Tuesday, 22 October 2013

Last week some frightening disclosures have come from the Westminster Government. Despite the warm summer, the amount of spare electricity is at its lowest level ever, and in the event of a bitterly cold spell, electricity rationing or power cuts could be necessary. There are many factors involved.   Many of our nuclear power plants are nearing the end of their working life.   The UK Government's plans to build a new generation of nuclear plants have stalled again and again.  The first big problem came with country after country turning down Britain's request to build them;  finally it is the Japanese that we have to rely on, but at a big price – viz. a blank cheque for the costs. The building of a new nuclear plant at Hinkley, which has been heralded with a fanfare of trumpets, is a one off.   The French agreed to build this plant years ago, but no one would provide the necessary investment.  The Chinese have come to the rescue.  They have got the deal they wanted, so if it is up and running in 10 years’ time, we will have to pay double or more on today's prices for the electricity it produces.  So much for reducing bills.

Rather ironically, Japan has stopped building such plants since the Fuchishima Nuclear Disaster.  But the big problem now is securing investment.   No investor is prepared to make long term investments in nuclear without getting a guaranteed return.  This, our UK Government cannot or does not wish to give in view of future uncertainties.  No quick break through is expected.  Original Government costings show that with the proposed new nuclear plants, the price we will have to pay through our household bills will be twice or three times what we are paying now.   The throw away remark of a Government official sounds ominous – "If you want power you have to pay for it".  France is also having problems with its ageing nuclear reactors and any surplus is being soaked up by Germany who is closing down all its nuclear reactors by 2020. The French President has said that he will end France's reliance on nuclear and move to renewables. This year in the US four nuclear plants have been closed down as they are no longer financially viable, and of course the US is now in the process of building hundreds of thousands of wind turbines which will stride the continent from the Atlantic to the Pacific.

The increases in electricity prices in recent years have been caused by the soaring price of natural gas in world markets.  Natural gas is the major component in electricity production today.  Take for example the figures for Scottish & Southern Energy (April 2011 to March 2012) who are the main electricity suppliers in the Highlands  – 
                                                           (In comparison – average for GB)
Natural Gas      -     49%               Natural Gas     -     40.7%
Coal                     -     35%               Coal                    -     29.2%
Renewables      -     14%               Renewables     -        9.2%
Nuclear              -       1%                Nuclear            -      19.1%
Other                   -       1%                Other                -         1.8%

Coal will have to be phased out due to an EU directive, which makes the position even more acute, as coal currently plays such a major part in electricity production.

We get natural gas of course from the North Sea, but there are no facilities for storing it, and when increased demand occurs it has to be purchased from abroad at the highest price rates. So what is the UK Government going to do about it?

Obviously, the continued purchase of expensive natural gas has to be continued, and the amount greatly increased as nuclear power begins to wane and even sooner of course as coal is phased out.   But it is now obvious from Mr. Cameron's recent statements that the future is "renewables".  So what is planned? This year the Westminster Government gave a subsidy of £1 billion to renewables.  Next year it is to be £3 billion and it will continue to rise year upon year to a staggering £10 billion in 2020 (figures only reported last week).

Scotland currently produces 35% of its electricity from renewables (figures March 2013).  Around 25% of this is surplus to its needs, and is "exported" south across the border.  With or without Independence, England needs Scotland's renewables to keep English lights on.

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