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The markets will provide (subject to the weather)

by Jerome a Paris Wed Oct 24th, 2007 at 05:43:50 AM EST

The UK's wonderful (non-)policy of relying on the markets to provide for competitive energy is demonstrating yet again its superior performance:

Seven of UK's 16 reactors closed
Nearly half of Britain's nuclear power reactors have been out of action due to breakdowns and maintenance.

"It is disturbing. I mean, we're going to have to rely on it being a warm winter. If it isn't, maybe we will run into power cuts. And the consequential loss of that is not just the loss of electricity, it's the loss to industry when everything fails."

As noted yesterday; Gordon Brown sees nuclear as the only way forward for UK energy policy (to the extent that he seems willing to scupper plans to push for renewables!), despite the industry's dismal track record in the country (see the table below the fold), and despite the fact that any nuclear plant will likely require 10 years to be built, whereas the problems are right now.

But be ready for massive campaigns to blame the French for not delivering enough power across the Channel, and the Russians for using the "energy weapon" unfairly when prices spike this winter...

[Update: see this comment about the just published "Energy Market Outlook" by the UK government.]


UK Nuclear Electricity:
1998 28% 103.7TWh
1999 26%
2000 23%
2001 24%
2002 23%
2003 22%
2004 20%
2005 21%
2006 19% 79.2TWh

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Well, this could be good for the wool industry.
by Colman (colman at eurotrib.com) on Wed Oct 24th, 2007 at 05:51:58 AM EST
The electric interconnector across the channel is only 2 GW. Yep, like in "lower than three 700MW obsolete magnox nuclear units".

They can bash the French as much as they want, nothing will get them more than 2GW from the continent this winter.

And remember: fuel-oil and gas heaters require a bit of electricity to move the water into the convectors throughout the home. Without electricity in a cold snap, a house dweller in the countryside may have to purge his heating circuit or frost will burst the pipes...

(well at least, this will force the consumption of natgas to go down this winter !)

As far as I can tell from Paris, we're already in for a cold winter. Get ready for hour-long rolling blackouts in the UK, ban on the sale and use of electric heaters, a boom in stand-alone gas canister heaters, and a haircut in the demographic pyramid...


Pierre

by Pierre on Wed Oct 24th, 2007 at 06:03:20 AM EST
(well at least, this will force the consumption of natgas to go down this winter !)

Demand destruction, always good! The markets provide!

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Wed Oct 24th, 2007 at 09:38:36 AM EST
[ Parent ]
It took a stinking septic Thames before Parliment decided to actually DO somthing about pollution in London.
Rolling blackouts might force the British government to join the real world and have an actually energy policy beyond 'leave it to the market'.
by EvilEuropean (evileuropean@googlemail.com) on Wed Oct 24th, 2007 at 06:15:10 AM EST
Welcome to the Axis of Europe, EvilEuropean!

I doubt this will be enough to force them to drop their Market Jihadists ideology...

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Wed Oct 24th, 2007 at 08:43:55 AM EST
[ Parent ]
Welcome, O Evil One!

I hope you won't mind, but I corrected (having capacity so to do) your blog's URL on your user page (blogspot had the "g" missing).

So that's The Evil European.

You're in good company here --

signed: B€€lz€bub

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Oct 24th, 2007 at 12:49:28 PM EST
[ Parent ]
has actually just published its first Energy Markets Outlook report (PDF link).

Picking from its executive summary:


The energy policy framework combines competitive energy markets and effective, independent regulation

Recent experience from the gas market in Great Britain has shown that markets can deliver significant investment in new supplies which help to maintain security of supply. It also highlighted that when investments are delayed or shocks lead to supplies being very tight relative to demand, prices rise and customers respond by reducing their consumption, thereby helping to prevent blackouts or shortages. But this response comes at a cost to customers, particularly industrial customers who compete in
international markets.

No amount of investment will ever be enough to deliver an absolute guarantee that energy supplies will be sufficient to meet any level of demand. Therefore, security of supply is not a simple question of "will the lights stay on?", but a matter of assessing the risks to supplies. In other words, "how likely is it that some level of demand will not be met in the future?"

"Markets invest enough, except when they don't. In which cases, markets work, as consumers adapt to reality. Funnily, that adaptation has a cost. But let's not blame the market for underinvestment. Nobody can invest enough."


There are significant opportunities for the construction of new generation capacity

In the medium term, there appear to be significant opportunities for the construction of new generation capacity in order to meet current expected levels of demand.

"shit, lots of power plants need to be built quickly!"


Price signals will play an important role in balancing gas supply and demand

In terms of capacity, on the assumption that facilities currently under construction are completed to target, new import capacity should more than offset declining indigenous production until around 2015. Gas supplies to the UK will therefore not be constrained by physical capacity until this time (although prices may need to rise to attract supplies to the UK.) Further investment will be needed to avoid physical capacity constraints from around 2015.

It should be noted that as gas and, in particular, liquefied natural gas is traded internationally, import infrastructure will be used to deliver gas supplies only if UK prices are attractive relative to other countries. Although this allows for considerable flexibility to respond to shocks affecting one or more supply source or route, it does increase the complexity of assessing the future security of supply; and means that price signals may have an increasingly important role in balancing gas supply and demand in the short term.

As noted in yesterday's story, relying on volatile short term prices creates investment uncertainty and imposes a volatility premium on prices (compared to long term contracts with smoothed indexed prices). It also creates the risk of shortages - which translate into price spikes, i.e. prices high enough for shortaged to covnert "efficiently" into "voluntary" demand destruction by those most hurt by such high prices.

The UK government sees these things as a good thing - rationing by price is still rationing.

And, btw, getting new LNG terminals or pipelines onstream by 2015 will require to get started really soon, as these things take a bit of time to plan and build...


The future use of coal, oil and nuclear fuels is unlikely to be limited by resource availability

We conclude that global resources [of oil and gas] are sufficiently abundant to meet demand for the foreseeable future, but a number of constraints have the potential to threaten the ease with which these resources can be turned into production. These include labour, equipment and service sector constraints and geopolitical risks (such as resource nationalism and the risk of disruptions as supply routes become longer and have to cross more borders).

Peak oil? Nope.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Oct 24th, 2007 at 06:17:30 AM EST
The amount of willful blindness to obvious reality is boggling.  I'm going back to my review of how the addition of innovative compressor/expander technolgies can bring windpower to the level of both peaking and baseload plant.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Wed Oct 24th, 2007 at 06:30:10 AM EST
[ Parent ]
"foreseeable future" == next quarter
by Colman (colman at eurotrib.com) on Wed Oct 24th, 2007 at 06:44:25 AM EST
[ Parent ]
That is not a joke.

We have met the enemy, and it is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Oct 24th, 2007 at 06:45:27 AM EST
[ Parent ]
Mmm... My wife and I should be sent to London (from Paris) by our respective companies next September.

Maybe it's time to negociate a change of plans?

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Wed Oct 24th, 2007 at 08:18:41 AM EST
[ Parent ]
Plan to buy warm clothes...

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Oct 24th, 2007 at 09:14:52 AM EST
[ Parent ]
Oh, no heating wouldn't worry me all THAT much, but how would I get access to my favourite blogs? How would I cook?

Now those are real worries ;-)

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Wed Oct 24th, 2007 at 11:45:14 AM EST
[ Parent ]
I say, this chappy here wants to BLOG and COOK!

Oh Lord, French is he? Put him on the Eurostar back...

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Oct 24th, 2007 at 01:02:17 PM EST
[ Parent ]
These include labour, equipment and service sector constraints and geopolitical risks (such as resource nationalism and the risk of disruptions as supply routes become longer and have to cross more borders) [emphasis added].

Is it just me or does that translate roughly into:

If our former colonies decide to use their new-found sovereignty to insist that we don't exploit their natural resources (at least not without paying them their fair share), then we are royally screwed.

Nah... Neo-colonialism from the neo-liberalists? Can't be! They're all about freedom ain't they? Or is that just for rich, white people?

Bleh!

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Oct 24th, 2007 at 05:12:53 PM EST
[ Parent ]
Actually this probably means Russia.
by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Oct 24th, 2007 at 06:28:37 PM EST
[ Parent ]
What a superb example of Whitehallbollocks.

It looks like 'serious' English, reads like 'serious' English, but has the content of a third rate school essay.

When will these idiots realise that a polished but slightly stodgy prose style is no substitute for creativity and ideas?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Oct 24th, 2007 at 06:27:15 PM EST
[ Parent ]
(Postscript.)

Whitehall:


The energy policy framework combines competitive energy markets and effective, independent regulation

But stable affordable energy? Er - actually, no.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Oct 24th, 2007 at 06:34:14 PM EST
[ Parent ]
competitive energy markets

means

(a) awash with speculative money; and

(b) shamelessly manipulated by investment banks and traders.

while

effective, independent regulation

is a sad joke.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Oct 24th, 2007 at 08:03:59 PM EST
[ Parent ]
Are you implying that markets may not provide warm houses to UK this winter..

Impossible. Energy is like.. bananas.. once you get used not to eat them.. you can pass...

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Wed Oct 24th, 2007 at 10:08:56 AM EST


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