France

A virtue of The Economist's focus this week on the vulnerability of our energy systems, regardless of whether they have got everything right (and there's plenty that's good as well as some that's bad) is that it has brought attention to the issue. Unfortunately, for every sensible comment, there are usually several from people who have picked their magic bullet and just trot out their usual unthinking platitudes without considering the complexities.

The favourite magic bullets are usually one form or another of renewable electricity, or nuclear power. For example, several nuclear freaks gave us the benefit of their opinions in response to a perfectly sensible post on Raedwald's blog.

I provided some information on there to explain why nuclear won't be a magic bullet, but I want to provide a bit of supporting analysis here.

The nuclear lobby often points to our import of power from France as illustration that the French nuclear-based system is more reliable than our mixture of generating technologies. They like to paint the story as though we are reliant on French nuclear power. Let's see how well that holds up to scrutiny.

I have looked at half-hourly system-demand data for the current year to end of May, available from National Grid/Elexon. The total or average volume of the flow over the French interconnector doesn't tell us much. We are net importers of a relatively small volume of our power (partly constrained by the capacity of the interconnector). But the more interesting question is when that power flows.

Looking first at how it varies by time of day:

It's a mixed bag. System demand is (not surprisingly) higher during the day than at night, and has two peaks during the day, morning and evening. The French send the most power during our evening peak, so that is definitely them responding to our demand. But they send more over at night (when we don't need it) than they do in the morning and early afternoon, suggesting that we are providing an outlet to dump the inflexible output from their nuclear plant at night time. That's a fairly 50:50 relationship, then. They give it to us when we most need it, but we take it from them when they most need to dump it even though we don't need it then.

That is an average of winter and spring performance. Our needs are greater in winter (i.e. we are getting closer to using the full capacity available in order to meet demand), so let's see how they help us out at that time. Taking just the first three months of the year:

Our system demand is higher over a 3-month winter average than over a 5-month winter/spring average. But the French send us significantly less power during the winter than they do for the 5-month period. In fact, during most of our morning peak of demand, they are taking power from us (negative flows), rather than the other way round. They are still helping us out during the evening peak, but to a lesser extent. And they are still dumping their power on us at night, though again to a lesser extent. That's not 50:50. At the time of the year when supplies are tightest, they are using us more than we are using them.

We can see that picture more clearly if we look at the weekly averages:

As average system demand decreases, as the weather improves and the days get longer, the French send us more of their power. That's back to front, if French nuclear is helping to meet our needs, but consistent with the UK acting as a dumping ground for excess French nuclear production. Most noticeably, in the week with the highest demand so far this year (week 2), they were actually net importers from the UK. How very helpful of them.

If nuclear is not subsidised and the safety and environmental factors are rigorously controlled, then it is a useful part of our electricity mix. But it is an inflexible part of the mix, which is why France pushes her power out to her neighbours when demand is lower at home, and pulls it in when demand is higher. We can't all do that. We can use hydro to store the power to some extent, but it depends on the geographic and political constraints (the UK's potential is very limited), and even France, with massive hydro investment, cannot fully balance supply and demand in this way. To the extent that nuclear output cannot be matched to demand through stored hydro-power, there is a limit to how much of our electricity can be supplied by nuclear. In the UK, with limited hydro, but grand plans for inflexible, intermittent wind power, the practical limit is probably in the region of 10-12 GW, operating at fairly constant output to provide around 20-25% of our electricity. As electricity is only a minority of our total energy consumption, that equates to around 4% of our final energy consumption, or 8% of our primary energy supply.

As I said, nuclear can be a useful part of our systems, but it's no magic bullet for our broader energy issues.

This week's Spectator includes an article by Elliot Wilson about nuclear power and Barbara Judge, one of the great-and-the-good, chair of the UK Atomic Energy Authority (amongst many senior roles), and wife of Sir Paul Judge (he of The Jury Team). The article contains the following passage:

"If there's a model to follow, it is the French one... In the wake of the first global energy crisis, the goal was to find ways to wean France off Arab oil... the plan work[ed] blindingly well - four fifths of French energy needs are now provided by 59 nuclear plants..."

I have written to The Spectator, quoting this passage, and pointing out that this is yet another repetition of the nuclear lobby's lies on this subject.

According to the International Energy Agency, nuclear energy provides 43 per cent of France's Primary Energy Supply, and 17 per cent of their Final Energy Consumption. Oil provides 33 per cent of their Primary Energy Supply and 49 per cent of their Final Energy Consumption. Their consumption of oil has reduced by 3 per cent since 1970. Over the same period, consumption of oil in the UK has reduced by 17 per cent.

France's lips are still wrapped firmly round the petroleum teat. Nuclear energy is not a substitute for oil. But when have the nuclear lobby ever let the facts get in the way of their propaganda? 

Mr Wilson has made the classic mistake, on which various rent-seekers in the energy sector rely (including the wind and solar lobbies, as well as the nuclear crowd), of failing to distinguish between electricity and energy. It's not the first time this fundamental error has appeared in The Spectator, as in many other parts of the media. It's a particular favourite of Michael Portillo and Bernard Ingham. But journalists who are not aware of this basic distinction ought not to be writing on the subject. 

Coincidentally, Sir Paul also has a track record of "economy with the truth" on this sort of subject - in his case, providing misleading claims about BA's carbon-offsetting facility. Perhaps it's a conjugal thing.

I have been in France for a couple of days, visiting a potential business partner's sites. They have plans to install a huge area of photovoltaic (PV) panels at both sites. In both cases, they claim that the PV will pay for the cost of the buildings on which the panels will be installed. Hence they are building very big structures to cover with PV.

That is somewhat surprising, because PV, unless massively subsidised, doesn't even cover the cost of itself (i.e. installing and running the panels), let alone pay for the building underneath. The explanation: the French government is introducing a tariff to pay €500/MWh from PV. By comparison, their power costs (they claim, though this probably hides massive subsidy to the nuclear industry) around €37/MWh to produce, and consumers pay €42-120/MWh (large industrial to small domestic).

In this respect, they are outdoing even the Germans, who "only" threw €320-400/MWh at PV. This made the Germans the biggest deployers of PV in the world (relative to the size of their economy). And yet contributed a gnat's fart of electricity (<0.1%) to their total energy supplies.

Our potential colleagues will not be the only ones planning to respond to this incentive by building installations that otherwise would not be built, which will cost a fortune, fit badly with their nuclear power (as both are inflexible), and add little to their energy supplies or security. There will doubtless be a spate of construction subsidised by this massive distortion, whose cost bears no relation to the environmental or economic benefit (particularly in France, where this power will mainly be displacing nuclear, and therefore making a minimal impact on carbon emissions, and reducing the efficiency of the nuclear power stations).

The French government justifies this, as governments always do, by claiming that massive support will produce massive deployment, which will achieve economies of scale, and drive the technology down the learning curve, making the technology viable in the long-run. What they have not explained is why this has not already been achieved by the German programme, and why, following that programme and the supposed economies and learning achieved, they have had to introduce a subsidy even more generous than the Germans in order to encourage the market. Is this yet another example where the learning curve is negative, and the lessons learned are that the technology is more expensive and less likely to reduce in cost than its proponents expected?

GdF is an energy company, Suez operates in the energy and environment sectors. They want to merge. The French government is intervening to tell Suez that it must divest itself of its environment division if the merger is to go ahead. Why is that?

Is it on competition grounds? Quite the opposite. The competition threat comes not from the merging of Suez's environment division with GdF's energy activities, but from the merging of the two companies' energy interests. But the French government is not only unconcerned about creating an energy behemoth, it is actively encouraging it as the desirable outcome. They want to create another "national champion".

Is it because there are few synergies between the energy and environment sectors? Suez obviously doesn't think so, and as it is the active partner, protecting the tasty morsel that is GdF from the terrible fate of being swallowed by a foreign competitor such as Italy's Enel, Suez's opinion ought to count. And there are indeed obvious synergies, for instance in the potential for the use of waste as a source of energy, and in the environmental impact of energy-generating and -supplying activities. The French government has not tried to justify its intervention on these grounds.

No. It is because the French government wants to retain in the merged group the share of influence that it currently has over GdF. As Sarkozy said, "I proposed to Suez that it merge its energy activities with Gaz de France... to build a big gas and electricity group with... the state as principal shareholder."

Let's not worry that its influence has proved so effective that it has made GdF a target of acquisition. Nor that the group in which the French government has less influence (Suez) has been doing better than the group in which it has more influence (GdF). This is not about commercial logic and the good of the businesses in question. It is about power and making sure that the French state has the biggest finger in as many big pies as possible. Commercial logic and competition be damned. The inevitable result of political involvement in commercial activities.

Some people claim that Nicolas Sarkozy is France's Margaret Thatcher. Yeah, right.

To quote from the BBC report:

"A reference to 'free and undistorted competition' was pulled from the draft [Treaty that isn't the Constitutional Treaty] after French pressure late on Thursday. Instead, the treaty refers to 'social cohesion' and 'full employment'."

Sarkozy did not hide his contempt for free trade during the election. This is consistent with his position. But those who thought they were getting an economic liberal, simply because they heard someone who talked tough on immigration and liked to swing a handbag, were fools.

Anyway, two good things stem from this.

Firstly, it is clear that this is not just a tidying-up exercise, and that this goes to the heart of what Europe is about. The Government has absolutely no excuse to deny the British public a referendum, given their promises that one would be held for any significant changes.

Secondly, Jose Manual Barroso, Angela Merkel and the rest of the con-merchants can no longer argue that certain aspects, such as voting rights, ought not to be opened up again, as they have already been settled. If something as fundamental as this is still subject to change, then nothing should be off-limits. We should support the Poles in demanding that the German stitch-up on voting rights be re-examined. They were right anyway, but now there is no excuse for trying to railroad them.