What to do about a thing like a Green Bank ?
March 22, 2010
So the UK Conservative party want to build a Green Investment Bank to consolidate all the funding functions currently held by bodies such as The Carbon Trust and the Marine Renewables Deployment Fund.
Fair enough, seems like a good idea. Use ISAs to fund it ? Again, no objections there.
Here’s what it needs to be successful;
A strong research department.
That’s it. Nothing else. Just a set of market savvy investment analysts to make sure that the technologies and projects that are being invested in are not complete trash. It won’t be able to afford the best brokers or indeed the best analysts, but then its aim is not to outperform the market. It would be good for the country if it did, home-grown profits count double in this game, but there is no shareholder imperative to work against (or indeed with) so fiduciary responsibility is replaced by electoral responsibility.
The analysts need to have cross-sectoral visibility so that they are not working against each other but apart from that nothing special needs to be in place, except some independent oversight to build confidence in the market that these are kosher companies with realistic chances of commercial success.
Of course if the worst happens and all its investments come to nought, that could be a lot of cash that the govt has to refund to the ISA holders, but presumably there will be some form of hedge against catastrophic loss.
We’ll have to wait and see what Labour’s equivalent looks like when the last pre-election budget is announced on Wednesday, but Reuters is reporting a £2bn investment fund with half from assets sales and half from private investment. I’m sure that there will be more detail than that, but if Alistair Darling’s announcement conforms to the leak, sorry briefing, then it really isn’t very imaginative. Its just another pot of cash with another set of criteria. £2bn isn’t enough to kick-start any major infrastructure projects (the super grid is estimated at around £30bn, the high speed rail at £30bn and each of the 8-12 new nuclear reactors is supposed to be around £5bn (very roughly)), so you have to ask where is this money aimed at ? We’ll find out on Wednesday I suppose.
Forging ahead
March 18, 2010
Finally Sheffield’s Forgemasters has got the government assistance that it has been looking for to build a 15,000 tonne press needed to manufacture the largest nuclear reactor components. I say finally because the project finance team has been working for 2 years to finalise the deal, before that the forge was conceived and designed, so my guess is that at least 5 years of work has gone into this and without it UK plc would seriously loose out in any new nuclear build.
The help is in the form of an £80m loan so we tax payers aren’t going to get stung for the full £80m unless Forgemasters goes bust immediately. We are effectively paying just over half the interest on the total loan by standing 57% of the total £140m required to build the kit. So, rough guess on a 5 year loan at 10% pa, the tax payer is taking £40m off the total bill that Forgemasters will have to pay. Its an opportunity cost to us, rather than an expenditure. Westinghouse, Lloyds and the European Bank are actually putting up most of the money. If you want a comparison the new windturbine blade test facility in Blythe is receiving over £25m worth of grants and supporting infrastructure, but then that’s a brand new capacity for the country and it deserves help too. I don’t know about you but I’d rather my money went into manufacturing than banking, maybe that’s just me 
I have to say I don’t think that’s a bad deal with the nuclear industry going the way that it is and it is a big piece of the supply chain for the UK’s own new nuclear generating capacity. So whether you regard £40m as a speculation against later export revenue, an investment in reducing import expenditure, a way to retain some real, world-leading manufacturing expertise, or simply a way to create several hundred skilled jobs for the next couple of decades it can’t be bad news.
Right now 15kt presses are not exactly common with only Japan, China and Russia reported as having capacity on this scale, with South Korea and India both wanting to enter the field.
Other people’s comments;
The Dark Lord lays out the argument in this article from last year.
This article from the Institute of Engineers has a similar flavour.
The WNA’s view of developments.
Even the Guardian seems to accept the logic of the loan
There is a second interesting point within the funding announcement (its near the bottom) was that Forgemasters would be ‘overseeing’ development of Indian forging capacity in a £30m deal. That is a technology transfer deal, effectively to show the Indians how to forge the smaller components of nuclear power systems. So we gain access to their market at the expense of some of our older technology. Swings and roundabouts. The big money is in the big kit, but a £3m per year revenue stream from tech transfer is enough to pay quite a chunk of the loan interest without tying up too many resources.
Of course you could take the other view, that nuclear power is bad/unnecessary/expensive/foolish/dangerous whatever form it comes in and we shouldn’t help its development through taxpayer assistance, whatever form it comes in. Personally I can’t justify that opinion ethically or economically as long at we in the UK use medical isotopes and invest in other less proven energy sources, such as coal with CCS or solar PV. I can see the arguments, but I think that they are emotionally driven rather than empirically based. The argument against spreading nuclear power technology to countries that currently don’t use it is much stronger, but even there its not black and white.
So I think the Forgemasters deal is great for Sheff and good for the UK. Let’s stop fannying about and start building big kit. Don’t care if its 300m tall 10MW offshore wind turbines, giant steel sea snakes or nuclear pressure vessels, the sooner we start the better, then we can stop hand-wringing and get back to helping the last billion out of crushing poverty.
Random Energy Ideas Part Four
August 5, 2009
This one is a bit convoluted, but bear with me I wouldn’t type it all out just to annoy you.
Heat is an up and coming issue in the UK, specifically what to do with all that waste industrial heat from power stations and steel plants (if there are any left). Excess domestic heat can be dealt with by just opening the windows, or if you want to be super hi-tech pumping it into liquid or solid storage, but try that with the excess heat from even a modest power station and you’d end up standing in a pool of magma. What you really need is a set of complimentary large-scale parasitic industries that need large amounts of heat (almost) all day (almost) every day.
Apologies to proponents of domestic heating grids, but I don’t see the point of digging up the roads and changing everyone’s central heating system, if you can use the heat as efficiently in industry or agriculture. You are increasing resource use not decreasing it and I like to be able to control the heating in my house. I assume that everyone does, which means that we will all use the heat at the same time or not. Where does it go when ‘not’ is the majority thought ? The overall aim is surely, most efficient use of energy on a country-sized scale, which makes commercial or industrial use of waste heat much more preferable, especially since factories don’t care about the view and can be located next to the heat source on land that is cheap and nasty.
Here are some possibles, most of which turn out to have been mentioned before, but hey, in for a penny;
Industrial laundry – Got a few hospitals, hotels and army barracks that don’t need ‘special fabric conditioner’ ? Well, you most likely also have a full-time laundry. Its hot, it uses heat, it produces heat. Hitching these up to a waste heat system seems like a no-brainer. You have to factor in transport to and from the site to make sure that its actually a more efficient use of energy, but that happens all the time anyway.
Server Farms – what ? Don’t they need coolth rather than warmth ? Well yes, but any heat difference can be converted to the opposite heat difference with a bit of fancy thermodynamic engineering, you just can’t do it with 100% efficiency. Not only are server farms big electrical power consumers, so the shorter the cable run to them the better, but they also require large amounts of refrigeration. Instead of using electricity to power that refrigeration why not use waste heat from the local power plant. Don’t spend a million on PV so that you can tell your shareholders that you provide enough to do the server room lighting, spend it re-locating next to a power plant and knock holes in your energy budget. Or if you simply have to be somewhere else warm your own and neighboring buildings with excess heat from servers.
Greenhouses – worried about food security, food miles, invasive species, pesticide use, water consumption, whatever floats your boat really. The world of agriculture is a lot more controllable under glass. With waste heat you can heat or cool a set of glasshouses, collect & store the rainwater and you can control the humidity, exercise some degree of hygiene and you can keep more of the beasties off your cabbages. You’ll still need fertilizers and pesticides, but since they are not getting wsahed straight into the local river you need less. More to the point you can produce much more food locally over a larger portion of the year. No energy other than waste heat required.
Fish farms – along the same lines. UK fish stocks are said to be struggling. World fish stocks are said to be plummeting. I have no idea whether that is true, all I know is that whenever I’ve cast a hook over the side for mackerel I have never failed to catch my dinner. But I don’t do it very often and I’ve noticed that cod is not always alone on the menu in the chip shop these days. Anyway…..
On the shores of Lake Victoria the fishermen prize the tilapia. Its a nice looking fish with firm, white, tasty flesh. Its great fried whole, but will take the same range of flavours as a sea fish like a bass. They are freshwater, algae feeding, quick growing and easy to ‘domesticate’. They are an ideal farming fish as far as I can tell as a non-pescitorialist. They just won’t breed at a water temperature of less that 30C.
Again the food security, food miles argument comes in, but it also has a conservation element since we aren’t munching on sea-caught, wild stocks. Just a word of warning though, the tilapia that you can buy in the local UK supermarket are a farmed cousin of the tilapia nilensis that is hooked out of Lake Victoria. Its still tasty, but just not quite as nice, and a bit smaller. Maybe that’s wild vs farmed I don’t know.
You would have to do this fish farming in covered ponds with good circulation but, again, nothing but waste heat required. You could even float some aquaculture on the top of the ponds so as to grow the fishes food on-site and maybe take a crop from (I’m thinking of something like corriander with fibrous roots), but that’s only guesswork.
Other industrial-scale heat sinks
Food processing factories – all those cook-chill ready meals are prepared somewhere.
Ceramics – from tiles to toilet bowls, they all have drying facilities and large kilns that could benefit from pre-heating
Swimming pools and leisure centres – or indeed any large spaces that are heated year round like
Airports – heated runway ? well, terminal buildings anyway
Shopping Centres, hospitals, large office complexes.
Basically what I’m saying is, keep those damn heat pipes out of my house ! There’s plenty of other places to shove them before you get to me. If you want to include them in new developments that’s fine, I can decide to move into one or not, but my house is my home is my castle is my cave is my den. I don’t let just anyone in. Don’t even get me started on smart meters !
That sounds crazy but I’m only joking a little. The whole retrofit and external influence on home life is a serious issue and one that often gets forgotten in a blizzard of techno fixes and macro economics. Energy services are there to make life better. If the downsides outweigh the upsides don’t do it.
Random Energy Ideas Part Two
June 19, 2009
Feed-In Tariff Franchises
I like this one. Its got real possibilities.
The UK is going to bring in feed-in tariffs for some renewable energy sources. Not sure which. Not sure when. But it will happen. This opens some possibilities, like roof rental for solar. My idea is a bit more holistic.
If feed-in tariffs were enabled the possibility of local ‘Mom & Pop’ power companies is raised. This could placate much enmity within the planning process with operators being locally based and directly accountable to the communities that they live in (there has always been an issue with perception vs reality here but I won’t go into that).
To get a significant number of these ‘local’ power companies why not set up an off-the-shelf McPower franchising system.
The franchise would cover the technical feasibility, planning process and engineering set-up. Once commissioned the franchisee would be tied to the franchisor (possibly an existing network operator, possibly not) who would supply any specialist consultancy and engineering supplies required at +/- market rate.
The franchisee would be responsible for operation, care & maintenance of the installation. It would, for a large proportion of the set-up fee, take a cut of the energy supplied and a portion of the sale of any carbon credits generated. The option could be given that the franchisee can ‘save’ carbon credits for redemption in the future thus giving them the option to hedge their capital investment through exposure to the EU carbon market.
Capital investment for the project would initially be via a loan from either the franchisor or a commercial bank that has applicable skillsets (it would be an investment bank but I’m not sure that any of those still exist).
The reason for a network operator to engage in this kind of operation is
less on the ground staff, pensions, etc
a quick and guaranteed payback on capital investment (loan would be secured)
probably an increased chance of gaining planning permission for additional generating capacity covered under the RO
a tied-in supply of carbon credits (under supposed terms & conditions of franchise)
Reasons for planning authorities to buy-in
local operator on a scale that is accessible and accountable (to local govt and populous)
meets objectives on employment (many areas with potential for renewables are both under populated and under employed)
meets objectives on sustainable industry (with majority of supply chain easily seen it is easier to assess sustainability)
Reasons for a franchisee to buy the franchise
allows a small skilled/semi-skilled business to operate in an area that is remote (lifestyle)
ethical industry (lifestyle)
allows access to an area of industry that was not previously available (economic gap)
has back-up from the big boys (insurance)
can grow the business by adding more sites (possible for terms and conditions allow for good corporate citizenship proof by operation. This would qualify the franchisee to acquire more sites in the area as they gain a good reputation within the community. Cycle of benefit)
Possible problems
Still requires a well funded corporate or govt agency behind it to sustain the model (to facilitate loans and supply chain economies of scale that make the franchise model viable)
Franchisees may be seen as puppets rather than local operators
Ideal first targets large farmers and land owners with significant on-site energy needs (there is a possibility of linking in with subsidies for CAPEX on renewables for these to negate the need for development loans). It allows a risk reduction and diversification of income stream for these users.
There’s your business model, now away you go and make it happen
