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The danger of the lights going out is very real

light bulbEd Davey, the Energy secretary, has just reassured us that he is very sure that the lights will not go out. Given the credibility of politicians’ promises, particularly from this Coalition, that’s all right then. Or is it?

The energy watchdog Ofgem has warned that power blackouts could arrive as early as 2 years time. It also noted that the UK buffer of spare electricity would no current trends fall from 4% of national supplies to 2% by 2015. Hospital trusts are already beeing contacted across the country to reduce demand at peak times by using diesel-fired generators. In addition, hotel chains and water utilities are being asked to make big savings every year by implementing the National Grid demand reduction scheme.

Ofgem believe the risk of power blackouts within 18 months has doubled since only a year ago. They assert that the closure of power plants this decade – in total about a fifth of UK power generation capacity, including all but one nuclear plant – will mean that the likelihood of power shortages will increase to about once in 12 years in 2015 as opposed to once in 47 years now. As a result the government has been forced to reveal its real fears by handing over to the National Grid powers to switch on mothballed plants to meet spikes in demand and to pay factories to switch off during peak evening hours from 4-8 pm.

Nevertheless in the plans announced by Osborne in the CSR a week ago to counter this looming supply crunch, the government has shown itself still obsessed with pushing the fossil fuels economy to the limit rather than making the decisive switch to renewables which is the only sustainable long-term low-cost carbon-free fuel for the future.

Having repeatedly said there would be no public subsidies for nuclear, Osborne has now awarded a £10bn guarantee to the French nuclear giant EDF for its £14bn nuclear power station at Hinkly Point in Somerset. The purpose of this is to enable EDF to gain access to cheaper financing in the market, which would bring down its cost of capital, and thus (hopefully from the government’s point of view) resolve the lengthy dispute over the ‘strike price’ since EDF would be taking on less risk to develop Hinkley.

It remains to be seen whether this happens because all other commercial interests which initially expressed an interest in developing Hinkley have now withdrawn and EDF is the government’s last hope, which will induce EDF to push to the limit the price they exact since they have the government by the throat.

So much for the efficiencies of the private market. No investment for the future, and then EDF extracting an excessively expensive price because it is the sole provider left in the field. There couldn’t be a clearer case for taking one or more of the Big Six energy companies into public ownership to ensure investment to secure the nation’s energy future, to keep prices down for the consumer, and to deal with the gross profiteering in the opaque wholesale market.

Picture credit: p.Gordon at Flikr

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