Best of the Week
Most Popular
1.Is the Stocks Bull Market Over? Dow Trend Forecast into End January 2015 - Nadeem_Walayat
2.Gold and Silver Stocks Apocalypse Now, Bear Market Review - Rambus_Chartology
3.NHS Baldrick Plan to Spread Ebola Across UK - Sheffield, Newcastle, Liverpool, London Hospitals - Nadeem_Walayat
4.Ebola Terror Threat Suicide Bio-Weapons Threatens Multiple 9/11's, Global Plague - Nadeem_Walayat
5.Second-Richest Man Says Mortgages Now a "No Brainer" - Dr. Steve Sjuggerud
6.Gold And Silver Still No End In Sight - Michael_Noonan
7.NHS Baldrick Plan to Spread Ebola Across UK - Sheffield, Newcastle, Liverpool, London Hospitals - Nadeem_Walayat
8.The Gold Bug is Set to Bite Back - EWI
9.How Alibaba Could Capitalize on the EBay-PayPal Split - Frank_Holmes
10.The Consequences of the Economic Peace - John_Mauldin
Last 5 days
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14
Bullish Silver Stealth Buying - 24th Oct 14
Blood in the Streets to Create the Gold Stocks Investor Opportunity of the Decade - 24th Oct 14
Swiss ‘Yes’ and ‘No’ Gold Initiative Campaigns Compete at Launches in Bern - 24th Oct 14
War And The Law Of Unintended Consequences - 24th Oct 14
Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - 24th Oct 14
Saudi Move to Cut Oil Prices Is Now Russia's Biggest Economic Threat - 24th Oct 14
US Stock Market Top Is Now In Sight - 24th Oct 14
New Profit Points in the Shifting Balance of Power, Welcome to Saudi America - 24th Oct 14
QE Failure & Folly Of Paper Mache, Treasury Bond Integrated Lifeline Patches - 24th Oct 14
U.S. Economy Faltering Momentum, Debt and Asset Bubbles - 23rd Oct 14
Annuities - Afraid Your Money Will Vanish before You Do? - 23rd Oct 14
What Debt Deleveraging? - 23rd Oct 14
How to Profit from Massive Spin-Offs with Just One Play - 23rd Oct 14
Evaluating Ebola as a Biological Weapon - 23rd Oct 14
Euro, USD, Gold and Stocks According to Chartology - 23rd Oct 14
Why You Should Always Be Invested in the Stock Market (Even Now) - 23rd Oct 14
Five U.S. Housing Market Warning Signs Point to Real Estate Market Downturn - 23rd Oct 14
The Better Short: Gold or Silver? - 23rd Oct 14
Focus on Graphite Companies with Green Energy and Technology Strategies - 22nd Oct 14
Crude Oil Price Hitting Bottom - 22nd Oct 14
Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - 22nd Oct 14
Gold Or Crushing Paper Debt Stocks Crash? - 22nd Oct 14
India Gold Demand Surges 450% and Bank of Russia Demand At 15 Year High - 22nd Oct 14
Bitcoin Stock Exchange Could Be "More Valuable than Alibaba" - 22nd Oct 14
Currency War - How to Profit from a Stronger U.S. Dollar - 22nd Oct 14
Banks Hold Treasuries and Make Loans- 22nd Oct 14
Gold and Silver Timing is Everything - 22nd Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VII) - 22nd Oct 14
Follow the Baby Boom to Biotech Stock Profits - 22nd Oct 14
Copper, Nickel and Zinc Won't Be Cheap for Long - 22nd Oct 14
How Will We Know That the Gold & Silver Price Bottom Is In? - 21st Oct 14
Is Gold as Dead as Florida Hurricanes? - 21st Oct 14
First Swiss Gold Poll Shows Pro-Gold Side In Lead At 45% - 21st Oct 14
The Similarities Between Germany and China - 21st Oct 14
The REAL Reason Why the Stock Market Turned Down - 21st Oct 14
Petrobras is a 'Scheme, Not a Stock' - 21st Oct 14
Stocks Bear Market Indicator Is Off the Mark - 20th Oct 14
Stock Market Ideal Turning Point is at Hand - 20th Oct 14
Investors Quit Complaining, The Environment is Perfect Right Now - 20th Oct 14
Ebola Armageddon Could Trigger a Rebirth in Gold and Silver Prices - 20th Oct 14
Gold vs Euro Risk Due To Possible Return of Italian Lira - Drachmas, Escudos, Pesetas and Punts? - 20th Oct 14
Stocks Rebounded Following Recent Sell-Off, But Will It Last? - 20th Oct 14
U.S. Responsible for West Africa Ebola Outbreak Says Liberian Scientist - 20th Oct 14
Stock Market Intermediate B Wave has Started - 20th Oct 14
Gold Stocks Analysis – FNV, CG, NCM, SBM - 19th Oct 14
Stock Market Primary IV Wave Counter Trend Rally - 19th Oct 14
Gold And Silver - Financial World: House Of Cards Built On Sand - 18th Oct 14
Anatomy of a Stock Market Sell-Off - 18th Oct 14
Why OPEC Has Declared an Oil War on Russia - 18th Oct 14
Gold and Silver Extreme Shorting Peaks - 18th Oct 14
Bitcoin Price Fall to $350? - 18th Oct 14
Tesco Supermarket Crisis Worse To Come as Customers Vanish! - 18th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

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