Energy Matters Global and Domestic

[NewcastleFalcon]

Martin Lewis did the "Gas Crisis" on Jeremy Vine today, then on came a couple of politicians and the general public.

While Martin Lewis outlined the scale of the Gas Price Cap rise to come in the Spring, of the order of 50% increase and a headline £600 more/year likely on a dual fuel tariff, some tinkering with VAT and the Green levies got an airing. Triflingly piddling compared to the year on year gas price hike on the way.

So out trots the "We should produce more of "our own" gas from the gas fields around the UK Coast"

Hardly ever mentioned in these discussions...we have already sold our Gas extraction from our own seas around the UK, to multinational companies, some private equity companies, and many state owned companies. Their loyalties are to shareholders and investors, their dividends, and capital growth. They will sell their gas to the highest bidder and if that means shipping the gas in LNG form to any part of the world that will pay the price, that is what they will do. They are under no obligation to increase the supply to the UK, or to sell the gas for UK consumption at a discount rate to reduce domestic gas bills out of the goodness of their heart.

The UK has a particularly large lobby of citizens who use gas for heating and hot water. Probably over 80% of households. No quick or economic alternative to drop that percentage down to any great extent exists short-term, so gas demand and dependency will remain high. There will be some action by Government over what they control which is precious little.

The North Sea has been sold, licences have been granted, and unless within those licences is some obligation to supply the UK's Gas demand first, no directive from UK Government can enforce increased production. As long as licence holders comply with the terms of their licences, they can sell the gas they produce to whoever they choose from gas fields they have discovered, developed, taken the risk on and are currently reaping the rewards.

REgards Neil

[bobins]

Presumably a short term reduction in domestic VAT on gas which is offset by a windfall tax on the gas companies who will be making remarkable profits off the back of the higher gas prices would be out of the question as it interferes with big businesses' profits - and that's a 'Bad Thing'™.

[NewcastleFalcon]

Here's the Crown Estates in Action. There has just been an auction for developing wind farms around the coast of Scotland and its results have been announced today.

Here are the successful bidders, pick out from it what you can

This is the horses mouth stuff from Crown Estates Scotland, as opposed to the Inverness Courier's own spin on it.

https://www.crownestatescotland.com/new ... spirations

REgards Neil

[Gibbo2286]

Watch out now for the rise of the objectors Neil.

[NewcastleFalcon]

THis is a bit of a prequel to the news just announced where the auction of rights to develop Wind farms in specific areas of the North Sea managed by Crown Estates Scotland was reported to raise £700 million.

Decent enough background info here.

Will ScotWind auction deliver a renewables revolution?
https://www.bbc.co.uk/news/uk-scotland-59980279

Regards Neil

[NewcastleFalcon]

So how much control will UK Governments retain over the supply of energy, produced by the companies who develop the windfarms in the North Sea. If the new contracts follow the pattern of the first four rounds then for 15 years a strike price will be determined, and some stability of pricing will be determined by that mechanism.

After 15 years the generator companies are free to reap the rewards for their investment, and just like oil and gas, with no UK state shareholding in any of the generator companies, no UK Govt continuing dividends, and no future control over production and price. Little UK Govt risk in the development and initial production years, and currently many companies bidding for the development rights.

The apparent initial bonanza from licencing fees is small compared to long-term continuing dividends from having a share in the companies producing the energy. Many state-owned companies are in possession of licences in the UK North Sea, the UK Government is not one of them. To be fair, probably a bit late to join in with that approach now, and the current process encourages the conditions for investors and companies to find UK North Sea Wind an attractive investment proposal.

Mentioned before but according to this, with similar levels of production between 1971 and 2014, Norway generated considerably more revenue from North Sea Oil and Gas compared to the UK. Contributing to this, £400 billion from dividends from Norwegian State owned Oil and Gas Companies.

For interest
https://resourcegovernance.org/blog/did ... il-revenue

REgards Neil

[Gibbo2286]

The private companies and their shareholders take all the financial risks Neil, the taxpayer gets the benefit without that risk and the government has the power, without taking ownership, of taxing the dividends and regulating the prices, but that's straying into politics which we don't do here.

[mickthemaverick]

.............. but that's straying into politics which we don't do here.

Indeed we don't, and how much better the FCF is for that fact!!

[NewcastleFalcon]

The private companies and their shareholders take all the financial risks Neil, the taxpayer gets the benefit without that risk and the government has the power, without taking ownership, of taxing the dividends and regulating the prices, but that's straying into politics which we don't do here.

I often mention that in my ramblings on here Gibbo, and its patently true. The end product of the process will be pretty much identical to our UK Oil and Gas production/reserves, no "ownership", and companies which can trade their electricity to whoever and whereever they want with none of it bottled and labeled UK Electricity for UK consumption only. May even facilitate in the current situation in 2021, a faster development of the UK Wind Power generating capacity than anywhere else in the world. The CFD process effectively guarantees revenues at the strike price for 15 years, which is a useful encouragement to investors, and to date the UK North Sea sector has had no problem attracting investors.

With the pace and scale of developments worldwide, there will be competition for lets call it "gubbins supply" and labour. Great chance for a bit of larger scale UK industry to sprout up, but the Danes and the Chinese may have got there first. The winning bidders have also promised to invest about £1bn in sourcing materials and services from Scottish supply chain companies for every 1GW of offshore wind capacity built, which could put local firms in line for £25bn of investment.

The list here from Crown Estates Scotland shows the Lead Applicants and the many partners in their developments.

https://www.crownestatescotland.com/res ... ers-170122

Regards Neil

[NewcastleFalcon]

Over to Nuclear and the much vaunted Rolls Royce Small Modular Reactor

Its a while since Dave's Dulcet tones have had an airing

Rolls Royce Small Modular Reactor: Energy Revolution or delusional distraction?

REgards Neil

[NewcastleFalcon]

Just watched ten minutes on Solar panels. Improving all the time but current technologies reach a maximum efficiency ceiling at around 30% Sunlight to Electricity conversion efficiency as they are incapable of absorbing the full spectrum of wavelengths of light.

Dave has a look at a promising development from the UK by Cambridge Photon Technology.

Link
Solar PV efficiency - new breakthrough!

Regards Neil

[bobins]

I thought it might be insightful to show the current spread of UK electricity generation as of now - just after 4.00pm UK time. Info taken from the Gridwatch website https://www.gridwatch.templar.co.uk/

Electricity generation spread - Gridwatch

Total demand is not far off peak. Frequency is drooping a little, and a little earlier in the day than when it usually struggles, but it'll even out tonight. Gas and nuclear generation are not far off flat out, though nuclear would/should normally be flat out by now. Wind is way below peak output, and solar is virtually non-existant... which is to be expected by now Biomass is over in the red and coal is working hard. We're importing a gnats from France and the Dutch interconnect is not far off flat out - but that's not unusual, same as the other interconnects.

[NewcastleFalcon]

Much Windier today

Regards Neil

[thorter]

Unfortunately, we need consistent energy. Reliable energy has been successfully driver out to the point where the grid only just gets by when wind and solar are low. This shows in the balancing prices. It is very unclear what will happen then the remaining coal and nuclear stations close shortly. The necessary huge amount of storage and extra wind capacity do not seem feasible in the timescale.

Here is the generation and price data from https://www2.bmreports.com yesterday and the day before, when balancing energy reached £4 per kwh.

[bobins]

Regards Neil

And in a change round from yesterday, we're exporting around 2GW of energy to France and Holland at the moment. Biomass is still over in the red, and coal is still playing its part

Energy spread - Gridwatch