Damien Lardoux, Portfolio Manager at EQ Investor, has given his view on the government’s controversial decision regarding Hinkley Point. The full comment can be found below:
Following a final six-week review and after agreeing a ‘golden share’ deal, the UK Government has given the green light to two nuclear reactors at Hinkley Point in Somerset. The controversial move will see the first new nuclear plant built in the UK for 20 years.
As a leader on tackling climate change, the decision can be viewed as a major milestone to achieving a reduction in greenhouse gas emissions of 80% by 2050. Low and zero carbon sources represented slightly less than 50% of the UK energy mix in 2015. At 20%, nuclear power is the fourth biggest source of energy after gas, renewables and coal – contributing significantly to the 38% drop in greenhouse gas emissions since 1990. So why do I have reservations?
First, let’s take a look at the technology behind it. The European Pressurised Reactor (EPR), designed by Areva and EDF, has faced huge problems in its two European implementations to date, Finland and France. Significant design faults have resulted in six – and nine – year delays, and they aren’t expected to complete before 2018. Costs have more than tripled the initial forecasts and in Finland they have cancelled the option for a second reactor.
I find it hard to believe that EDF, the main contractor at Hinkley Point, will be on time and on budget.
Much has been made about the Chinese involvement, but the state-owned CGN brings its own experience of building two EPR reactors. These are expected to start producing electricity next year, after only a four-year delay! Less is known on these two reactors but concerns have been raised about faulty components and a lack of safety test data.
Without one working instance of the new EPR technology, it can’t be denied that the UK Government is taking a gamble, even if EDF is taking on the construction risk.
Interestingly, the Chinese themselves are not planning to build anymore reactors on home soil due to the high cost! Onshore and offshore wind farms currently produces electricity at a cheaper rate than what Hinkley Point promises. According to WindEurope, wind turbines have become 10% more powerful year-on-year, with high competition also reducing costs. The electricity produced by Hinkley Point is indexed to inflation and will soar over the 35 years of the contract.
Comparing the build times also raises questions. Hinkley Point will take at least nine years to establish, whilst onshore and offshore wind farms take eighteen months and four years respectively. It becomes quite clear that renewables would help to meet the climate change deadline sooner and with more certainty than the unproven EPR technology.
While nuclear power does not create climate change-related ‘greenhouse’ gases, it does poses security and health concerns. Chernobyl, Three Miles Islands and Fukushima caused serious consequences for the surrounding areas. Climate change itself may further increase the risk of nuclear accidents as heat waves causes cooling problems, as seen in France and the US. Uranium mining also creates health issues for the workers and the local community. That’s not forgetting the perennial challenge for the nuclear industry of what to do with reactive waste.
Rightly, the advocates of Hinkley Point argue that to only rely on renewables is risky, particularly at peak demand over the winter months. However, the development of interconnectors between the UK and other European countries would help to meet this demand and bring cheaper electricity when needed.
Looking at this from the demand side, Government measures to increase energy efficiency particularly of commercial and residential buildings would substantially reduce the UK’s need for generating new capacity. At times of peak demand, the rescheduling of non-essential use of electricity by energy intensive industries would alleviate pressure on the grid and could help to avoid building a new nuclear plant.
Bearing all of this in mind, I really struggle to understand why the Government under Theresa May felt the need to rush through a decision. Perhaps it sets the right tone for our post-Brexit economy?
We firmly believe it would have been wiser for the UK to promote cheaper and more reliable solutions to face the coming energy challenges. At EQ, we have developed the Positive Impact Portfolios to help finance companies that are helping the world to reduce greenhouse gas emissions. While nuclear energy is not entirely screened out, it represents less than 0.1% of our portfolios’ allocation. Furthermore, we have engaged with our fund managers to ensure that they only invest in energy companies which get more of their energy mix from renewables than from nuclear.
Is Wood Burning Sustainable For Your Home?
Wood is a classic heat source, whether we think about people gathered around a campfire or wood stoves in old cabins, but is it a sustainable source of heat in modern society? The answer is an ambivalent one. In certain settings, wood heat is an ideal solution, but for the majority of homes, it isn’t especially suitable. So what’s the tipping point?
Wood heat is ideal for small homes on large properties, for individuals who can gather their own wood, and who have modern wood burning ovens. A green approach to wood heat is one of biofuel on the smallest of scales.
Is Biofuel Green?
One of the reasons that wood heat is a source of so much divide in the eco-friendly community is that it’s a renewable resource and renewable has become synonymous with green. What wood heat isn’t, though, is clean or healthy. It lets off a significant amount of carbon and particulates, and trees certainly don’t grow as quickly as it’s consumed for heat.
Of course, wood is a much less harmful source of heat than coal, but for scientists interested in developing green energy sources, it makes more sense to focus on solar and wind power. Why, then, would they invest in improved wood burning technology?
Solar and wind technology are good large-scale energy solutions, but when it comes to small-space heating, wood has its own advantages. First, wood heat is in keeping with the DIY spirit of homesteaders and tiny house enthusiasts. These individuals are more likely to be driven to gather their own wood and live in small spaces that can be effectively heated as such.
Wood heat is also very effective on an individual scale because it requires very little infrastructure. Modern wood stoves made of steel rather than cast iron are built to EPA specifications, and the only additional necessary tools include a quality axe, somewhere to store the wood, and an appropriate covering to keep it dry. And all the wood can come from your own land.
Wood heat is also ideal for people living off the grid or in cold areas prone to frequent power outages, as it’s constantly reliable. Even if the power goes out, you know that you’ll be able to turn up the heat. That’s important if you live somewhere like Maine where the winters can get exceedingly cold. People have even successfully heated a 40’x34’ home with a single stove.
Benefits Of Biomass
The ultimate question regarding wood heat is whether any energy source that’s dangerous on the large scale is acceptable on a smaller one. For now, the best answer is that with a growing population and limited progress towards “pure” green energy, wood should remain a viable option, specifically because it’s used on a limited scale. Biomass heat is even included in the UK’s Renewable Heat Initiative and minor modifications can make it even more sustainable.
Wood stoves, when embraced in conjunction with pellet stoves, geothermal heating, and masonry heaters, all more efficient forms of sustainable heat, should be part of a modern energy strategy. Ultimately, we’re headed in the direction of diversified energy – all of it cleaner – and wood has a place in the big picture, serving small homes and off-the-grid structures, while solar, wind, and other large-scale initiatives fuel our cities.
7 Benefits You Should Consider Giving Your Energy Employees
As an energy startup, you’re always looking to offer the most competitive packages to entice top-tier talent. This can be tough, especially when trying to put something together that’s both affordable but also has perks that employees are after.
After all, this is an incredibly competitive field and one that’s constantly doing what it can to stay ahead. However, that’s why I’m bringing you a few helpful benefits that could be what bolsters you ahead of your competition. Check them out below:
One benefit commonly overlooked by companies is offering your employees financial advising services, which could help them tremendously in planning for their long-term goals with your firm. This includes anything from budgeting and savings plans to recommendations for credit repair services and investments. Try to take a look at if your energy company could bring on an extra person or two specifically for this role, as it will pay off tremendously regarding retention and employee happiness.
While often included in a lot of health benefits packages, offering your employees life insurance could be an excellent addition to your current perks. Although seldom used, life insurance is a small sign that shows you care about the life of their family beyond just office hours. Additionally, at such a low cost, this is a pretty simple aspect to add to your packages. Try contacting some brokers or insurance agents to see if you can find a policy that’s right for your firm.
Dedicated Time To Enjoy Their Hobbies
Although something seen more often in startups in Silicon Valley, having dedicated office time for employees to enjoy their passions is something that has shown great results. Whether it be learning the piano or taking on building a video game, having your team spend some time on the things they truly enjoy can translate to increased productivity. Why? Because giving them the ability to better themselves, they’ll in turn bring that to their work as well.
The Ability To Work Remotely
It’s no secret that a lot of employers despise the idea of letting their employees work remotely. However, it’s actually proven to hold some amazing benefits. According to Global Workplace Analytics, 95% of employers that allow their employees to telework reported an increased rate of retention, saving on both turnover and sick days. Depending on the needs of each individual role, this can be a strategy to implement either whenever your team wants or on assigned days. Either way, this is one perk almost everyone will love.
Even though it’s mandated for companies with over 50 employees, offering health insurance regardless is arguably a benefit well received across the board. In fact, as noted in research compiled by KFF, 28.6% of employers with less than 50 people still offered health care. Why is that the case? Because it shows you care about their well-being, and know that a healthy employee is one that doesn’t have to worry about astronomical medical bills.
Unlimited Time Off
This is a perk that almost no employer offers but should be regarded as something to consider. According to The Washington Post, only 1-2% of companies offer unlimited vacation, which it’s easy to see why. A true “unlimited vacation” program could be a firm’s worse nightmare, with employees skipping out every other week to enjoy themselves. However, with the right model in place that rewards hard work with days off, your employees will absolutely adore this policy.
A Full Pantry
Finally, having a pantry full of food can be one perk that’s not only relatively inexpensive but also adds to the value of the workplace. As noted by USA Today, when surveying employees who had snacks versus those who didn’t, 67% of those who did reported they were “very happy” with their work life. You’d be surprised at how much of a difference this could make, especially when considering the price point. Consider adding a kitchen to your office if you haven’t already, and always keep the snacks and drinks everyone wants fully stocked. Doing so will increase morale tremendously.
Compiling a great package for your energy company is going to take some time in looking at what you can afford versus what’s the most you can offer. While it might mean cutting back in other areas, having a workforce that feels like you genuinely want to take care of them can take you far. And with so many different benefits to include in your energy company’s package, which one is your favorite? Comment with your answers below!