Best of the Week
Most Popular
1.Putin’s World: Why Russia’s Showdown with the West Will Worsen - John_Mauldin
2. Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable? - Nadeem_Walayat
3. Gold and Silver 2015 Trend Forecasts, Prices to Go BOOM - Austin_Galt
4.Gold Price Golden Bottom? - Toby_Connor
5.Gold Price and Miners Soar on Huge Volume - P_Radomski_CFA
6.Stock Market and the Jaws of Life or Death? - Rambus_Chartology
7.Gold Price 2015 - EWI
8.Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - Nadeem_Walayat
9.Gold, Silver, Crude and S&P Ending Wedge Patterns - DeviantInvestor
10.Is the Gold And Silver Golden Rule Broken? - Michael_Noonan
Last 5 days
Harry Dent's Simple Strategy for Surviving Withdrawals from Markets on Crack - 27th Nov 14
Socialist France Just Cannot Compete Against Google Freedom - 27th Nov 14
A Short Tale About the Grand Manipulation of Crude Oil Prices - 26th Nov 14
China Secret Gold Buying ... How Could It Happen? - 26th Nov 14
Gold Price Spikes to $1,467.50/oz on Computer Glitch? - 26th Nov 14
Gold - So Bad It's Good: Surviving 2014 - 26th Nov 14
TrueShopping.co.uk Real Customer Experience Review - Online Shopping Lessons - 26th Nov 14
Is There A New Global Consensus About Cheating Investors To Reboot Employment? - 26th Nov 14
EUR/USD – Currency Bulls Don’t Give Up - 26th Nov 14
Swiss Gold Referendum A Golden Opportunity for Switzerland - 25th Nov 14
Silver: What COT Analysis Tells Us - 25th Nov 14
Stock Market Big, Bold and Ugly - 25th Nov 14
U.S. Dollar Near Top? Gold and Silver Trading, Platinum Breakout Invalidation - 25th Nov 14
Buy Fear - Easily Pick Up Profits on Stock Market Dips - 25th Nov 14
The Islamic State Reshapes the Middle East - 25th Nov 14
Gold Price Forecast 2015 - 25th Nov 14
The Swiss Referendum On Gold: What’s Missing From The Debate - 25th Nov 14
Clash of Generations - Why Millennials Still Live at Home; Not Jobs, Student Debt, or Housing - 25th Nov 14
Stock Market Reminiscent of Pompeii - 25th Nov 14
Once Upon A Time There Were Philosopher Kings - 24th Nov 14
The 2014 Crude Oil Price Crash Explained - 24th Nov 14
China Stock Investing - Follow the Money! - 24th Nov 14
122 Tonnes of Gold Secretly Repatriated to Netherlands - 24th Nov 14
What Causes the U.S. Dollar to Move? - 24th Nov 14
Stock Market Indexes New Highs - Will Uptrend Extend Even Further? - 24th Nov 14
All Hail the King U.S. Dollar - Trend Forecast - 24th Nov 14
Where Is China Economy On The Map Exactly? - 24th Nov 14
Most of The World Economies Panic - Is The US Next? - 24th Nov 14
Stock Market Exhaustion Gap? - 24th Nov 14
Gold Golden Gains Come After The Pain - 24th Nov 14
Crude Oil and Stock Market Setting The Stage For The Next Recession - 23rd Nov 14
This Publicly-Owned Bank Is Outperforming Wall Street - 23rd Nov 14
Who’s Ready For $30 Crude Oil Price? - 23rd Nov 14
Strategic, Methodological and Developmental Importance of Knowledge Consumption - 23rd Nov 14
Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - 23rd Nov 14
Gold Price 2015 - 22nd Nov 14
Stock Market Medium Term Top? - 22nd Nov 14
Is the Gold And Silver Golden Rule Broken? - 22nd Nov 14
Malaysia's Subsidy and Budget Deficit Conundrum - 22nd Nov 14
Investors Hated Gold at Precisely the Wrong Time: What About Now? - 22nd Nov 14
Gold and GLD ETF Selloff - 22nd Nov 14
Currency Wars, the Ruble and Keynes - 21st Nov 14
Stock Market Investor Sentiment in The Balance - 21st Nov 14
Two Biotech Stocks Set to Double on One Powerful Catalyst - 21st Nov 14
Swiss Gold Poll Likely Tighter Than Polls Suggest - 21st Nov 14
Gold's Volatility and Other Things to Watch - 21st Nov 14
Australia Stock Market and AUD Dollar Analysis (ASX200 and AUDUSD) - 21st Nov 14
New Algae Research May Have Uncovered an “Energy Forest” Under the Sea - 21st Nov 14
The Cultural and Political Consequences of Fiat Money - 20th Nov 14
United States Social Crisis - No One Told You When to Run, You Missed the Starting Gun! - 20th Nov 14
Euro-Zone Tooth Fairy Economics, Spain Needs to leave the Euro - 20th Nov 14
Ebola Threat Remains a Risk - New Deaths in Nebraska and New York - 20th Nov 14
Stock Market and the Jaws of Life or Death? - 20th Nov 14
Putin’s World: Why Russia’s Showdown with the West Will Worsen - 20th Nov 14
Making Money While The World Burns - 20th Nov 14
Why This "Quiet Zone" Is Now Tech Stocks Biggest Profit Sector - 20th Nov 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Gold Report 2015

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

© 2005-2014 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

Free Report - Financial Markets 2014