Siting power stations

Energy Minister Nick Drew*, in the comments to his own post on Kingsnorth, Coal and a New Dash For Gas:

... delaying the decommissioning might be a low-cost option in some instances ... but it's not necessarily so, beyond a couple of years extra lifespan:

- the plants-to-be-decommissioned were nominated (by their owners) quite a few years ago, on the grounds that there was no economic way to clean them up. As such they really are probably rubbish, and will mostly have had only basic safety-type maintenance done on them since that decision. But capital plant needs constant upgrading-type maintenance to give it a decent lifespan, so their demise is now almost inevitable

- the owners generally see more value in these plants as brown-field sites for new plants in due course. This is because (a) permitting for new large power-plants on greenfield sites is really, really difficult across all of Europe and (b) choice sites (with good access to cooling water, transport links etc) are at a premium even without permitting problem.

It's the last paragraph that chimes with me. One fairly ridiculous way of dismissing Georgists' economic analysis is to accuse them of being obsessed with land, and to say that land is not important to a modern economy ("I'm typing this from my lap-top. I don't need land for that!"). OK, but lap-tops need electricity, which comes from power stations.

Superficially, how much land does a power station need? A few hundred acres perhaps, it doesn't need to be particularly fertile or anything, it's not like agriculture... but it needs all the things that ND mentions, and it burns coal, oil or gas that are derived from land; and it can't be too far from major cities/factories because for every pilon and substation between it and the customer it has to battle for planning permission and make 'wayleave' payments.

The cost/value of the land is not in the inherent value of the land (you can snap up a few hundred acres of farmland for a few million quid, peanuts to a power company) but in all the planning permission and hassle. There are trade-offs - near a town means more customers, shorter power cables, easier to get employees to maintain the thing; but near a town also means more objections from residents (we all want electricity but nobody wants to live near a power station. Funny, that). Similarly, land prices near a town are higher; but land prices further out into the countryside are much lower (but then you get the Greenie lobby crying doubly foul, etc).

So as ND suggests, once you have 'banked' that planning permission, you can allow your old power station to disintegrate (gleefully encouraged to do so by the EU, of course, we're best off out sharpish, different topic) but the site retains an enormous amount of value as the potential site for a replacement power station. So the old power company is no longer a power company, it's a land speculator.

Putting the whole global-cooling-peak-oil debate to one side for now, is it better to tax a power station on the value of electricity it generates (which discourages electricity generation) or to reduce taxes on that and increase the tax on the site value (which for these purposes means Business Rates) thus discouraging, or at least reducing the rewards to property speculation and indirectly encouraging them to keep the plant in good working order?

Just sayin', is all.

* Well he is in my Bloggers Cabinet anyway.

"Revolt grows over planning bill"

Let's look at some different takes on what is essentially the same topic:

1. From the BBC: "A Labour revolt is growing over a bill to take away ministers' and councils' planning powers on major projects like airports and nuclear power stations [and hand these powers to] an independent commission".

2. EUReferendum reckon that power cuts will be become ever-more frequent - this is due to  increasing demand; failure to replace and maintain stuff; Greenie opposition to power stations; the EU Large Combustion Plants Directive and restrictive planning laws. Rather unfairly, the list misses off "NIMBY opposition" alongside "Greenie opposition", but apart from that, fair summary.

3. David Starckie's new book "Aviation Markets", "... the book tackles subjects such as ... how airport slots should be allocated (answer: price)."

4. Lord Howell's energy policy, which amounts to "let the markets decide (not the Greenies)". This has been officially adopted as MW policy - don't tax it any higher than other businesses and for Heaven's sake, don't subsidise it. Sensible gummint oversight, sure, that's a different topic.

As ever, the MW manifesto - which is based on understanding and welcoming free markets and building policies around them - has ready answers to this:

a. As many powers as possible (apart from defence, immigration and the voting age at national elections, basically everything) should be delegated down to local councils. So if, for example, Medway Council decides to allow a local power station to be replaced/upgraded, that will be the end of the matter.

b. Local councils will obtain the bulk of their income from licence fees and user charges and Land Value Tax. And rents from social housing, different topic.

i) If there is demand for an airport, of course the Greenies and NIMBYs will be dead set against it, but as councils in the areas affected by the airport will be able to charge, via auction, around £12,000 per take-off/landing slot, there will be plenty of money coming in. Air travel will still be profitable (if not, the price will drop until it is), and if the receipts are more than enough to pay for the transport infrastructure, install secondary double glazing in homes in the flight path, etc, with a bit left over for other local amenities (to buy off the local electorate), then the airport will be built. Else not.

ii) Of course, some homes will still fall in value if they are in the flight path. At least the NIMBYs will have the consolation that their Land Value Tax bill has fallen. Conversely, with more jobs in the area (Heathrow employs 70,000 people), and remembering that house prices are largely a function of local wages, Land Value Tax receipts might even increase.

iii) Greenies and NIMBYs will object to other things that are essential but that nobody wants near them - for example power stations or waste incinerators and landfill sites. Again, local councils have to make the trade-off; if the potential income from charging fees for allowing sites to be used for landfill (EU-imposed landfill tax is a ludicrous £1m-plus per acre!) or for a waste incineration plant is greater than the potential net fall in Land Value Tax receipts (more local jobs, boosting land values, but they can whiff a bit, depressing land values), then the local council will grant permission for that landfill site or waste incineration plant. Else not.

c. When I say "no subsidies", this includes explicit subsidies (e.g. for wind turbines) and implicit ones. Nuclear power only works because of explicit and implicit subsidies - the most iniquitous being what amounts to a taxpayer funded bail-out for decomissioning and the fact that nuclear power stations do not have to insure themselves against 'worst case scenarios'.

d. As to sensible regulation and oversight, the problem with electricity generation is that we need overcapacity (which the market has no reason to provide) to cope with unforeseen power outages. Part of this can be dealt with by chucking more cables in the North Sea so that we can buy and sell capacity from the Dutch and the Belgians (who are an hour ahead of us - so we can fire up our generators an hour earlier and sell it to them in the morning). Altho' the MW manifesto does not recommend State provision of goods and services, there can be no harm in the State buying up old marginal, barely profitable power stations to provide that 5% of spare capacity that we need as a cushion and only firing them up when all else fails.

e. As a final thought, what about the long-mooted Severn Barrage? As an aside, it's nice to see this being proposed as a source of 'clean energy' (to pacify the Greenies) but being opposed by 'environmentalists', but that's not the main point.

The main point is that I, as a non-scientist, have no idea whether it will 'work'. Not the faintest. In much the same way, the Victorians who first proposed the Channel Tunnel had no idea whether it was really viable. But Thatcher (basically) flogged off the rights to build it to private companies, so for the taxpayer it was win-win. If it works, it'll compete against cross-channel ferries and air transport, if it doesn't, tough, private investors lose money. Either way, at least HM Treasury has banked some money. With the benefit of 20/20 hindsight, in economic terms it probably wasn't worth it. But so what? It's there now, so we might as well use it, and we all benefit from more competition on cross-channel routes.

The same applies to the Severn Barrage. An MW-led gummint will steamroller local opposition* and auction off a thirty year lease on permission to build and operate it (to be shared between all the county councils on either side of the estuary). If it works, great. Even if it doesn't, so what? Part of the lease agreement will be that if it doesn't, the winning bidder has to demolish it again. And if it works (in terms of 'it generates electricity') but fails (in terms of 'it doesn't cover its interest costs'), then so what? Once it's built, it will provide us with plenty of electricity at negligible marginal cost.

* Of course, something will be built to compensate local surfers for the loss of The Severn Bore.

Leytonstone car free day

The street was packed with people watching The Beat, so I snuck between two stalls (that were lined up along the edge of the pavement) to be able to walk along behind them.

The lady in charge of one of the two stalls did not take kindly to this.

She started asking cretinous questions like "Did you not see that we put boxes in the way?"
"Well yes" said I "That is why I lifted my feet particularly high, so's to avoid tripping up"
"They were there to stop people sneaking between and behind stalls"
"Well they didn't work" said I

Honestly, power corrupts. Put a lady in charge of a stall and she turns into the SS. The only thing stopping me from telling her to f*** off back to Germany, the f***ing Nazi was the fact that I am far too polite, she was black and the place was teeming with PC police.