Deri Hughes is a private investor and former parliamentary assistant.
A firm by the name of “Xlinks” has an ambitious plan to build a combined wind turbine, solar photovoltaic and battery storage installation in Morocco, connected to the British electricity grid via a lengthy set of undersea cables. It would be a fine technical achievement if realised. It might also be a fine commercial achievement for the developers. Whether it would be beneficial for Britain is a different matter.
At the point of connection to the British grid, the project would provide 3.6 gigawatts (GW) of power. For context, the fabulously expensive Hinkley Point C nuclear power station is to provide 3.2GW. The amount of power supplied from Morocco as a proportion of demand would vary according to grid conditions. The developers cite a figure of 8 per cent, which could indeed be expected. That is a high proportion from a single source, with corresponding implications for redundancy of supply and potential for disruption.
Put one way, the country could have a substantial new source of electrical energy with a suitably green hue. Put another way, the country could have 8 per cent of its power supply, and the stability of its grid, placed at the mercy of conditions and locations that are beyond its control.
The onshore equipment in Morocco would be under the control of the host government.
However friendly and reasonable the current Moroccan government might be, its future nature and actions cannot be known. Nor can it be known whether some other actor, possibly hostile, might control the relevant land in the future. Furthermore, Morocco is involved in a long-running conflict with the Polisario Front in the adjacent Western Sahara territory. The Front is understood to have received weapons, including strike drones, from Iran.
The parallel with the Houthis in Yemen is striking, and serves as a warning.
The project would rely on undersea cables.
As is becoming increasingly apparent, undersea infrastructure is vulnerable to damage, both accidental and deliberate. Communications cables are damaged frequently, usually by anchors or fishing equipment. They can be repaired reasonably quickly. However, large power cables are a different proposition. They are substantially more difficult to repair. A break in the Morocco-UK cables would cause a loss of supply lasting several months. Multiple breaks in different locations could cause a loss for a few years.
The history of Middle Eastern oil in the post-1945 era should also give pause. Relatively cheap oil for the West in the 1950s and 1960s gave way to very expensive oil in the 1970s. The change in pricing was due primarily to geopolitical disagreements, but it can also be interpreted as a desire to realise a better price for a commodity that had become essential to Western prosperity. Either way, customer dependence gave rise to supplier opportunity.
Governments of an earlier time would have viewed the project as harebrained. They were interested in secure supply at a competitive price. This project provides neither. Security aside, it is a true white elephant, and would be wholly unviable in a free market. And yet, the British government is indulging it.
Why has energy policy reached such a state? The answer, of course, is decarbonisation.
The essential truth of the quest for decarbonisation is that it is expensive and disruptive.
If it were cheap and convenient, it could be accomplished quite naturally, through free economic actions. As it is, state action is deemed necessary, and the chosen policy course has more in common with central economic planning than the operation of free peoples and free markets. It is more Attlee than Thatcher; or more Pyongyang than Seoul.
In Britain, the principal energy policy prescription is a combination of additional electrification and the commissioning of approved generating capacity. We have, for some years, been subject to attempted persuasion that the prescription is cheaper, or soon will be. That effort, best described as propaganda, goes on. The most prosaic response to such assertions is that the developers of approved generating projects do not proceed without some form of subsidy or distorted market arrangement. There is currently plenty of both in the British electricity market; the contrast with the reform-suffused market conditions of the 1990s is stark.
Lack of fundamental economic viability is not unique to the Morocco project; it is characteristic of the bulk of the approved generating capacity commissioned in recent years. Hence the subsidies and other market distortions, deliberately brought about by policy. The intention is to ensure that such projects can produce a guaranteed financial return for their backers, irrespective of economic merit.
That return is provided by the consumers of electricity, whether they are aware of it or not: they pay more.
Predictably, such a flagrant departure from free market principles has drawn significant commercial interest. To play contemporary buzzword bingo, “price signals” have been sent, the industry has “certainty”, and investment has been “unlocked”. Put more bluntly, the trough has been filled, and the feeding frenzy is under way, courtesy of British bill payers.
Expensive and disruptive indeed.
The consequences of inflated electricity prices are especially pronounced for two constituencies: poorer households, and energy-intensive industries. However, it affects us all. A greater proportion of the country’s resources are consumed by the electricity market, and its international competitiveness declines. In short, it makes us poorer.
It was not always thus, and need not be so. The electricity supply industry has become less efficient and productive in recent years, and is currently set to deteriorate further. That is a function of policy; of decarbonisation.
There is a fundamental conflict between the decarbonisation agenda and the maximisation of liberty and prosperity. The Labour party, true to form, is favouring the former over the latter. The Conservative party, in government, did the same. The Reform party takes a very different view. The Conservative party in opposition should follow suit. Its view of wholesale decarbonisation – “net zero” in particular – should imitate that of a rational person contemplating an Islamic Revolutionary Guard Corps proxy unit within range of a major British power station: aversion.
Deri Hughes is a private investor and former parliamentary assistant.
A firm by the name of “Xlinks” has an ambitious plan to build a combined wind turbine, solar photovoltaic and battery storage installation in Morocco, connected to the British electricity grid via a lengthy set of undersea cables. It would be a fine technical achievement if realised. It might also be a fine commercial achievement for the developers. Whether it would be beneficial for Britain is a different matter.
At the point of connection to the British grid, the project would provide 3.6 gigawatts (GW) of power. For context, the fabulously expensive Hinkley Point C nuclear power station is to provide 3.2GW. The amount of power supplied from Morocco as a proportion of demand would vary according to grid conditions. The developers cite a figure of 8 per cent, which could indeed be expected. That is a high proportion from a single source, with corresponding implications for redundancy of supply and potential for disruption.
Put one way, the country could have a substantial new source of electrical energy with a suitably green hue. Put another way, the country could have 8 per cent of its power supply, and the stability of its grid, placed at the mercy of conditions and locations that are beyond its control.
The onshore equipment in Morocco would be under the control of the host government.
However friendly and reasonable the current Moroccan government might be, its future nature and actions cannot be known. Nor can it be known whether some other actor, possibly hostile, might control the relevant land in the future. Furthermore, Morocco is involved in a long-running conflict with the Polisario Front in the adjacent Western Sahara territory. The Front is understood to have received weapons, including strike drones, from Iran.
The parallel with the Houthis in Yemen is striking, and serves as a warning.
The project would rely on undersea cables.
As is becoming increasingly apparent, undersea infrastructure is vulnerable to damage, both accidental and deliberate. Communications cables are damaged frequently, usually by anchors or fishing equipment. They can be repaired reasonably quickly. However, large power cables are a different proposition. They are substantially more difficult to repair. A break in the Morocco-UK cables would cause a loss of supply lasting several months. Multiple breaks in different locations could cause a loss for a few years.
The history of Middle Eastern oil in the post-1945 era should also give pause. Relatively cheap oil for the West in the 1950s and 1960s gave way to very expensive oil in the 1970s. The change in pricing was due primarily to geopolitical disagreements, but it can also be interpreted as a desire to realise a better price for a commodity that had become essential to Western prosperity. Either way, customer dependence gave rise to supplier opportunity.
Governments of an earlier time would have viewed the project as harebrained. They were interested in secure supply at a competitive price. This project provides neither. Security aside, it is a true white elephant, and would be wholly unviable in a free market. And yet, the British government is indulging it.
Why has energy policy reached such a state? The answer, of course, is decarbonisation.
The essential truth of the quest for decarbonisation is that it is expensive and disruptive.
If it were cheap and convenient, it could be accomplished quite naturally, through free economic actions. As it is, state action is deemed necessary, and the chosen policy course has more in common with central economic planning than the operation of free peoples and free markets. It is more Attlee than Thatcher; or more Pyongyang than Seoul.
In Britain, the principal energy policy prescription is a combination of additional electrification and the commissioning of approved generating capacity. We have, for some years, been subject to attempted persuasion that the prescription is cheaper, or soon will be. That effort, best described as propaganda, goes on. The most prosaic response to such assertions is that the developers of approved generating projects do not proceed without some form of subsidy or distorted market arrangement. There is currently plenty of both in the British electricity market; the contrast with the reform-suffused market conditions of the 1990s is stark.
Lack of fundamental economic viability is not unique to the Morocco project; it is characteristic of the bulk of the approved generating capacity commissioned in recent years. Hence the subsidies and other market distortions, deliberately brought about by policy. The intention is to ensure that such projects can produce a guaranteed financial return for their backers, irrespective of economic merit.
That return is provided by the consumers of electricity, whether they are aware of it or not: they pay more.
Predictably, such a flagrant departure from free market principles has drawn significant commercial interest. To play contemporary buzzword bingo, “price signals” have been sent, the industry has “certainty”, and investment has been “unlocked”. Put more bluntly, the trough has been filled, and the feeding frenzy is under way, courtesy of British bill payers.
Expensive and disruptive indeed.
The consequences of inflated electricity prices are especially pronounced for two constituencies: poorer households, and energy-intensive industries. However, it affects us all. A greater proportion of the country’s resources are consumed by the electricity market, and its international competitiveness declines. In short, it makes us poorer.
It was not always thus, and need not be so. The electricity supply industry has become less efficient and productive in recent years, and is currently set to deteriorate further. That is a function of policy; of decarbonisation.
There is a fundamental conflict between the decarbonisation agenda and the maximisation of liberty and prosperity. The Labour party, true to form, is favouring the former over the latter. The Conservative party, in government, did the same. The Reform party takes a very different view. The Conservative party in opposition should follow suit. Its view of wholesale decarbonisation – “net zero” in particular – should imitate that of a rational person contemplating an Islamic Revolutionary Guard Corps proxy unit within range of a major British power station: aversion.