Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

UK's Green Energy And Nuclear Rout

Politics / Energy Resources Dec 16, 2012 - 11:33 AM GMT

By: Andrew_McKillop

Politics

GOUGE THE SHEEPLE
in Europe, among very strong national competition in clean energy price gouging, the U.K. government’s effort to expand renewable energy and nuclear power are now forecast as raising household electricity bills by 54% by 2020, according to Bloomberg New Energy Finance. In the UK case, as in France (but in few other countries) "renewable-based and low carbon electricity" also includes nuclear power. This is now an openly admitted high cost option, and the UK is so de-industrialized or uninterested in building nuclear plant that it cannot build reactors itself. As a direct result the UK government is locked into a process of promising France's government handout-dependent nuclear industry tariffs as high as 140 GBP (about $215) per 1000 kWh of power produced by French-built "new build" reactors in Britain. If these reactors are ever built in Britain.


In energy price terms this is equivalent to oil at around $325/barrel.

In France, even the ultimate high cost, white elephant EPR reactors of the Flamanville type are presently forecast by EDF and the French Cour des Comptes as producing electricity at about 80 EUR ($104) per 1000 kWh when Flamanville-3 comes into service "about 2015". Far away on the other side of the English Channel, however, French nuclear power is a luxury good. But "low carbon".

In the UK case as in other EU27 countries, the national "green energy programs", or REAPs are carefully not communicated by government as inevitably raising power prices. For the UK, the "UK mix" of nuclear and renewables will account for about 40% of the forecast 54% power price increase. The other three-fifths of the hike will be due to the closedown of the UK's ageing coal-fired power plants, the shift to wholesale-based power trading claimed as needed to integrate green/low carbon electricity, and the replacement, reinforcement and growth of power grids to handle increased amounts of green/low carbon power.

Able to cause legitimate fear of fuel poverty in UK households, especially lower income families, these present estimates of power price rises are only late-2012 forecasts for the year 2020. For the period 2005-2012, UK electricity bills rose by an average of 70%, due mainly to gas and coal price rises. Taking account of the extreme high cost of "new build nuclear", and extreme high cost of a national smart-and-super power grid, both of which are claimed as necessary for the UK, power price rises to 2020 may be far above 54%.

EXPENSIVE ENERGY AND "LOW INFLATION'
Prime minister David Cameron’s coalition government has trimmed subsidies for solar and wind power after a surge in installations, with an inevitable ripple effect in the renewable energy industry of closed plants, company shutdowns and layoffs. Official arguments are that "energy price inflation" has become so noticeable, to the voting public, that slashing subsidies to green energy and destroying jobs in the sector is now necessary. At the same time, the UK government claims Britain must relaunch its nuclear power plant fleet, using foreign suppliers, guaranteeing extreme high power prices.

The argument continues that due to green energy subsidies, utilities such as French GDF and Spanish Ibderrola-linked Scottish Southern SSE Plc, and Russian Gazprom-linked Centrica Plc, have lifted energy costs for UK consumers so high, that this threatens to curtail a very sluggish economic recovery. UK government claims for nuclear power, conversely, are that this low carbon power is "reasonable priced" despite all facts and figures to the contrary and despite ongoing negotiations with France's EDF and Areva on guaranteed extreme high power tariffs.

Behind the low carbon smokescreen, the UK policy shift to renewables, and back to nuclear power betrays the schizophrenia of deciders in the "old nuclear" OECD developed countries. This includes the US, but especially concerns European countries. Nuclear power was given years, or decades of benign neglect, while malignant neglect in the power sector has created a context where, according to German ulitility company RWE at least 40% of all coal-fired power plants in Europe, producing about 45% of Europe's total electric power supply must be replaced by 2030 or earlier. This is due to technological and industrial obsolescence, not "carbon correctness". Replacing them will be very expensive and the building work must start very soon, to avoid serial blackouts.

At the same time, the EU27 member state REAPs set targets for transforming the power generating mix to at least 20%, often 30% "renewable or low carbon" by 2020, largely at the expense of coal. Also due to government schizophrenia in Europe but not in the US, natural gas fired generation is considered firstly high carbon and polluting, and secondly high cost due to current gas import tariffs and the schizophrenic attitude to shale gas of several major European governments. This can be set as being prepared and happy to import shale gas from outside Europe in the form of overpriced LNG, but being unhappy about producing cheap shale gas at home.

Years of doing nothing in the electric power sector, followed by massive but contradictory programs to develop renewable energy, and nuclear power in the case of the UK, while preaching or enforcing energy saving and efficiency raising, with not-so-stealthy and ever rising state control of the energy sector, and the explosion of casino style energy trading produce worst-case results on the ground.  In the UK this also results in the present government stance that renewables and nuclear power are "the only possible choice". Ever rising power prices are the only possible result.

HIGH PRICED POWER
Observers already conclude that the only way UK households and businesses can mitigate the impact of higher electricity bills will be "by improving energy efficiency". In other words using less electricity. Even with this "carbon correct moderation", UK forecasters suggest that average UK two-person households will be paying about $1200 per year for electricity by 2020. Energy price inflation is alive and well - whatever happens to international energy commodity prices.

The move by Big Government in the UK to shift back to nuclear energy, under very close state control while also englobing, controlling and "restructuring" green energy can only generate massively high costs for final energy consumers and taxpayers. The reasons why UK governments before the present David Cameron administration first abandoned nuclear power on a de facto basis, without ever admitting it, were the extreme high costs of nuclear power and the existence of cheaper power generating alternatives, especially coal and gas.

Today, UK government has doggedly gone along with French nuclear price gouging because it claims that it is staying the course and continuing with the always-programmed but never achieved "rebirth of nuclear power" in the UK, which is saga dating back to the late 1970s. From the start of the UK nuclear power program in the mid 1950s, as in other countries using nuclear power, this was a government controlled, state dominated sector totally dependent on state financing. The flirt with green energy, then invasion by government of the green energy sector, and its present "restructuring" as a high-price power supplier under state control only dates from the 2000-2005 period.

Attempts at "privatizing nuclear" in the UK have been a long story of failure, serial bankruptcies and forced sale of assets at "penny on the dollar" prices. The result has been a massive break-up of the industry, explaining why the UK is now industrially incapable of building a nuclear power plant and must go cap in hand to the French, after trying a shortlist of other possible supplier countries. Current policy and action by the government of David Cameron threatens the same sorry final state for the UK renewable energy industry.

Proving the belated recognition of these clumsy endgame choices, the UK government has now moved to permit domestic shale gas exploration and development, while communicating the "consensus view" that shale gas, in the UK, will be unlikely to cause any major fall in gas prices relative to current extreme-high gas prices. For electricity produced from gas, therefore, prices will remain high. This conforms and complies with the higher policy goal - of deindustrialising the economy and pauperizing low income families, while preaching economic growth, human wellbeing and protection of the environment.

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2012 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

Andrew McKillop Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules