Construction Industry Hit by PSO Levy

From The Irish Times :

The Commission for Energy Regulation (CER) wants to increase the public service obligation (PSO) levy on electricity bills by €104 million to €496.5 million from next October to support renewable energy developers and peat-fired power plants.

However, cement and concrete manufacturers, whose businesses face high energy bills, have warned the regulator that such a move could hit jobs and endanger the recovery in construction.

In a submission to the commission, manufacturer Kilsaran International says that over the 12 months from October, the increase would add €43,984 to its energy bills and points out that it cannot recover this from customers.

One of the biggest issues in Ireland right now is the shortage in housing. It is being framed as a problem for government to fix but probably the best thing the government could do is stay out of it. By meddling with energy costs, the government has hit the very people who could sort out the housing crisis - the people who build the houses. 

The Irish Government creates problems. Then everyone looks to them to solve it. 

The Migrant Crisis, Robots, Global Warming and the Inconsistency of the Media

Reading and believing the Mainstream media these days requires you to believe several different and conflicting positions / theories at the same time. It seems they have lost all sense of consistency in their urge to be politically correct.  

This video looks at some recent discussions in the media :

PSO Levy for Renewables Doubles in Two Years

The PSO Levy is paid to Renewables and Peat generation every year to make up the shortfall between the market price and fixed price set for certain indigenous sources. The Energy Regulator has announced a 20% increase in the PSO Levy for the 2017/18 year. Renewables now makes up 80% of the levy and wind  energy makes up 94% of renewables. So 75% of the PSO Levy now goes to wind generation.



The amount of PSO Levy paid to renewables has doubled in two years from €181 million to € 376 million as renewable generation capacity increased by over 50% from 2,000 MW in 2015 to nearly 3,300 MW in 2017 .  

Renewables generation capacity in blue and PSO Levy in millions in red

Back in 2013, energy costs were a big issue for multinationals in Ireland. Following this recent announcement on the PSO Levy by the energy regulator, it will surely be an even bigger issue.




For domestic / household consumers, they will see a massive 30% increase in the levy.  How long can this go on until there is a backlash ? The Regulator tries to reassure consumers :

Increasing levels of wind generation on the system decrease the wholesale price of electricity, which feeds  through to retail prices.

This claim was debunked on my blog a few years ago :

http://irishenergyblog.blogspot.ie/2015/05/does-wind-energy-reduce-wholesale-prices.html 

The reason for recent falls in wholesale prices was because of the fall in the price of gas. Which was more than offset by the PSO Levy and increases in network and other system costs to pay for all this new renewable infrastructure.

Why are Politicians Obsessed with Climate Change ?

by Owen Martin

The Irish government has recently had to endure scandal after scandal in just about every department - justice, health, finance, housing etc. But there is still only one issue in town - climate change.

Fifty years on and there has been a clearing-out of another generation, this time by the running, shorts-wearing avocado smashers. To what will they bring their focus, energy and vigour? One thing they have promised is to take climate change seriously. On election as Taoiseach, Leo Varadkar said he wanted to see a new ambition on climate change. But he and his colleagues should do more than that; they should define it as the most important challenge to be faced; they are, after all, in Andrew O’Hagan’s phrase, the “globally warmed generation” - Diarmaid Ferriter, Irish Times

This week, yet another National Mitigation Plan was announced by the government to loud fanfare. 

David Whitehead, a geologist and paleoclimatologist from Galway, lays out quite simply the futility of the Paris Agreement and such climate mitigation plans as they relate to Ireland :

A peer-reviewed paper in the Global Policy journal has modelled the impact of the CO2 emission reduction promises, called Intended Nationally Determined Contributions (INDCs), made ahead of the Paris climate summit. The climate impact of all Paris INDCs, if every nation fulfilled them by 2030, which is most unlikely, and if the climate models used to assess the temperature effect of CO2 emissions are accurate, which is perhaps even more unlikely, the temperature reduction would be 0.048°C by 2100. If the INDC’s were extended for another 70 years and every nation fulfilled them by 2030, and continued to fulfill them until the end of the century, and there was no ‘CO₂ leakage’ to non-committed nations, the entirety of the Paris INDCs would reduce modelled global temperature rises by just 0.17°C by 2100.  The Irish Times cannot have it both ways; if the models are correct the impact of the Paris agreement is negligible and if they are incorrect the rationale for the Paris Accord is unfounded. Paris is just symbolic virtue signaling by western governments and less developed countries signed up because it promised them large cash transfers. Now Turkey states that unless it receives the money it will not ratify Paris. Other countries will follow. Ireland is the second most carbon efficient economy in the world in terms of CO2 emissions in relation to GDP, and would probably be first if our GDP figures were correct, which we all know they are not.  Ireland is also the most carbon efficient economy in the EU and so for us to be pay huge  fines  levied by the EU for a failure to meet the  2020 and 2030 CO2 emissions targets, agreed to by Eamonn Ryan on ideological grounds, would be  economically  very damaging and  an act of political lunacy -  David Whitehead. BA(Mod. Nat.Sc.)TCD, FIMMM, C.Eng.

These facts are not secret nor are they in any way over complicated for policy makers and the media to understand. If climate change is a serious threat to the world, Ireland can play no role in combating it and in any case we are at present a very carbon efficient economy. So our politicians should be fully focused on the other big issues they urgently need to deal with. 

Ireland has a serious debt problem, the worst in the EU relative to our GDP. We have out of control public sector spending. Our public sector workers enjoy far higher salaries and pension entitlements than those in the private sector. Our social welfare spending is much higher than the EU average.  A housing bubble is manifesting itself once again in Dublin city. Despite spending more on health than anyone else in the EU, apart from Iceland, we still have a dysfunctional health system. Elements of trusted organisations like the police force, care and charity organisations have revealed themselves to be corrupt. Pension funds are repeatedly raided by our cash hungry government. The idea of retiring in your 60's on a state pension seems less and less likely by the day.  Socialist dogma coming from the media and government opposition benches prevents even a debate on most of these important issues, let alone solutions to be put forward. 

If nobody in the House of Lords has never heard of the economic theory "comparative advantage", then you could safely bet a lot of money that nobody in either two parliaments in Dublin have heard of it.  

One more anniversary. 200 years ago, 1817, saw the publication of David Ricardo’s Principles of Political Economy, which contains the first exposition of the principle of comparative advantage, a thoroughly counterintuitive idea that was once described by Paul Samuelson as the only proposition in the whole of social science that is both true and surprising.Comparative advantage takes Adam Smith’s division of labour one step further and explains why free trade benefits everybody, even countries that are the worst at making things, even countries that are the best at making things. But it also, in my view, explains prosperity – what it is and why it happens to us and not to rabbits or rocks - Matt Ridley, the case for Free Market Anti-Capitalism

The fact is that it is not our energy or climate policy that is unsustainable. It is our massive debt, welfare and government spending that is unsustainable. It is the raiding of pension pots and rainy day funds that is unsustainable. It is our high income taxation policy that is unsustainable. It is the PSO levy that is funding renewable energy projects that is unsustainable. The government must know this and they know, because of our education system, that there will never be a free market anti capitalism system as Matt Ridley describes that might help address these problems. Although perhaps its too late for that now anyway.

So the government must propagate the idea that the end of the world is nigh anyway. They must call attention to a problem much bigger than all these issues and then use all the instruments of the State to help fight it.  They must choose an issue that most people do not understand. And this is where climate change comes in. No longer do the politicians have to deal with the real issues. They can continually make themselves look good to a gullible public by pretending to combat a fake and larger enemy until the house of cards does finally crumble. 

Should Ireland Leave the EU ?

A new report by Ray Bassett outlines just how hard it's going to be for Ireland to avoid consideration of an Irexit after Brexit . Right now, our politicians don't want to contemplate leaving the EU and are proudly wearing the EU jersey's. But as Bassett points out, so much of our economies are intertwined and inter-dependent that at some stage Ireland will have no choice but to contemplate an exit. Throw into the mix the direction EU is heading and things get even worse for Ireland. The full report can be read here and it's worthwhile reading through it all :

https://policyexchange.org.uk/wp-content/uploads/2017/07/After-Brexit-will-Ireland-be-next-to-exit.pdf

The loss of influence has been seen in the European Parliament. The concept of a directly elected European Parliament makes no sense unless the aim is a United States of Europe. The democratic element in the EU is provided for by the individual governments and their parliaments. For a country like Ireland to agree to transfer powers to an institution like the European Parliament where it has little or no say, given the relative sizes of the Member States, is bizarre to say the least. However, Ireland has been enthusiastic about giving up its powers to this unwieldly body.

Personally, even as a Euro-skeptic,  I think it's wise at this early stage to stick with team EU to see how the dice will fall, however, the option to leave must be put firmly on the table to strengthen our hand.   

Therefore, given the circumstances, Irexit has to be the option for Ireland in a hard Brexit situation. In any negotiation, there must be a bottom line and if breached, the option of walking away must always be there. Irexit is a definite option for Ireland, should the UK and the EU not arrive at a satisfactory deal.

At some stage, as Bassett's report points out, we are going to have to weigh up the costs and benefits of leaving the EU. Better to begin planning now. A Brexit minister should be appointed straight away. Instead, our government will focus on climate change and other trivial matters by comparison.

Climate Change in Ireland - The Inconvenient Facts

I've started a new You Tube channel today titled "Coming Up For Air", and the first video is a neat summary of the various points made about climate change on this blog over the years :

North South Interconnector - Worth the Money ?

Aside from the renewables aspect, the main justification for the North South interconnector is a deficit of reliable electricity generation in Northern Ireland.

Today, following the closure of old plant in the North, it is the South which is exporting its surplus electricity northwards - John Fitzgerald, economist.

Despite the signing of a local reserve services contract in 2015, the construction of the second North South Interconnector is the optimum solution available to alleviate this security of supply risk and allow the surplus of generation capacity which exists in Ireland to be counted towards security of supply in Northern Ireland - Eirgrid 2015.

Eirgrid now acknowledge that the commissioning of a new plant in Northern Ireland would help solve this problem :

In Northern Ireland, emissions legislation is causing a significant amount of plant to be restricted in its running hours, or to be decommissioned. This will lead to a deficit of supply. This situation would be alleviated by the second North-South Interconnector in 2021, or by the commissioning of new plant.

The assumption that South Ireland will have surplus generation to export to the North is now questionable due to new capacity market rules:

While we have reported a large surplus of plant in previous GCS reports, we now envisage that this surplus will be reduced if it is not required by the new Capacity Market. This is because the Capacity Market will only pay for enough generating units to meet the capacity requirement - Eirgrid 2017.

Interconnectors are fraught with all sorts of engineering and system problems. The interconnector from Northern Ireland to Scotland has suffered numerous faults and England no longer has enough surplus electricity to export to South Ireland through the undersea cable between the two countries (EWIC).  

The East-West interconnector (EWIC) connects the transmission systems of Ireland and Wales with a capacity of 500 MW in either direction. However, it is difficult to predict whether or not imports for the full 500 MW will be available at all times. Informed by the proposed I-SEM Capacity Market decision, we assume a 50% derating factor, i.e. 250 MW.

For the purposes of adequacy studies, we treat the Moyle interconnector similarly to EWIC, i.e. with a suitable capacity reliance (50% of 450 MW which gives 225 MW) to account for the uncertain availability of generation in Great Britain.

So assuming that the interconnector actually works for most of the time (granted this is less of a problem with overground land cables than it is with those placed under the sea), what happens if the exporting market does not have sufficient generation to export electricity through it ? Given the new capacity market rules and the planned data centres which will drive demand for electricity upwards in South Ireland, a new power station in Belfast would probably be the least costly and most secure solution to Northern Ireland's problems. 

Furthermore, if the new All Island capacity market will pay for surplus generation in the South to export to the North, then why not just allow the capacity market to pay for that generating plant in the North and save money on a completely new grid ?