AEP - manic religious enthusiasm for wind power

Several folks around here cite Evans Pritchard from time to time, noting that some of his stuff is excellent and some is bonkers.  His latest on the wonders of (offshore) windfarms is firmly in the latter character, being in the nature of an outpouring of religious fervour.  How else can we explain this? 

Barry Norris from Argonaut Capital disagrees [with AEP's uncritical enthusiasm], calling wind “an unsustainable economic rent seeking parasitical industry”. Rent seeking, certainly. But unsustainable?  The cost of running a gas power plant this autumn (around £84 MWh) is still almost double the average tariff paid to wind companies under recent CfD contracts (£46 MWh).  It was nine times more during the gas panic last year.  The Treasury pockets the difference.  It is a reverse subsidy.  Home-harvested wind also slows the leakage of our national wealth through the current account deficit.  Mr Norris doubts that wind companies will be able to meet commitments agreed in their CfD contracts, and will require a renegotiation.  I agree.  The strike price will have to rise in the new unforeseen circumstances.  He expects a ”shabby bail-out”: I call it a reduction in the wind tax paid to the Treasury.

Oh dear.  Aside from the entirely dishonest use of the "9 times" statistic (as coined by Ed Miliband, oft-parroted by greens, and true for just a couple of days last autumn): why will higher-than-expected gas prices require renegotiation of windpower contracts?  Answer: because that's not the unforeseen circumstance.   The problem is not high gas prices - which ought to assist other forms of energy - but shortage of raw materials and skilled labour (see diagram below) as every developer on the planet is seeking to pile (literally) into the same things at the same time, on a truly gigantic scale.  A bit, errr, inflationary, wouldn't we say?  And

(a) Those CfDs, far from the being hedge they were offered as (via auctions), were in fact used as speculative punts by the developers, hoping that they'd be able to source their raw materials at prices which the CfD would reward with an acceptable rate of return.  But that's what they were - naked speculative punts.  And pretty stupid ones too, because ...  

(b)  ... this wasn't remotely unforeseen.  Trust me: the banks knew this all along: both the speculative aspect, and the inflationary outcome.

AEP puts up a couple of diagrams.  One neatly proves that windpower is horribly variable, which doesn't really assist his cause.  The other is this (right).  Does he feel it demonstrates the feasibility of what he's so stricken with?  I'd say a resource-heavy surge that the "Development" projection represents should trigger a reality-check for the most optimistic forecaster.  Even the "Consented" tranche is f**ked.  What does he imagine the impact of actually materialising demand on the scale of this graph would be on the price of raw materials?  

As with so many aspects of the Net Zero thing, there's a very strong odour of incense here: it's basically a religion. 

ND

 

Tory Windpower Policy - What's Cooking?

True to its manifesto, the government has signalled an end to onshore windpower development.  That is, of course, unless the wind industry somehow delivers on its claim to be 'near to grid parity with costs falling all the time', in which case they won't need subsidies ...  I needn't go on.  Even then, with increased powers - nay, obligations - for local planning authorities to take local protests into account, a hypothetical 'economically viable' windfarm might struggle to get consent.

This will piss off several noisy groups in no uncertain terms:

• greens, obviously
• developers who pretend to be hippies but are as uninterested in the environment as the average coal producer, and considerably more hypocritical
• landowners hoping to join the great game
• the SNP, as their entire energy policy is predicated on a very significant increase in Scottish onshore wind capacity, haha.

So in political terms it's quite a development - and an opportunity to surmise what's going on in renewables policy as a whole.  The Tory manifesto isn't much help beyond the fate of onshore wind: "We will cut emissions as cost-effectively as possible, and will not support additional distorting and expensive power sector targets."  The first half of that is fatuous - see the Swansea Bay Tidal Lagoon - but the second is interesting ...

The UK is more or less on course to hit its 2020 renewables targets.  (I put aside the issue of whether 'achieving the target' is anything more than an arbitrary feat of civil engineering.)  So beyond that, where does the government imagine it is headed with the 'green crap'?  A cynic would say: no politician looks beyond the next election and - given the lead-time of big new developments - the die is already cast for 2020: in which case, the next 5 years is all about (a) keeping the lights on and (b) spin. 

But I suspect there is a bit of a longer-term plan there somewhere.  The Paris jamboree looms large and at least something will emerge from that with implications for the next while.   If forced to guess where the government is going (which has nothing whatsoever to do with where it ought to be going), I reckon:

• momentum / pride will lead them to continue trying, for a while, to get the EDF nuke deal away without conceding anything extra, on the grounds that (as far as we know) there isn't much to pay until the damn things actually start generating - which won't be in Cameron's political lifetime, to put it mildly
• ... but if EDF plays its usual trick of saying, zut alors, the cost has gone up by another EUR 2 billion, we need some more £££ - then the whole thing will be allowed to fold
• Osborne intends to fend off any actually difficult targets for the 2020-2050 period: even though Paris will be an insufferable piety-fest, Merkel has shown how the can may be booted clear over the horizon
• they think offshore wind + biomass is, in practical terms, enough to meet whatever will end up being the 2030 targets - and quite a good job-creation scheme for British industry
• they will attempt to ensure the UK is there or thereabouts in any nascent CCS industry that might one day come into being (don't hold your breath)
• they will manipulate the new Capacity Market to ensure new gas-fired plants get built. 

Any other reading of the runes?

ND

Wind Storm Brewing

Ages ago I suggested that as times got harder the indulgence that is the UK's 'decarbonisation' policy would run up against its ever more ridiculous costs: GDP trumps GHG was the coinage.  And so it comes to pass.  The windfarm pro- and anti- camps are getting increasingly noisy, with no end of spurious arguments on both sides: but follow the money, it's the economics that matter.  Take away the subsidies and you wouldn't hear a peep from me because I reckon the supposed health and aesthetic and bird-butchery issues would take care of themselves.

If the greens fear they may have reached something like their high- water mark,  it looks like they've every intention of screaming until they go blue in the face and rolling around on the floor of the supermarket until they get given a bag of crisps.  

In the past, commenters on the big newspaper websites fell into predictable patterns: CiF article on wind yields 80% pro, 20% anti; and conversely for a DTel piece.  I can't claim this is a scientific finding and I don't have the time to confirm it, but I have the distinct impression that things have changed in just the last couple of weeks: now the DTel gets bombarded with pro.  This would be all of a piece with the very recent appearance of the seemingly quite well-organised No Dash For Gas.

There are other interesting aspects to the public 'debate'.  Both the long-time anti-wind DTel and Mail have come down squarely in favour of new nukes and I am guessing this is a signal to Cameron that they don't mind him having that half of his low-carbon strategy (as well as the fact that - follow the money - the big nuke interests are potentially big advertisers).

Finally, even the quite delightfully bonkers Dellingpole (who does the anti cause little good by being so wrong on his facts) has swallowed the green line on public opinion.  "In a recent poll, the majority of those surveyed said they wanted more wind power", he writes.  That's certainly what the greens always claim but all the polls I've read say nothing of the kind.

Ear-plugs all round: this is going to get very shrill.

ND   

Britain's Future

Get used to it, as my co-author here Nick Drew has often warned, there has been far too little infrastructure development in the UK of recent years to sustain our power system. Today even the useless quango that is ofgem has twigged that it is now too late to stop a wave of power cuts in this decade. Instead, money has been wasted on idiotic wind sytems and other green wibblery that has left us without power. How much do you think the French are going to chareg when we ask them to top us up?

Time to buy shares in companies that make generators and make preparations for your energy bills to triple from where they are today.

Is there anything a new Government could do, well it could faast track some efficient gas powered stations unless the Nukes arrive for the end of the decade, this might work, but I am not confident given our planning system and the marxist resistance of greenies who long for man to go back to living in eco-friendly caves.