Government to shift resources from wind power to nuclear power in ERM – Energy Market Reform…….by Dr Dave Toke
Energy and Climate Change Secretary Chris Huhne is heralding a move towards giving nuclear power guaranteed subsidies from electricity consumers whilst going back to the discredited 1990s approach of awarding contracts to supply wind power through contract auctions. In doing so the wind power construction programme, on the basis of past performance, will be cut by at least a half. The Government can save money by cancelling the current Renewables Obligation, and then limiting the number of onshore and offshore windfarms in the future. Money thus saved can be spent on nuclear power. Electricity prices will rise even higher if both nuclear and renewables are funded, and the Government’s solution to this is to limit renewable energy. In effect the policy means a transfer of money from renewable energy towards nuclear power.
Chris Huhne unveiled his thinking at a press conference on Dec 16th when he gave support to proposals, inspired by E.ON, for a ‘low carbon’ support mechanism. See reporthttp://www.businessgreen.com/bg/news/1933215/energy-reforms-promise-guaranteed-returns-low-carbon-generators (see middle section mention of auctions in particular).
A return to a Tory 1990s (NFFO) style contract auctioning system is likely to massacre the onshore wind power programme and at least halve the previous (Labour) Government’s target of around 30 GW of offshore wind by 2020. In the 1990s the auctions for renewable energy contracts took years to organize. Half of the projects that made successful contract bids proved to be uneconomic and half of the rest did not get planning consent – so only around one in four proposed projects could be implemented.
If the auction proposal is applied to Round 3 of the offshore wind power programme it will destroy the arrangements that The Crown Estates have organised. Developers already given leases in Round 3 would have to compete in this auction system in order to be given price support contracts. Obviously, not all would get contracts. Moreover much of the contracted capacity will end up being uneconomic and thus undeveloped because the auction system encourages developers to put in optimistically low bids. It is claimed that things will be different this time, but the renewable auction system has been tried several times around the world for renewables (UK, Ireland, California,and Denmark under the post 2001 right wing government) and low capacity out turns are ALWAYS the result. Let us not lose ten years finding out it that it is the same yet again.
The wind power programme will be cut by more than half and effectively replaced with nuclear power which is likely to be given much more relatively favourable treatment under the proposed ‘low carbon mechanism’. History suggests that the system for funding nuclear will be very opaque and it will give misleading impressions about its cost relative to renewables.
The Renewables Obligation (RO) (although expensive) is much preferable to
the renewable auction system being proposed because it at least allows companies a much greater opportunity to set up schemes with a good price for their electricity. Of course, what we need most is a REAL feed-in tariff system like they have in the bulk of EU countries (led by Germany) which also leaves the choice about whether to set up a project to developers, but gives a more cost effective outcome. If there is a consistent campaign supported by the green NGOs and others on this we have a good
chance of success, although the problem will still remain of getting good feed-in tariff
prices set by the Government for the different renewable technologies. – Co-ordination with RenewableUK would be needed there, although they are likely to try to
defend the RO as their first choice.
One thing is for certain – we cannot place ANY trust on Chris Huhne’s green
publicity hype. The Lib Dems are poised to commit a radioactive version of their U turn on student tuition fees. Chris Huhne is abandoning the anti-nuclear, very bullish pro-renewable, stance upon which they campaigned before the General Election and he is now promoting a policy which effectively funds nuclear at the expense of renewables. Yes he will support (some) renewables, but the amount of renewables funded will be limited in practice to allow funding for nuclear power.
As the Liberal Democrats themselves said before the election (15th April 2009):
Reacting to the list of 11 possible sites for new nuclear power stations, Liberal Democrat Shadow Energy and Climate Change Secretary, Simon Hughes said: “A new generation of nuclear power stations will be a colossal mistake regardless of where they are built.”
“They are hugely expensive, dangerous and will take too long to build.
“There is a real danger that the Government is becoming too close to and the big energy companies.
“The best answer to Britain’s needs is a massive expansion of renewable energy. If billions of pounds are wasted on new nuclear sites the money simply won’t be available to do this.”