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« DECC consistently misled public over electricity costs | Main | BBC: "To hell with your charter obligations" »

Stuff their mouths with gold

In all the trailers for Amber Rudd's big energy speech today, the news that has struck me is not the phase out of coal, most of which was going to happen anyway because of low natural gas prices and EU regulations.

No, what is interesting is that Rudd will apparently admit that in order to get any gas-fired power stations built they are going to have to be subsidised. So a big "bravo" to the political establishment for managing to turn a functioning energy system into one in which everybody participating will be in receipt of taxpayer largesse. Oh well done indeed.

The six-million dollar question is, of course, just how much subsidy is going to be required to tempt investors back into the market. The political risk of taking part is going to be sky-high. Over the lifespan of a power station, governments will come and go. Will anyone want to risk that the bungs will survive so much change? My guess is that getting anything done is going to involve "stuffing their mouths with gold", and then some.

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Reader Comments (47)

It is not "taxpayer largesse". It is the electricity consumers who will pay and the big 6 who will get the blame. We can't have the Government being seen to be responsible for sky high electricity prices

Developers will get their mouths stuffed with gold. The rest of us will just get stuffed (or some other more suitable word such as shafted).

Nov 18, 2015 at 10:10 AM | Registered CommenterPhillip Bratby

Is any developer worth their salt going to develop something that is only going to work for "a few months a year" as Prof Ekins said this morning?

It'll take an awful lot of gold stuffing to make up the income for the remainder of the year.

Amber Rudd's been listening to Greenpeace again by the sound of it.

Nov 18, 2015 at 10:13 AM | Unregistered CommenterMessenger

The children who run modern governments will gradually learn what the grown-ups knew all along: that trust takes a long long time to build and can be lost in a morning. Yes nobody trusts the government anymore and the only basis on which any reasonable man will deal with them is that there is so much money upfront that when the government inevitably reneges on the deal, the other party will have done OK. Of course government is just another of western institutions which have squandered their trust. Deeply odd that a society whose bedrock is the quality of its institutions, their trustworthiness, has effectively destroyed most of them in the last 50 years: there's a thesis lurking to get out of that thought somewhere.

Nov 18, 2015 at 10:14 AM | Unregistered Commenterbill

You know, if you were putting together a strategy of renationalising the power generating companies, you couldn't dream up a better opening gambit.

BTW: That pic of Rudd standing next to the Earth Hour promo poster just goes to show that she is incapable of independent thought. By your advisors shall ye be known. (apologies to Matthew)

Nov 18, 2015 at 10:27 AM | Unregistered CommenterHarry Passfield

Bring back the CEGB all is forgiven,

Having worked for some years for that August Institution its worth remembering that everybody there had just one aim and that was to 'keep the lights on'

I'm not a great fan of nationalised industry in general but seeing the mess we are now in I do miss the old beast. In its last year of operation (1989) retail electricity prices were under 4p per unit and falling, they now exceed 15p and are rising. The old CEGB ran some interesting trials . of wind power in the 1970s and early 80s and considered them a niche generator that could never exceed 10% of total capacity without destabilizing the grid.

Nov 18, 2015 at 10:41 AM | Unregistered CommenterKeith Willshaw

Ideally, power station builders would get paid "up-front" for the cost of building the things, plus a profit, then subsequent contracts would pay for electricity generation. Problem is, that requires moving back to central control, a legal and political minefield, but it would at least reduce risk for power station builders, and avoid us bill-payers from having to pay to entice investors to bear the risk.

The big question is who is pulling the strings? My suspicion/fear is that nobody is.

Nov 18, 2015 at 10:43 AM | Unregistered CommenterMikky

Admiral Cunningham of Hyndhope reckoned 300 years to build a naval reputation. A remarkable and unsung warrior.

It was the horrendous losses sustained whilst supporting the evacuation of Crete in May 1941 which prompted perhaps his most famous quote, when he resolutely declared that ‘it takes the Navy three years to build a new ship … it will take 300 years to build a new tradition’

Nov 18, 2015 at 11:21 AM | Unregistered CommenterSandyS

SandyS well that sounds about right doesn't it? Most of our 'modern' country, including the Navy for that matter, has its roots in the 1650-1750 era - so much of our good things - our institutions - have been built on that 300 hundred year foundation, and our generation has chucked it all away. Why? Can't people understand that trust is a really good thing, essential to a functioning society, that there are limits to a society run on contracts administered by lawyers, implicit in that arrangement being "I'll cheat you if I possibly can"?

Nov 18, 2015 at 11:40 AM | Unregistered Commenterbill

It seems the UK has now got itself into the position where consumers have to pay for subsidies through their electricity bills for wind generated electricity because it is uneconomic to invest in a wind turbine that only operates at 25-30% of capacity and you don't know when or how much electricity it is going to produce. As a result of the subsidy and their preferential access to the grid and because they get paid to shut down when they can operate but no one needs the power so many wind generators are built that they crowd conventional generators out of the market for a significant proportion of the time.

Meanwhile conventional generating plants have to be kept running on stand-by but not selling power, and hence not receiving revenue, when wind generation is high which means that they have higher costs and lower revenues and so no- one wants to invest in them. But without them the wind sector does not work - so now they have to be subsidised or they will close and not be replaced.

So what the "renewable" energy legislation has managed to achieve is a way of ensuring that the back up capacity required to make it wind generation viable, albeit unnecessary, by ensuring that the conventional generation capacity required to facilitate wind generation is necessary but non viable."

That takes a degree of stupidity that is close to genius.

Nov 18, 2015 at 11:42 AM | Unregistered CommenterSpectator

What about letting customers choose whether they want Unreliable Green electricity coming out of their sockets, as often as it is able to, and allowing them to pay for the "privilege".

Forcing people to pay a premium for a product that can't be delivered, is pure Green economics, and many Green Economists have done very well financially out of promoting it.

Nov 18, 2015 at 12:06 PM | Unregistered Commentergolf charlie

"We know competition works. It keeps costs low and can deliver a clean and reliable energy system."

This is just a mantra with little relation to experience or common sense.

When does competition become a cartel of the big 6 and at what point does forced competition from the small companies (without the cost burdens of government sustainability mandates) have the effect of shutting down the big companies leaving us with not enough power? The electricity market is a natural monopoly that was never suited to competition in the first place.

What sodding low prices? For years we've been seeing price hikes? The low prices are in the US and are due to shale gas exploitation that we have dragged our feet with. We never saw these promised low prices in any other privatisation either - quite the opposite in some cases.

The evidence is that the free market left to itself would build coal plants - just like they are doing in the developing world.

The only way that the free market could actually participate meaningfully is by giving us home generators that are silent and pollution free but they'd have to be run on gas too and no doubt they'd be banned by some new green-influenced government interference as soon as they became available.

Nov 18, 2015 at 12:06 PM | Unregistered CommenterJamesG

Spectator wrote "That takes a degree of stupidity that is close to genius."

All too true I am afraid and the chickens will come home to roost with a vengeance next winter with the loss of the 4 gigawatts currently available from Eggborough and Longannet. We are currently seeing panic as margins are only 1.2%. Next November the figure will be -10%.

ISIL dont need to sabotage the UK national grid, our government is doing just fine in that regard. Poor old Walter Marshall must be turning in his grave.

Nov 18, 2015 at 12:15 PM | Unregistered CommenterKeith Willshaw

'How do we do that..?'

Build some bloody power stations..!

Nov 18, 2015 at 12:33 PM | Unregistered Commentersherlock1

I love the line

"We want to see a competitive electricity market, with government out of the way as much as possible, by 2025."

Rather as it was prior to 1988 in fact when we had an apolitical electricity authority that had only 6 Chairmen in 40 years and a guiding ethos of 'keep the lights on' Its policy of diversified supply was logical and sensible and it planned for the long term.

So of course our politicians destroyed it.


Nov 18, 2015 at 12:48 PM | Unregistered CommenterKeith Willshaw

"The six-million dollar question is, of course, just how much subsidy is going to be required to tempt investors back into the market."

The technical term is bend over and grab your ankles. Repealing the Climate Change Act 2008 is the cheapest place to start.

Nov 18, 2015 at 1:29 PM | Unregistered Commentermichael hart

Looking at the photo of Amber, in front of the DimWit banner, someone has poster-bombed a WWF Panda at the top.

Has someone told the WWF that pandas, like polar bears, are doing very nicely despite the WWF's worst publicity?

Could we have some WWF posters of pandas on ice? It might help the public judge the WWF more favourably, with the climate pantomime season coming up in COP 21.

Nov 18, 2015 at 1:36 PM | Unregistered Commentergolf charlie

I love that 'So we still haven't got the balance right'.

As if 'we' were stumbling along blindfold, trying to invent something form scratch and vainly attempting to achieve something so difficult it's virtually impossible. As if they hadn't destroyed 'the balance' that we already had in the first place ...

Nov 18, 2015 at 1:50 PM | Unregistered CommenterBarbara

The big advantage of coal is that it can be stockpiled. Not so easy with gas. Ad we might find ourselves at the wrong end of a long gas demand chain.

Nov 18, 2015 at 2:01 PM | Unregistered CommenterJamesG

Indeed, Barbara. It's the "we" that be the problem.

Nov 18, 2015 at 2:06 PM | Unregistered CommenterGamecock

Seen on the BBC website:
"Professor Paul Ekins, an expert on resources and environmental policy at University College London, said the government had "abandoned" the cheapest forms of power - onshore wind and solar energy"

So cheap they need subsidised. Do academics just have to wave a green or red flag these days to get employed as an 'expert'?

They should rename it BB-BS.

Nov 18, 2015 at 2:09 PM | Unregistered CommenterJamesG

"Do it for your planet."

Can I sell it? Then it's not mine.

Nov 18, 2015 at 2:23 PM | Unregistered CommenterGamecock

Whilst understanding the kit is old I am very reluctant to see a source of energy removed from the mix. Especially one as stated above, can be stockpiled and is still an indigenous resource.

The UK's no new coal without CCS law prohibits replacement of the aging kit. Can't remember if it is part of the damned 2008 CCA or was separate legislation?

Domestically I have spent time increasing the energy sources I have available. Cooking is dual fuel, as is heating. logs in plentiful supply. Limited electrical backup, though not yet installed a generator.

So I have concerns when we discard a secure and proven system of energy. But then again we have form, in the past we did chose to discard wind and water mills....

PS can somebody explain why:-

" Our most important task is providing a compelling example to the rest of the world of how to cut carbon while controlling costs. "

Nov 18, 2015 at 2:29 PM | Registered CommenterGreen Sand


As per usual nobody mentions that the planet has not even noticed climate change yet and since even the worst case scenario will not harm it in any way, who can blame it.However life is at risk including ours and there lies the real truth.

Nov 18, 2015 at 2:32 PM | Registered CommenterDung

Reading between the lines and looking at GWPF leads me to believe that The Climate Change Act will be decapitated straight after COP21 :)

Nov 18, 2015 at 2:34 PM | Registered CommenterDung

From Benny at GWPF:

"We certainly welcome the governments announcement that the proposed phase-out of unabated coal plants in 10 years time will be conditional on whether the intended shift to new gas plants can be achieved within this time," he added.

Nov 18, 2015 at 2:44 PM | Registered CommenterDung

Well - this was always how it was going to end.

Germany is already having to subsidise both gas and coal plants or the owners will shut them. In their case it is because of an oversupply of renewable power (occasionally) which has a guarantee that it will be purchased. The others ( gas in particular ) have to shut down. Their owners threatened to close them completely without subsidy. They were already running in an inefficient stop/start manner, but then eventually couldn't make any money at all.

In the UK it is even more lunatic in that we have to promise subsidies to even get them built in the first place.

Nov 18, 2015 at 3:04 PM | Unregistered CommenterRetired Dave

Amber gave the red light to coal and fudged the rest of it, because she is a bit thick and plus true to form, at any time, at any place = any bod from the DECC lies through their teeth.

More pertinently................................ and once more I beg the question...............

If it is OK for the Germans to NEW build dirty coal fired power electrical generation plant, why can't Britain construct new build coal fired plant?

Amber Rudd, another tremendously garrulous but ultimately useless energy minister and one who is terrorized of [her own shadow] the green blob and of doing the right thing for the greater good of the nation.............IE get politics and at that, get the fanatical green religionists [DECC]..... away from the levers of energy policy decision making and oh btw Amber - get thyself gone too. Rudd, you're just another patsy for George and his treasury wing nuts "we can't be seen to be doing aught affecting the budget but in the same moment screwing industry into the ground via green taxes and via the insanity of the green agenda and causing blackouts into the bargain". we are ****ed and what a way to **** the country.

Nov 18, 2015 at 3:13 PM | Unregistered CommenterAthelstan.

The U.K. can always buy coal fired electricity from Germany

Nov 18, 2015 at 3:27 PM | Unregistered CommenterJamspid

How many Greens did it take to change a light bulb's design for the worse?

How many Greens did it take to ruin a nations ability to keep light bulbs powered?

How many Greens does it take to close functional power stations, and replace them with non functional wind mills?

How many Greens can't do basic maths? (Greens are excused from trying to answer this)

Jokes about Greens are not banned under anti-discrimination legislation concerning age, race, sexual identity, religion, hair colour etc

Nov 18, 2015 at 3:35 PM | Unregistered Commentergolf charlie

Bish, you were right the first time. She said:

In the next 10 years, it’s imperative that we get new gas-fired power stations built.

We need to get the right signals in the electricity market to achieve that.

We are already consulting on how to improve the Capacity Market.

And after this year’s auction we will take stock and ensure it delivers the gas we need.

The capacity market must be rigged so that new gas stations are actually built. The failure of the Carrington plant to fund itself will have really struck home. So, effectively, subsidy must be promised, as you said.

Nov 18, 2015 at 3:37 PM | Unregistered CommenterPeter Mott

"a compelling example to the rest of the world"

To do what - laugh?

Nov 18, 2015 at 3:47 PM | Registered Commenterjamesp

Why's she say something nutty like that ? * @Greensand I don't know
Maybe cos her team is full of PR people ..and no engineers

* "Our most important task is providing a compelling example to the rest of the world of how to cut carbon while controlling costs. "
God it's PPE fk-wit-speak
What more COMPELLING than staying alive ?
What more COMPELLING than having a reliable energy supply, without blackouts ?

.. Is it the UK's duty to provide a compelling example in all other wars aswell as the war on CO2 ? (Labour says no)

Nov 18, 2015 at 4:00 PM | Registered Commenterstewgreen

We knew what we were doing once, everything hinged round the rather strange idea - to think about it now.......a stupid idea that, cheap electricity was vital for industry, the security and wellbeing of the nation. Security? Wow such a weird notion...... so coal which we had in abundance and nuclear provided the majority of our needs, gas was used for what it is good for - only domestic heating and industrial processing. Then, during the Thatcher years, it all went tits up and Brussels just had to get its oarsmen stuck into a boat, in which it had no business.

A lot of years down the line and here we are, the threshold of an energy crisis and imminent blackouts which will cause such a grid failure, the death rate will be off the scale - as they say.

So, we are where we are and were here because we're here.

Q. How many boondoggles do you have to build before the 15% of output target is hit?

A. nobody knows and nobody ever will.

Thus, the base, if you guarantee first to Brussels, the green blob and the chatterati that 15% of British energy will come from boondoggles........ that eternally ethereal figure somehow just plucked out of the air [yeah] and THEN base all the rest of your energy policy around logically follows nothing else is going to fit either. Uncertainty and panic targeting are set to the default position. What ever happened to first thinking about what our needs actually are - or these days: is that too much to ask of our ruling elite? I surmise, the answer to that is - most definitely.

You should buy shares in diesel generators [all sizes] manufacturers and start casting the scythes and fashioning new wains, it's a golden future and back to the land we go.

Nov 18, 2015 at 4:12 PM | Unregistered CommenterAthelstan.

Yes @JamesP We are the Mr Bean of the world's energy policy

..Ha ha ! look the British energy policy falling over.
... look at their industry emigrating away, look at rising prices, look at their dreamy ideas what sad simpletons they are.
..Do you remember how they led the world with their Sinclair C5 electric car ?

Nov 18, 2015 at 4:13 PM | Registered Commenterstewgreen

'As per usual nobody mentions that the planet has not even noticed climate change yet and since even the worst case scenario will not harm it in any way, who can blame it.However life is at risk including ours and there lies the real truth.
Nov 18, 2015 at 2:32 PM | Registered CommenterDung '

"Life" is no more at risk than the planet is at risk. Wait, there is one risk to life: geoengineering has the potential to kill all.

Nov 18, 2015 at 4:22 PM | Unregistered CommenterGamecock

From the text on DECC website:

We need to build a new energy infrastructure, fit for the 21st century.

Much of that is already in the pipeline – new gas, such as the plant at Carrington, and of course, a large increase in renewables over the next five years and in the longer-term, new nuclear.

At the same time, we are building new interconnectors to make it easier to import cheaper electricity from Europe.

These changes are vital. Cheaper energy means lower household bills – something which matters to all of us.

Cloud cukoo land.

The pipe line is blocked at the discharge end, and has been for many years, and yet they keep on stuffing non-viable projects into their end somewhere in a Whitehall basement.

Carrington is 860MW, next year. FPCOFA.

The CCGT pipeline stretches from 16 October 2007 to 23 July 2015 (8 years) and contains 16,268 MW of generation. None of it has got on-site yet.

The renewables pipeline, as far as wind is concerned, is horrifying.

National Grid is expecting 1,744 MW to come on-line in 2016, 13,224 MW is approved and to start construction soon and all to be on-line by end 2022. Also, there is 7,051 MW awaiting approval and a further 16,424 MW in the scoping stage. That is a staggering 38,443 MW which could come on-line in the coming decade.

It is madness to include interconnectors with Europe in UK capacity calculations, as Amber seem to think she should. The electricity generated in Europe belongs to the individual nations and its availability for the UK grid is uncertain to say the least. There are no interconnectors on NG TEC register and yet even they craftily slide them into their Winter Outlooks as an option.

Private money is not interested in investing in CCGTs so if the UK is to get some new plant the only way is to set up "New Central Electricity Generating Board" (as mentioned above) although who would staff it is problematic. Suitable, experienced personnel are either retired or dead.

Just to deliver the 16,424 approved plant would need more than £20 billion and 10 years, at least, to bring on-line. Too late.

Probably no new nuclear for 15 years and definitely no new coal, ever in the UK, even if CCS disappears, because the GreenBlob will ensure that the approval authorities are well briefed so that all sorts of "essential" safety features are incorporated until, like nuclear, coal will become un-viable. Moonbat, together with dozens of gormless MPs will be leading the charge.

Nov 18, 2015 at 4:33 PM | Unregistered CommenterBrownedoff

...Indeed, moving to a new model without risking energy security will require government to continue to intervene. But that should diminish over time.

We need to start that work now.

So how do we do that?...

By recognising that CO2 is plant food, and has NOTHING to do with temperature change of the planet...

Nov 18, 2015 at 5:11 PM | Unregistered CommenterDodgy Geezer


regarding your point,

...Rather as it was prior to 1988 in fact when we had an apolitical electricity authority that had only 6 Chairmen in 40 years and a guiding ethos of 'keep the lights on' Its policy of diversified supply was logical and sensible and it planned for the long term...

It is not quite the case that the electricity authority was apolitical. The authority compelled the Norwebs and Manwebs to increase prices in order to pay for nuclear power (the stuff that was supposed to be too cheap to meter!). I remember seeing an interesting programme in the early eighties (possibly Panorama, Man Alive or World in Action) where the journalist got hold of correspondence from the Managing Director of either Manweb or Norweb. It was clear that the director did not want to increase prices but he was warned, in a round about way, that "you might be independent but that you work for us and we can sack you if you don't do as we say".
I was most surprised years later when the electricity was privatised that nobody knew the true cost of nuclear until that point. Do any other readers have any memory of the programme? I'd love to see a transcript.
Of course, without the nuclear levy, CEGB electricity would have been even cheaper.

Nov 18, 2015 at 6:04 PM | Unregistered Commenterandymc

andymc, imagine how expensive wind would be if they had to pay to maintain an electricity supply when the wind wasn't blowing. Cost comparisons with nuclear are easy, it just depends which costs you do not want to include.

Electricity bills would be cheaper now, but for the subsidies paid for Unreliables

Nov 18, 2015 at 7:28 PM | Unregistered Commentergolf charlie

Andymc: You have fallen for the old 'nuclear is too cheap to meter' fallacy, words spoken by the Chairman of the AEC about hydrogen fusion, not nuclear fission.

Nobody knows how much nuclear cost for at least two reasons. Firstly because the old CEGB was hugely inefficient and every project under the sun within the CEGB used to bill their costs to nuclear. Secondly the regulator would never say how safe nuclear should be and kept piling on more and more ridiculous rules and regulations so that the designs got ever more complex and building and operating them got more and more expensive. Most of the costs of nuclear are to meet safety and risk targets that go way beyond anything necessary, or applicable to other industries. Hence nuclear power is by orders of magnitude the safest method of generating electricity. Nobody was killed at Fukushima, and nobody was killed at Three Mile Island; and these were older and less safe designs than modern ones.

Nov 18, 2015 at 7:54 PM | Registered CommenterPhillip Bratby

Bishop, you were correct the first time. She said:

We now have an electricity system where no form of power generation, not even gas-fired power stations, can be built without government intervention

Government intervention = guaranteed price per MW/h paid by National Grid and hence consumers as with the white-elephant Hinkley nuclear plant ie a Government mandated subsidy.

She also said:

We know competition works. It keeps costs low

Which is true. Unfortunately her's and previous governments since 1997 (perhaps even 1992: did Major meddle with energy markets?) have passed laws which prevent free market competition.

Nov 18, 2015 at 8:56 PM | Unregistered CommenterPcar

andymc wrote

"It is not quite the case that the electricity authority was apolitical. The authority compelled the Norwebs and Manwebs to increase prices in order to pay for nuclear power"

In point of fact the Nuclear Levy was imposed by the CEGB not the government. Walter Marshall was a nuclear engineer by training and strongly believed in diversified energy sources, a policy that helped ensure the lights stayed on during the miners strike, Much of the levy went into a fund intended to pay for decommissioning. That fund was appropriated by the treasury when the electricity industry was nationalized.

Nov 18, 2015 at 9:58 PM | Unregistered CommenterKeith Willshaw

It is strange to see the conflicts between the intentions and the results.
"We want to see a competitive electricity market, with government out of the way as much as possible, by 2025."
That sentence is completely ruined by the subsidies for so called green energy.
We got the worst of the two. They pretend it is market driven, but is even more controlled now, with a lot of money to uphold the facade.

Nov 18, 2015 at 10:54 PM | Unregistered CommenterSvend Ferdinandsen

"Indeed, moving to a new model without risking energy security will require government to continue to intervene.

Government intervention is what got UK energy where it is. Why should we think that more will result in any improvement?

But that should diminish over time."

Is that something like "the withering away of the State" that Marxists used to chatter about? Did it ever happen? No.

"We are the Mr Bean of the world's energy policy --stewgreen

I was thinking more like The Black Knight.

Nov 19, 2015 at 6:14 AM | Unregistered Commenterjorgekafkazar

And we need government intervention because ...

Oh yes, because other government interventions have scared off investors.

Nov 19, 2015 at 7:25 AM | Unregistered CommenterPunksta

I couldn’t believe this guy listening to him on the radio broadcast – so I did this to let off steam and put it on YouTube. Hasn’t done me much good though.The only joy was the tidy looking interviewer! Grrrr.

Nov 19, 2015 at 11:29 PM | Unregistered CommenterDouglas

Last post spelling error. Try again!

Nov 20, 2015 at 12:14 AM | Unregistered CommenterDouglas

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