The Climate Change Business

WorthingGooner, Going Postal

Before I start on the main body of this exercise, a few words on my background. On leaving school I joined, what at that time was one of the UK’s largest Power Engineering companies. Over 35 years I worked on the planning, design, manufacturing and construction of Boilers and associated plant for numerous Power Stations, both in this country and all over the world. We sold all sort of steam raising plant and auxiliaries, including small package boilers, marine boilers, waste heat boilers, industrial boilers, recovery boilers, power station boilers and even nuclear power station steam generators. Add to that all the pumps, fans, heat exchangers, coal oil and gas burners, instrumentation, de NOx equipment, de sulphurisation plant, ducts, stairs, walkways, piping, coal and oil handling plant, cranes, structural steelwork, etc. and you can see I have wide experience of the industry.

Over many years the power industry in this country has been decimated by successive governments either making poor decisions or refusing to make any decision until events had overtaken them. When I started in the business there were three major British boiler makers and two British steam turbine makers competing for every new U.K. power station. Overseas companies didn’t bother bidding for U.K. jobs because they couldn’t compete on price and, because of the competitive home market, those five companies had an enormous export market. I worked on jobs for all over the world either acquired directly through competitive tender or sold by our subsidiaries or licensees. Interestingly, exceptions were jobs in France and Germany as they were extremely protective of their own manufacturing industry and however low a price we bid the orders always went to an indigenous company. We even tested a below cost bid on one German tender and were still under cut by a German company who were later allowed to raise the price.

Today, in the U.K., only the Power Station builder I worked for remains, but it is now Korean owned and mainly maintains and repairs existing plant or designs new plant for manufacturing and construction by its Korean owner and their subsidiaries. The other four companies have either closed or have been taken over by French or German companies and their manufacturing is no longer in the U.K. What caused this was multi faceted, a lack of domestic orders due to the Governments lack of an effective Energy Policy, the break up of the CEGB, our slavish adherents to EU open tendering, the dash for gas, indecision on Nuclear Power, allowing our companies to be sold overseas to acquire their technology and finally but not least “climate change”. As a result, the few UK CCGT power stations that have been built in the past 15 years have included Siemens (German) or Alstom (French) gas turbines, waste heat recovery boilers and steam turbines, Hinkley Point C is being supplied by a French company and future nuclear stations could well be Chinese.

Whether you believe in Climate Change or not, and I don’t, Climate Change is big business in the U.K. but especially for overseas power companies. For example two thirds of U.K. wind farms have been built using Turbines manufactured outside the U.K. and that is no small number, by mid December last year there were 9,391 Wind Turbines in the UK with a plate capacity of 20.5 Gw. Those manufactured in the U.K. have often used major parts made abroad and were only assembled here. The Isle of Wight had an Wind Turbine factory owned by a Danish company who closed it when the industry hit a down turn. It has recently been reopened to build wind turbine blades. With the boom in offshore wind farms Siemens has recently opened a wind turbine factory in Hull.

WorthingGooner, Going Postal
Global Horizontal Irradiation, United Kingdom

Manufacturing is even worse for Solar farms, just about all photovoltaic panels are made abroad. The largest manufacturing companies are Chinese, American and Canadian but the cheapest panels tend to come from Germany, this is because of the EU’s 64.9% duty on Chinese Panels which are generally the cheapest. So the overseas manufacturers do OK out of climate change. But what about others? The wind and solar farm owners pay pretty good money to land owners for having farms on their land. They can expect as much as £40,000 p.a. for a large wind turbine. Stories in the press said that in 2011 David Cameron’s father in law was being paid £350,000 a year for wind turbines on his estate. Then in 2015 he is reported to have a second set of turbines built on his land bring another £250,000 a year.

The Wind Farm owners don’t do badly either. The older wind farms (pre 2014) have contracts to sell power to the Grid at its open market rate and in addition they are paid in Renewable Obligation Certificates (ROCs) for the electricity they produce. In the 12 months to September 2018 the eligible Wind farms generated 21.3TWh of power for which they received 40.2 million ROCs @ £47.22 each. This equates to £1.898 Billion or £89/MWh. Looking at the costs for just one of the older wind farms Whitelee 1 which cost £300 million to develop. It produces 1.27TWh/year for which it receives ROCs worth £47.22/MWh. This pays the Spanish owners Iberdrola, an additional £60million a year. Not a bad return on a £300 million investment.

The post 2014 Wind Farms are paid under a Contract for Difference scheme where they bid for a 15 year contract to supply the Grid and the lowest price bid is supposed to be awarded the contract. Due to the Grids current obligation to purchase 40.9 % renewable power, this offered price is almost always accepted, it is the old coal fired and CCGT power stations that lose out. The current prices being paid under CfDs range from £166.59 /MWh to £63.66/MWh. It should be noted that no wind farm is currently being paid the lowest amount. Only farms still in the planning stage have bid this low and we have to wait and see if the projects proceed or are uneconomical at this price. The average price paid for CfD electricity from those actually generating is £129/MWh. How does all this compare with electricity on the open market from Gas fired CCGTs? That currently costs about £55/MWh so it looks like the wind generators are also raking it in.

Oh, and one thing we must not forget is the £127 million in last years Constraint Payments. This is what Wind Farms are paid for not suppling power to the Grid, either when it is too windy and they can’t operate safely or there is too little wind to generate power or they have to be dumped because too much is being produced for the Grid to take. Constraint payments are currently £72.29/MWh and are payed on a basis of what could have been produced. Over £2 million a week paid out for doing nothing!

The Government has removed subsidies from new build onshore wind turbines but they remain for offshore wind farms (Scotland has its own rules). Since this happened there have been no applications for new onshore wind farms. If some green person tells you wind energy is as cheap as fossil fired energy this is a fact worth pointing out. Wind farms are not profitable without a subsidy. In addition both wind and solar power are intermittent. Wind Turbines only work when the wind blows and if it’s neither too weak nor too strong. Solar only works when the sun shines and is less effective the further north you go in the country (see the illustration). So South Coast installations are much more efficient than those in Cumbria. Solar also works less well in winter when the sun is weaker and the hours of daylight are less. Solar is said be only 1% efficient in January. Because of the intermittent nature of Wind and Solar reliable backup is necessary and at the moment this can only come from fossil fuel. Despite suggestions otherwise batteries are not up to the job. Elon Musk, another person making money out of renewables, has made a fuss about battery backup and has supplied such to South Australia after last years black outs. Tesla supplied 600 linked Powerwall units at a cost of £80 million. Unfortunately, it proved an expensive failure as in this winters blackout as it could only supply 100Mw for 80 Minutes and demand in SA is normally between 400 and 1200 Mw. Simple maths show just how expensive battery back up would be to cover the whole state for a single day, even when demand is at its lowest. For one days supply at 400Mw you would need 18 Tesla units at £80 million each or £1,440 million. The Rampion Wind Farm, off the Sussex coast is also rated at 400Mw and cost £1,300 million to build. To suggest more than doubling the cost just for back up is clearly ludicrous. There have been a number of claims that Battery storage is falling in price but Powerwall units have increased in price by 16% since this installation.

Another renewable source that has been proposed is tidal. This is also an intermittent supply, it only generates when the tide is coming in or going out, it is useless at slack water again requiring a backup source. But worst of all it is extremely expensive as proven by the recent Swansea Bay Lagoon fiasco. Power was offered on a 35 year escalating CfD starting at £92/MWh, on the face of it, the same price as the power from the Hinckley Point Nuclear Plant. However in addition it relied on a huge loans from the Welsh Government only repayable after 65 years. Analysis of the project showed that the investor should make money but at a huge cost for the electricity customers.

Who else makes money out of renewable energy? How about Drax with it’s four 660Mw wood chip fired boilers. I worked on the boilers for the original coal fired station and later on the De-sulphurisation equipment. These where the last coal fired boilers built in the U.K. and were state of the art when built. Of the four wood chip units the first two converted receive ROCs and next two are CfDs. Adding these payments together in 2017 Drax was subsidised to the rate of £729 million.

WorthingGooner, Going Postal
Environmental Levies

Of course there are plenty of individuals, rather than companies, that make money out of climate change. You only have to look at the number of Universities that have Departments “investigating” climate change which are stuffed with Professors who rely on Government grants and from whom you can get a climate change related Degree. It is, of course, in their interests to perpetuate climate change. The more they promote it the more money they get. One of note is the University of East Anglia which has a bit of a reputation when it comes to climate change. Recently it has been in the media that Lord Debden (John Selwyn Gummer), Chairman of the Climate Change Committee, has benefitted from his family firm taking on £600,000 worth of work from various “green” companies. But it’s not just Debden, several other of the “Independent” Climate Change Committee have ties to industry or academia that benefits from climate change money. Rebecca Heaton works for Drax, Piers Forester is Professor of Climate Change at the University of Leeds, Corinne Le Quere is Professor of Climate Change at East Anglia, Jim Skea is Professor of Sustainable Energy at Imperial College and one of the most interesting Baroness Brown who has a number of other positions such as Chair of the Carbon Trust, is the UK’s Low Carbon Business Ambassador and is a non executive director of the Offshore Renewable Energy Catapult. All appear to make a living out of climate change.

Then there are Smartmeters, plenty of money to be made there. Despite the claim they are free to the customer, save you money and are good for Climate Change as you use less energy, they are currently costing around £420 on average per install. The manufacturers don’t make them for nothing, the utilities don’t install them for nothing, both of them get paid and make a profit. Someone has to pay for them and there is no prize for guessing who. It’s another one of those items paid for through your energy bill. The latest estimate is that a Smartmeter “could” save you £18 a year, what is not mentioned is that include the utilities cost or reading you old style meter. You should also remember a Smartmeter only indicates usage, it can’t actually save energy on its own. That’s down to you seeing just what you are using and turning things off and consequently achieving savings. Pay £420 to save £18 pa is not a very good deal, especially as the meter only has a life of 20 years and it will need replacing before its cost is recovered. This seems like the economics of the mad house until you realise that these new meters have several other feature aimed at saving the utilities money. Gone is the meter reader and all costs associated with him (about £13 a household per annum), usage is reported over the mobile phone network directly to the utilities billing computers. Do not pay your bill and it will cut you off remotely. Shortage of power being generated, well it can charge you at a premium rate if you are not willing to forgo your supply. It’s really nothing to do with saving energy it’s all down to making more money. No one is going to replace 53 million meters (some twice where the Mark 1 meters are not up to the job in hand) for nothing.

Everywhere you look those pushing climate change seem to be benefiting from Government money, which is to say the climate change business gets its money from you and me. This year the Environmental Levies added to energy bills amount to over £12 Billion or £450 each for each household! Climate Change has truly become big Business.

© WorthingGooner 2019

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