaving the EU (which means putting euro skeptic climate change deniers in charge) means the end of any commitment towards environmental protection. Equally those on the left need to accept that voting to leave the EU will mean a massive assault on workers rights and pay, on small business and in general it will be used to reverse decades of social progress (So if you voted for Corbyn as labour party leader, that is in effect what you just voted for as well, as Stephen Hawking pointed out the other day).

Posted in clean energy, climate change, economics, efficiency, energy, fossil fuels, nuclear, politics, power, renewables, Shale Gas, subsidy, sustainability, sustainable | Tagged , , , , , , , , , , , , , , | 4 Comments

Electricity prices – its complicated

I came across this comment the other day from some climate denier, the figure he was referring to being given below. The point he was trying to make was that German electricity prices are high and thus renewables = expensive electricity. However, the reality is a little more complicated than this.


Figure 1, Electricity prices by country (in US cents/kWh) [Source: Statista (2015)]

For example, while yes German electricity costs are high and Germany does have a lot of renewables, but it also has lots of fossil fuel plants, indeed more of its power still comes from fossil fuels than renewables. Yet some of the countries listed above, Portugal, Sweden or Austria for example have significantly lower electricity costs, yet a very renewable heavy electricity, grid (as shown in figure 2). Indeed, Norway and Iceland, two countries with near 100% renewable electricity and relatively cheap electricity prices, aren’t even on this graph. In short, the data would seem to imply that renewables equals cheaper electricity, however that would ignore a number of important factors relating to how electricity is priced. The situation is a little more complicated.


Figure 2, % Share of renewable energy in gross electricity consumption [Source Cleanwire.org based on Eurostat data (2015)]

For example, the UK as a whole gets only 14% of its electricity from renewables, yet Scotland gets 57% from renewables. And for the record, I pay less than this 14.16 cents quoted for my electricity (and I’m in Scotland) and I’m on a 100% renewable electricity contract! Bottom line, the wholesale electricity price of a country is not a very good benchmark by which to compare different energy technologies. The devil is in the detail.

The wholesale price of electricity pays for a lot more than just the power plant. It also includes the cost of the infrastructure (e.g. the power lines, transformers, sub stations, energy storage, etc.) and maintaining that infrastructure. Different countries have very different policies that can have a big influence on how much power costs. Indeed, even comparing by the prices at which the power companies buy and sell electricity can be a bit iffy. Gas fired plants or Hydro will generally only come online when the prices are high, nuclear (which wants to be on all the time) and variable renewables will sell to the grid at whatever price they can get.


Figure 3, Breakdown of a typical UK bill [Source: BBC (2014) based on Ofgem figures]

This is why LCOE is generally used instead. And the latest data on that says that once we factor in the costs of CCS or cleaning up coal, fossil fuels will in future be more expensive than renewables.

But like I said government policy, not so much how much power infrastructure is added, but how this capacity is added can have a fairly large influence on price. The high UK electricity prices being a case in point. Prices in the UK are high because the Thatcher government privatised the industry along laisse-faire lines and we’ve been paying the prices ever since. The industry was set up to benefit the spiv’s and speculators in the city. They’ve consolidated much of the UK’s electricity industry into a cosy cartel of big companies, who are very quick to put up prices whenever they get an excuse to do so (e.g. oil or gas prices go up, brexit, etc.), but they are usually very slow to bring them back down again when costs go down. They’ll engage in all sorts of antics, such as turning off wind turbines at peak demand to create an artificial shortage and push up prices.

And should you wonder why British bill payers don’t abandon the big 6 power companies, well that’s easier said than done. Many people who rent can’t change suppliers without their landlord’s permission. And as they’d have to sign a long term deal to get the best prices, they often aren’t in a position to do so, due to the insecurity and a lack of secured tenure that UK renters have to cope with. I’m paying less than the average because the first day after I bought, I started the process of switching supplier…. which took 3 months and lots of phone calls and threats of legal action. I buy from a smaller firm, and as they mostly generate from renewables (which don’t go up in price every time Putin throws a hissy fit), they can charge me a lower rate and haven’t pushed up their prices since I joined (although with Brexit and the higher inflation we’re now seeing, a bill increase is more or less a dead cert).

It should also be remembered that higher energy prices aren’t necessarily a bad thing, as this incentivises energy conservation and encourages investment. However, while the rest of Europe (notably Germany), have active and highly successful programs aimed and improving energy conservation, the UK under the Tories has actually abandoned such policies. As a result UK energy efficiency is now going into reverse. And often the very people who can lease afford high energy prices in the UK are the very people living in leaky energy inefficient homes, often paying the highest prices.

So all in all, its a mess. And a lack of any coherent energy policy from successive governments does not help. The mixed signals from the Tories means the sort of long term investment in new infrastructure that should have started decades ago, isn’t being made. The country is dependant for a lot of its power from creaky old coal and nuclear power plants, many of which are operating well pass their sell by date. Gaps in capacity aren’t being met by some sort of long term plan (e.g. energy storage tied to renewables, gas fired CHP tied to renewables, etc.) but instead by a proliferation of diesel farms, which are very expensive.

As a result, the UK power grid is a classic example of British make do and mend. The Hinkley C project (assuming it actually gets built of course) highlights everything that’s wrong with the UK’s energy policy. I mean if the Tories really, really want a nuclear plant that badly, why use this ridiculous CfD method to pay for it? Why not just do what the French did and pay for the plant directly out of the national coffers. Nevermind the cost to the bill payers of Hinkley, the cost to the UK taxpayer means it would still be cheaper if they nationalised the project. But that would involve use of that which we do not speak of (socialism), which is against the Tories religion of Thatcherism (shortly to become the state religion of the UK post-Brexit). So like the Merchant of Venice, they are paying those nasty French and Chinese socialist and their state owned companies to nationalise the project for them….same way many of the UK’s “private” train companies (which were also privatised) are now owned by state owned railway companies from around the world!

By contrast, some governments actively try and push down electricity prices. France, by effectively funding their nuclear industry out of the public purse are effectively subsidising electricity prices. Now granted, this comes with its own problems, i.e. it’s not exactly cheap (the French have dozens of reactors in contrast to the one or two the UK is proposing to build), its pushing up France’s national debt and one has to question the wisdom of giving away cheap electricity (and thus encouraging the energy inefficiency). In Scandinavia they’ve promoted and installed lots of things like district heating schemes run by CHP plants (which eliminates the need for a gas grid), invested heavily in energy efficiency, or large renewables projects which all help improve the reliability of the grid, lower energy demand and generally help to keep prices reasonable.

But back to the question, why is German electricity so expensive? Well unlike the UK (who produces a lot of its gas or can buy it cheaply from Norway) Germany has issues securing gas supplies. Given their dependence on gas (hence why they are so keen on renewables!), they have to spend a lot of money building and maintaining large gas storage facilities. Ultimately phasing out nuclear at the same time they are adding lots of renewables is pushing up prices in the short term. Although it still only represents a small portion of bills, typically about a quarter of an average bill. But that said, doing the opposite (as the UK proves) isn’t going to help keep prices low, indeed over time it will likely result in even higher prices.


Figure 4, Gas storage by country, Germany’s stockpile represents 80 days of supply at normal winter withdrawal rates [Source: BMWI, 2014]

Also there is the reliability of the grid to consider. Germany has a very reliable electricity grid, with significantly less brown outs or black outs than other countries. This incidentally counters another anti-renewable argument, that more renewables equals more blackouts. The Germans, being notoriously risk averse, spend a lot more money backing up and reinforcing their grid. As a result, they’ve build an energy grid not unlike the way they design their cars, very reliable, high tech, but perhaps a bit over engineering and a little on the pricey side.


Figure 5, Grid Reliability by selected country [Source: CEER & Energy Transition.de, 2015]

So whether you think this is a good deal or not boils down to how dangerously you are willing to live. The Germans, unsurprisingly, don’t want to live dangerously and are happy to pay high prices and conserve. But customers in other countries, who are willing to accept that the odd black out will happen from time to time, get to benefit from cheaper electricity. This is an important point in the context of renewables roll out. If we are willing to accept that the odd hour or two here and there without power isn’t going to be the end of the world, we can end up making some significant savings. And in a renewable heavy, distributed grid model, many will have their own means of power generation independent of the grid and hence a black out is less likely to impact on them.

So the key point here is that the devil is in the detail, one has to put any set of statistics in the proper context. But here’s the problem, most people and in particular those on the right want short snappy right or wrong answers, not a longer (but ultimately more accurate) analysis that weights up the different arguments. And policy makers can be very prone to taking short answers that the believe can be easily sold to voters over longer winded but accurate facts.

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