Renewables encounter the industrial saboteurs

The Europeans have decided that they should embrace renewables while here in USA, we are going fracking.  Right now, there are those who think that we have made the right choice.  I seriously doubt it.  When the real bills for fracking come due—just in time to notice that this is a very expensive way to extract fossil fuels from the earth—I am pretty sure that folks will come to the opposite conclusion.  But this piece comes from Business Insider and they are notorious for taking short-term views of almost everything.

There is SOME validity to the arguments that Europe's push to meet their pretty ambitious emissions targets has indeed made electricity expensive and that expensive electricity has and will cause a world of hurt to Europe's poor.  In my mind, this says that the real problem is trying to meet some tough carbon emission standards using neoliberal economics—the flaw isn't the attempt to cut down on carbon pollution but the crazy idea that everything worth doing should be profitable.  Veblen called the folks who use the monetary mechanisms to disrupt the necessary workings of an economy "industrial saboteurs."  It is hard to imagine a more accurate description.

One can only hope that these conditions are temporary because it is a disaster if they are not.

Europe's Renewable Energy Push Has Completely Backfired, And Electricity Bills Are Skyrocketing

ROB WILE NOV. 6, 2013,
REUTERS/Suzanne Plunkett

The Great American Shale Boom has helped U.S. homeowners and manufacturers alike lower their electricity bills.

Across the pond lies a parallel universe.

In the last four years, European electricity costs have spiked 17% for homeowners and 21% for industry, according to the Institute of Electrical and Electronics Engineers.

The situation is most acute in the U.K., where one in six households was spending more than 10% of its income to "maintain adequate warmth" in 2011, according government statistics cited by Reuters' John Kemp.

What went wrong?

Reuters' Karolin Schaps and Barbara Lewis write that much of the increase is related to the cost of complying with the continent's ambitious carbon emissions targets. The European Union is supposed to cut emissions to 20% below 1990 levels.

That's not coming cheap.

For instance, German utilities just increased the surcharge levied on consumers to fund more renewables by 18% to 6.24 euro-cents per kilowatt-hour. German households now have the third-highest power bills in Europe.

European power suppliers are saying the drive to renewables has caused them to mothball 51 Gigawatts-worth of cheaper fossil fuel-based power sources, or the equivalent of the combined capacity of Belgium, the Czech Republic and Portugal, Bloomberg's Ewa Krukowska, Alessandro Vitelli & Tino Andresen reported.

Infrastructure improvements are also set to come with a $1 trillion price tag through the end of the decade, Reuters says.

"The cost of funding government policies for renewable energy, social support and energy efficiency is increasing faster than any other part of an energy bill," Paul Massara, chief executive of RWE npower told Reuters.

The chief of Italian oil giant Eni recently called the situation an emergency and warned Europe's lack of competitiveness was costing investment in continental industry.

As a result, there's talk of putting climate goals on hold to help bring costs down.

Bloomberg's Stefan Nicola reports Angela Merkel plans to reduce renewable subsidies once she forms a coalition.

And Reuters' columnist John Kemp says Labour Leader Ed Miliband recently "launched a metaphorical grenade" into the country's clean energy consensus when he promised ratepayers' bills would be frozen if his party comes to power in 2015.

"The squeeze in real incomes has made customers and voters much more sensitive to the impact of rising utility bills," Kemp writes. "And bills have risen so much for so long that increases are starting to spark public resistance."

Some countries have already turned back to coal, the price of which has fallen because of the continent's struggling economy and the rise of natural gas in the U.S., which has boosted coal exports. European coal generation increased 6% in 2011 YOY and 2% in 2012 YOY.

Of course, that negates the whole point of the climate change policies.

So far, European countries have resisted ramping up their own shale extraction — fracking was just banned in France. Other countries are waiting to see how fracking fares in the U.K., where as we recently reported drilling has commenced in a town one hour south of London.

And some, like the Poles, argue the higher costs are working as planned, since emissions are coming down. “Growth will return and the price will find its equilibrium again," the FT reported a Polish government memo as saying. "No administrative meddling is needed or else we might create the impression that such measures are standard practice.” more

Meanwhile, uncertainty in the global marketplace has produced an operating loss for the world's only pure wind turbine investment opportunity.  So Vestas is cutting employment and other standard responses to operating losses.  This, at a time when the world should be filling their order books.

Wind turbine maker Vestas posts loss, raises guidance

06 NOVEMBER 2013

AFP - Danish wind turbine maker Vestas posted a quarterly loss on Wednesday but raised its 2013 forecast as it continued with a restructuring programme which has cut thousands of jobs.

"The free cash flow for 2013 is now expected to be 500 to 700 million euros ($675 to $945 million) compared to the earlier expectation of a free cash flow of minimum 200 million euros," the company said in a statement.

Free cash flow is an important measure of the rate at which a company can generate cash surplus to operating and existing investment requirements.

"This is driven by higher earnings, lower investments and better working capital management."

The Aarhus-based company also raised the full-year guidance for margins on earnings before interest and taxes (EBIT) before special items to two percent from one percent.

The troubled company posted a third-quarter loss of 87 million euros -- its ninth quarterly loss in a row -- compared with analyst expectations of a four million euro profit, and a 175 million loss in the same period last year.

"It's partly due to losses on exchange rates and much higher tax payments than expected," Sydbank analyst Jacob Pedersen told Danish news agency Ritzau.

"It's not something that really changes the impression that Vestas is moving in the right direction with regards to earnings," he added.

Revenue also came in below expectations at 1.44 billion euros, compared with the 1.54 billion euros forecast by analysts polled by Dow Jones Newswires.

Vestas ousted its chief executive in August after posting yet another loss in the second quarter.

The group has been in financial difficulty for several years, owing to an overly ambitious expansion followed by draconian restructuring measures that have included cutting thousands of jobs.

Its two-year turnaround plan is focused on cost reductions, reduced investments and increased outsourcing.

By mid morning, shares in Vestas were up 14 percent on the Copenhagen Stock Exchange, in an overall market that was up 0.89 percent. more