Best of the Week
Most Popular
1.U.S. Housing Bull Market Over? House Prices Trend Forecast Current State - Nadeem_Walayat
2.The Coming U.S. Economic Collapse Will Trigger a Revolution - Harry_Dent
3. Stock Market Crash a Historical Pattern? - Wim_Grommen
4.Global Panic - U.S. Federal Government Stockpiling Ammo – Here’s What We’re Going to Do - Shah Gilani
5.AI, Robotics, and the Future of Jobs - Aaron Smith
6.This is Your Economic Recovery With and Without Drugs - James_Quinn
7.Gold and Silver Price Getting Set To Explode Higher - Austin_Galt
8.The Something for Nothing Society - Lifecycle of Bureaucracy - Ty_Andros
9.Another Interesting Stock Market Juncture - Tony_Caldaro
10.Inflation vs the Deflationary Straw Man - Gary_Tanashian
Last 5 days
Don't Get Ruined by These 10 Popular Stock Market Investment Myths - 29th Aug 14
Low Cost Transcontinental Gold - 29th Aug 14
Gold Bullish Central Banks Should Give Money Directly To The People - Helicopter Janet? - 29th Aug 14
US House Prices Bull Market Over? Trend Forecast Video - 29th Aug 14
The Fed Meeting at Jackson Hole Exposed Yellen’s Greatest Weakness - 29th Aug 14
AAPL Apple Stock About To Get sMACked - 29th Aug 14
A History of Unlimited Money: Learn From It or Repeat Its Mistakes - 29th Aug 14
How You Can Play to Win When Market Makers Are Calling the Shots - 28th Aug 14
EU Gas Supply Is In Real And Imminent Danger - 28th Aug 14
Central Banks at the Root of Evil - 28th Aug 14
European Bond Market: Bubble of all Bubbles! - 28th Aug 14
Employers Aren’t Just Whining: The “Skills Gap” Is Real - 28th Aug 14
The ISIS Menace - Just What We Need, Another War - 27th Aug 14
The Risky Business of Methane-Rich “Fire Ice” - 27th Aug 14
CFR Recommends Policy Shift that is Very Bullish for Gold - 27th Aug 14
Ukraine Standoff Signals Global Power Shift - 27th Aug 14
Stock Market Panic Decline Begins - 27th Aug 14
The Monopoly of the Government Education Cartel - 27th Aug 14
How to Invest in Silver Today for Double-Digit Gains - 27th Aug 14
The Big Solar Energy Breakthrough We've Been Waiting For - 27th Aug 14
U.S. Empire’s Bumpy Ride - 27th Aug 14
Gold Market and the Interest Rate Trap - 27th Aug 14
Stock Market Staring Into the Great Abyss - 27th Aug 14
A Look at the Coming 30-year Inflation Cycle - 27th Aug 14
Forex Trading - Will USD/CHF Rally Above 0.9200? - 27th Aug 14
Europe’s Depressing Economy Dog Days of Summer - 27th Aug 14
How The Coming Silver Price Bubble Will Develop - 26th Aug 14
A Nation of Shopkeepers - Supply-Side (Voodoo) Economics? - 26th Aug 14
Stock Market Bear Tracks Abound In Wall Street - 26th Aug 14
65,000 U.S. Marines Hold up a Mirror to the Economy - 26th Aug 14
Bitcoin Market Provides Clues for Investors - 26th Aug 14
The Key to Trading Success - 26th Aug 14
Will The US Succeed in Breaking Russia to Maintain Dollar Hegemony?... - 26th Aug 14
Even Mainstream Academia Worried about Massive Bubbles in Markets - 26th Aug 14
Iraq and Syria Follow Lebanon's Precedent - 26th Aug 14
Colonization by Bankruptcy: The High-stakes Chess Match for Argentina - 26th Aug 14
Dow Stock Index On The Cusp - 26th Aug 14
Prohibition Laws and Agency Regulations - 26th Aug 14
Will Canadian Regulators be Able to Avoid Final Fatal TSX Venture Exchange (TSX-V) Crash? - 25th Aug 14
HUI Gold Mining Stocks Elliott Wave Projection - 25th Aug 14
Stock Market Uncertainty Resolved With New High - 25th Aug 14
Go Forth Multiply And Replenish The Earth - 25th Aug 14
Dollar Dumping: When Actions Speak Loudest - 25th Aug 14
A Plethora of Currency, Stocks and Precious Metals Chartology - 25th Aug 14
Why Isn’t Fed Monetary Pumping Helping the U.S. Economy? - 25th Aug 14
Myths About Money and Inflation - 25th Aug 14
The Fed Will Raise U.S. Interest Rates in March 2015 - 25th Aug 14
Gold Price Manipulation Still Alive - 25th Aug 14
The Ebola Outbreak: U.S. Sponsored Bioterror? - 24th Aug 14
Instigating War in Europe - Understanding Ukraine in 15 Minutes - 24th Aug 14
LNG Catalysts About to Hand You the investment Opportunity of the Decade - 24th Aug 14
Another Interesting Stock Market Juncture - 24th Aug 14
The West Set Up the ISIS Endgame - 24th Aug 14
Gold And Silver Low Prices Are NOT The Reason To Own Precious Metals - 24th Aug 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Biggest lie in Stock Market History Revealed

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