Look, I know I prattle on about how everything the government does ends in disaster. But have you seen the consequences of our energy policy!? It’d leave Milton Friedman speechless.
No civil servant could engineer such a broad spread range of disastrous outcomes. At least, not on purpose, if they actually tried.
Such a beautiful mix of predictable and unpleasant nincompoopery hasn’t been seen since… well, since the government got heavily involved in energy policy last time around.
While the Financial Times tells us about the wonders of a four-day work week, most Britons are more worried about a return to the three-day week. “Why Seventies-style energy surge pricing will change how we live” is a headline from the Telegraph, with “Time-of-use tariffs, designed to manage the nation’s energy use, could lead to rising bills, domestic strife and a sense of déjà vu…”
Ahh, nostalgia…
And so the good old smart meters are where we start our Disneyland Pirates of the Caribbean themed tour of UK energy policy. (The scenery on the ride gradually gets more dystopian until you plunge down in the darkness with a fake log as your only hope of staying warm and dry.)
Smart meters were sold as a high-tech innovation that would allow energy companies to calculate your energy bill over the internet. That seems like a good idea to save money, time and effort. But the truth has turned out to be a little different. Nefarious, even.
In my experience, UK power meters are unlikely to be connected to the labelled location in the first place. My neighbours, it turned out, used a lot of power.
According to Richard Littlejohn’s electrician, as paraphrased in the Daily Mail, even if the meters are set up right… well, they might not be connected at all. You need the internet to function for that. Which is not exactly guaranteed in the dumb-net UK.
And if they do have a signal, well, the smart meters still might not be accurate. They might be “wildly inaccurate” according to the electrician. Not that I know how or why.
But even if it all works well, the electrician supposedly said, “There’s absolutely no guarantee you’ll save a penny. They are designed to charge you more when demand peaks, so you’ll end up with higher bills, not lower as their protagonists pretend.”
Yes, when the government is involved in tech to save you money, what do you think it’ll actually do in the end?
If you answered, “It’ll raise my bills,” you might actually be wrong. According to the Daily Mail’s article, governments could use smart meters to ration energy and cut you off altogether. Which, to be fair, would presumably reduce your overall bill…
Job done! Who was I to be sceptical about the smart meter’s ability to lower your bill?
Cutting of energy might sound a bit drastic, although blackouts and brownouts are not unheard of these days to begin with. But consider what’s going on in Canada. Peaceful protesters are having their bank accounts frozen by the government. And those who cannot take care of their dog because their bank account has been frozen could have the pet taken away by said government…
Politicians aren’t content with going after you, they want to go after your best friend too. And you think they won’t shut you off for using too much energy, or using energy at the wrong time of day?
Of course it’s worth mentioning that, when we’re struggling with a lack of reliable baseload energy, surge pricing is more likely to be necessary and to have a bigger impact. So, the smart meters are just in time then!
Phew.
Back to our energy supply and smart meters again (twice) below.
While the Daily Mail and Telegraph commentators are harkening back to the days of Economy 7 meters and storage heaters, we have our own 2020s version to keep people warm with fury – heat pumps.
A letter to the Telegraph, under the headline “Rising electricity tariffs will mean heat pumps are too expensive to run”, claims to have done the maths:
[…] although both oil and electricity prices have fluctuated, it has been cheaper to use the heat pump. However, after the recent very steep rise in our electricity tariff, in future we may be making greater use of our oil boiler.
Conveniently, the UK government plans to help install 600,000 heat pumps a year by 2028, just when it no longer makes sense to do so because of high electricity prices (which they caused to spike)…
Only a complete fool would transition a nation to a lower cost of heating and presume the relative cost stays the same as the vast transition in supply and demand occurs. Especially while making a mess of energy production…
But fools abound: “Energy scores for homes are to be overhauled by the Government, amid fears that under the current system installing a heat pump could cut the value of properties.”
Why would a heat pump reduce the value of your property? Perhaps because it makes heating more expensive?
Perhaps it does, but the Telegraph headline has a better reason: “Homes risk energy rating downgrade if they install a heat pump”. So the government’s own energy ratings system knows that the governments own green energy policy is a bad idea already? Impressive.
But wait, there’s more. MP Craig Mackinlay of the Net Zero Scrutiny group does a good job of pointing out that, when combined with the government green energy rules which landlords face, this could get really interesting:
“Given that heat pumps can actually increase energy use, on which EPC certification is derived, they could push a property that might have been rated C under an old method into D.
“That could make it both unrentable and possibly even unsaleable, if some of the more nonsensical Net Zero measures that we hear about are realised.”
As Tintin’s friend Captain Haddock might say: billions of bilious blue blistering barnacles in a thundering typhoon! Actually, a thundering typhoon is probably what the UK needs to keep its energy policy functional at this point…
But imagine being a landlord who put in a heat pump because of green rules only to find out that they can’t rent out their property because of green rules about the heat pump…
Sometimes I think, “serves your right for trusting the government’s heat pump initiative.” But at this point, it seems impossible to avoid the government’s various schemes in any economic activity we undertake. And so, we all suffer under their contradictory subsidies and requirements.
Now the British public can probably forgive incompetence from government supported energy project rollouts. We are used to it, after all. But what about a little bait and switch tactics? Because it turns out that unfunctional smart meters can be used to implement surge pricing.
What could possibly go wrong?
Now I’m a fan of surge pricing in any and all scenarios… that don’t involve government. So, I am not in favour of surge pricing very often then…
But it’s worth mentioning Uber, the taxi ride hailing company. You see, the best way to encourage more drivers on to the road when they are needed is to pay them more. The best way to reduce demand for trips when there’s too much is to make them more expensive. And the best way to make sure those who need a ride most actually get one is to give them the opportunity to outbid others who don’t really need one.
Surge pricing, in other words, makes things more efficient. It allows supply and demand to rebalance at flexible equilibriums.
But when government gets involved, as it does in energy production and pricing, all this goes haywire.
Having suppressed the price of energy with caps, which sent a load of energy companies bust, and having suppressed energy production with all sorts of other policies, the government then suddenly hiked energy prices while announcing the possibility of smart meter surge pricing.
What do you think that looks like to bill-payers? Bait and switch? Or just an election-losing proposition of the first order?
But am I really blaming the government for high energy prices? Well, yes.
Not having enough baseload power alongside renewables produces a highly predictable result.
Shutting down the national gas reserves and shutting down gas production and then picking fights with a major international gas producer produces a highly predictable result too.
Funnily enough, the early warning systems designed to warn us of Russia’s nuclear-powered retaliation can be put out of whack by smart meters which are designed to charge us more for electricity when we don’t have enough Russian gas!
Like I said, no civil servant could’ve thought of it…
But you know what they can think of? Russia hacking our smart meters, is what I expect…
Not that I’m blaming civil servants exclusively. Insulate Britain has been busy advocating a similar policy which proved disastrous in Australia only a few years ago. The Australians even had to have a Royal Commission into the Home Insulation Program because it was such a debacle. It’s one so bad that I’m not willing to make a joke about it, except to mention the name it is commonly known by: the pink batts scandal.
Which also makes the point that it’s not just the UK that’s a mess. For gas markets to get this messed up, you need a unified approach – cooperation between nations all over the world.
German industry is shutting down over power prices. Texas, once the energy capital of the world, had blackouts. In Australia, consumers pay substantially more for Australian gas than they charge foreigners for it!
Then there are the international embarrassments. For years now, countries have been adding ethanol to petrol because it’s green. Except, a new study says it isn’t. And the result isn’t even close, sums up Green Car Reports:
Funded in part by the National Wildlife Federation and U.S. Department of Energy, the study found that ethanol is at least 24% more carbon-intensive than gasoline due to emissions from land use and changes to corn growth, as well as the emissions from production and combustion that come with any liquid carbon-based fuel.
Oops. Not that this will deter the rollout from E5 to E10 in the UK…
But the worst news of all does come from the UK, with the price of a pint soaring because of energy costs. And this is after the incredibly ironic CO2 shortage, which threatened beer supplies in 2020 and 2021.
The green solutions to our energy troubles are looking a little shaky too. As you’d expect in an electrified economy, a lack of electricity causes problems. If only policy-makers would’ve expected it too.
California electric car owners were encouraged to charge their cars at off-peak hours and to sign up to Flex Alerts which would help them voluntarily reduce energy consumption at key times. “Now is the perfect time to do a load of laundry,” the state’s Flex Alert Twitter account helpfully pointed out at one point…
Over at the EU, a battle broke out over whether nuclear and gas were to be considered green under the aptly named EU Taxonomy for Sustainable Activities.
Is that Tax-on-me or Tax-on-the-economy?
I don’t know, but at least they’re pro-gas, unlike the UK government…
The Financial Times highlights just how EU energy and foreign policy is intertwined, and how desperate the Europeans are these days: “EU regulators halt probe into Qatar gas contracts” and “Move comes amid concerns that supply from Russia to Europe could be disrupted”. They’ll be shipping Calais’ campers to American cotton farms next. Then again, perhaps it’s because the World Cup is coming up.
The UK’s electric car owners might soon complain of similar bait and switch tactics to the smart meter believers. The many enticing incentives that make electric cars a viable purchase are looking a little vulnerable. “Pay-per-mile road charging ‘threatens electric car sales’” and “How electric cars could blow an £8bn hole in Britain’s finances” reports the Telegraph. It turns out that having roads is more important than the transition to electric cars… to some politicians.
Perhaps this explains the boom in electric SUVs. Underfunded roads because of electric incentives might require a 4WD to navigate soon.
It reminds you of the solar subsidy debacle. The Guardian reported that “Home solar panel installations fall by 94% as subsidies cut” and “Labour accuses UK government of ‘actively dismantling’ solar power industry”. But here’s the highlight:
Renewable energy developers and green groups had hoped ministers would replace the scheme with another incentive system to avoid dashing the sector’s momentum and accelerating job losses in the industry.
Instead, officials confirmed that new solar pv installations would be expected to give their unused clean power to energy companies for free until a new scheme is set up. A spokesman for the government said new proposals will be unveiled in the coming days.
So there you have it, the government unlocked what might be the most important discovery in human history since burning coal: a source of free energy itself! (Your wallet.)
But at least the transition to electric cars won’t burn down people’s homes, as the Australian home insulation initiative did. Oh, wait… it has?
Now you might say nobody saw all this coming. But back in 2015, you could’ve read this from the Centre for Policy Studies:
In a new report Central Planning with Market Features: how renewable subsidies destroyed the UK electricity market, published by the Centre for Policy Studies on Wednesday 18 March, Rupert Darwall shows that recent energy policy represents the biggest expansion of state power since the nationalisations of the 1940s and 1950s – and is on course to be the most expensive domestic policy disaster in modern British history.
Let’s just say that some of the dot-points that follow have been prescient…
The good news is that governments sometimes U-turn on their promises. “Six North Sea oil and gas fields are set to be given the green light this year […] as Cabinet figures push back against “insane” demands to go further on net zero,” reports the Telegraph. But it seems some parts of the cabinet are insane, given the split…
Having driven us insane with their energy policies, it’s nice of them to join us.
Nick Hubble
Editor, Fortune & Freedom
