Radio 4 Money Box interview with Dale Vince of Ecotricity

MattMattMattUK

BUFF said:

MattMattMattUK said:

If the government cared about energy supply, and I say if because it is obvious from their energy strategy that they do not, then over the last decade of Conservative rule they would have been investing in increased extraction from the north sea, a large scale nuclear power building project and hugely increased on and off shore wind production, as well as mandating all new builds are fitted with solar PV. 

Perhaps they do but it isn't their only concern (e.g. global warming & the future of the environment)?

Nuclear, solar and wind would protect the environment and be a positive usage for climate change. Even using UK gas is not a bad thing, it is better for the environment to use locally produced gas than to import gas from the Middle East and/or Russia.

BUFF said:
They have certainly given major tax breaks for North Sea production, they have certainly been trying (but failing) to do large scale nuclear building & on & off shore wind production has hugely increased (as long as the wind blows - beyond their cocntrol).

The tax breaks for North Sea exploration would be enough to build 6 large (3 GW) nuclear power stations ever year, the problem has always been finance, they expect either private companies, or the Chinese, to fund them, but that problem would be avoided if we funded them ourselves. Wind has increased, but not because of government help and if it received even 20% of the subsidy fossil fuels receive it's rollout would be considerably increased. 

BUFF said:
Obviously the government not being prepared to contribute to the cost of maintaining/refurbing Rough was not a good idea strategically but you can't blame the operators for their decision to lose it from an economic pov if the government wasn't willing to contribute.

It was a poor decision from the government, I agree that private companies cannot be expected to cover a reserve which they gain no net benefit from, but it could also have been mitigated by larger UK production, which should also remain a priority whilst we build up additional generation capacity, of which we will need a lot.

lesley2020

Hi Matt - or maybe we should be calling you '3M' - ;o)

Thanks for the very informative facts - always a relief to get those instead of uninformed or politically motivated opinion on this site.

Norway - I remember going to a friend's house over there and being alarmed to see tiny electric panel radiators as their only source of heating in the dead of a harsh winter. However the house turned out to be as warm as toast obviously due to properly designed construction and insulation. Anecdotal evidence talking to new UK house owners suggests that insulation has not improved much over here.

Nuclear - yes I think that the Greens in Germany may have shot themselves in the foot over their stance on this - which serves as a pertinent lesson about how we should always periodically review our firmly held beliefs.

I eventually came to the conclusion that it didn't seem that nuclear energy was inherently dangerous, just the lousy management of it and the accompanying secrecy. Had governments put in place serious monitoring of management and safety practices we would probably have lots more reactors and less need for gas.

Unfortunately the tendency of most recent UK governments to give big business a 'Get out of Jail Free' card by allowing them to use 'Self-certification' etc. meant that effective monitoring by the state was unlikely to be promoted as a solution.

Buster_Danog

MattMattMattUK said:

On top of that Russia has for two years now been reducing the amount of gas it sells to Europe, pushing up costs,

Although before the Ukraine situation Angela Merkel confirmed Russia had fulfilled its contractual obligations meaning many of the stories in the papers at that time were nonsense. I believe Russia even increased supply at one point. The Russians claimed that countries in the EU had bought gas from them on contracts agreed prior to the price rise which meant they were getting gas at a rate lower than the current market rate. Supposedly some of the gas companies in Europe had then sold that gas on as LNG because they were able to make large profits meaning they did not have the reserves they normally would which also contributed to the media frenzy.

Something doesn't sound right. The winters are said to be warm, but during the winter there were claims that there had been very cold weather during winter causing lower reserves than usual.

lesley2020

Buster_Danog said:

MattMattMattUK said:

On top of that Russia has for two years now been reducing the amount of gas it sells to Europe, pushing up costs,

Although before the Ukraine situation Angela Merkel confirmed Russia had fulfilled its contractual obligations meaning many of the stories in the papers at that time were nonsense. I believe Russia even increased supply at one point. The Russians claimed that countries in the EU had bought gas from them on contracts agreed prior to the price rise which meant they were getting gas at a rate lower than the current market rate. Supposedly some of the gas companies in Europe had then sold that gas on as LNG because they were able to make large profits meaning they did not have the reserves they normally would which also contributed to the media frenzy.

Something doesn't sound right. The winters are said to be warm, but during the winter there were claims that there had been very cold weather during winter causing lower reserves than usual.

Interesting, thanks. Unfortunately news reporting is more heat than light at the moment. As Churchill said 'The first casualty of War is the truth'.

BUFF

MattMattMattUK said:

Nuclear, solar and wind would protect the environment 

Nuclear, solar & wind don't protect the environment - but they may be less bad for it. They all have their downsides.

MattMattMattUK said:

The tax breaks for North Sea exploration would be enough to build 6 large (3 GW) nuclear power stations ever year, the problem has always been finance, they expect either private companies, or the Chinese, to fund them, but that problem would be avoided if we funded them ourselves. Wind has increased, but not because of government help and if it received even 20% of the subsidy fossil fuels receive it's rollout would be considerably increased. 

My understanding is that UK fossil fuel subsidies (tax breaks etc.) are of the order of £10 billion pa.. Hinkley C (a 3.2 GW plant) is costing well over £20 billion. That's not even 1/2 a plant per year let alone 6.
If the government was to fund them directly upfront it would have a greater effect on the population - higher taxes and/or lower services. Our political system supports short-termism as MPs all fear not being re-elected.

Wind is still subsidised but agreed not at that level.

p.s. any tips on multi-quoting on this forum? You seem to have it down but I struggle ...

markin

I think the calculated costs for Hinkley if the Government had just financed and owned it is far lower, and the actual cost isn't the up front build of 20bn its 81bn over 35 years and again probably half if you take out the profit for financing it.

https://unearthed.greenpeace.org/2015/10/21/qa-how-much-are-we-paying-for-hinkley-and-who-gets-the-benefit/

" Flamanville, on France’s northern coast, has been beset by overruns since construction started in 2007. It is currently projected to cost €10.5bn (£9.2bn) – a steal compared to Hinkley, but still three times its original budget. The Flamanville reactor is a new European pressurised reactor (EPR), the same troublesome design that is planned for Hinkley."

=========================

The good news is the Finland plant seems on track so far to turn on by 31.7.2022.

https://www.tvo.fi/en/index/production/plantunits/ol3/ol3forecast.html

MattMattMattUK

Buster_Danog said:

MattMattMattUK said:

On top of that Russia has for two years now been reducing the amount of gas it sells to Europe, pushing up costs,

Although before the Ukraine situation Angela Merkel confirmed Russia had fulfilled its contractual obligations meaning many of the stories in the papers at that time were nonsense.

Fulfilling it's contractual obligations is one thing, going back to 2015-2019 less than half the gas shipped to the EU from Russia was "contractual", which is detailed in long term contracts, the majority of it was bought in addition to the contracts. Some of the stories would have been "nonsense", others would have explained the difference and been factual.

Buster_Danog said:
I believe Russia even increased supply at one point. 

It varied supply throughout the year, it cut shipments significantly in 2020 and raised them slightly in 2021, they were still well below 2019 levels.

Buster_Danog said:
The Russians claimed that countries in the EU had bought gas from them on contracts agreed prior to the price rise which meant they were getting gas at a rate lower than the current market rate.

They had, that is how long term contracts work, the price they fixed the supply contract at would have been higher than the spot rate they fixed in at the time, but lower than the market rate later in the contract, both the EU countries and Gazprom fixed the contracts, being more comfortable with guaranteed supply and cost, and guaranteed revenue than risking a fluctuating market on their entire supply. For the rest of the gas which was purchased outside of long term contracts, the price was higher and closer to, or above, market rates.

Buster_Danog said:
Supposedly some of the gas companies in Europe had then sold that gas on as LNG because they were able to make large profits meaning they did not have the reserves they normally would which also contributed to the media frenzy.

Supposedly lots of things might have happened, but it is very difficult to sell piped gas as LNG because LNG is supercooled to a liquid and piped gas is not, to sell it as LNG it would need to go to a processing facility, be supercooled and then moved into specialist containers and/or transport vessels. They may have sold on some gas, which is a separate matter and something that as commercial operations they are entitled to do, just as everyone else is selling gas at commercial rates.

Buster_Danog said:

Something doesn't sound right. The winters are said to be warm, but during the winter there were claims that there had been very cold weather during winter causing lower reserves than usual.

The data is there if you can be bothered to read it, rather than inaccurately speculating. 

Gas reserves are usually drawn down during the winters and built up during the summer, in the summer they were not built up because Russia shipped considerably less gas than in previous years, meaning reserves were already low when winter 2021 hit. With Russia shipping less gas and China taking a considerable proportion of LNG from the Middle East that, combined with the Northern Hemisphere winter pushed up costs considerably even before Russia invaded Ukraine. 

lesley2020

Hi Matt - you manage the remarkable feat of making energy markets sound interesting - do you have a blog of your own elsehwere that some of us could follow or are you here incognito?

Final question - one of the puzzles I found with the media's threadbare explanation of the supposed reasons for the price rise was the repeated reference to 'increased Chinese/Asian consumption'.

Assuming they meant 'an increase since 2019' (and not just an increase back to normal levels after the Covid related dip ) could you clarify how much more is being consumed, whether it is mostly China or whether other Asian countries are requiring more energy - and finally what is causing this leap?  Thanks for your explanations so far.

MattMattMattUK

lesley2020 said:

Hi Matt - you manage the remarkable feat of making energy markets sound interesting - do you have a blog of your own elsehwere that some of us could follow or are you here incognito?

Final question - one of the puzzles I found with the media's threadbare explanation of the supposed reasons for the price rise was the repeated reference to 'increased Chinese/Asian consumption'.

Assuming they meant 'an increase since 2019' (and not just an increase back to normal levels after the Covid related dip ) could you clarify how much more is being consumed, whether it is mostly China or whether other Asian countries are requiring more energy - and finally what is causing this leap?  Thanks for your explanations so far.

No one is 100% sure yet, the full public data only goes to the end of 2020, with incomplete data for 2021 and only spot traded volumes for 2022. 

The number of LNG tankers going China is up considerably, I don't have the figures to hand but China's gas consumption has doubled since 2019 and is still growing, at the current rate of around 12-14% per year and that is expected to continue until 2030. 

The major leap in China is industrial use and electricity production, which didn't really slow much even with Covid. 

Estimates are that gas consumption might be up 10-20% globally on 2019, but also with supply constrained as Russia is producing around 30% less than in 2019 and OPEC has not increased production to 2019 levels either. 

lesley2020

MattMattMattUK said:

The number of LNG tankers going China is up considerably, I don't have the figures to hand but China's gas consumption has doubled since 2019 and is still growing, at the current rate of around 12-14% per year and that is expected to continue until 2030. 

The major leap in China is industrial use and electricity production, which didn't really slow much even with Covid. 

Estimates are that gas consumption might be up 10-20% globally on 2019, but also with supply constrained as Russia is producing around 30% less than in 2019 and OPEC has not increased production to 2019 levels either. 

I believe you but do find it almost incredible that China could double gas consumption in 3 years - that suggests an amazing increase in production (and domestic/foreign demand for products) and an amazing number of people buying stuff domestically to power via electricity. Though maybe places like the US also saw this type of growth as living standards increased in the 50's??

Interesting to think of what might be going on in the minds of the previously complacent US and UK governments as they see previously 'poor' countries being able to demand and purchase a growing share of available energy.

Personally as well as throwing money at green energy expansion I can't see how any government anywhere can't avoid promoting an equal expansion of nuclear - even as a temporary measure.

Beggars belief that our various governnents have done so little to improve domestic energy production - though may explain US interest in Iraq, Iran, Russia and other countries etc.

BTW Kitty Kelley (she who has never been successfully sued for libel) wrote an eye-opening biograpny of the Bush family which ;reveals a lot about the importance of oil to that particular clan.