MorganEnergy

In the wake of the Fukushima disaster in Japan, most people have been predicting the demise of the nuclear power industry. Recent events appear to have proved that true, with German Chancellor Angela Merkel choosing to shut 7 of her country’s older plants, and promising an exit from nuclear generation by 2022. Switzerland’s cabinet has voted to follow suit. This article by John Daly on oilprice.com, titled “Nuclear Twilight in Europe”, is typical of the sort of media reaction we have seen.

Not every European leader agrees with the German line. In Italy Silvio Berlusconi was keen to press ahead with new nuclear build. Given his ability to win elections despite being mired in all sorts of scandals, you might have thought that the Italian Prime Minister would be unconcerned at being forced to fight a referendum on the subject, but Berlusconi was so afraid of the result that he put all his energy (and considerable media clout) into trying to keep the turnout below the 50% needed for the result to be legally binding. It didn’t work and, as The Guardian reported, well over 90% of the people who did vote were against nuclear power.

Some countries in Europe have always been more well-disposed towards nuclear. Sweden has 10 operating nuclear plants that supply over 40% of the country’s electricity. Following the Three Mile Island disaster a referendum voted to close all of the existing plants by 2010, but most of them are still operating and the Swedish parliament has voted to allow new nuclear build. That, of course, was before Fukushima. Also Vattenfall has had a particularly difficult time of late with the nuclear plants it operates in Germany, particularly Krümmel and Brunsbüttel. A recent International Atomic Energy Agency report listed Vattenfall as the worst nuclear operator in Europe.

Finland is one of the few countries in the world currently building a new nuclear power station. The Finnish people, however, are not happy, and haven’t been since well before Fukushima. The Olkiluoto 3 reactor is currently scheduled to come online 4 years late, and massively over budget.

The existence of nuclear power in an interconnected market means that even countries that are firmly opposed to nuclear make use of it. At today’s Economist UK Energy Summit, Director-General Philip Lowe noted that Austria gets 6% of its electricity from nuclear, despite public opinion being very much against it.

The one country in Europe that has always been a flag bearer for nuclear, however, is France. That support has continued, despite the problems in Japan. In the wake of the Fukushima disaster the European Union decided to undertake a program of stress tests on all nuclear power stations within its borders. No country was likely to vote against that, but pro-nuclear countries have been working behind the scenes to make sure that the tests were not as stringent as they might be. This lobbying has been led by France, the Czech Republic, and particularly by the UK.

Today the UK government released a list of 8 sites at which new nuclear build is planned to be authorized. In order to forestall public objections, all 8 plants will be built on brownfield sites adjacent to existing nuclear reactors. The plans still have to be voted on by parliament, but given that they were put in motion by the preceding Labour government, it will take a fairly substantial u-turn for the vote to fail. And if the UK government manages to get nuclear plants built despite the inevitable public opposition, other European governments might once again reconsider their options.

Well, that has been a rather busy two years, and blogging rather fell by the wayside. Things are a little calmer now. Also Lynne Kiesling at Knowledge Problem has been lamenting the lack of women economists in the blogosphere. So I’m going to try to get this thing back on a regular schedule.

One of the things I have been doing over the past couple of years is maintaining a website for my friend and colleague, Perry Sioshansi. You can find it here. The articles there are all from his magazine, EEnergy Informer.

I’ll be based mainly in Europe for the foreseeable future, so most of what I write will be about European issues. There will be no prizes for guessing what the main topic of conversation is here.

As I expected, environmental groups are not happy with the British government’s plans for an 8GW tidal barrage across the Severn Estuary. In theory the government has whittled a long list of 10 tidal power projects down to a short list of 5, and will eventually choose the best project. In practice no one expects them to opt for anything other than the massive 8GW scheme because that’s the one that will deliver the most generating capacity. Unfortunately it may also be the project that causes most environmental damage.

Britain’s environmentalists are not taking this lying down. A coalition formed by the National Trust, the Royal Society for the Protection of Birds, the WWF and the Anglers’ Trust has commissioned a report from the engineering consultancy, W.S. Atkins. That report has now been published, and it casts significant doubt on the process that produced the short list from the long list. In particular Atkins alleges that the government report:

• Assumed that two-way generation would produce similar or less power to ebb-only generation; and
• Used 30-year-old calculations that seriously underestimate the potential output of some schemes

The two-way generation issue is particularly important as such schemes are believed to be less environmentally damaging than ebb-only generation. The government short list eliminated the “tidal reef” project based on this technology that was the preferred candidate of the environmental groups.

You have to have a certain amount of sympathy for the government bureaucrats for wanting to avoid a scheme that bills itself as a, “Totally new concept in tidal power generation”. On the other hand, this debate isn’t going to go away, and trying to eliminate a major rival candidate early on was perhaps not a good idea.

More coverage in The Guardian.

I had a visitor today. He claimed to be from Scottish Power and he needed to read the electricity meter. Although he very carefully didn’t say so, it was pretty clear that what he wanted was to get information about my usage levels so that he could give me a quote with a view to luring me away from my current supplier. I sent him packing, and thought no more about it until I saw a blog post by a friend who had experienced a similar visit.

The difference here is that the meter here is on the wall outside the house, whereas Juliet’s meter is inside the house. Consequently the Scottish Power salesman was keen to get entry to her home. Once again he wasn’t admitting to being a salesman, but instead spouted the nonsense about needing to do a “tariff check”. Because this involved someone trying to get into the house, Juliet not only sent the fellow away, she reported him to the police.

Is this reasonable? Actually I think it is. It is one thing for an electricity salesman to come to the door. It is quite another for him to try to trick his way into someone’s house. Juliet can look after herself (she’s a black belt at something dangerous), but older people could easily be quite frightened by this. That’s particularly so because the British media keep warning us against “distraction burglaries”, where one man distracts the householder with some fancy tale while the other sneaks into the house to rob it.

Given the scale of the operation (Juliet lives quite a long way from where I am), I have no doubt that this was a legitimate Scottish Power sales campaign, though I note that such things are often outsourced to specialist doorstep sales companies so the staff involved, and even the choice of tactics, may not have much connection with Scottish Power. It is, however, a rather stupid campaign, and one that is likely to backfire on the company. I’m writing this post in part in the hope that someone from Scottish Power will see it and ask some hard questions of their subcontractors.

More generally, however, I wonder about a retail market in which these things happen. The intention in opening up residential supply to competition was always to introduce healthy competition to the market. But experience has shown that customers are not interested in switching supplier for any reason other than price, and the savings available are often so small that no one can be bothered – hence the high pressure sales techniques. This new “tariff check” scam is quite mild compared to what used to go on before Ofgem got a grip on proceedings. We might have competition, but whether it is healthy or not appears to be open to debate.

The irony of the whole affair is that I’m currently staying with a friend, and when she got home she informed me that she’s already with Scottish Power, so clearly whoever is running the campaign isn’t bothering to check which households are already sold.

The May 2009 issue of EEnergy Informer is now available. Here is the contents list:

• US Poised To Fire On All Cylinders In Copenhagen
• Does it Make Sense For Oil Rich UAE To Go Nuclear?
• What To Do About Carbon’s Deeply Unequal Effects
• No More Free Carbon: EPA Requires Carbon Reporting
• Abu Dhabi’s Masdar Project: Desert Mirage Or Miracle?
• How Many Green Jobs Will There Be?
• Missing Headline: CAISO Goes Nodal And Nothing Happens
• Wind’s Global Contribution to Grow
• Global Solar PV Installations Reach 6 GW Milestone in 2008

The article on the Masdar Project is available for free. All other articles currently require a subscription to the paper edition of the magazine. To request a sample copy of EEnergy Informer click here.

The UK Government has published a list of 11 sites at which it hopes new nuclear power stations will be built. According to The Guardian, the sites are:

Dungeness in Kent; Sizewell in Suffolk; Hartlepool in Cleveland; Heysham in Lancashire; Sellafield in Cumbria; Braystones in Cumbria; Kirksanton in Cumbria; Wylfa Peninsula in Anglesey; Oldbury in Gloucestershire; Hinkley Point in Somerset and Bradwell in Essex.

The majority of these locations (9) already house existing nuclear installations. The other two are close to the nuclear re-processing facility at Sellafield. The government hopes that the choice of brownfield sites will ease the process of planning inquiries, though anti-nuclear protesters are already lining up to challenge the process.

Meanwhile the companies involved are busy courting local public opinion. Here in Somerset homes have received leaflets from EdF that talk enthusiastically about the new jobs that will be created, and about the nuclear skills training center that will be established in conjunction with a local college. Hinkley Point is a particularly interesting site as it overlooks the Severn Estuary more or less exactly where the proposed tidal barrage would be built. This gives local people a genuine choice as to how they want their future electricity generated: by a nuclear power station, or by a renewable energy project that environmental campaigners say will be disastrous for local wildlife. The next year or so could be interesting.

Today’s issue of the Wall Street Journal has a major article about cyber-attacks on the US electricity grid. Apparently spies from a number of countries, including Russia and China, have been covertly hacking into electricity systems in the US.

The espionage appeared pervasive across the U.S. and doesn’t target a particular company or region, said a former Department of Homeland Security official. “There are intrusions, and they are growing,” the former official said, referring to electrical systems. “There were a lot last year.”

Thus far no damage has been reported, and the hacking activity appears to have been more of a scouting mission than an all out attack. However, officials worry that malware may have been left behind and could be activated in the event that hostilities break out.

The other major problem is, of course, working out who is attacking you:

It is nearly impossible to know whether or not an attack is government-sponsored because of the difficulty in tracking true identities in cyberspace. U.S. officials said investigators have followed electronic trails of stolen data to China and Russia.

Russian and Chinese officials have denied any official involvement in the attacks.

Although attacks of this type have been going on for some time, it is probably no accident that the WSJ has chosen to report them now. The Smart Grid movement is finally managing to get some traction, and one of many questions being asked is whether there should be an open standard for supply of equipment, or if instead a single company should be tasked with developing a secret and supposedly hack-proof technology. The WSJ acknowledges this in a supporting article that asks whether the Smart Grid would help repel attackers, or open the door to them.

At one level this is just another one of those traditional Washington arguments where a big business tries to persuade Congress that it needs to be granted monopoly control of some aspect of the economy under some pretext or other. However, in this case the pretext could be worryingly wrong, because open standards may be the best solution.

Last week security expert Bruce Schneier worried about who should be in charge of cybersecurity in the US. He pointed out that organizations like the NSA tend towards paranoia and, if given sweeping powers, will be tempted to use those powers against imagined internal enemies rather than external ones. In addition security organizations like the NSA often have an incentive to preserve back doors in systems so that they can use them themselves, rather than plug them so that others cannot.

The main point, however, is that security systems can never be made hack-proof. As technology journalist Cory Doctorow explains, discussing a rather different area of business, the only way to be sure that a security system is actually unbreakable is to make it public and let enthusiastic hackers try to break it. Contests such as this one held last month to test the security of web browsers do far more to keep our computer systems secure than bureaucratic secrecy.

The April 2009 issue of EEnergy Informer is now available. Here is the contents list:

• Does Clean And Green Rhyme With Recession And Unemployment?
• EDF And ENEL to Launch Italy’s Nuclear Future
• Coal Fighting For Survival
• A Dying Breed: AAA Rating
• Will Obama’s Climate Plan Be Too Taxing On Sputtering Economy?
• In Search Of Elusive Carbon Neutrality
• Don’t Like Coal? Try More Energy Efficiency
• Greening of Michigan And New York
• Will AMI Investments Pay Off?
• USCAP: Being At The Table And Ending Up As Lunch
• Disappointed With Markets, Maryland Toys With Re-Regulation

The article on the US climate plan is available for free. All other articles currently require a subscription to the paper edition of the magazine. To subscribe to EEnergy Informer click here.

Despite having plenty of good prospects for wind energy, the UK has lagged behind both other European countries and America in deployment of wind farms. The problem is well known: planning permission. NIMBYism is a major issue – the British public has got it into its head that a wind farm is a terrible eyesore than is to be resisted at all costs. However, environmental groups, including the Royal Society for the Protection of Birds (RSPB), have also campaigned strongly against wind farms on the grounds that they are a danger to our feathered friends.

Not any more. Much to the delight of the British Wind Energy Association (BWEA), the RSPB has published a report titled Positive Planning for Onshore Wind. Produced by the Institute for European Environmental Policy (IEEP), the report states that risks to wildlife can be minimized by sensible planning and choice of location. Ruth Davis head of Climate Change Policy at the RSPB said:

“This report shows that if we get it right, the UK can produce huge amounts of clean energy without time-consuming conflicts and harm to our wildlife. Get it wrong and people may reject wind power. That would be disastrous.”

Actually, of course, the British people rejected wind power en masse a long time ago, and the RSPB should accept a large share of the blame for that. But it is good to see them change their stance. Possibly their minds were powerfully concentrated by the government’s enthusiasm for the Severn Barrage scheme which, if it goes ahead, is predicted to destroy large areas of wetlands that are vital to many bird species. The main advantage of the barrage, as far as the government is concerned, is the ability to get a huge amount of new generation from only one public inquiry, rather than have to fight environmental protesters in many small battles all over the country.

The full RSPB report is available here.

According to the consumer advocacy organization, Which?, energy companies in the UK are getting large amounts of money in interest-free loans from customers. It works like this: customers get a lower tariff if they pay by direct debit, but rather than charging them the correct amount of the bill each month the utility helpfully smooths the pain by charging a flat amount each month. In theory this should average out at the correct amount each year, but the companies generally seem to manage to estimate usage that causes the customer to pay for more energy than they are actually using. Eventually, of course, the money has to be paid back, but in the meantime the utility has been getting a free loan.

For those of us who live in the UK the only real surprise about this is that it has taken people so long to catch onto this scam. Now that Which? has made a fuss, and politicians have noticed, hopefully Ofgem will do something about it.

Coverage of the issue is available via Platts, the BBC and The Times.