Green Deal Flop

Nah, nah, na naah nah!  “I told you so, Mr Davey” is so childish and yet somehow feels so appropriate given the childish naivety deployed in rolling out the Green Deal. You would think these people had never worked in the real world with real people. Oh wait…….

“It is pretty generally accepted that the Green Deal is poorly designed, difficult to implement, and will run into a wall of apathy that makes the 15% energy supply switch rates look like an unmitigated success……..Me; I might sit this one out thanks.” Et voila – my blog post from January 25th this year. (Read full blog here…) And the unmitigated flop was confirmed this week when we all discovered that a whopping 4 households had managed to navigate their way to some kind of wishy-washy milestone that confirmed them as takers of the Green Deal – sort of. You couldn’t make this stuff up.

Meanwhile in other news we are all going to be heating and eating beans on toast off the camping stove in 2015 according to OFGEM as the spare margin in the generation stack is revised lower to a relatively meagre 2%. Now National Grid already operates a Standing Operating Reserve (or STOR scheme to the spods out there), but it is suggesting an additional demand side balancing reserve whereby large users of power reduce consumption over the peak hours of 16:00 – 20:00 hrs Monday-Friday during the winter. This is very reminiscent of another scheme operating in the large end gas market whereby significant gas users sign up to be made available for interruption should the gas system become tight in certain areas during peak winter periods. This scheme has been going, in one form or another, for years; but it is probably more viable in the gas market given the disproportionate demand for gas that some industries such as the fertilizer industry have relative to households and other businesses. The power market might need significantly more players to sign up to make a dent.

There is a substantial pile of mothballed plant in the UK that could, given the right price incentives and an easy ride by the regulator and the government of the day, be brought back into play should that 2% reserve creep down below the 1% number. I think it quite likely that any government faced with the possibility of a black-out (and I must stress that this is still an incredibly remote possibility and assumes no one does anything to stop it); will stare at environmental legislation emanating from Europe such as the Large Combustion Plant Directive (LCPD for the more catchy acronym), and quietly wave through a restart of some old coal plants that had done their final legal hours under the legislation. Their view will be rather a fight with Europe, let’s face it we are good at that anyway, than have to deal with the political fall-out of a return to the “Winter of Discontent”.

And so we come to that great white hope of energy security, fracking shale gas. Given the relatively heated debate surrounding this, F######g shale gas seems an appropriate epithet somehow. I understand the environmental campaigners concerns with regards to contaminated groundwater and escaping methane (much more dangerous to climate change than CO2); but I have less sympathy with any argument that relies on the fear of earthquakes the size equivalent of the Number 9 bus rolling past your cottage near Lake Windemere. I also find the “any extra fossil fuel is wrong” argument one that is not grounded in global real-economik. As it stands at the moment cheap shale gas in the US has caused a mini collapse in their use of coal – which is single handedly dragging the US at an accelerated rate towards a less carbon intensive economy which is also more competitive than previously and so simultaneously leading to  a possible slow-down in Chinese coal fired production as manufacturers look at once again onshoring their manufacturing plants. Unfortunately us liberal European types; so reluctant to embrace shale, find ourselves the dumping ground for all that cheap American coal that needs a market. So in one of life’s little ironies we end up burning more coal than before (because it is cheaper than gas – and remember we don’t like shale gas) and so our carbon footprint gets worse. Go figure. In my view Shale gas and fracking will do four things for the UK:

  1. It will introduce a viable new industry to the North of Britain that might well bring some relief, employment, vibrancy and economic prosperity to all those towns and communities that suffered disproportionately from things like the closure of the coal mines!
  2. It will enable us to be less reliant on the gas coming from either the Russians or the Middle East; which from a national security and a “keep the lights on” perspective is a good thing.
  3. It will enable us to replace coal fired generation (as happened in the US) with more gas and so halving the carbon footprint per kWh of equivalent electricity generated whilst at the same time providing us with a locally sourced, stable base load power to offset wind’s unpredictability.
  4. Lastly it buys us the time to develop the technology and processes necessary to deliver non-fossil fuel sources of power that will be economic and reliable successors to gas. As long as we don’t discard the carbon agenda then we will still be able to incentivise (and if necessary subsidise the R&D for renewable technologies)

As regards groundwater contamination and escaping methane; it should not be, and isn’t, beyond the wit of companies, governments and regulators to implement a localised management system that shuts itself down the moment key indicators start moving the needle in the wrong direction.

If you don’t believe fracking has a place in the energy mix then answers on a postcard please as to how we square the circle. I am all up for pragmatic solutions, especially renewable ones.  Mentions of Fusion will be accorded minimal credence unless the writer is a nuclear physicist or a deity.

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