DANCING IN THE DARK?

Yesterday the National Grid warned that its capacity to supply electricity this winter would be at a seven-year low due to generator closures and breakdowns. The National Grid revealed that spare electricity capacity, which ran at about 5% over the winter months last year, would be nearer 4% this year, three years ago the margin was 17%. The loss of generating capacity is a symptom of a bigger systematic sector wide problem as a result of the model for energy production, distribution and ownership being fundamentally flawed.

Our energy production and distribution model has been restructured to primarily benefit the big 6 energy cartel members, their interests and their (City) profits. From the perspective of energy consumers and smaller scale energy producers, or anyone who wants things to change the problem is that all the Westminster based political parties have quietly bought into this cartel dominated model of energy production and ownership (or perhaps were quietly bought).

The reality is that the UK’s cartel dominated model for energy production and distribution is not necessarily the norm everywhere in Europe or around the world. Alternatives exist and prosper, a particularly good example of a balanced and healthy energy mix can be found in Germany. Here small may very well be beautiful, even within a geographically sizeable state, particularly in relation to energy, back in 2012 some 22% of the countries energy came from small scale green entrepreneurs. 

In Germany community based co-operatives (both urban and rural), farmers and homeowners are part of the 1.3 million renewable energy producers and part of the energy mix. Incidentally in Germany, citizens’, cooperatives, and communities own more than half of German renewable capacity. Small-scale electricity generation is having a knock on effect encouraging change throughout the energy system.

In Berlin, a cooperative (Burger Energie Berlin – literally Berlin Citizens Energy) is campaigning to take control of the capital's electricity grid with some 35,000km of underground cables. The cooperative is a free, cross-party coalition of citizens who are committed to a sustainable, sustainable and democratic energy policy in Berlin. Members have one vote regardless of the amount their deposit and anyone who wants the power network to be in civil hand, is welcome.

Ordinary Berliners have invested their cash in the venture with the intention of producing a reliable 100 percent renewable energy supply. The aim is to promote the integration of renewable energy into the grid and to invest a portion of the profits from this directly into the transition to renewable energy. At present the Berlin electricity grid is run by Vattenfall (whose concession runs out this year) regularly generates millions in profits, members of the co-operative believe that the profits from the grid operation should flow to Berlin’s citizens.  

This is grass roots energy generation that has potentially the power to change the nature of the energy supply system (in Germany and elsewhere). They aim to build an energy grid that is better handle the rise of green power and allows local use of locally produced energy. This may well be a case of small being both beautiful and perhaps more disturbing from the perspective of Westminster being that it is both community beneficial and community owned.

In Germany, there is a deliberate promoted policy of energy transition (or ‘Energiewende’) – this is a very different approach to what is practised in these islands (at least south of the Scottish border). For a start the ‘Energiewende’ is driven by a desire to reduce and eliminate any dependency on nuclear energy. 

The introduction of the Feed-in-tariff (EEG) in 2008 was an important part of this process, along with (post Fukushima) the almost unanimous across the board political commitment to a wide range of targets (in 2011) which included a commitment to reduce energy demand (with a 50% reduction in primary energy use by 2050) and the achievement of an 80% renewable electricity share of total consumption (by 2050). This has resulted in a significant uptake of renewables in Germany.

It is worth noting that:

• In early 2012, around 25% of Germany’s power was generated from renewable sources;
• Costs for wind generated power have fallen by around 50% since 1990;
• Costs for solar systems has fallen by around 80-90% since 1990;
• In 2011, over 380,000 people were employed in the renewable energy sources industry
• Only 13% of Germany’s 60 GW of renewable energy is owned by utilities, with the rest being owned by households, communities, and farmers among others;
• In less than 7 years, an energy market with 4 main suppliers has turned into one with more than a million suppliers;
• Solar supply has already met peak lunchtime demand on several occasions.

Another of the benefits of the Energiewende is more local ownership of the means of energy production, more jobs, more security of supply and real meaningful action to tackle climate-changing emissions from energy.

The real striking difference is that the operation of the grid in Germany means that generated renewable electricity is used first and that distribution network operators (DNOs) are also seeking to reduce demand. This is so radically different from the way the energy is generated, distributed and used here in Wales.

Another significant difference, aside from the scale and pattern of investment (in Germany), is that small businesses, co-operatives, individual households and local authorities benefit from investment distributed by a network of local banks (something we pretty much entirely lack in Wales). The whole thing is supported by the KfW (state investment bank) to the tune of 23.3 billion euro in the area of environment and climate protection (2012 figures).

These developments are a million miles away from the so-called ‘Free market’ for energy that exists in the UK, which is pretty dominated by the ‘Big 6’ energy cartel members. The fact that some former politicians have found rewarding post political career employment within the energy sector may be co-incidental but suggests that there is little desire for improvement within Westminster.

The way the current set up works, it is difficult to imagine ‘Government’ at most levels (at least south of the Scottish border) in the UK grasping the concept, the practicalities and real possibilities of genuine community owned beneficial energy generation projects.

POWER FROM THE PEOPLE

There are times when Westminster, the Euro sceptics and perhaps the City are happy for the 22 miles of water separating the British Isles from the European mainland to seem psychologically much wider than they are geographically. Economically at times, particularly when it comes to the model for energy production, distribution and ownership those few miles of water at times might as well be a thousand miles wide. 

I mention this because last week Ofgen referred the energy market (this is Ofgen speak for the big 6 energy cartel members) to the Competition and Markets Authority for a full investigation. Ofgem says that the investigation should ensure, once and for all, that competition works effectively for consumers, by bearing down on prices while driving improvements in customer service and innovation.

Let’s just say that I for one won’t be holding my breath... as our energy production and distribution model has been restructured (over the years) to primarily benefit the big 6 energy cartel members, their interests and their (City) profits. From the perspective of energy consumers and smaller scale energy producers, the problem is that all the Westminster based political parties had quietly bought into this cartel dominated model of energy production and ownership.

The reality is that the UK’s cartel dominated model for energy production and distribution is not necessarily the norm everywhere in Europe. Alternatives exist and prosper, a particularly good example of a balanced and healthy energy mix can be found in Germany. Here small may very well be beautiful, particularly in relation to energy, back in 2012 some 22% of the countries energy came from small scale green entrepreneurs. 

Community co-operatives (both urban and rural), farmers and homeowners are part of the 1.3 million renewable energy producers and part of the energy mix. Incidentally in Germany, citizens’, cooperatives, and communities own more than half of German renewable capacity. Small scale electricity generation is having a knock on effect encouraging change throughout the energy system.

In Berlin, a cooperative (Burger Energie Berlin – literally Berlin Citizens Energy) is campaigning to take control of the capital's electricity grid with some 35,000 km of underground cables. The cooperative is a free, cross-party coalition of citizens who are committed to a sustainable, sustainable and democratic energy policy in Berlin. Members have one vote regardless of the amount their deposit and anyone who wants the power network to be in civil hand, is welcome.

Ordinary Berliners have invested their cash in the venture with the intention of producing a reliable 100 percent renewable energy supply. The aim is to promote the integration of renewable energy into the grid and to invest a portion of the profits from this directly into the transition to renewable energy. At present the Berlin electricity grid is run by Vattenfall (whose concession runs out this year) regularly generates millions in profits, members of the co-operative believe that the profits from the grid operation should flow to Berlin’s citizens.  

This is grass roots energy generation that has potentially the power to change the nature of the energy supply system (in Germany and elsewhere). They aim to build an energy grid that is better handle the rise of green power and allows local use of locally produced energy. This may well be a case of small being both beautiful and perhaps more disturbing from the perspective of Westminster being both community beneficial and community owned. 

These developments are a million miles away from the alleged ‘Free market’ for energy that exists in the UK, which is dominated by the ‘Big 6’ energy cartel members. The way the current set up works, it is difficult to imagine ‘Government’ at most levels in the UK grasping  the concept, let alone the practicalities and possibilities of genuine community owned and community beneficial energy generation projects even crossing the collective mind of Westminster and some of the devolved institutions. 

HE WHO PAYS THE PIPER?

Almost quietly, almost unnoticed and certainly unheralded at least in this part of Western Europe the Nord Stream gas pipeline has come on-line which enables Russia to ship commercial natural gas supplies to Western and Central Europe. The gas pipeline, currently one of the world's longest submerged pipelines has not been without controversy. The pipeline project, which was actively pushed by the Russian government and agreed to by Gerhard Schröder's government of Germany. The project has not been without a degree of controversy for a number of reasons, especially the fact that it increasing European energy dependence on Russia.

Gazprom, nominally an independent energy company but in fact the energy arm of the Kremlin, has a bit a reputation for generously spreading it's largess around to help get what it wants. Some dubious activities may have taken place in Sweden and in Germany to smooth the path for the Nord Stream pipeline. Certainly it is a fact that Schröder, by coincidence after leaving the post of Chancellor of Germany, ended up as head the shareholders' committee of Nord Stream AG.

There is another factor that has set some alarm bells sounding and that’s because the new pipeline may enable Russia to bypass traditional transit countries Ukraine, Slovakia, Czech Republic, Belarus and Poland. Some transit countries are very concerned that a long-term plan of the Kremlin is to attempt to exert political influence on them by threatening their gas supply without affecting supplies to Western Europe.

In recent years there have been several seasonal and very bitter public Russian and Ukrainian gas disputes. Now with Nord Stream there is a real fear that France and Germany may sell the Eastern European countries down the river in exchange for cheap Gas. These fears have been strengthened by the fact that Russia has consistently refused to ratify the Energy Charter Treaty (ECT).

The ECT is an old international agreement which should provide a transparent framework for energy trade, transit and investments. The ECT process was originally based on plans to integrating the energy sectors of the then Soviet Union and Eastern Europe just after the end of the Cold War into a much broader European and world energy market.

Nord Stream’s critics have said that Europe could become dangerously over dependent on Russian natural gas supplies, especially if Russia faces a surge in both domestic and a foreign demand for gas. A Swedish Defence Research Agency study noted over 55 incidents since 1991, with "both political and economic underpinnings".

Back in April 2006 Radosław Sikorski, who was then Poland's defence minister, made reference to the project in terms of the 1939 Nazi-Soviet Molotov–Ribbentrop Pact. More recently Edward Lucas in his updated (2009) book The New Cold War: Putin's Russia and the Threat to the West, (which is well worth a read) has suggested that "though Nord Stream's backers insist that the project is business pure and simple, this would be easier to believe if it were more transparent."

The involvement of Gazprom in the project – a company that's as great a believer in transparency as its masters in the Kremlin - does not help matters and neither does the fact that Nord Stream AG is incorporated in Switzerland where it can take full advantage of effective banking anonymity. Russia's response has been that the pipeline actually increases Europe's energy security, and that any criticism is caused by bitterness about the loss of significant transit revenues, and political influence. Diplomatically that's as close to ‘Bite me!’ as you can get.

So there we are Russia is quietly supplying a significant portion gas supplies to Western Europe – how soon before we end up hostage to a Russian political agendas. Be silent and get your gas or criticize us over Human rights or when we attack a small country or chill in the leak midwinter! I have no yearning for a new cold war, but harsh realities, but the writing may be on the wall when it comes to energy security.

Relying on energy supplies that are at risk of interruption or are found in unstable regions of the world is just plain stupidity, as is consciously choosing to become more increasingly dependent on imported gas. If you think that the members of the big six give customers a hard time just wait until one or two of them get bought by Gazprom no doubt ably assisted by the city based friends of New Labour and the Conservatives, ever eager to chase a quick profit at our expense.

Here in Wales, a small country on the fringe of Europe, we had better take note and hope that we can rapidly make our small country energy independent. We need to develop a flexible self-sufficient energy development strategy that encourages decentralised micro generation schemes and by actually implementing it this could create jobs, useful skills and help to bootstrap the economy out of the developing recession as well as helping consumers. The peoples of these islands need to be entirely self sufficient via renewable non nuclear non market driven energy resources and quickly.

A NO TO THE NUCLEAR OPTION

German Chancellor Angela Merkel has that the decision to phase out nuclear power by 2022 will make Germany a trailblazer in renewable energy and that the country would reap economic benefits from the move. Germany is the biggest industrial power to renounce nuclear energy, in a major policy reversal for the governing centre-right coalition.

A panel was set up to review nuclear power following the crisis at Fukushima in Japan resulting from the earthquake and tsunami (back in March) which led to significant anti-nuclear protests across Germany. The anti-nuclear drive Green party, also took control of the Christian Democrat stronghold of Baden-Wuerttemberg, in late March. Political commentators suggest that Chancellor Merkel could even be examining the prospects of a possible coalition with the Greens.

The previous centre-left Social Democrats (SPD) and the Greens coalition government decided to shut down Germany's nuclear power stations by 2021. Back in September (2010) Chancellor Merkel's coalition abandoned those plans and announced that it would extend the life of the country's nuclear reactors by an average of 12 years.This decision very unpopular in Germany well before the radioactive leaks at the Fukushima plant.

After Fukushima, Mrs Merkel promptly scrapped her extension plan, and rapidly announced a review of the German nuclear industry.Basically as a result of this review, seven of Germany's oldest reactors (which were taken off-line for a safety review immediately after the Japanese crisis) will never be used again. An eighth plant is already off-line and has been repeatedly plagued by technical problems will also be closed down. Six other plants will go off-line by 2021 at the latest and the three newest plants by 2022.

Germany has relied on nuclear power for 23% of its energy needs. The plan is to actually reduce electricity use by 10% over the next ten years with far more efficient machinery and buildings and also the plan is to generate home grown green energy jobs and technologies.  There will be an increase in the amount of wind generated energy and a re-orientation of Germany's electricity distribution system because much of the extra wind power would come from farms on the North Sea to replace atomic power stations in the south.