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. 

LET THE GOOD TIMES ROLL...

Profits before people

One of the real long lasting legacies from the blighted wasted years of Conservative and New Labour rule in the 1980's, 1990's and 2000's is the fact that the members of the 'Big 6' energy (cartel) companies can continue unchecked to fleece their customers with little or non existent regulation. Ofgem (which nominally regulates the energy industry) has produced statistics that show that members of the 'Big 6' have more than doubled their retail profit margins over the last 18 months and are earning an average of £95 pound profit per household on those who hold dual fuel bills (a 7% profit on previous figures). Ofgem estimates that profits per household will reach or pass the £100 pound mark within the next 12 months. Recently acquired statistics from EDF, British Gas and the rest of the cartel members show that their profit margins from power generation, which is run as a separate operation form the business of energy sale to customers, came in at around 24% in 2011 and has risen since. Ofgem revealed that the average profit margins for energy generation within the cartel rose from 18.4% in 2010 to 24.4% in 2011. All of the 'Big 6' cartel members ramped up their energy charges between October 2012 and January 2013 to squeeze as much as they can from their customers. Even the members of the 'Big 6 ' energy cartel are perhaps getting a little embarrassed by their own blatant profiteering and their own management bonus culture as save for via Ofgem and the press it is becoming increasingly difficult to find just how much they are squeezing from us.

A REGULATED ENERGY MARKET?

Plaid is right to call on the Welsh Government to pull its finger out when it comes to ending the injustice in the energy sector. The big six energy cartel members are busy ramping up fat profits while they can and successive Westminster Government’s have quietly looked the other way. We have excessive profiteering on the part of the energy companies, while Welsh consumers pay around 5-10% more for their energy than anywhere elsewhere in the UK due to a combination of poorer energy infrastructure, the effective demise of competition in the nominal free market, and older housing stock.

I can see no good  reason why the energy market in Wales should not be regulated in here in Wales - we would be hard pressed to make it any worse. Energy wise things have not been helped by the Labour in Wales Government (in Cardiff) which shows no signs of stirring from its s elf-induced lethargy to do anything significant about developing the energy sector. They have done little save to bleat occasionally about excessive on-shore wind-farm development and the lack of any real planning input in the process due to the 50 MW (onshore) and 1 MW (off-shore) rule, something that ironically is their fault.

We need not be in this situation, if the party formerly known as New Labour and the Conservatives had actually honoured their Welsh general election manifesto promise in 2011 to increase the 1 MW limit for off-shore and 50 MW for on-shore threshold for planning for energy project. This failure effectively prevents the development of realistic community beneficial energy schemes, some of which may be over the threshold, so they have to be decided on in Westminster rather than in Wales, and since when has Westminster seriously had any time for Wales?

Back in January (2012) Plaid MP Jonathan Edwards called for energy powers to be transferred to the Welsh Government; his bill would have given the Welsh Government powers over energy generation in Wales. The bill, which was blocked by Labour and Conservative MPs (and defeated by 239 votes to 44), would have ensured equality with Scotland and Northern Ireland and would have meant that Wales would have been better placed to fight fuel poverty with responsibility for our own resources.

Last week Plaid Cymru’s Simon Thomas AM outlined what he saw as excessive profits by energy companies. He called for the Welsh Government to work towards the devolution of energy policy so that it can protect the people of Wales form unjust practices.

The Party of Wales Mid and West Wales AM Simon Thomas said:

“As winter approaches, families are finding it more difficult than ever to pay for their heating bills, yet energy companies are reporting enormous profits. We cannot protect Welsh consumers from price rises without obtaining further energy powers and the ability to regulate the energy market in Wales.

“It is clear that something needs to be done. It isn’t fair that Welsh consumers pay 5 or 10 per cent more for their energy than other UK regions. We have heard allegations of price fixing at a time when figures also show that there are thousands of excess winter death each year. If energy companies are found to have been price-fixing then there will be serious questions for them to answer about those excess deaths.

“The Party of Wales is convinced that the devolution of powers over energy is the only way to protect Welsh customers from the unfair practices in the energy market.

“But we also want the Welsh Government to use the powers it already has to help more people. Through extending the Arbed scheme we could help more families bring down their energy bills by making their homes more energy efficient – this could have a huge effect on their bills. Heating bills are one of the biggest worries that Welsh families are facing this winter, and a Party of Wales Government would do much more to help them.”

A pressing question remains, whether or not Carwyn Jones will actually trying to do something or anything about trying to develop our countries energy potential over the remaining years of their term in office? I suspect that the answer is going to be a resounding no! Sadly I suspect that he and his Labour in Wales government will sit quietly and do nothing merely waiting for the Westminster cycle to run its course and duly (they hope) return a Labour in Westminster Government – what a waste of time and (admittedly limited) opportunities.