Eirgrid to Underground New Grid Infrastructure

 Over the past decade, as many readers will know, there has been a huge furor in many communities north and south of the border about the North South Interconnector. With the main bone of contention being the decision by Eirgrid not to underground it. However, it looks like Eirgrid have finally learned a lesson from that and are now listening to communities. But surely this new approach by Eirgrid raises questions about their existing plans for the North South Interconnector ?

On the grid side, we have made three decisions in the past 12 months that we arguably might not have made five years ago. We declared that two major pieces of grid infrastructure are going underground. The first is in the Dublin-Kildare region where we have made the call and said a critical piece of west Dublin infrastructure is going to be underground.

We have said the line to Mayo will be underground and the converter station for the Celtic Interconnector, one of Ireland's most critical projects which will link us to France, will be located not beside the substation in Knockraha, but in an industrial site in Ballyadam. This is because that is what communities asked us to do - Mark Foley, CEO Eirgrid

Link :

https://www.oireachtas.ie/en/debates/debate/joint_committee_on_environment_and_climate_action/2021-10-05/2/

The Green Europe and Unsustainable Finances Paradox

 

The graph below shows the total balance sheet assets of three of the world's major banks - the Fed in America, European Central Bank and Bank of Japan. It is noteworthy for many reasons. Firstly, the ECB has overtaken the other two with total assets of $9.6 trillion. Most of this is due to quantitative easing (QE) or money printing. 

The ECB has been engaging in large scale QE since 2015, long before the covid pandemic. Which is odd since most of Europe's economies were strong then. Certainly, here in Ireland, house prices were rising again, as were rents by 2015 and 2016. At the end of 2016, the government brought in rent controls to cap rent increases. Also in early 2016, the European Commission expected Ireland to be the fastest growing economy in Europe. Yet, Ireland was been flooded with this cheap ECB money which the government was only too happy to take and spend in an economy beginning to heat up (on a side note - it didnt fix the health service did it ?). 

As the pandemic hit in March 2020, the ECB went even further than US and Japan and printed enormous amounts of euros to the extent that they practically doubled their balance sheet. Although there are other factors impacting inflation right now, I believe this to be one of the main reasons, if not the most significant. Over half of this new money has gone to government bonds, a record amount of central bank financing of government debt. Normally, the government would have to go to the market to trade their bonds. But we are far away from normal in this age of negative interest rates. Now the central bank prints the new money to buy government bonds that presumably most of the market would not touch.

What is remarkable about all this is that, in a Europe completely captured by the green movement,  government finances have been allowed to reach such epic unsustainable proportions. Surely, government spending should be reduced so as to reduce consumption. Enabling countries to spend beyond their means and deferring the cost of excessive consumption should be the last thing that green politicians should want. It's true, that some of this spending has gone on renewable infrastructure such as wind turbines and pylons (about € 1 trillion) . But these technologies require large amounts of rare earths and metals to produce and so contribute to more consumption and more mining of the planet. Instead, the preferred method to reduce consumption is through taxation. The problem with taxing fuel and electricity is that it results in yet more government spending as the poor and working class become even poorer and are unable to pay for necessities like fuel and electricity. The government then gets locked into a spending cycle where pressure comes on it to increase social welfare supports and just recently the Irish government has planned to give every household €100 off their electricity bill. The cycle of taxation - borrow / spend - inflation - tax - borrow - inflation continues.

If we were really serious about sustainability then we would get our finances in order first. By encouraging people to save instead of spend, we slow that economic growth that eco warriors claim is destroying our planet. We put the future on a firm sustainable footing. But instead we have created the exact opposite environment of low / negative interest rates where people are unable to save and governments spend beyond their wildest dreams. 

It is incredible to me that green politicians are not aware of this simple paradox. Or perhaps that old saying "money talks" is more relevant than ever and still overrides all of the green buzzwords that politicians love to use. 

More Gas Power Stations to be Built

The government have issued a policy statement on security of electricity supply which states :

• the development of new conventional generation (including gas-fired and gasoil/distillate-fired generation) is a national priority and should be permitted and supported in order to ensure security of electricity supply and support the growth of renewable electricity generation

This amounts to an admission that the renewable programme has failed. Imagine if a smoker said I will need to smoke more just to support my attempt at quitting smoking. They would rightly be ridiculed.

 

• it is appropriate that existing conventional electricity generation capacity should be retained until the new conventional electricity generation capacity is developed in order to ensure security of electricity supply

Many years ago on this blog I warned that wind energy would never be capable of replacing a power station. Here we have an admission that Moneypoint coal power station and Tarbert oil power station cannot be replaced by renewables. So what is the point? Henry Ford's model T replaced the horse and cart. The telephone replaced the telegram.

The same government banned gas and oil exploration and of course a coal mine would never be allowed to open again in Ireland. So what will all these fossil fuel power stations run on in the new energy scarce future ? Hot air? Wishful thinking? Empty platitudes? Virtue signalling? Of those, we have plenty. 

Can the VAT rate on Electricity be Reduced?

Sinn Féin suggested recently that the VAT rate on electricity, currently at 13.5%, be temporarily removed to ease the burden on households over the winter. The government have claimed that they can't do that due to EU law. In this post, I will take a quick look at the VAT Directive and try to establish what is actually permitted. 

First of all, there is no doubt that the minimum vat rate allowed is 5%, so that rules out a complete removal of vat :

"The reduced rates shall be fixed as a percentage of the taxable amount, which may not be less than 5 %". 

Next, Article 118 states that certain services cannot go below 12% and this was referred to by the government as applicable to electricity. As electricity comes under Annex 1, it would seem that the government is correct (- -but wouldn't 12% be better than no reduction ? ) :

" Article 118

 Member States which, at 1 January 1991, were applying a reduced rate to the supply of goods or services other than those specified in Annex III may apply the reduced rate, or one of the two reduced rates, provided for in Article 98 to the supply of those goods or services, provided that the rate is not lower than 12 %". 

However, something that has been noticed before is that there is often a grey area with EU law. Article 102 deals specifically with the supply of energy, including electricity and allows for either of the two reduced rates to be applied. In the case of Ireland, the two reduced rates are 13.5% and 9% (for hotels) :

"Article 102

After consultation of the VAT Committee, each Member State may apply a reduced rate to the supply of natural gas, electricity or district heating"

It is remarkable that no reference is made here to the minimum rate of 12%, but as article 102 precedes 118, perhaps it is inferred that 102 can be relied upon alone in relation to electricity. In that case, surely, a reference to the exception under 102 should have been made in 118. 

I am no legal expert and perhaps someone can comment below on what they think. 

We can test the legal recipes in the EU VAT directive by the results. And here, it would seem to be the case that when we look at other European countries, the vat on electricity can be reduced to a minimum of 5%.

- - Portugal reduced the vat on electricity to 6% for low usage households in 2019. Initial figures show that the reduced rate applies to about 42% of customers with the rest paying vat at the higher rate of 23%.

- - Spain have introduced a temporary reduction to 10% for low usage customers until December 2021. After that, the vat will revert to the normal 21% rate. It is estimated that the vast majority of households and businesses will qualify for the reduced 10 % rate. 

- - Italy have a fixed vat rate of 10% on electricity. This proves that the minimum rate of 12% does not apply to electricity as per article 102 . Applying the Italian model to Ireland would mean we could reduce our vat rate to 9% on electricity. 

- - Greece have a super reduced vat rate of 6% on electricity since 2019. This also applies to medicine and vaccines as well as children's books. Their normal reduced rate is 13 % which applies to hotels. It is interesting to see that in Ireland we seem to have our priorities completely wrong with hotels regarded as more essential than electricity. 

- - The UK had along with Malta the lowest vat rate on electricity in the EU with a rate of 5%. One of the reasons for brexit is that they were not able to reduce it to zero. 

- - Luxembourg have a vat rate of 8% on electricity. 

It seems clear that the vat rate on electricity can be lowered to at least 9%. But the government have chosen the spending option as usual which means additional handouts to struggling families. Which in turn will lead to a cycle of inflation as bills rise even more. 

EU Ban Scottish Potato Seeds

 Ireland has been importing potato seeds from Scotland for over 150 years but amazingly the EU has banned them following Brexit because they do not comply with "phytosanitary rules". I thought it truly remarkable that the most virus resistant seed available to Ireland since the Great Famine does not comply with EU rules. And we pay the EU for the privilege. 

1866

1879

1949

Peak Winter Demand Arrives

Things get a little bit shaky !

 Last night at 5.30pm, the electricity grid hit peak demand for All Ireland at 6,638MW - not far off Record peak demand of 6,878MW reached on December 21st last year.

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But total system generation was only 6,106MW leaving a shortfall of 532MW.  

Wind energy was low most of the day, only 380MW or about 7% was available for the whole island at 5.30pm.

The two UK interconnectors saved the day with combined imports of 450MW. There was still a shortfall of about 80MW, made up presumably from demand side units. These would comprise mostly of diesel generators and combined heat and power units. These units are "non-centrally monitored" according to Eirgrid and are not included in these graphs.  

Of course, that damned Brexit lot across the sea with their dastardly nuclear power charged us handsomely for the imported power, at € 2,000 a MW. 

To give some credit to the Irish grid operators, they were correct to build the East West interconnector as it is making up for the once efficient gas plant that have been prematurely wrecked from backing up the wind. One just hopes that the UK will have sufficient power to give us on those cold winter nights over the next few months. 

Whitegate and Dublin Bay Power Stations Trip

 850MW of generation lost last night

Both Whitegate and Dublin Bay gas power stations tripped last night a few hours after I had published about the return of Whitegate power station. Dublin Bay appears to be back this morning but Whitegate is still offline. This shows the precarious nature we are in. It now means we are dependent on a not too dependent interconnector and wind system. 

There is no reason given for the outages. It's possible that the loss of one power station can trip another but whether this is what occurred last night I do not know.