Over the past two weeks the Prime Minister and his deputy have had a falling out over the House of Lords. This in itself looks like just another political spat, however, for the power industry the breakdown could be catastrophic.
With another three years to run, what are the chances that the present coalition government will reach agreement over the construction of any new nuclear power plants. Given the passion for renewables by the LibDems only new gas plants are likely to be given the go ahead to provide backup for wind power, when the wind decides it does not want to blow. The fact that gas supplies have to be bought from overseas means we will have no independent control over Britain’s power supplies.
It would appear that the politicians will only wake up and take meaningful decisions when the lights go out. On cold, still, winters evenings when demand peaks we are forced to buy power from France. With a new government in France who is to know what stance they will take, especially if the Euro zone comes unstuck.
We believe that the standby diesel generator market could be forced into panic and meltdown as it did in 1973. Forward thinking now may very well be a good investment especially for units which can take advantage of the STOR arrangements where the asset is making a return.