Tuesday, 26 October 2010

Once You Have Paid The Danegeld ...

… you will never get rid of the pillaging hordes.

This subsidy business is getting right out of hand. In the beginning, various players in the nuclear lobby decided the best way to promote their uneconomic monstrosities in the 21st Century, when state electricity monopolies are no longer on offer and the s-word is out of fashion, was to ask for a ‘floor price’ to be set on carbon credits under the EU emissions trading scheme. What particular floor price ? Earlier this year they were suggesting EUR 35 / tonne (vs current price of around EUR 15).

Back when the Coalition took power, seemingly in favour of the floor price as an unobtrusive way of ripping off electricity consumers (that’s, errr, everyone, a.k.a. a TAX), the nuclear lobby let it be understood that actually, they probably needed, ho-hum, let’s make it a round EUR 50.

Now, it seems, Huhne is being lobbied by the usual suspects for “between EUR 80 and EUR 90” – or an equivalent amount in a more complicated package they have in mind to disguise the bung they want even more thoroughly (because it will mean 25% on your bill).

Which is no surprise really, is it ? In May, we wrote:

"of course, €50 would only be the start. When, after a couple of years, the government notices that no new nukes have been started, and that the preposterous targets for new wind farms are not being met, they will solemnly be told by the subsidy-wallahs that the floor is not high enough."

Except we were out by … a couple of years: it only took the sharks a couple of months.

Why ? Because they smell blood, or rather, sweat – that of a Government scared that the lights will be going out and, they detect, showing every sign of being willing to throw someone else’s money at it.

And so does every other mother’s son in the industry. We know about the wind farm wallahs of old, but get this one from yesterday: Centrica wants someone to dream up a new subsidy to bribe them to build more gas storage facilities. Because, don’t you know, they’ve heard the government is really rather keen that we should have some more – and they sure as hell ain’t going to part with their own money when they hear everyone else just sticks their hands out. (“Sources described the economic climate as ‘extremely challenging’”.)

When do we suppose this is going to end ?



CityUnslicker said...

with us all poorer ND. I am dismayed too at the amount being wasted on Windfarms announced yesterday, I will post later.

Budgie said...

I too am dismayed by the subsidy to wind generation. Not least the fact that wind is so unreliable that there has to be backup schemes: storage; conventional generators; or power swaps. So the cost of the windmills are additional to the standard backups.

UKERC say that the cost (I believe these leave out the wind backup costs) of one Megawatt hour is:
1. Offshore wind, £149.
2. Coal, £80
3. Gas, £80
4. Nuclear, £97
5. Onshore wind, £88.

However, simply because some subsidies are bad, it is illogical to maintain that all subsidies are bad. We may choose to value a degree of electricity supply security and therefore be prepared to pay for that.

Even at the above prices (or similar; no doubt others have other figures), it makes sense to me to have half our electricity generated by nuclear. This is because it is reliable (unlike wind), and does not require a constant supply of fuel, unlike gas and coal which may be manipulated by outside forces.

Nick Drew said...

budgie - I agree that subsidies can be legitimate (ideally with a democratic mandate)

personally I reckon hidden / undeclared subsidies are illegitimate, for starters

but if, in full possession of the facts, you / we are willing to pay for something, so be it

at 50% nuke, we would be paying an absolute fortune for security of supply (UKERC is not a major authority on costs, and nuke costs are always significantly understated by the only people who really know, i.e. those who want to build'em). I don't deny the utility value of electricity is enormous

personally, I am not paranoid about security of gas supply - so we have to have a modus vivendi with the Russians (and the Qataris and the Algerians ...) - so what ? we will need one with the Chinese as well. That's life

which is why I tend to favour gas (and indeed high-tech coal) over nuke - nothing doctrinal, I just hate paying more than I need to

James Higham said...

they detect, showing every sign of being willing to throw someone else’s money at it

Any better than Broon's mob?

Anonymous said...

Throwing money at people to ensure there is a continued supply is fine as long as

1 it is offered to all suppliers - from nukes to hamster wheels

2 it is offered on an even basis - the hamsters get the same subsidy as the wind farmers

3 it it clear to us how much the subsidy is

rwendland said...

The current nuclear operators are looking at life-extending the current PWR fleet to 60 or even 80 years - economic even at current leccy prices. This is bad news for the western new nuclear builders, as the future hole they want to fill vanishes. This low demand will further make new nuclear uneconomic in the west.

EDF's idea/plan to take over Areva looks to me quite likely to happen, as Areva increasingly struggles.

Of course we in Blightly, at the behest of our wonderful nuclear lobby, went for the Advanced gas-cooled reactor, not the alien "American" PWR (excepting Sizewell B). The AGR's slowly cracking graphite cores make life extension beyond 40 to 50 years rather unlikely. So its wind and gas for us in the future. Nuclear dropping out will probably increase night-time wholesale prices, which should at least help wind economics a bit (and the building of more HVDC links to France!).

Peter Wood said...

It is utter rubbish that the floor price is a subsidy for nuclear. The proposal benefits renewables or any other way of reducing emissions just as much as nuclear. The only way that it benefits any of those industries is that it makes electricity from fossil fuels more expensive. If this price floor is a subsidy for nuclear then preventing the construction of new coal-fired power plants would be a subsidy for nuclear.