By Paul Homewood
Rebecca Long-Bailey has moved forward (or backwards) on Labour’s plans to decarbonise the UK.
The woefully inadequate Long-Bailey has only got the job of shadow business secretary because she is a hard left acolyte of Jeremy Corbyn, for whom most of his MPs refuse to work for.
Her latest move is to gather together trade unionists, industry leaders, academics, engineers and public institutions to look at the detail. No doubt this will be the usual bunch of renewable lobbyists, paid up members of the green blob and marxist academics.
But I have come across a document she put out last September, which offers some insights into how Labour will start to try to meet its manifesto promise that 60% of UK energy would be low carbon by 2030.
It consists of four strands:
Currently there is offshore capacity of 8 GW, due to rise to 14 GW by 2025.
The first, very basic question is how much subsidy is Labour prepared to pay out to obtain this investment.
Current wholesale prices for electricity are £55/MWh, and the official government projections see this coming down to £44/MWh by 2035, at current prices.
By contrast, the lowest strike price agreed via CfDs for offshore wind so far is £63.66/MWh.
Nobody is prepared to build new offshore wind farms at the moment without a guaranteed price well above current market prices, so the only way Labour can achieve their goal is to massively increase subsidies.
Assuming a subsidy of £20/MWh, the extra 38 GW required under this plan would add £2.7bn to the £14.2bn already budgeted for by the current government.
Current onshore wind capacity is 13 GW, so this plan would need to more than double what we have.
Again, this raises the question of how much extra subsidy is Labour prepared to pay out.
Since subsidy schemes for onshore were ended, new investment in onshore wind has dried up to a trickle. So how will Labour encourage this investment to return, or will it finance it direct from taxation? And who will pay for excess costs – bill payers or taxpayers?
Labour wants to raise solar capacity from 13 GW to 35 GW.
But again, new solar build has dried up since subsidies stopped.
Long-Bailey witters on about the falling costs of solar panels, but developers would be queuing up now to build new solar farms if they could make money.
The plan also talks about expanding rooftop solar. But this begs the question of who pays. Will government pay for panels on a privately owned house, or company offices? Clearly not. So how will they persuade private property owners to do it. Government has been trying for years to encourage this via the Green Deal, but the uptake has been distinctly unimpressive, simply because the economics don’t stack up.
Will Labour then resurrect the obscene incentives, previously offered through FITs, which mainly benefit wealthy people, but have to be paid largely by the poor?
She also seems to be totally unaware that solar power runs at little more than 1% of capacity during winter months, when power is at a premium. There is little point in wasting tens of billions of pounds building up solar capacity, which you can only use in summer when you don’t need it, but is not available in winter when you really do.
What happens when there’s too much wind and sun?
But on top of the question of subsidies, is a much more fundamental one.
Adding offshore, onshore and solar together from her plan, we could expect annual generation of 286 TWh, about 85% of total generation currently. This would equate to an average of 33 GW.
Because of the huge weather related variations in wind and solar outputs, there will be many times when there is far more wind and sun generated power than the grid can absorb. This would certainly be the case in summer.
Even the Committee on Climate Change recognises this problem. In its modelling, it works on a maximum wind/solar capacity of 87 GW, much less than Labour’s 117 GW.
But even then, the CCC calculate that there will be a hell of a lot of surplus power in the system, when wind, solar and nuclear output exceed demand. Under Long-Bailey’s plan, such surplus would be immense.
CCC 5th Carbon Budget
So just what does Long-Bailey propose to do with this excess electricity? If it is just thrown away, the unit costs for the power we do actually use becomes much more expensive.
TRANSLATION- somebody has to pay the cost of this.
If we offload the surplus onto, say, Norway (assuming we have tens of GW of interconnector capacity, which does not exist), are they going to pay full price for it? Of course not.
Even the CCC have realised that there is a limit to how much intermittent capacity the grid can absorb. Apparently, Long-Bailey, whose only experience outside politics is as a solicitor, has not grasped these basic concepts, which should be obvious to anyone with a bit of knowledge of the subject.
Unfortunately her plan does not get any better.
She plans to cut demand for domestic heating by 25%, by upgrading 12m homes to the highest energy efficiency standards:
As is the case throughout her plan, there is no mention of cost. But we do have some clues.
She talks about 160,000 new jobs created. At, say, £50,000 each (incl NI, pension contributions, and miscellaneous costs such as travel), we are looking at a cost of £8bn a year. You could easily double this when adding on material costs, such as new windows, insulation etc.
So where does she propose to get £16bn from each year? That would equate to £16k for each of those 12m homes, when spread over 12 years (ie three Parliaments).
And how much would each household save in energy? Probably no more than a couple of hundred pounds a year. Yet the very same households are already paying more than this in green levies.
It would make more sense reducing people’s energy bills, for instance by eliminating VAT, than embarking on an unaffordable programme of energy efficiency improvements.
And what is certain is that if such a programme was organised by government, it would cost twice as much and take twice as long as it would otherwise.
Finally we go back to the question of who pays? Many of these 12m homes are owner occupied, so will owners benefit from government largesse? Or will they be forced to pay the cost, money which they are unlikely to have.
Quite apart from these issues, it is unlikely that all of the energy savings projected will come to pass. Most people who invest in insulation take advantage of warmer homes, and not just reduced bills. Even Long-Bailey talks about “homes that are warmer”. She cannot have it both ways.
Energy savings will only go a small way to meeting Labour’s targets. As far as heating is concerned, 44% of heat demand will need to be made renewable:
The plan makes no mention of how this will be achieved, but it plainly cannot come from electrification. As she admits herself, peak demand for heating six times larger than electricity, which is also much more costly than gas anyway.
This leaves hydrogen. As Lord Oxburgh’s Parliamentary Report has already stated, the only viable way to produce hydrogen is via steam reforming using natural gas.
Even then the costs would be astronomical. Based on estimated costs for a pilot study in Leeds, a national roll out of hydrogen would cost £163bn, plus £11bn a year in running costs.
Jobs and Costs
As noted, Labour’s plan makes no mention of costs anywhere in the document, probably because they assume money grows on trees.
But they do talk about new jobs created, apparently 410,000.
We have heard nonsensical claims like this before from politicians. Remember when Ed Miliband claimed his green revolution would create 400,000 jobs? That was back in 2009. I wonder what happened to them.
But on a more fundamental level, such claims merely display politicians lack of understanding about how economies work.
Put simply, you cannot “create jobs”, as the money to pay for them is taken out of the rest of the economy, particularly when there is no added value.
It also begs the question of just where these bodies are going to come from. After all, there are hardly 410,000 skilled workers sat around unemployed. If these new jobs are to be filled, employees will have to be taken away from other productive sectors of the economy.
Of course, Labour’s policies will probably create many more unemployed workers. But I don’t think a skilled worker at a factory on Merseyside will be particularly happy having to move hundreds of miles in order to take up a new job as a double glazing salesman!
Labour’s plan is here:
via NOT A LOT OF PEOPLE KNOW THAT
February 19, 2019 at 07:30AM