Glimpsing the Future

Can we glimpse the future of energy ?

Ambient, sustainable energy is all around us, and sooner or
later we will find the ways to make use of it for the good of all.

The following is an appropriately edited transcript of a
conversation on the Claverton Energy Research Group
forum online, and was written by Nick Balmer, a consultant
in renewable energy.
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…The huge scale of the possible changes for all concerned is
causing all of the current Titans in the [energy] industry to deploy
the full force of the media [and their] PR [public relations] in an
attempt to manipulate the public and policy towards their own way
of thinking, or in such a way as to protect their own vested interests.

The great thing is that these issues are being aired out in the open,
and groups like [Claverton Energy Research Group forum] allow
people with knowledge of these affairs to debate these issues openly.

The big problem is that each of us has only a very detailed
understanding of some small fraction of the total issue.

Most of the public and government only has a very slight knowledge
of the total issue, and has had only limited access to ways to find out
in detail what is going on.

As Egypt is demonstrating today, everybody now has a voice and as
Wikileaks shows, sooner or later everything will come out into the
open.

All of us are struggling to come to terms with this explosion of
access to knowledge.

It is quite clear that lots of bubbles are being burst as a result of
the Global Financial implosion and the huge expansion in available
knowledge.

Just as banking and property has been shown to be an unaffordable
Ponzi scheme and to be vastly over-inflated, UK energy policy is now
coming under huge scrutiny.

We can now compare our energy systems with other countries.

Due to the huge geological accident of fate, since the 1700’s in coal,
and 1970’s in oil and gas, we have been extremely fortunate in being
able to live way beyond the lifestyle standards of most of the World.

We have not had to adapt.

Other countries that didn’t have this advantage had to change over
recent decades.

Places like Denmark, Austria, Germany [and so on] have made huge
changes because they had less energy from fossil resources.

Now we have reached the peak or crunch point, we find ourselves well
behind those countries that had to adapt earlier.

Everybody is concentrating on the Capital cost of deploying per
MW [megawatt] and overlooks the cost of fuels.

The cost of fuels over time is massively more important than the
CAPEX [capital expenditure on investment].

So even if windfarms cost 20 times per MW or GW [gigawatt] more to
build than nuclear or coal or gas, in the scheme of things,
[wind power] is always going to win, because the fuel is free and
unlimited for centuries to come.

Similarly [solar power technologies], or even more effective,
household insulation and cutting energy use.

And yet the media and government are blinded by the barrage of PR
and media from the energy vested interests who are working with
every muscle to stop this coming out into the open.

I often meet financiers in my work trying to promote and support AD
[anaerobic digestion of biological waste for the production of
renewable methane], biomass, solar and wind projects.

I am always struggling to prove to them that I have an offtake [return
on investment] and the fuel supply. This is often really hard to do
[but] I only have to do this for seven to 12 years to make my business
cases stack up.

I was really depressed at the end of one such presentation and
discussion, when one broadly sympathetic banker who had turned me
down said that he was having even worse problems with largescale
energy projects.

How do you predict the price and supply of coal forward for 25 years
or more ?

It has jumped 17% in recent months.

How do you prove that you are going to have offtake for huge power
stations in future years ?

Demand dropped 8% in 2009.

How do you raise the equity or debt for a billion [pound] project when
banks don’t want to lend more than £30 million each ? Imagine how
many banks that would take ?

We have reached a tipping point in our economy, sustainability and
future outlook.

Yes, the existing mega-power companies are fighting as hard as
Mubarak today to hold onto power, but they represent the past just
as surely as he does.

Those companies can rejuvenate themselves, unlike the Egyptian
President.

If they don’t, there are an increasingly large number of smaller and
more active players coming into the market.

The average household pays somewhere around £1,300 a year for
its heating and lighting.

The companies that come forward with a way to do that for £1,000 is
going to capture the market very quickly.

I have friends in Austria who only pay 65 Euros for services that I
pay £1,400 for.

They do this through insulation, triple glazing, solar and biomass energy.

Most [UK] households have less than £400 per year discretionary
disposable income. This prevents them making changes to their houses
they desperately want and know they need to make.
This can
drop their energy demands hugely.

If somebody can unlock that Gordian Knot the benefits would be
enormous as there are something like 27 million households.

At a time when household debt is at an all-time high, incomes are
shrinking, and 40% live on ether government salaries, state
pensions or benefits.

Energy is a very high part of these households’ outgoings – if you
pay £1,300 a year and your house only brings in £11,000 to £20,000
per year.

A 50% increase in the £1,300 could bring great distress, and
possibly even civil unrest here.

The increases fossil power [companies] need to make their systems
bankable will increase energy bills. This will feed straight through into
government liabilities because 40% of us live on government payouts.

If government can drop the cost of heating and lighting quite easily
by £100 to £500 per household per year while at the same time
provide employment for hundreds of thousands of White Van men
cutting energy uses, doesn’t this make far more sense than building
unsustainable power stations that will have to be [bankrolled] by the
government, who will then have to buy back electricity at a price our
communities cannot stand ?

Project a similar calculation onto transport fuels and you get even
greater problems.

At $80 a barrel [of oil] industry is shrinking and relatively few
renewable fuel business cases work. At $100 a barrel most renewable
fuels can compete.

At $120 a barrel almost any alternative beats oil, and that is before
you start to look at issues like fuel security and the environment.

Although the battle is one of David and Goliath, or the Dinosaur and
those early mammals, between the new energy industries and the
existing vested energy industries, [it] has only one outcome.

It is only a matter of the co-lateral damage along the way.

Like Mubarak, it is clear they must go. Are they going to go
gracefully, or are they going to smash the place up first ?

Nick Balmer
Renewable Energy Consultant

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