UK - Power generation issues

I admit to having a very biased view on this having worked in the power generation industry just after it was privatised, but anyway......

A long time ago, the UK had a state owned electricity supply industry which supplied electricity generated from a variety of sources (nuclear, coal, oil, renewables and others). It was centrally planned and run and the key was continuity of supply. This meant that there was generous overcapacity in the system and that plant was run for durability rather than maximum return on investment. This meant, for examples that plants were "run up" well within operational parameters.

The decision to privatise was allegedly taken to improve efficiency in the system. The first effect of this was for generators to shut down any surplus capacity in order to keep prices high in the open market. There has also been a shift away from coal and nuclear towards gas and renewables. You'll not be shocked to hear that "competition" in the industry has resulted in prices rising well above inflation.

There is no longer any centralised planning of capacity and because of this there have been many attempts to "bribe" generators to keep plants open. A particuarly egregious example this is being locked into paying double the going rate for electricity from a nuclear plant being built and run by French and Chinese owned state electricity companies (instead of being, I don't know, being built and operated by a UK state owned company).

There is no real incentive to improve the situation because the additional costs are being borne by the consumers and no-one is really being held to account.

The latest story that has me shaking my head slowly is this one:

http://ift.tt/1lLD5rg

Quote:

Diesel farms could this week win contracts worth hundreds of millions of pounds as part of a Government scheme to keep the lights on. The payments, which will add to our energy bills, are intended to ensure there is enough generating capacity on the power network.

This feels like a third world solution to a first world problem and will deliver terrible value for money

Quote:

"This is allowing sky-high returns for diesel investors, but terrible value for money for consumers" he said.

It is possible that, in extremis, private operation of power plants may be more efficient than state operation (though I'm pretty sure the staff are the same, all that's changed are the operating parameters), but a failure to plan centrally AND a market which financially rewards brinkmanship will cost in the long run.

via International Skeptics Forum http://ift.tt/1lqMGnF