On my recent visit to London I had the opportunity to meet with a friend who is one of the foremost assesors of risk in energy investments. This is a rather esoteric field but not far removed from those who analize risk in securitized debt.
The news of the day was that the cost for the UK to comply with new EU emmission reduction rules will mean something like a 65% increase in the average family┬┤s energy bill. The news even put a convenient number on it, the cost to the average family will rise from 1250 pounds per year (about $2000) to 2000 pounds (about $3100).
My friend stated the obvious, maybe there will be less enthuasim about reducing greenhouse emmissions when the cost literally “comes home” to the people.
He also gave an interesting insight into wind power. I saw several billboards saying that the UK has about 45% of all wind energy in Europe. The implication is clear, the UK needs to use this resource more. My friend noted that a steam turbine generator weighs about 500 kilos for each kilowatt of electricity produced. The wind turbine weighs 1500 kilos for each kilowatt produced. And as I already knew, wind turbines are notoriously high maintenance machines with frequent outages. If you want to see evidence of this visit the massive wind turbine farms between Los Angeles and Palm Springs. More important, wind turbines are too fickle to provide the baseline electric supply, i.e. wind power cannot provide sufficient power for normal consumption reliably. Wind power is useful for supplemental electric power that can replace baseline supply when available.
And here we are two months from the UN Copenhagen Conference on Climate Change, billed by many as “Kyoto II.” The event promises to be dissapointing.