You’ve been framed

Maybe we get boring about Smart Metering sometimes, but it’s an obvious and easy story, and it’s Friday.

The UK government thinks that it won’t work and will cost the UK £16+ billion.  A classic framing trick, as economists would call it, but it’s you being framed:  The average voter is likely to be shocked by £16 billion, and will be sooo thankful to a government that avoids that cost.  Imagine a bill for £16 billion landing on the doormat.  My energy bill went up by £40 a month already I don’t want it to go up anymore etc etc.

But that’s £16 billion for 45 million meters.  Meters with an average life of 20 years.  So your energy  costs go up by £3 a month tops on dual fuel.  Another issue is that Ofgem consultants say meters will be £340 per meter, and will take ten years. Any meter operator says £100 or less. California is doing it for $165 (3 years)and Italy did almost all electric meters (in three years) for less than €75 each.               

Words fail us on the stupidity of it all.  Does BERR really think that less than 10 p per day could alienate domestic users/voters who have seen annual bills double to over a grand? Not to mention as this story points out from a contract for 3 million users  @$235 each signed in Texas this week Energy conservation is the critical ‘fifth fuel’. A recent California study found smart metering cut energy consumption by upwards of 9%. In an Ontario study, researchers noted that a demand reduction of 6.5% was feasible from customers simply having access to the usage information from smart meters.  Just a five percent drop in peak demand nationally would eliminate the need for installing and running some 625 infrequently used peaking power plants, translating into annual savings of $3 billion, a recent Brattle Group study found.

Our technology will allow Oncor consumers to see real-time pricing in their bills, such as time of use, time of year, time of day. That gives consumers control, so that they can make more informed decisions to use power efficiently and effectively.
Texans, not known for socialistic and tree hugging bias,  don’t have the “benefit” of split metering and transmission as Ofgem foisted on an unwilling and uncomprehending UK several years ago.  On the other hand there were blackouts in part of the UK this week.   

Hit the Road

We think that everyone at BERR and Ofgem who recently decided that any scope for saving carbon/energy/cash via smart metering is doubtful should put this neat device in their car and hit the road.

If real-time mileage feedback produces fuel-efficient driving habits, it can do the same for energy use. Those lucky enough, smart enough or rich enough to drive a Toyota Prius hybrid already love the built in mileage feedback. Toyota installed it in the Prius to prove to drivers the basic premise of hybrid drive, but it went on to be such a popular way of improving driving technique and MPG by providing feedback that Toyota are now installing it as standard across the whole range of Toyota cars. (We know, they’ve been in Beamers for years. Don’t write in). All manufacturers will install  something similar over time. Result: Today cutting edge, tomorrow mainstream.   

Real time energy smart metering (SM) combined with real time prices, where consumers know exactly what they are using and paying has proven potential to cut peak loads.  If a smart meter shows that the electricity price on a winter workday at 1700 is at it’s highest price, householders can decide to put the washing on at 19.30, have dinner at 1800 and pester their kids to switch the lights off much more at 1700. (BERR/Ofgem think they won’t bother, although they think that everyone is perfectly happy to input information into tiresome price comparison sites to save a fiver a year). Result: peak demand drops enough that additional generation and network capacity becomes unnecessary. Without that type of feedback, the costs of peak capacity end up costing industrial and domestic users far more than any 1% extra annual cost of installing SM. And that doesn’t do Planet Earth any favours.

Solar Apple

Speculation is rife about the new iPhone, allegedly to be released June 9.  Apple is notoriously secretive about  new products, but here is a report on a recent Apple patent application  for what may be a solar powered iPhone.  How cool is that? Don’t sit on laurels too long. Today’s cool is tomorrows’ future.  Today’s cutting edge is simply tomorrow’s mainstream.

Remember, a carbon footprint is impacted by choice of mobile device and other ICT decisions. Some mobile devices have a major carbon footprint relative to their size.  The biggest energy hog in your home, assuming you heat with gas:  a broadband modem. Further reason to take energy back in house as core among all parts of any forward looking business.

Bad News for Energy Consultants

New UK consumer protection legislation may impact those who can predict future outcomes based solely on past performance.

Think of energy like the weather: just as you can reasonably anticipate tomorrow’s market from today’s performance, outcomes more than a few days into the future depend on variables which are either not accurately predictable, cannot be anticipated, have yet to occur etc etc.

Energy consultants make money by allegedly being able to guess  market directions and advise you accordingly.  The difference between that and clairvoyance?  You only have to   cross the palm with silver once inside the tent.  A usual energy consultant contract can stretch several years.

Fortune-tellers,astrologists and other mediums are among those opposing the new laws, saying they will be forced to tell custo mers that they are offering "entertainment only" and their work is not "experimentally proven".

The Fall of Conservatism

A strange headline to have the morning after a  Conservative landslide in Crewe one might think, but NHO is all about anticipating news, not reacting to it.

Any Tory return will not be John Major 2, we already are living through that. And for sure it won’t be Thatcher Redux either. It’s a new world out there and this article shows how bankrupt American conservatism now is. Pat Buchanan was less polite, paraphrasing the social critic Eric Hoffer: “Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket ". American influence in the world is easily declining, but both New Labour and the Tories look there first before any UK interests.  Labour will probably lose next time, but have no delusions,Reagan/Thatcher market economics is irrelevant and what on earth could David Cameron or anyone do about energy prices anyway?  Not much, but quite a lot as we’ll be discussing later. 

Energy Myth, Energy Reality

Alan Asher finally puts it into print.   There is a myth that there is vigorous price competition between suppliers.   No wonder Energywatch is being disbanded.  Who would want to have a consumer champion for energy prices ? Maybe a government staring defeat in the face. But they have been so stupid for so long over energy that it’s unlikely to halt the habit of a lifetime.  But the next government, if it will be Tory are the people who wrote the book on competition.  Let’s hope they learnt something over the last 11 years.  Don’t bet your house on it.  Will political parties start  talking the truth for a change?  Somewhat like us.

Fantastic News. Awful News

This isn’t a case of good news, bad news:  This is Fantastic News on the back of Incredibly Painfully Awful News.  But it’s the same news.

Oil, Coal, Gas, and as result electricity prices, for those foolish enough to still fix prices, will be up by  over 100% up on last year’s prices.  This is the era of £1 pound a therm for this winter in old money,  3+ pence per kWh in new. That’s for gas.  Electricity:  the sky’s the limit but 13p a kWh has already happened and it may get worse yet.

Let’s not ignore the monumental impact of this super-spike or surge or whatever the cause: At the turn of the century,  even a smaller office or warehouse, larger restaurant etc about 300,000 kWhs annual volume etc, was ignored by many customers, suppliers and consultants. What the hell, it was only about a £2K spend tops.  Next year that same site is £10K or more.

The good news, is that if these kind of prices don’t concentrate the minds of buyers, nothing will.  This kind of money makes not only the cost  of new metering irrelevant, it makes new metering essential.

Solar, Wind or Ground Source investments now have pay back periods measured in two or three years as opposed to seven to ten or never as they were not long ago.  That is the fantastic news, for us and for the planet.

Birds and Bees

On the subject of climate change, politically  we sit in between Swampy and Jeremy Clarkson. That way we distance ourselves, while being close enough to see if anything interesting happens.

Unfortunately both sides often lend themselves to wholesale trivialisation of matters that are not just important, but extremely complex.  Above all NHO is about being climate change realists:  it ain’t going away however much JC would want it to, but the new Eco-Millenium isn’t just several years late – it’s arrival at all is in doubt.

Consider how complex things are when Bird Life International says that one in eight birds are threatened with extinction.  Yet RSPB Scotland got 10,000 people to sign a petition against the Isle of Lewis wind farm Chief among their complaints: The island is home to nesting pairs of the golden eagle and RSPB Scotland welcomed the refusal of the planning application. "The government has made it clear on this issue that renewables must be developed but not at any price," said society director Stewart Houston

We live on one planet, although recognising that fact alone is like a red flag to a bull like Clarkson. We can start working globally to save one out of every eight birds. Or we can act locally in the wrong fashion and save a handful of them. There are hard choices out there, although we think a choice between one in eight out of several billions of birds should count more than the odd nesting pair.  Perspective is needed.  Unfortunately people tend to emotionalise the closer to home they are,  and no one does nimby as good as RSPB. Maybe they should learn  from this quote “The loss of one human life is a tragedy.  Millions are just statistics”  This is from Stalin, unfortunate, but still true.

For some reason we can’t quite fathom, wind power has always attracted a bad press in Britain. Wind was never proposed as the sole solution. But rejecting it out of hand has given the UK a Beaufort Scale 1 wind industry. Germany, a country with a much smaller coastline is a world leader. Denmark and Portugal have exceeded their targets.  Their electricity prices won’t be rising by 100% like the UK. Nobody has cornered the market in wind. Even Texas is blowing up a storm with the world’s largest wind farm being built by one of the worlds biggest oil men. Here in the UK we have a miniscule wind industry.  But we have birds!

On the subject of bio-diversity, we’ve been following the collapse of bee populations worldwide as a portent of we-don’t-quite- know-what and not-sure-we-want-to-know-anyway. Perhaps we read too many end of the world comics when we were kids, but  this kind of story was often on the opening page.  It’s hitting food prices, so this may start going mainstream.

IBM’s solar breakthrough

We don’t think there is one single solution to the carbon problem: it contradicts what we feel that thinking in black and white is wrong and the application of grey matter will provide the solutions.  We subscribe to a lot of theories revolving around new technology and increased productivity.  This one is about both, how IBM has made solar 10 times more effective:    By using a much lower number of photovoltaic cells in a solar farm and concentrating more light on to each cell using larger lenses, IBM’s system enables a significant cost advantage in terms of a lesser number of total components. The researchers said that the concentration increases the power of the sun’s rays by a factor of ten, allowing cells that normally generate 20W of power to generate 200W instead.

IBM isn’t thinking too far outside it’s box here:  Silicon for computing, or silicon for solar,  the physics are pretty much the same.

Two Books for Energy Buyers. And smart people as well.

Predictably Irrational: The Hidden Forces That Shape Our Decisions
By Dan Ariely

Nudge: Improving Decisions About Health, Wealth, and Happiness
By Richard H. Thaler and Cass R. Sunstein

Book Review of  two books Ofgem  and your energy consultant would rather you not read. 

Two reasons to take this seriously:  Both  are based on the work of Daniel Kahneman founder of behavioural economics.  Your energy consultant may try to tell you they are smarter than some Yank psychologist,  but then again, they didn’t win the 2002 Nobel Prize for Economics.

Secondly, both authors are advisers to Barack Obama.   Whatever comes of his campaign,  you can bet your bottom pound  that David Cameron and Gordon Brown are now in a mad rush to use the same  ideas for a UK audience.
Obama rejects heavy-handed regulation and insists above all on disclosure, so that consumers will know exactly what they are getting.
The key word is disclosure and the other key word is feedback.  UK energy consumers get neither, but are expected to keep on paying.  They won’t keep happily paying, or voting, without  some feedback or correctly framed default options.