Gossage gossip October 2016

Typography
Opinion

A Turkey voting for Christmas?

Let us get one thing straight about Hinkley Point C nuclear station.  It does not follow that PM Theresa May’s approval to build means that we shall (in that immortal phrase ) definitely be cooking our Christmas turkeys with its power in 2025.

 

We know that, within its French state-controlled developer Electricité de France, there have been very serious misgivings about Hinkley’s viability. Board members, including the finance director, have resigned on the issue; indeed it was their departure which provided that bare majority on the company board to enable it to progress last July. The company’s unions remain opposed.

EdF’s 37bn euro of net debt dwarfs its 22 billion euro market capitalization. It already faces an estimated 55 billion euro bill before 2025, just to increase the life expectancy of existing 50 nuclear stations from 40 to 50 years, to provide cash flow. Nobody knows where that sum can be found.

Tellingly, in the very week that the so-called “green light “ was given by the UK government for Hinkley, shares in EdF fell by 8%. They have dropped by a staggering 40% over the past year, led by these worries about the company’s ability to absorb the extra capital spending from Hinkley Point.

This is a saga with a very long way still to go. And we all know, even if somehow this - the most expensive project on earth – does ever get built, two things will be true. It will end up costing far more than the official £18bn. And it won’t be ready by December 25, 2025.

 

Catching the bird of paradise

Much celebration by the greenies that, for a few precious hours, the British mainland’s supply of power came more from renewable electricity sources than from conventional fossil fuels of coal and natural gas.

This in turn prompted much ribald laughter from Central America. Where the state of Costa Rica takes such environmentally benign supply sources entirely for granted. Over the past year renewable energy sources have accounted for 99% of that country’s electricity.

According to the Costa Rican Electricity Institute, 285 out of the last 365 days were powered exclusively by electricity generated by hydro electricity, and a combination of wind, solar and geothermal energy. For 121 days running, all electricity has been both fossil and nuclear free.

Costa Rica has long been celebrated as being the largest nation on earth to eschew the expense of keeping a standing army. Let alone an air-force or, despite an extensive shoreline, a navy. Law and order is entirely a matter for the police force.

Somehow this peaceful, and prosperous, republic is unconcerned about ever being able to “punch above our weight”, to coin a phrase much beloved on British diplomats. That it is also clearly leading the way towards that much-coveted nirvana of a non-carbon world is simply yet another feather in Costa Rica’s cap.

 

Organised hypocrisy

For many years the Daily Mail has regularly waxed indignant at the monies expended in subsidies, entirely designed to encourage the spread of renewable energy.  The newspaper has fearlessly named and shamed the way that, in particular, more affluent members of society have been amongst the main beneficiaries of this largesse.

In particular, it tends to highlight the way so many absentee Scottish landowners have, as the Mail so elegantly put it, had their renewable energy snouts placed firmly in the taxpayers’ trough.

However there is one new hydro-electric project based in the Highlands which somehow has miraculously managed to escape the Daily Mail’s righteous ire. Last summer work began upon a new 1.2MW scheme sited on the Langwell estate near Ullapool.  The dam, turbines, pipeline and powerhouse were due to complete late September. And the project stands to earn over £15million during the next 20 years in subsidies.

The scheme is 60% owned by HG hydro Ltd. And 40% by the Canaird River Company Ltd – which stands to earn around £6million for that company’s proprietor. The head of Canaird is not a Scot, but a late middle-aged foul-mouthed millionaire living in London.

And who is the lucky absentee landlord in question, exploiting the system so profitably for himself? Why none other than Paul Dacre. And what is Mr Dacre’s main line of business? Why, he is the editor-in-chief of that scourge of green levies, the Daily Mail.

 

Not very clubbable

Various organisations claim to be the “voice of British business”. None is more vocal than the Institute of Directors. Based in a plush Pall Mall clubhouse, it issues all-too-frequent homilies about how it claims the captains of industry feel upon important matters.

It has a chief energy advisor. His name is Dan Lewis. He issues lots of statements. These mostly boil down to pressing the need to drop market interventions and regulations. This would be fine (if occasionally very foolish), so long as Lewis stuck to telling the truth.

For instance, recently he has been opining about the iniquities of the National Grid. “Many larger businesses”, complains Lewis, “already are having to immediately cut power consumption and curtail economic activity, when National Grid issues demand side balancing reserve notices.”

Claiming such compulsion takes place is, to use a technical phrase, utter garbage. There is no member of the Institute of Directors (or indeed any other firm) who HAS to “cut power consumption” at the behest of National Grid.

However, quite a number of large companies have voluntarily entered into a contract with the Grid, agreeing that they will, given appropriate warning, reduce consumption levels at certain times so as to enable the Grid to carry out a balancing act between supply and demand. In return, these companies invariably will be receiving preferential prices per kilowatt-hour for much, if not all, of their standard purchases.

Such activities, called demand side management, have long been commonplace in Japan, and in many American States. To the best of my knowledge, these voluntary arrangements suit both parties to the contract well; otherwise they would not continue happening.

I have to ask, whose interests does Dan Lewis think he is representing when he makes such foolish allegations? Certainly not those of the members of the Institute of Directors.

 

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