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Electric shock…

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The chart above shows that from the end of April to the end of September this year solar panels installed in the fields and on the roofs of British houses generated more electricity than Britain’s ageing coal-fired power stations.  Over those five months, solar generated an estimated 6,964 gigawatt hours (Gwh) and coal 6,342 Gwh, so solar generated 5.4% of Britain’s electricity supply and coal 4.7%.  Of course the amount of electricity generated by solar will fall significantly as we go into winter with shorter daylight hours, a weaker sun and more rainy weather so in this period the majority of British electricity will end up being generated by gas.  Up until 2010 Britain was self- sufficient in gas production but in 2016, as the North Sea gas fields near the end of production, we import the majority of our gas and, as the British Pound has devalued, imports are going to be more expensive. The renewable energy sector has made much of the fact that solar energy production has exceeded the energy produced by coal.  But unfortunately this is as much to do with the phasing out of highly polluting energy production and mechanical breakdowns as it has with any significant advance in the amount of solar energy being produced.  Indeed a landmark was passed earlier this year when, at midnight on the 10th May, all of Britain’s coal-powered electricity generating stations went offline until 0400 hours.  You may think that a mere four hours without coal-powered electricity seems unremarkable but this hadn’t happened in Britain since coal was first used for electricity production in 1882.  Coal underpinned Britain’s industrial revolution and even as late as 1921 more than one and a quarter million people were employed in coal production.  Fast forward to December last year and just over 2,000 were left working in the industry and Britain is set to totally eliminate dirty coal-powered electricity generation by 2025 to meet internationally agreed clean energy standards.   What will this mean to British consumers?  I pointed out in this article in August that they already pay an exceptionally high price for electricity and gas as, under the prevailing neo-liberal political philosophy, all our utility services have been privatised.  This privatisation allows just a handful of companies, many of them foreign, to act as expensive gatekeepers to everybody wanting to use electricity or gas.  But if you think prices are being hiked now, I can tell you that we are being deliberately put on a path that will make things much, much worse.  What is happening in the U.K. energy market means that the price that our consumers are forced to pay to keep their homes warm and well lit, to wash and cook, and to run all the electronic devices deemed essential to modern life, will soon be the most expensive on the globe.  According to the government's own figures the British already pay the third highest price for electricity in the world, and the most that any country in the G7 pays (excluding taxes).  To put these figures in perspective: British people already pay 59% above the global average cost for electricity.  And when it comes to gas prices, at present they still pay around the global average, although recently gas prices have been falling much faster in other countries than they have here.   In Britain we have to use gas to produce just under half of our electricity and, as the gas infrastructure is currently up for sale to the highest bidder, consumer prices will inexorably rise as yet another foreign gatekeeper extracts a toll charge to squeeze as high a return as possible on a very safe investment. I’ve written before about Roger Witcomb who was recently in charge of reviewing energy prices in Britain and how he was quickly pushed to one side when he had the temerity to suggest that what these handful of companies (the gatekeepers): “...are actually doing – and I shall get into trouble for this – is metering and billing. They are not making the stuff.”  This brave soul went on to say that a profit margin of 7% for metering and billing was too high and that it should be nearer 1.2%.  I’m not sure what happened to him but what he said was eminently reasonable.  Just think about it:  At a time when banks hold some $10 trillion of negatively-yielding sovereign bonds, the chance to actually realise a profit of more than 7% on a vital national service like supplying energy will be highly attractive to any investment fund anywhere.  But the sad truth ultimately behind all this financial manipulation means that the British end up paying far more than necessary for their energy and this is tragic as it particularly affects the poor and vulnerable.  A government briefing paper published in March this year, says that in 2014, [which had a very mild winter] no less than 2.38 million households in England were defined as being in fuel poverty, that’s 10.6% of all households.  Fuel poverty means the household can’t afford to heat their homes adequately. It would be comforting to think that a Labour Government would be more humane about such things but the energy hikes started when they were in power.  The new Conservative Prime Minister, Theresa May, an ex-grammar school girl, may have chosen a cabinet with fewer privately educated members than there have been for 70 years, but it seems that all the members of her Government are still in thrall to the predominant “free market” ideology.  That the concept of a “free market” is a disastrous fallacy should be obvious to all but the brain-dead at a time when Central Banks keep printing money and distributing it to banks and favoured companies.  The Bank of England recently started its own Corporate Bond Purchase scheme supplying cheap (new, electronically-printed) money to a select list of approved companies which include Apple, Daimler, Deutsche Telekom, Dong Energy, Hutchison Whampoa and McDonald’s amongst the needy.  Having looked down the full list I noted that there are few British companies among them, despite the idea that a country’s corporate bonds are meant to support that country’s own enterprising businesses.  In August I wrote about a brilliantly successful British company, ARM Holdings plc, but even ARM isn’t included on the Bank of England’s approved list.  So much for stimulating home-grown industry.  Other nations are sensible and do things differently:  According to Bloomberg estimates, by the end of next year, the Bank of Japan will be the number one shareholder in 55 of Japan’s largest companies.  In effect corporate bond buying by Central Banks is creating a new form of nationalisation, as ever more desperate measures are taken to try to stimulate the depressed global economy.  So much for the free market doctrine which has inexplicably transmogrified into a philosophy of “free money for the less needy.”  These complicated and selfish economic manoeuvres are particularly unfortunate for the beleaguered British because our leaders seem unable or unwilling to grasp the simple fact that essential utilities, like energy, must be provided at the lowest possible cost or the economy, and therefore employment, will stagnate.  Cheap power is also essential for business, particularly for manufacturing businesses, as they are the biggest users.  Britain will be doomed to always struggle to be competitive in the export of manufactured goods if our industrial companies have to pay considerably more for energy than those in other countries.  One would really like to think that the collective wisdom of government would realise this but, sadly, we live in an age of professional egocentric politicians whose only prior experience of life is political research, public relations or lobbying. As if to cruelly compound the disproportionately high cost of energy for the British, the government has contracted to purchase electricity from Hinkley Point C, a nuclear power plant being built by the French state owned company EDF, using Chinese expertise, at a “strike” price agreed in 2012 of £92.50 per Megawatt hour.  Naturally this will be adjusted for inflation for the next 35 years.  The guaranteed £92.50 per Megawatt hour is, of course, a wholesale price because the electricity can only be sold through the monopoly gatekeepers.  This means that unless the situation changes the hapless U.K. consumer will end-up paying another 7% or so on top of whatever becomes the final exorbitant price for the metering and billing service.  It’s depressing to note that the current spot price for electricity is £30 per Megawatt hour and the National Audit Office, using a price of £45 per Megawatt hour, estimates the additional bill for consumers has already risen from the original 2013 estimate of £6.1 billion to £29.7 billion because it could be bought more cheaply from other sources.  The electricity produced by Hinkley Point C will be so unbelievably expensive because, besides the guaranteed price, the government will also provide £2 billion to fund the development of the building.  And, as we’re talking about a nuclear power station, the government (meaning the poor old British public yet again) will also have to pay the majority of the decommissioning costs, and these will continue well beyond the life of our great, great grandchildren.  So you can see that whatever happens in the future the price of electricity for British consumers is going to rise and rise. It seems bizarre that now, when the production cost of clean renewable energy is speedily going down and efficient storage methods are rapidly going up, the U.K. has ignored all that and instead has committed itself for the next 35 years to an unproven and outrageously expensive nuclear power station essentially owned by two foreign countries but, of course, requiring a huge financial input from the taxpayer.   Didn’t the government note that for four days in May this year Portugal used only renewable energy?  And did they miss the even more impressive fact that Germany, with all its heavy industrial companies, managed to use only renewable electricity for 24 hours also in May? More enlightened countries than Britain are concentrating on developing renewable technologies and the cost of production will drop exponentially as the manufacturing processes are scaled up.  The price of solar installations has gone down by 75% in the last five years while the cost of wind turbines has actually halved in that period.  On an individual level in Britain, solar, earth and air source heat pumps, and wood-burning stoves are gaining popularity with those who can afford them, despite the government back-tracking on its financial incentives.   It’s notable that although China is still building coal-fired power stations in some areas, it’s also leading in solar production and producing thousands of wind turbines.  One wind turbine was being installed in China every single hour of every single day throughout last year, and that impressive rolling programme continues.  China apart, the international agreements about the reality of climate change means that carbon-based fuels are on the way out, despite upsetting all the vested interests.  In Britain, commercial wind farms (on and off-shore), and solar farms are increasing but there’s been no government insistence that all industrial complexes, large public buildings and new-build houses install solar panels and or heat pumps where applicable.  Why on earth not?  It also seems very odd to me that, apart from one area in Wales, we haven’t looked seriously at harnessing tidal energy when this country has the second highest tidal flow in the world.  In fact tidal energy doesn’t feature at all in Britain’s future energy plans. So, until pigs fly and we get a wise and humane government we’re stuck and the price we pay for our electricity and gas is going to escalate.  At an individual level the only thing we can do to help ourselves is to cut down on the amount of energy we use.  This is possible by following the government’s advice and installing efficient insulation; making our homes draught-proof; changing light bulbs to LED; double-glazing windows; and updating old, power-hungry boilers, fridges and freezers, as well as simply dressing warmly indoors.  Plus, of course, utilising some kind of renewable energy like solar panels or heat pumps.  But unfortunately, as the government well knows, those people October 2016
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The chart above shows that from the end of April to the end of September this year solar panels installed in the fields and on the roofs of British houses generated more electricity than Britain’s ageing coal-fired power stations.  Over those five months, solar generated an estimated 6,964 gigawatt hours (Gwh) and coal 6,342 Gwh, so solar generated 5.4% of Britain’s electricity supply and coal 4.7%.  Of course the amount of electricity generated by solar will fall significantly as we go into winter with shorter daylight hours, a weaker sun and more rainy weather so in this period the majority of British electricity will end up being generated by gas.  Up until 2010 Britain was self-sufficient in gas production but in 2016, as the North Sea gas fields near the end of production, we import the majority of our gas and, as the British Pound has devalued, imports are going to be more expensive. The renewable energy sector has made much of the fact that solar energy production has exceeded the energy produced by coal.  But unfortunately this is as much to do with the phasing out of highly polluting energy production and mechanical breakdowns as it has with any significant advance in the amount of solar energy being produced.  Indeed a landmark was passed earlier this year when, at midnight on the 10th May, all of Britain’s coal-powered electricity generating stations went offline until 0400 hours.  You may think that a mere four hours without coal-powered electricity seems unremarkable but this hadn’t happened in Britain since coal was first used for electricity production in 1882.  Coal underpinned Britain’s industrial revolution and even as late as 1921 more than one and a quarter million people were employed in coal production.  Fast forward to December last year and just over 2,000 were left working in the industry and Britain is set to totally eliminate dirty coal-powered electricity generation by 2025 to meet internationally agreed clean energy standards.   What will this mean to British consumers?  I pointed out in this article in August that they already pay an exceptionally high price for electricity and gas as, under the prevailing neo-liberal political philosophy, all our utility services have been privatised.  This privatisation allows just a handful of companies, many of them foreign, to act as expensive gatekeepers to everybody wanting to use electricity or gas.  But if you think prices are being hiked now, I can tell you that we are being deliberately put on a path that will make things much, much worse.  What is happening in the U.K. energy market means that the price that our consumers are forced to pay to keep their homes warm and well lit, to wash and cook, and to run all the electronic devices deemed essential to modern life, will soon be the most expensive on the globe.  According to the government's own figures the British already pay the third highest price for electricity in the world, and the most that any country in the G7 pays (excluding taxes).  To put these figures in perspective: British people already pay 59% above the global average cost for electricity.  And when it comes to gas prices, at present they still pay around the global average, although recently gas prices have been falling much faster in other countries than they have here.   In Britain we have to use gas to produce just under half of our electricity and, as the gas infrastructure is currently up for sale to the highest bidder, consumer prices will inexorably rise as yet another foreign gatekeeper extracts a toll charge to squeeze as high a return as possible on a very safe investment. I’ve written before about Roger Witcomb who was recently in charge of reviewing energy prices in Britain and how he was quickly pushed to one side when he had the temerity to suggest that what these handful of companies (the gatekeepers): “...are actually doing – and I shall get into trouble for this – is metering and billing. They are not making the stuff.”  This brave soul went on to say that a profit margin of 7% for metering and billing was too high and that it should be nearer 1.2%.  I’m not sure what happened to him but what he said was eminently reasonable.  Just think about it:  At a time when banks hold some $10 trillion of negatively-yielding sovereign bonds, the chance to actually realise a profit of more than 7% on a vital national service like supplying energy will be highly attractive to any investment fund anywhere.  But the sad truth ultimately behind all this financial manipulation means that the British end up paying far more than necessary for their energy and this is tragic as it particularly affects the poor and vulnerable.  A government briefing paper published in March this year, says that in 2014, [which had a very mild winter] no less than 2.38 million households in England were defined as being in fuel poverty, that’s 10.6% of all households.  Fuel poverty means the household can’t afford to heat their homes adequately. It would be comforting to think that a Labour Government would be more humane about such things but the energy hikes started when they were in power.  The new Conservative Prime Minister, Theresa May, an ex-grammar school girl, may have chosen a cabinet with fewer privately educated members than there have been for 70 years, but it seems that all the members of her Government are still in thrall to the predominant “free market” ideology.  That the concept of a “free market” is a disastrous fallacy should be obvious to all but the brain-dead at a time when Central Banks keep printing money and distributing it to banks and favoured companies.  The Bank of England recently started its own Corporate Bond Purchase scheme supplying cheap (new, electronically-printed) money to a select list of approved companies which include Apple, Daimler, Deutsche Telekom, Dong Energy, Hutchison Whampoa and McDonald’s amongst the needy.  Having looked down the full list I noted that there are few British companies among them, despite the idea that a country’s corporate bonds are meant to support that country’s own enterprising businesses.  In August I wrote about a brilliantly successful British company, ARM Holdings plc, but even ARM isn’t included on the Bank of England’s approved list.  So much for stimulating home-grown industry.  Other nations are sensible and do things differently:  According to Bloomberg estimates, by the end of next year, the Bank of Japan will be the number one shareholder in 55 of Japan’s largest companies.  In effect corporate bond buying by Central Banks is creating a new form of nationalisation, as ever more desperate measures are taken to try to stimulate the depressed global economy.  So much for the free market doctrine which has inexplicably transmogrified into a philosophy of “free money for the less needy.”  These complicated and selfish economic manoeuvres are particularly unfortunate for the beleaguered British because our leaders seem unable or unwilling to grasp the simple fact that essential utilities, like energy, must be provided at the lowest possible cost or the economy, and therefore employment, will stagnate.  Cheap power is also essential for business, particularly for manufacturing businesses, as they are the biggest users.  Britain will be doomed to always struggle to be competitive in the export of manufactured goods if our industrial companies have to pay considerably more for energy than those in other countries.  One would really like to think that the collective wisdom of government would realise this but, sadly, we live in an age of professional egocentric politicians whose only prior experience of life is political research, public relations or lobbying. As if to cruelly compound the disproportionately high cost of energy for the British, the government has contracted to purchase electricity from Hinkley Point C, a nuclear power plant being built by the French state owned company EDF, using Chinese expertise, at a “strike” price agreed in 2012 of £92.50 per Megawatt hour.  Naturally this will be adjusted for inflation for the next 35 years.  The guaranteed £92.50 per Megawatt hour is, of course, a wholesale price because the electricity can only be sold through the monopoly gatekeepers.  This means that unless the situation changes the hapless U.K. consumer will end-up paying another 7% or so on top of whatever becomes the final exorbitant price for the metering and billing service.  It’s depressing to note that the current spot price for electricity is £30 per Megawatt hour and the National Audit Office, using a price of £45 per Megawatt hour, estimates the additional bill for consumers has already risen from the original 2013 estimate of £6.1 billion to £29.7 billion because it could be bought more cheaply from other sources.  The electricity produced by Hinkley Point C will be so unbelievably expensive because, besides the guaranteed price, the government will also provide £2 billion to fund the development of the building.  And, as we’re talking about a nuclear power station, the government (meaning the poor old British public yet again) will also have to pay the majority of the decommissioning costs, and these will continue well beyond the life of our great, great grandchildren.  So you can see that whatever happens in the future the price of electricity for British consumers is going to rise and rise. It seems bizarre that now, when the production cost of clean renewable energy is speedily going down and efficient storage methods are rapidly going up, the U.K. has ignored all that and instead has committed itself for the next 35 years to an unproven and outrageously expensive nuclear power station essentially owned by two foreign countries but, of course, requiring a huge financial input from the taxpayer.   Didn’t the government note that for four days in May this year Portugal used only renewable energy?   And did they miss the even more impressive fact that Germany, with all its heavy industrial companies, managed to use only renewable electricity for 24 hours also in May? More enlightened countries than Britain are concentrating on developing renewable technologies and the cost of production will drop exponentially as the manufacturing processes are scaled up.  The price of solar installations has gone down by 75% in the last five years while the cost of wind turbines has actually halved in that period.  On an individual level in Britain, solar, earth and air source heat pumps, and wood-burning stoves are gaining popularity with those who can afford them, despite the government back-tracking on its financial incentives.   It’s notable that although China is still building coal-fired power stations in some areas, it’s also leading in solar production and producing thousands of wind turbines.  One wind turbine was being installed in China every single hour of every single day throughout last year, and that impressive rolling programme continues.  China apart, the international agreements about the reality of climate change means that carbon-based fuels are on the way out, despite upsetting all the vested interests.  In Britain, commercial wind farms (on and off-shore), and solar farms are increasing but there’s been no government insistence that all industrial complexes, large public buildings and new-build houses install solar panels and or heat pumps where applicable.  Why on earth not?  It also seems very odd to me that, apart from one area in Wales, we haven’t looked seriously at harnessing tidal energy when this country has the second highest tidal flow in the world.  In fact tidal energy doesn’t feature at all in Britain’s future energy plans. So, until pigs fly and we get a wise and humane government we’re stuck and the price we pay for our electricity and gas is going to escalate.  At an individual level the only thing we can do to help ourselves is to cut down on the amount of energy we use.  This is possible by following the government’s advice and installing efficient insulation; making our homes draught-proof; changing light bulbs to LED; double-glazing windows; and updating old, power- hungry boilers, fridges and freezers, as well as simply dressing warmly indoors.  Plus, of course, utilising some kind of renewable energy like solar panels or heat pumps.  But unfortunately, as the government well knows, those people October 2016
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Electric shock…

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