17 Oct 2013

Energy perfect storm

Today is a bit of a perfect “energy politics” storm.

A government commissioned report warns the maximum moment of power cut danger could be as soon as next winter.

British Gas announces mighty price rises for electricity and gas bills.

And George Osborne says the once unthinkable: the Chinese Communist state’s nuclear power companies might in future have 100 per cent ownership of Britain’s new nuclear power stations.


In the meanwhile, there’s one concrete announcement of a China/EDF partnership, committing to build new nuclear power plants at Hinckley in Somerset, from where I am writing this.

George Osborne slipped the announcement out to coincide with his China trip.

He sensibly packed his beloved high visibility jacket and got the chance to slip it on at Taishan nuclear power plant today. He said the investment would mean:  “Chinese money not British taxpayers money being used to construct a plant like this and so we can use our money for schools and hospitals.”


Well, the Chinese aren’t helping out for the love of Britain.

The government will guarantee an enticing price for nuclear generated electricity that outstrips the price paid for other electricity sources. It will be a “subsidy” in all but name – the coalition agreement forbids such a subsidy.

The energy experts I’ve chatted to seem remarkably relaxed about Chinese investment in nuclear energy here, but it’s really not so long since a Chinese delegation was sent packing with the message that Britain wasn’t interested.

No wonder, perhaps, that George Osborne is quite so gushing about the welcome for Chinese investment, trying to reassure his hosts that British attitudes have changed.

But the new nuclear energy programme is already at least five years behind schedule and the new Hinckley won’t be feeding into the grid until 2020.

The rest of the energy programme, replacing old coal-fired power stations with modern gas-fired plants, wind, etc, is easily three years behind schedule.

Old plants are closing nicely to schedule, new supply isn’t coming on line anything like fast enough.

The country is desperately dependent on energy companies building new capacity.

They say they’re charging prices to make that possible, and with only modest 5 per cent profits.

In their different ways, the government and Labour are saying those companies are fibbing.

Labour is doing it pretty blatantly, the government’s saying it will force energy companies to be more open about their profits – implying they’re hiding something as things stand. They’re also telling customers to switch to cheaper suppliers.

Call it a communist red letter day or red final demand day, this is a memorable moment in a mighty saga that will be at the centre of political debate for a long time to come.

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