Monthly Archives: October 2012

Japanese company Hitachi buys into nuclear

The news that Hitachi has paid what seems a high price for the Horizon franchise to build new nuclear stations in the UK is good news for the industry. Hitachi has a strong balance sheet and a good technical record – untarnished by Japan’s Fukushima incident. The deal is a tribute to the Department of Energy and Climate Change officials involved and to Number 10′s strong support for the nuclear programme.

Now, only two questions remain. What price will UK consumers pay for nuclear generated power and who will fund EDF’s initial investment in Hinkley Point.

After a long and successful campaign to make nuclear power acceptable within the UK the companies involved in the industry seem to be jeopardising further progress by refusing to spell out the detailed costs of the new nuclear stations they want to build. Read more

After Nick Butler’s post on David Cameron’s energy policy John Kay writes about the complexity of retail energy tariffs and how the simplification of these will not be easy.

Last week, David Cameron told the House of Commons that UK energy suppliers will be required to ensure that all their customers benefit from the lowest tariff. Coincidentally, Britain’s energy regulator Ofgem published a document proposing simplification of retail energy tariffs. The document demonstrated that simplification will be complicated. Certainly more complicated than the prime minister’s statement implied. Read more

Over the years, many governments, rivals, oligarchs and commentators have underestimated Vladimir Putin – often to their cost. When he came to power back in 1999, he was seen as simply a poodle, a temporary, technocratic figure as Mr Yeltsin’s prime minister with no political presence of his own. Some 13 years later, he is one of the longest serving leaders in the world.

Russia is no democratic paradise but by and large Mr Putin has avoided open conflicts and had begun to re-establish a position for Russia in the world – not quite the superpower it once was but rather as a country with a strong government that no one can afford to ignore. Read more

David Cameron is the first prime minister in living memory who has not employed a business policy adviser in Number 10. The lack of such an adviser is all too evident in the continuing shambles around the UK’s energy policy.

Picking up public irritation with rising electricity and gas bills, the PM declared that companies would be compelled to supply customers on the basis of the lowest tariff available. This signals a real lack of understanding of how business works. The rapid consequence of such a policy would be to push all tariffs up and to remove any incentive on any supplier to provide competitive packages to end users. Read more

Why are renewables losing out? According to the International Energy Agency, renewables, excluding biomass but including hydro, currently provide just 8 per cent of global electricity supply and 3 per cent of total energy demand. By 2035 on the IEA’s main scenario those figures will rise to just 15 and 7 per cent respectively. That represents some serious growth but not a breakthrough. Hydrocarbons on all the IEA scenarios will still be providing well over 60 per cent of final energy. The figure could be higher if shale gas and tight oil developments spread from the US and if coal prices fall further.

This limited achievement comes despite a decade of high spending on research – especially in the US, and despite a variety of generous subsidies – ranging from direct grants and feed-in tariffs, to protected market shares. In the UK, the support is entrenched in legislation requiring the government to produce long-term plans for reducing emissions over the next four decades. Renewables have benefitted over the past few years from concerns about rising energy prices and energy security, as well as from the desire to tackle climate change. Read more

Few countries can afford to turn away from the prospect of developing 5bn bbl of oil, but France, as ever, is exceptional. François Hollande, the socialist president, has refused to allow hydraulic fracking. In France, fracking is associated in the public mind with shale gas – a form of energy which is thought of, alongside Anglo-Saxon banks, McDonalds and other manifestations of globalisation, as fundamentally un-French and therefore bad.

France has plenty of shale gas which will now never be developed, presumably. The president’s announcement did not mention the country’s ‘tight oil’ resources. The question being asked in Paris is whether Mr Hollande knew just how great the prize of tight oil could be. Read more

The news that Areva and the Chinese company Guangdong Nuclear Power Group have pulled out of the bidding for the Horizon franchise to build some of the UK’s next generation of nuclear power stations was unsurprising. Areva is not an operator of nuclear stations and the government is reported to have made clear to the companies that while Chinese investment was welcome, a Chinese operator was not. Read more


Benjamin Netanyahu’s speech to the UN General Assembly has taken the immediate heat away from the confrontation between Israel and Iran. The prospect of an imminent strike on Iran’s nuclear facilities and of retaliation from Tehran has been removed. What does this mean for oil prices? Read more