Stopthesethings.com October 25, 2015
David Cameron won an election promising to scrap wind power subsidies; and plans to follow through – with terminal results for the wind industry in Britain.
UK Pledges To Ax Green Energy Subsidies
15 October 2015
The United Kingdom is pledging to end all green energy subsidies by the mid-2020s.
“By the mid-2020s, we would like to see the government retreat as much as is possible from [renewable energy] subsidies, the current administration is aiming to be more discriminating about the types of low-carbon technology it wishes to support,” Stephen Lovegrove, the permanent secretary of Britain’s Department of Energy and Climate Change, said at an event Tuesday hosted by Columbia University.
Lovegrove said subsidies should end because “there is a cost being imposed on consumers which distorts the U.K.’s competitiveness and the [British] pound in people’s pockets when they get home.” Lovegrove is referencing the additional green energy tax attached to the bills British homeowners pay.
Lovegrove’s announcement comes as 38 percent of British households are cutting back essential purchases, like food, to pay for high energy bills. Another 59 percent of homes are worried about how they are going to pay energy bills.
Green energy subsidies regularly exceed spending caps and account for roughly 7 percent of British energy bills, according to study released in July by the government.
If subsidies are not cut, the government anticipates an 18 percent increase in domestic electricity prices by 2020, which could drive up household energy bills another 5 percent.
Brits paid a whopping 54 percent more for electricity than Americans paid last year, in part due to green energy taxes. Such taxes currently cost residents and businesses an estimated £4.3 billion (roughly $6.6 billion) every year.
Environmental groups are unhappy at the prospect of no green subsidies.
The government should back key renewable technologies like wind and solar now to give families and businesses the cheapest and cleanest energy in the future. Instead, it seems obsessed with expensive and old technologies and slashing clean energy subsidies too fast and too broadly” Doug Parr, Greenpeace’s chief scientist told the Financial Times.
At an economic level, subsidising the production of a good or the provision of a service makes sense where there is complete market failure, such that the good or service will never be supplied (or only at a price which is practically un-affordable to the majority of consumers); and where the total benefit to the welfare of consumers equals the cost of the subsidy.
As to the supply of electricity, there is NO market failure; affordable power is available around-the-clock in all developed economies; and has been so for half-a-century or more. So that point of ‘justification’ for endless wind-welfare goes nowhere.
Short of true ‘market failure’, another potential justification for subsidies paid to producers is where an ‘infant industry’ needs a ‘kickstart’ to get going. The argument is that the ‘new’ industry will ‘create’ new jobs; and, therefore, justify the subsidy, which can be withdrawn after a period sufficient to allow the industry to develop to a point where the subsidy is no longer needed, at all.
That’s where wind power scores two strikes: the wind industry has been telling us it can ween itself off subsidies (but just not now) for over 30 years.
The third – and final – strike is that wind power (despite being able to slosh in a massive subsidy trough) simply cannot provide meaningful power (ie, power available on-demand) – as the Brits are learning to their horror.
With winter looming, Britons are bracing for another season of frosty blackouts, as its wind power calamity takes full effect: the consequence of wind power failures will be mandatory power cuts to productive industries – killing real output and real jobs; and rocketing prices needed to pay real generators to keep reserve capacity – just to keep households lit.
David ‘The Terminator’ Cameron’s decision to scrap wind power subsidies is not just driven by politics; it’s a recognition that the £billions in subsidies thrown at wind power outfits have delivered nothing but energy market chaos in return – as the next two articles demonstrate.
Factories face switch-off to keep household lights on, National Grid warns
15 October 2015
Rising risk of blackouts means factories may need to be paid to switch off on weekday evenings to keep household lights on
Factories may have to shut down on weekday evenings this winter to keep household lights on as Britain faces the worst power crunch in a decade, National Grid has warned.
There is an “increased likelihood” that there will be “insufficient supply available in the market to meet demand”, forcing the UK to rely on “last resort” measures such as paying factories to power down, National Grid warned.
The risk of blackouts will be the highest since 2007/08, even once emergency plans to reduce energy demand from businesses and fire up old mothballed plant have been deployed, analysis released on Thursday shows.
Britain’s spare capacity margin – the effective ‘safety buffer’ between peak electricity demand and available power supplies – will be just 5.1 per cent once the emergency measures are used.
Without such intervention to artificially bolster supplies, the margin would have fallen to just 1.2 per cent, the lowest in a decade National Grid confirmed.
In a report, the company said there was an “increased likelihood” that it would have to pay large businesses to switch off between 4pm and 8pm during the week.
Businesses with 130 megawatts of capacity have signed up to take part in the scheme, which is voluntary. They will be paid for taking part, even if they are not actually called upon – as happened last winter.
A further 2.29 gigawatts of power plant capacity that would not otherwise be available will be paid to remain on standby to fire up if needed.
Such action would only be taken “as a last resort in the event that there is insufficient supply available in the market to meet demand”, it said.
Analysis by Ofgem, the energy regulator, suggests that without the emergency interventions, a blackout during a cold snap would be highly likely.
The risk of “controlled disconnections”, in which customers’ power supplies are cut off, could have been as high as a “one in one year” event – implying an incident would have been expected at some point during the winter.
The tightening of supplies has been caused by the old coal plants being forced to close by environmental rules more quickly than new plants are being built.
More coal plants and old nuclear plants are expected to close in coming years, worsening the crisis.
The GMB Union, which represents energy workers, has accused the Government and National Grid of complacency with 7.4 gigawatts of capacity due to be lost as nine power stations close during 2016.
Ofgem forecasts suggest that by next winter Britain could experience ‘negative margins’ – meaning output from Britain’s power plants would not be enough to meet peak demand – if it is very calm, resulting in low wind turbine output.
By 2018/19 a new Government subsidy scheme called the ‘capacity market’ is due to come into effect, designed to pay power plants to guarantee they will be available to keep the lights on.
But that scheme has been called into question after the Telegraph revealed the only new gas plant due to be built through the scheme is in doubt, with its developers unable to secure funding.
Expert have warned a solution to keep the lights is likely to require more subsidies to be paid to new plants, raising bills for consumers.
Cordi O’Hara, director of UK market operations for National Grid, said: “Electricity margins are manageable throughout the winter period and we believe we have the right tools in place to manage the system. This includes using the 2.4 GW of additional balancing services that we have ready in place for times of highest demand.”
Amber Rudd, the energy secretary, said: “Keeping the lights on is non-negotiable. National Grid has the right tools in place to manage the system this winter and we will ensure that they continue to do so in future.
“Our number one priority is to ensure that hardworking families and businesses have access to secure, affordable energy supplies they can rely on.
“In the longer term we are investing in infrastructure and low-carbon energy supplies, such as nuclear and shale gas, to improve energy security for future generations.”
Here’s The Times’ take on Britain’s brewing wind power disaster.
Households to pay for winter energy crisis
16 October 2015
Families could pay more for energy this winter as power stations invest to minimise the threat of power cuts.
The retirement of ageing coal-fired stations and a reliance on intermittent wind energy have left Britain’s system more vulnerable to supply shocks than at any time for at least a decade, National Grid said yesterday. It warned that the margin of spare capacity this winter would be 5.1 per cent, compared with 6.1 per cent a year ago.
National Grid set out measures to protect supplies, which may lead to higher bills. They include temporarily cutting power to factories and paying mothballed power stations to be ready at short notice. Without these measures, the margin would be 1.2 per cent.
Power companies will be paid up to £3,000 per megawatt hour during shortfalls. The wholesale price is about £40 per megawatt hour. If National Grid is concerned about a shortage, it will issue an alert to power producers. Stations that can supply extra power will be paid the “triad price” as a reward.
Until this year, the triad price was capped at £300. Ofgem has raised it to provide an incentive for generators to maintain extra capacity. National Grid said measures would add only 50p to the average bills, but this did not include the triad prices.