Friday, 10 February 2012

Now That Huhne Is Gone ...

... it is earnestly to be hoped that his replacement Davey's opening gambit ("no change in direction or ambition") is just the conventional piety, and that he'll pull his green finger out right away.

Because otherwise the lights are going out. In a little-noticed announcement DECC has coughed the job:

"we face significant risks to security of electricity supply ... multiple voltage reductions in a typical year, and potentially more serious consequences, for example, power cuts affecting millions of homes, creating significant costs to the economy ... highly volatile prices in wholesale markets which would be likely to impact on consumer bills ... plausibly in the 2nd half of this decade".

Huhne's solution to this was to talk about introducing 'capacity charges' (prompted, interestingly, by Oliver Letwin, who has had an obsession with this approach since before electricity privatisation), which are payable to power plants offering reliable generating capacity, as opposed to electricity itself. This supposedly provides the necessary incentive for back-up capacity to be built. It is fair to say that it works quite well in New England, though it hasn't been operating for long. It has one tremendous and very desirable advantage - the 'demand-side' (large industrial users etc) can offer 'capacity' in the form of being willing to switch off on demand.

DECC can only think of one other example where they have capacity payments, namely Columbia - which they admit bears no resemblance to the UK market. C
uriously DECC doesn't mention Russia, where it has been an expensive and complex fiasco. But let that pass.

DECC envisages the scheme would be an auction between companies vying to provide capacity, followed by a 4-year lead-time for the new capacity itself to be built by the winning bidders. You will be pleased to learn that (a) details of the scheme haven't been devised yet, and (b) the earliest this scheme could be in place is 2015. 2015 + 4 = ...

2019 ... blackouts plausibly in the second half of this decade ... that's Huhne for you. Message to Davey: cut the crap & get moving. You won't be in power 'in the second half of this decade'; but we will still need electricity.

Keep warm this weekend ! - ND


Nick Drew said...

PS - Budgie, I'm getting my retaliation in first: if you can imagine a nuclear power plant starting up 4 years after winning a capacity auction - or indeed by 2019 on any basis whatsoever - then you are the only one!

(just joking - I am sure at least one nuke could make a very valuable contribution starting around, err, 2022 ... ?)

Timbo614 said...

If the government(s) of this country can't effectively supply:

a) Defence (Skint)
b) Energy (Privatised to foreigners & No plan)
c) Health (Currently, but slated for privatisation & demise)
d) Housing/Shelter (No plan & skint)
e) Food (At mercy of 6 shops & foreign imports)

Just what use are they? Are they validly taxing us while failing to actually secure the very basics?

Timbo - in one of those moods!

formertory said...

And is it not 2019 that's the deadline for all those nice smart meter installations, enabling your power usage to be re-priced or rationed at any time?

Electro-Kevin said...

No. That's CAMERON for you.

Richard Elliot said...

Didcot A (one of the coal fired station's scheduled for closure) is in Ed Davey's constituency.

Perhaps a bit of local politics to help him get re-elected will keep the lights on?

Although having said that his seat is pretty safe so it might not do us much good!