Truss mines magic money tree, mithering multitudes marvel at the munificence

Blighty has a new Dear Leader, under what has been an excessive interregnum to feed the ego of a small part of the Tory party. A four-month delay to collect their prognostications is fair enough for a party in opposition, but is far too long to replace an incumbent PM. Would we have had to wait four months in the depths of the pandemic if Bozza had been pasted by Covid? Or if Putin novichoked him or nukes London?

New! Dear Leader says shes is going to fix energy bills, after people have been working themselves up trying to find a way to pay a doubling of rates up to 51p a unit from October, while working minimum wage. After spending four months hollering from the rooftops that she is not in favour of handouts the likely solution looks very like handouts to me 😉 Indeed it looks tremendously Third World to me, subsidising the price of something. La Truss delivered herself of some pithy statements in her former life as a candidate:

On the eve of the price cap announcement, Ms Truss acknowledged that soaring energy bills were a “massive issue”.

But she said the government couldn’t “just bung more money into the system”.

Ms Truss told the hustings in Norwich: “What we need is to fix the supply of energy.

“If people think this problem is going to be over in six months they’re not right.”

I happen to agree with the sentiments, although not for the same reasons. Arguably fixing the supply of energy is a great idea. But to get there you wouldn’t start from here, but perhaps many years ago, although a hat tip should be given to the significant progress that has been made, particularly with offshore wind which is a resource Britain has a lot of, comparatively.

I also agree with Dear Leader that this won’t be over in six months. The well-repeated narrative is that it’s Putin wot done it by turning off the gas pipeline, indeed what surprises me is he didn’t do that earlier, General Winter is an old friend Russia knows well. See Napoleon, Hitler and Monty’s rule one on page one of the book of war. I don’t believe the narrative. Putin supplied the shock, but the response of the market prices shows there is very little spare capacity. I am of the view that this is what the foothills of peak oil looks like. It’s not a sudden bang and turn off all the things. It is increasing scarcity, and scarcity=high prices at first, and then shortages if the prices don’t depress demand enough.

That’s not going to be over in six months, and it may not be over, ever. This doesn’t mean we will be living in caves in five years’ time, but I agree with the former La Truss that the government can’t fix this by just bunging more money into the system. That’s because this money is for rising operating expenses, and while it’s sometimes reasonable to borrow money for capex, it is never a good idea to borrow money for opex.

Net zero is not about saving the planet

It may be politic to give the handout to bills to soften the transition, but it’s an ongoing drain if energy prices are going up because supply is running out of spare capacity. If you think the need for a bung is just as long as it take for Putin to prevail in Ukraine enough to get something he can walk away with, then yes, perhaps it’s a price impulse. The trouble is that the world consumption of fossil fuels shows a steady increase, because population is still increasing, and everyone would like to have an American lifestyle in terms of energy use.

can you see the falling fossil fuel consumption? Me neither

So even if Putin changes his mind, soon rising demand will consume the amount we have lost, and spare capacity is in short supply. For all the hullabaloo about CO2 emissions, humanity ain’t giving up using fossil fuels any time soon. Just look at that chart. There was a Covid retrenchment, but it’s roared back on track.

If you want to reduce CO2 emissions, then carbon capture and storage, which has never been demonstrated at scale, and tends to use a lot of energy itself, is the only way that’s going to happen. The good things about having loads of energy at hand are just so good than nobody is going to think of the  grandchildren. Sure, the West might get to net zero in penance for having been the first out of the block, and that penance will be making the fossil-fuelled air conditioning of a burgeoning Asia and Africa that little bit less expensive by taking some demand off the table.

For a declining part of the world less able to fight its way to the top in 50 years time increasing renewables is arguably not a bad allocation of capital, because electricity is not very storable and not very transmissible at transcontinental scale, so while it can displace some fossil fuel demand it can’t easily be sold to richer bidders. As a way of reducing global CO2 output? Fuhgeddaboutit, that consumption chart will be limited by supply, not going green IMO. You can feel good about the UK dropping its per capita fossil fuel usage from 46MWh per year in 1973 to about 22 in 2021.

You have Thatcher to thank there for destroying heavy industry, and the Arab-Israeli war in 1973 to thank for improving efficiency. There are echoes of 1973 now as well – in general if you do things that piss off your energy suppliers like yelling in their lugholes they are scumbags or supporting their enemies, the price goes up. Our product, our rules was the word in ‘73 too. Sometimes you have to put up with that privation, but pretending it isn’t going to happen won’t take you anywhere good.

The problem with energy is that all the alternative options suck. For an economy in secular decline, they suck bigly. You are likely to have less energy available in future, because it’s dearer, and that’s not something the government can fight. They could try and increase renewables, and they could do something about not tying the price of renewables to the price of gas – perhaps some industrial customers could live with the intermittency of renewables for a cheaper rate. There has been a historic correlation of energy-hungry industries colocating with sources of energy, from the cotton mills oop north with the abundant water power, to aluminium refining occurring near hydropower.

But for y’all at home, it’s gonna get dearer. There’s only so much money Dear Leader can magick up from taxation and borrowing because that’s the trouble with depending on the kindness of strangers It should be noted that some at the Bank of England dispute the former guv’nor’s pithy warning. Apparently Britain has foreign assets worth 4xGDP and is flogging these off at 6% of GDP to fund living above its means. So that’s all tickety-boo then, 66 years until the high-water mark reaches the low-water mark. Should see me out, that’s a SWR of 1.5% so it might even be sustainable, ceteris paribus… The trouble with life is that all things stay equal only in the grave.

We have lived with less energy before, we can do so again. We have some advantages – efficiency is better and control systems are smarter. Against that, energy is used in a lot more places quite diffusely than before the digital revolution of say the 1990s onwards. I started chasing power in the face of future energy rates of £1 for 2kWh. Saving energy at home showed that most commenters had the edge on me in the art of saving energy 😉 Despite that I hit two power hogs and continued chasing, as well as investing in renewables. And oil…

Now that La Truss has declared that the Ofgem increase isn’t going to happen for two years until the next election some of that is perhaps a misallocation of capital, and I am not going to increase my investment in renewables over and above what I have already. I am cheered not to be paying for other people’s heat pumps, solar panels and insulation, though 😉 I know it’s petty, but I don’t want to pay for your green crap through my power bill. I don’t mind too much paying for some green crap, even if it’s the same amount, through taxation1, because CEOs will hopefully get to pay more. There’s a hint of the poll tax in the everyone pays the same amount for the green crap so we don’t have to call it taxation.

Now the magic money tree has been located, well, that’s all fine then. Inquiring mustelid minds are intrigued as to how tens of billions of pounds are going to be magicked up ongoing, the obvious solution is to make those pounds worth a bit less so the job is easier to do. Still, it will reduce near term inflation, which gives me a little bit more time to think. On the other hand, if you look at a chart of the Great British Pound against a basket of other currencies, IMF special drawing rights, I’d say

How many IMF SDRs can 1 GBP buy

going down the toilet is perhaps being charitable. Not as bad as Covid, pretty much the same level as after Brexit. Looks like night has fallen on them sunny uplands, and Putin has knocked about 15% off the value.

  1. FWIW the Ermine is and probably always will be an income tax payer, despite the non particularly economically active status 

34 thoughts on “Truss mines magic money tree, mithering multitudes marvel at the munificence”

  1. Blighty has a new leader indeed 😉

    Regarding renewables, honestly I recommend you do some updated reading, a lot of things have changed since “without the hot air” was written and not many of those priors hold. I realise this can be an emotive subject (though not entirely sure why). We don’t question the relentless march of tech yet for some reason the equally relentless match of renewables is somehow controversial in some quarters.

    Liked by 1 person

    1. Yeah, a twofer indeed, though I didn’t know that when I posted this.

      > I recommend you do some updated reading

      Well go on then, show the way. I invest in some of this shit, and I am not so misanthropic that I want it to go titsup. I don’t see obvious flaws on McKay, but if someone has repealed the laws of thermodynamics, I am all ears


      1. The main factors that have changed since hot air was written:

        1. When a turbine doubles in height, the power output is squared. Turbines are vastly larger than they were in the mid 00s. Note that we’re already ahead of his NIMBY scenario.
        2. Solar efficiency has gone up slightly
        3. Costs have dropped so incredibly, that projects like Sahara Solar are financially viable
        4. While not mathematically optimal compared to utility scale, domestic rooftop solar can be profitable after 3-5 years
        5. We’re starting to see the same economies of scale in storage costs

        A study was released the other day showing the path to 100% renewables:

        A lot to digest, and a lot to read if you’re interested, but in summary there’s a lot of good news I think.

        Liked by 1 person

      2. Thanks! I have only really started on that, but it does look more promising. We have never before tried to overbuild a working energy system with an alternative that wasn’t obviously more energy-dense, so the sower’s way option is probably best. I don’t see a pan EMEA grid happening for some non-engineering reasons, but it it’s not a showstopper. Interesting on the future capabilities of wind, too. I am glad that we haven’t had to cover England in turbines as McKay seemed to imply 😉

        Still lots to get through. And it hasn’t changed my mind that domestic rooftop solar sucks, though if they introduce tiered by consumption charging I could see the attraction then!


  2. I agree with your thoughts, both the signs and the fundamentals are not good, whilst decent leadership which could soften the blow, is conspicuously absent. If you tolerate third rate leadership, you will end up in a third world country and we are well on our way to being a banana republic. I am currently in a pretty little spa town in the west midlands, which is deeply conservative and old money has quietly been happily homed here for generations, but even here you can see the stress cracks forming. In the town centre, a look at the shopfront promenade shows a lot of frippary that wont survive a serious depression, so stripping out those hair salons, charity shops, coffee shops, nail bars, artsy outlets and boozers (fancy or basic) and you don’t get much left. What will survive are needs, not wants, so the basic food retailers, pharmacies, post office, DIY store and some essential services like fuel stations, estate agents, lawyers, accountants, medical practitioners etc., so there’ll be ~90% of the facades boarded up.

    Printing more money again will just push up the nominal price of the remaining energy whilst evaporating people’s savings, otherwise Zimbabwe would be rich. Ironically, through the likes of Truss’s pignorant geopolitical posturing, Putin has been given an invitation to return the treatment the Soviet Union suffered from their new ‘friend’ The West when their system collapsed. Russia has a long memory of ‘our’ trustworthyness, from the Western betrayal after WWII to finding out in ’89 that The West only saw it as a petrol station and didn’t want a friend, what they really really wanted was a new continent of resources to keep their Waste themed party going for another generation.

    But at my pissant level, all I can do about it is shove my rock a little uphill by ‘being the change I want to see’ and in the last fortnight I changed my showers to ‘slow-flow’ which by no longer pinning victims against the wall in a prison-style fumigation sand blasting, saves a lot of water (also quietly going up disproportionately in cost, courtesy of the monopolies obligated to irrigate the country with sewage) as well as the heating to warm all that water that mostly bounces off you too quickly to do much, in a power shower. So, here’s my prediction based on the incentivisation scheme in place – people will loot if it is legal to enrich themselves at the expense of the others, so Lizzie’s energy bailout will effectively translate as taxpayer’s future money propping up the energy corporations’ profits right now. Much like the Aid industry that never seems to solve problems in the poor world, once all the siphoned off ‘commissions’ are added up, nothing actually hits the pockets of those in actual need. Nothing much ever changes under the sun and that, innit 🙂

    Liked by 1 person

    1. > In the town centre, a look at the shopfront promenade shows a lot of frippary that wont survive a serious depression, so stripping out those hair salons, charity shops, coffee shops, nail bars, artsy outlets and boozers

      I wonder if people will go back to living in town centres again, charity shops seem like a terrible waste of realestate and I’d have thought the space would be better suited for hosuing young folk who want to meet up with each other and don’t yet have kids and dogs – it would also be closer to transport hubs. I keep watching IUKP go down the toilet and buying a little bit more, but I don’t really believe Monevator that commercial property is an asset class, more a wasting asset in my experience 😉 Still, you have to sometimes invest in stuff you don’t beieve in, dive/wo/rsification and all that.

      > exfoliating showers

      I am a fan of gravity feed as an experience for some of those reasons 😉 I far prefer the leisurely pace – even my electric shower which was mains pressure less a bit was somehow less luxurious.

      Perhaps the luxuriant feel is getting away from the memory of the lethal Ascot water heaters of my childhood and the gas instant-on water heater in my first house, which |I used to have to dismantle the burner and power a fine copper wire through the jet because crap would wall into the works from the outside and bung it up. Things were always capricious and boiling hot or freezing cold, so I have an association of instant on showers of being freeze/thaw. My thirty-something former self spent £150 on a thermostatic mixer that nailed the water heater probelm, it was a direct cold feed one side and direct cold to the water heater. Since the water heater regulated temperature changing the water flow through a fixed heat input, I was never going to get a stable shower temperature from that bastard.

      I have only just discovered you are supposed to insulate the pipes leading from the hot water tank – the tank itself is lagged enough that I can’t really feel it’s warm, but the riser pipe was warm to the touch even though it was a few hours after the shower. 22mm foam insulation from the DIY store for loose change , a sharp Stanley knife and half an hour later, job done.


      1. My oldest friend lives in Munich and wanted to put his ailing and socially isolated, old, frail mother in an small town centre flat so she could watch all manner of life from her window and even venture down to the coffee shop below on good days. It is perfect for people in that situation in modern times when they no longer live in extended families and Germany still puts people before profit in many ways you barely get here. (Her old flat was facing fields to the horizon in the middle of nowhere as she could still drive)

        I only found out through work (supervising projects/maintenance and via budgeting) that naked hot water pipes lost a serious amount of heat that really made a difference in bills and almost nobody bothered to lag them or even knew. It was through more by luck through an excellent plumber, yes back in the days when you could get Polish, who said it wasn’t standard so they quote lower but you more than make up that ‘saving’ in future power bills. Back then, hot water tanks (containing heating elements) were lagged with styrofoam looking stuff, but interestingly he said it was still worth it to do more wherever possible, like thicker lagging for piping and any hot water storage tanks in the system. (they use something that looks like a sleeping bag on those)

        I see some crazy stuff around, like narrow piping unlagged on outside walls, because it was easier than digging up the floor in a room inside or smashing a wall – nobody thinks of the heat losses.

        Liked by 1 person

      2. Hadn’t thought of that, but yes, indeed, single folk in general could get a win out of town centre locations including the elderly.

        I recall those sleeping bag jobs from the 1970s, installers didn’t bother lagging hot water tanks at all years ago, I guess we sharpened our act up a bit in 1973 😉 I will see if they are still available. My tanks does have the styrofoam coating, and I am not absolutely sure I can feel any heat from this.

        But what the hell, why guess? I took an IR thermometer to the inside surface of the door of the airing cupboard, which is 25, and then to the lagged tank, which reads 26. So there is a difference, but i can’t feel it due to the low conductivity of the tank insulation relative to the wood of the door. An inside wall near the door is 22.

        The sleeping bag insulating jacket isn’t outrageous at £13 so I may sport that on the off-chance.

        > narrow piping unlagged on outside walls, because it was easier than digging up the floor in a room inside or smashing a wall – nobody thinks of the heat losses.

        I have some of that, but it is the outfall of the condensate from the condensing boiler. Having said that, I lag mine though it is in a sheltered location, not so much to keep heat but to stop it freezing, because if the condensate backs up the boiler shuts down. And if the condensate freezes the one thing you do know is that it’s cold outside and you’d prefer the boiler keep running 😉


      3. There’s a thread on the Lemon Fool with some loose numbers about the impact of lagging a foam sprayed hot water cylinder – look for “Lagging” in “Living Below Your Means”. The poster calculated payback time was around a month.

        Other thing I’ve found helpful is to insulate any cold water pipes (in my case the rising main) that run through the airing cupboard. I got pleasantly colder kitchen tap water in the heat of summer which means the cylinder was gradually sinking heat into the rising main pipe.

        Liked by 1 person

      4. > I got pleasantly colder kitchen tap water in the heat of summer which means the cylinder was gradually sinking heat into the rising main pipe.

        Gosh. Does that mean your cylinder is on the ground floor? Mine is on the first floor, and the rising main is tapped off first to feed the kitchen tap on the ground floor. I suppose the rising main comes up through the airing cupboard to feed the cold water tank, which is what pressurises the hot water cylinder.

        However, I’ll bear it in mind next summer, since the materials are dirt cheap and it’s not a long job, so the worst that can happen is I waste a little time and cash 😉


  3. Surprised that the bubble of governments printing money to buy their own debt hasn’t popped yet — they seem hellbent on accelerating the process. Do the elites have an exit strategy for when their economies eventually collapse? I doubt it, and they certainly won’t get a welcoming committee from the rest of the world. These times are truly baffling.

    Liked by 2 people

    1. A brief observation from across the pond here… I don’t mean to minimize the difficulties you face the next couple of years with your higher energy costs (If I were President of the USA I’d cut you a deal, we owe you for the blood you spilled in Iraq for absolutely no reason except to make us look slightly less arrogant). It is going to be tough, I’m sorry. We are really privileged here in the USA and reading about your energy saving measures is a good reminder of that.

      Further on down the road, you folks probably have more wealth in your “cultural capital” than you realize, because the richest country in the world (that’s us) is in thrall to your mannerisms, flags, accents, etc. We can’t get enough of it, and I doubt it qualifies as learned behavior, I think it’s ingrained…. how else to explain how my kids fell in love with Peppa Pig when they were four years old? And my kids can’t be the only ones.

      I guess what I’m getting at is, I’m more bullish on the UK in the long term than a lot of commenters here. Think of all the disasters that will happen in the world over the next 100 years, and how humanity will react to them. I think you’re in a good spot to capitalize on it. Of course, you have to have the right immigration policy…


    1. Google was my friend, though not when I wrote this post for some reason. Bank Underground

      No, I don’t believe it either. I am an old git and I am building up my stocks of foreign assets,, largely because I don’t believe the current crew is competent. But then arguably I hope to let them go as I get a fair bit older, so for a country with an upward drifting age profile, the macro picture could look like prince, not pauper. Bank Underground tend to be sharp young guns, I don’t think I am of the pay grade that can qualify this 😉


      1. Thanks very much for the link.
        The additional details are even more interesting than I had assumed.
        I am not sure that I have fully grasped all the points being made.
        One to think about I guess.
        Thanks again.

        Liked by 1 person

      2. Some elements make for uncomfortable reading. Take

        What exactly are these large revaluation effects which have raised the net international investment position so much?

        I can say for my own case, investing 2009 onwards, that the majority of it was lobbing capital into a hammered market, but of that quite a significant amount of that was the uplift in the USD through VWRL etc, and a lot of the apparent amount was the act of economic hara-kiri otherwise known as Brexit – see GBP XDR chart above, and thankfully the Ermine massive purchase of gold in the period before June 2016 – see GBP/XAU.

        That’s revaluation and I was helped by having earned most of the money I will ever have, it’s not something a young fellow saving as he earns in the decaying GBP could do, other than pressing for a pay rise or leaving the country to work somewhere less drawn to demagoguery, or at least with a better understanding of sound money.

        But it’s an apparent amount. I can’t buy more bread or smartphones with the larger numbers, my aim was to lose less of what I had. And because VWRL is about half US assets, that amount is vulnerable to the USD, for instance the risk of a future American civil war, or the Thucydides trap.

        However, I have lived long enough to know that there is always something catastrophic out that that could kill us. In general it doesn’t happen, and sometimes if it does it’s not as bad as we thought it was going to be.

        We better hope them blue bars keep rising faster than the red and yellow ones, eh? At least I am doing my bit, despite being considered economically inactive, getting into foreign assets which are so far bailing out the leaking ship of state faster than than the leaks…


      3. At the most basic level, it is clear that selling assets to raise an income is a thing – and IIRC you have often lamented the financial worlds obsession with individuals earned income. But I do question if the UK is somehow unique in its people holding [so much] overseas assets. Unless this is true, then what the paper points out is the case to some extent for most countries – with the possible exception of the US, who I understand, exhibit profound home bias – and who can blame them for that.

        I also wonder who is actually selling these assets – perhaps it could be pension funds.

        Just my pennies worth, but fascinating nonetheless.

        Liked by 1 person

      4. > I do question if the UK is somehow unique in its people holding [so much] overseas assets. Unless this is true, then what the paper points out is the case to some extent for most countries – with the possible exception of the US, who I understand, exhibit profound home bias – and who can blame them for that.

        Isn’t that the privilege of the US dollar being the world’s reserve currency? It’s easy for you and me to diversify away from the UK which is a mere 6% of world cap. Not really so much for an American, when you are the 600lb gorilla with about 50% of entire world market capitalisation.. I guess you could buy VXUS or VEU, but you are fishing in strange waters indeed –

        Asia-Pacific (46%); Europe (40%); N. America (7%); MidEast & Africa (4%); Latin America (3%)

        > if the UK is somehow unique in its people holding [so much] overseas assets

        Well, London was a world financial centre in its heyday, so perhaps it is British institutions rather than punters (and/or their pension funds) that skew this. There will be an overhang of accumulated capital due to that. It’s a foil to Tim Morgan’s Thinking the unthinkable: might there be no way out for Britain? Project Armageddon – the final report but it strikes me as a long shot.

        Better story though, I’d rather be prince than pauper


      5. > so perhaps it is British institutions rather than punters (and/or their pension funds)
        This is what I had initially assumed – ie before you provided the BoE link.

        I agree with your prince vs pauper sentiment and that:
        > It’s easy for you and me to diversify away from the UK which is a mere 6% of world cap.

        Also, I’d really like to know who is actually selling these appreciating assets.

        In summary, IMO the Bank Underground post – whilst fascinating – raises more questions than answers. But maybe that was as intended?


  4. So we have an electricity price linked to the gas price not the energy mix price – priceless. Those countries that rely on external gas supplies are being subsidised by other countries?

    Someone is laughing at all of this, all the way to the bank or at the bank perhaps?

    The UK Column has highlighted that the approach (by the EU et al) has been reactionary and about subsidy (wealth transfer?). It is not about attacking the source of the problem – the price discovery mechanism, lack of vision and very poor / non existant contingency planning.

    As you have highlighted with your previous post we could have reduced our energy consumption massively with the right policies, such as very cheap insulation, windows, lighter vehicles / education etc. Off switches for our energy draining devices as you have demonstrated on mass would reduce power station numbers? Reduced consumption means more money in the pocket of UK Plc and its people?

    – Why such high standing charges on bills – where does it go? Who owns the companies – are they pubically traded?
    – Why don’t we scrap VAT on necessities such as fuel and food but are capping and adding debt / inflation instead?
    – Why don’t we have a national energy saving fund / massive incentives to insulate and educate etc versus massive investments in renewables?
    – Why not reduce the size of the gov so productive cash is deployed in the productive economy > 50% gov means living beyound your means….more money for……

    Is UK Plc being taken for a ride?

    Liked by 1 person

  5. After reading your last post about all of the options on reducing electricity usage I did an audit of our house. I found a few light bulbs that consumed 77W, yet were in our corridor which is lightly used.

    The modern LED’s are an amazing advance. A new 1500 Lumen bulb uses just 10.5 Watts yet costs over £14 in France where I live. This is where I have not done the full maths on cost…

    1. Changing out a perfectly good bulb for an expensive new one – how much energy is needed to create each bulb / lifecyle cost – no idea / throw away the old bulb – what is the cost of that?
    2. Time used and time for payback of new bulb un-determined
    3. Source of our electricity and usage pattern – does it justify the change – we just went off grid…. (another story – was it justified – currently a toss of the coin and will it work in the winter here – for another season 😉

    Compared to the electric oven or inversion heater an infrequently used bulb investment seems a trivial energy saving – it seems “just do it” is the mantra – yet I struggle to understand the lifecycle cost to work out what is really best. It is a bit like do I run a car into the ground versus scrap it. Is its inherent energy versus swapping for a new vehicle a good decision… I have struggled what is “best” versus what is “finacially best” with decisions I have made.

    On final thought is around a desk lamp. The desk lamp with an ond bulb offers light and directed warmth versus a new bulb – no warmth and a possiblity to need to warm, the whole room, earlier.

    So… I am ill-informed. I not able to make an informed decision on bulbs etc due to lack of data or ignorance…, just gut call that it is 50:50 at best to retire some tools earlier or later.

    If someone has detalied lifecycle costs of all the materials of old vs new bulbs and the ability to recycle it would be greatly appreciated and go some way to informing other decisions on changing other white goods.

    Liked by 1 person

    1. > we just went off grid

      Surely this dominates the story pretty much regardless? The capital cost of off-grid generation and particularly storage favours serious minimising of the load. If it’s an off-grid 240V system then you are eating conversion costs – run what you can on the DC battery volts unless it’s something like a powerwall. OTOH an electric oven doesn’t sound very off grid!

      Sounds like you’re being rushed for your bulbs. Philips 1500lm lamp from CPC is £5.16. That’s a lot of light in a domestic setting, I don’t have anything above 870 (and those are dimmable lamps, which I don’t run flat out)

      While you do get warmth from bulbs you don’t always want warmth, better to target your lighting and heating independent of each other, other considerations being equal.

      In the UK, if you are replacing a 100W GLS lamp with the Philips one the power drain differential is 100-12.5=87W. At a unit price of 34p per unit after the end of this month the lamp cost is equivalent to 5.16/.34 kWh = 15.2kWh. That’s recouped in 15.2*1000/87 = 174 hours of running time, so if you run it on average for about half an hour a day you breakeven in a year.

      > If someone has detailed lifecycle costs of all the materials of old vs new bulbs and the ability to recycle it would be greatly appreciated

      GIYF, together with Uncle Sam. I would imagine LED lamps will have improved somewhat since 2013

      > The UK Column has highlighted that the approach (by the EU et al) has been reactionary and about subsidy (wealth transfer?). It is not about attacking the source of the problem – the price discovery mechanism, lack of vision and very poor / non existant contingency planning.

      Hmm, I’m sorry, but the ‘free market’ doesn’t do forward planning, resilience or contingency. The target variable is price and shareholder value. Resilience generally means spare capacity, and that is inefficient. As an example in a different industry, take a look at the list of reservoirs built in the UK and rank by year built. The last one was 1992, 30 years ago. We haven’t stopped drinking water or increasing population 30 years ago. Water was privatised in the UK in 1991. We seem shocked that the privatised water industry CBA to build infrastructure for some reason.

      Liked by 1 person

      1. Thankyou for your detailed reply and the links – very informative.

        Led Bulbs – the document you linked does conclude they are the way to go – I suppose I hate replacing items that work. Going off grid, to your point, requires us to shed as much load as possible hence I found your last energy post so interesting. (my blub price was for one of the very large “living room” types – normal bulbs are much cheaper to your observation.)

        Off Grid Load – We are just getting to grips with the off grid system. We installed it ourselves minimising costs (checked by an electrician friend). It is a 4KW solar array with 20KWh 48V solar battery bank it cost around £8K.

        The inverter does chew up some of the power generation. Its advantage is that the load is provided straight from the panels when there is enough sun. So the oven, kettle, washing machine can be used during the day where we live in France. We have low electricity demand as we have a gas bottle hob, solar hot water and a wood boiler (which we can feed with all types of dried wood) and stove.

        We use around 200-250KWh per month in the summer and around 300-350KWh per month in the winter (which can be reduced). Say 10KWhr per day, with the majority used during the day.

        Where we live we get on average 4.4 hours of sun per day in January – a theoretical 17KWhrs of solar a day in the worst month.

        Now the problem – on multiple cloudy days the array will only produce anywhere between 10-25% of its rating. We get 12h 40 mins of daylight in the winter so 4KW at 15% is 0.6KW for 12.4 hrs gives 7.6KWhr (only if the panels rotated with the light – they are fixed so we may only get as little as 6KWhr)- less than demand so no power hungry devices on cloudy days. The battery backup of 20KWh with 80% available should last several days. Should be an interesting time in the winter – we are keeping our grid connection for the time being.

        I would like to have excess power used to heat water / the house which would require another controller to divert the energy or close manual monitoring.

        Free markets – why do we pay wholesale prices for electricity across Europe based on gas prices – seems flawed and needs a rethink IMO. A total free market in energy would cut redundancy to the bone (where has the gas storage gone) – for such a critical infrastructure what is the price of redundancy on an electric bill.

        Or is it too much interference making the system fragile. Would free competition decide on the best solutions which may not be aligned with political desires.

        Looking at our off grid calculations I struggle to see how renewables can provide fail safe power without huge redundancy (I would have to double our solar panels or have a huge battery bank).

        Liked by 1 person

      2. When we had an off grid system on the smallholding – it was an island site – we followed the usual process of flaying extra loads. I don’t know if you could transfer the lighting circuits to 48VDC and wherther there are bulbs capable of running on that. These are certainly available – railway bulbs tended to be around 48V in my youth to discourage people nicking them ; )

        You do get 48V LED lamps apparently, and the segregation of lighting circuits (not sure about electrical practice in France) means it would be easy to run them direct off-line on the batteries. The solar panels produce DC and the controller will place the load at the maximum power point to deliver 48V DC for your battery bank. The inverter will probably be fed 48VDC, upconverting to 220VAC 50 Hz in France and then your LED lamps come off that. Having said that the lighting load is probably not that bad, but heaviest in winter where as you say, your solar generation will be at a low-water mark, so it may still help.

        > Should be an interesting time in the winter – we are keeping our grid connection for the time being.

        Wise 😉 We used a petrol generator to supplement the solar in winter and to power the borehole pump. A generator is hard to live with and sounded like a bag of nails when running. That’s OK on a smallholding but it’s not gracious living – we lived in the town not on site.

        But in general the cost profile of 100% off-grid favours spending virtually any amount of money on reducing loads, because storage capacity is very expensive. Which is the very good reason why most systems are grid-tied unless they are an island site far fron connection. In the case of our smallholding the power cable ran near to one corner, but the hefty quote to connect didn’t make sense for the value it would have delivered.

        > Now the problem – on multiple cloudy days the array will only produce anywhere between 10-25% of its rating.

        that is indeed the problem with solar in northern latitudes, the seasonal variation in capacity. It matches wind resource quite well, so on a national or better, continent-wide basis it isn’t such an issue. Panel rotation is less of an issue with the diffuse nature of overcast light, but the hit is severe. A radio club I am involved with has solar withthe gear running direct off the 12V batteries which is fine for our offered load once a week from the vernal equinox to about now, but begins to lose the fight after the autumnal equinox. We have taken delivery of a petrol generator, we used mine last winter. A generator is the most cost-effective solution for our usage pattern rather than upsizing the solar panels by 500%.

        > Would free competition decide on the best solutions

        The UK has battle tested this in rail, energy and water. In good times it delivers lower prices. It drives out resilience (Rough gas storage field, anyone?), and doesn’t so forward planning and sometimes even basic maintenance. Free competition is slow to build anything to deal with future demand, from nuclear power stations to reservoirs, and fixing leaks – the UK will be pumping shit into the rivers until 2050.

        You pays your money and you takes your choice. For essential services the free market seems to fail you when you need it most, because resilience is diametrically opposite efficiency. It’s spare capacity that is idling most of the time, and the management consultants spot that and get people to cut it, collect their fee and they are off before the consequences show up.

        In theory competent regulation could fix this. In practice the free market seems to buy the regulator. Or perhaps the UK is exceptionally corrupt in this regard – why we don’t have a moratorium on politicians working or coming from an industry they influenced policy for five years either side of their term of office beats me, but it’s not going to happen.

        So I don’t regard the privatisation of essential services as a resounding success. When I went to Amsterdam on the ferry, I walked up to Hoek van Holland off the boat on the day and bought a ticket to travel on the next train to Amsterdam. It was a reasonable price. Ditto in France from Paris to Pont l’Eveque. In the UK I would have had to book it in a narrow time window three months ahead, it would be valid for a specific train at a specific time, and trying to get a reasonable price is an exercise in trial and error involving pretending to get off and on at intermediate stations. I am struggling to think of a single example of free-market success in non-fungible services that stayed the course. British Rail was crap in a different way but you could walk up, get a ticket and it would be roughly the same price as last time. I haven’t used trains in the UK for several years because of their crappitude.

        On the flip side, the free market means your phone isn’t screwed to the wall and you can watch TV on it. The free market seems to be teriffic for nonessentials and fungible services, and sucks for anything which is single source either by design or by natural limitations of the implementation. Because monopolisers gonna monopolise, as Warren Buffett’s moat theory observed. Who’d have thunk it?


  6. The cure for high prices is high prices, as the saying goes. If you have high prices, then it encourages people to save money, by reducing their energy consumption.

    The new government price cap will encourage people to save some money, but the effect has been very blunted by how they have done it.

    I feel it could have been done in a much better way, with tiered unit rates. So the first, say 2000 kwh, are very cheap and so on through medium and high users each more expensive, with the very highest energy users paying the full market rate. That would encourage everyone, even the very well off reducing their consumption. (And help the poorest in society most).

    As it is though, there is not such a great incentive for the very richest to stop heating their swimming pools, with subsidised energy.

    > @pithythoughts: Do the elites have an exit strategy for when their economies eventually collapse?

    They do,
    As plans go, I think it still needs some work. 😉

    That Bank Underground article is fascinating, so thanks for the link. It dates from 2017 though, so I would be interested in seeing if it still holds true today.

    My gut feel is that putting the tax payer on the hook for the difference between the capped and the full market price, through borrowing, is not going to end well. Lets hope it is a warm winter and gas prices don’t go ‘to the moon’.

    Liked by 2 people

    1. > I feel it could have been done in a much better way, with tiered unit rates.

      I would buy a bloody powerwall (putting the thing in the garden, I have realestate enough), and solar panels, because I am sick of paying for other people’s energy requirements through my power bill. Heck, even before this hoohah I investigated generating electricity with gas to arbitrage the difference in prices, though the noise and safety issues nixed it somewhat. I don’t mind so much it coming out of general taxation, at least the social justice costs are spread proportional to income rather than due to existence.

      > putting the tax payer on the hook for the difference between the capped and the full market price, through borrowing, is not going to end well.

      Largely depends of whether you view this as a Putin-related impulse, in which case it is a cost of the war and the national debt tends to go up in wartime. But as amisgers, and the attempted gov renegotiation of renewables onto CFD rates indicate, tying electricity prices to gas prices is a little bit barmy. People shouldn’t be buying their electricity from ecotricity for the warm fuzzy green feeling. They should be doing it because it’s cheaper 😉


      1. I still don’t get the lack of conservation.

        We still make heavy fuel guzzling cars when we have new materials. (EV’s are questionable as the energy is invested up front and the batteries, currently, do not last for the lifetime of the car and are very heavy) We use air-conditioning instead of using appropriate building practices like blinds shutters, less glass and more insulation. Just to name a couple of areas that could be addressed.

        Wasting money \ capital on energy seems like madness when you don’t have to do it. A lot of gains can be had through habit and education. Our habit of “it is our right to use as much energy that we need” is counter productive – we are the ones that ultimately have to pay for the energy when the capital could be working for us instead. Consumption just leads to debt and reliance on other systems \ people.

        Removing the on going expense (wasted energy) should be a priority for each country as it is a waste of capital that can be re-deployed to productive areas and a better standard of living etc. Yet our politicians just focus on what they perceive big wins (power stations).

        So why aren’t we financially educated properly to make the correct decisions ourselves and use our hard earned capital wisely? Could it be that this is not desirable?

        Liked by 2 people

      2. > So why aren’t we financially educated properly to make the correct decisions ourselves and use our hard earned capital wisely? Could it be that this is not desirable?

        I don’t think it’s a conspiracy. It’s because energy has been cheaper in the past. I only started chasing energy usage when it started to go up, I had the education 😉

        I replaced systems where the capital cost recovery is achieves in a year or two. Hence pulling the CCTV system – a reolink solar powered camera or two replaces the static drain of the DVR and would have paid back in a year at the original Ofgem cap, two years under Trussonomics. The shower was a load I could tolerate until the increase in cost made it worth switching over.

        The cooker will probably pay for itself in about four years, I don’t yet have enough data to really say. But there was also a quality of life improvement – Mrs Ermine gets her coffee in minutes rather than 10 min, and doesn’t occasionally leave the ring on. I consolidated all those wall warts which gives me a single point to inject solar power from £150 worth of panels to offset the standing load as well as reducing the standing load by a useful 40W = £108 p.a, which means the CCTV power supply that took that lot over paid for itself in three months. I’d rather spend the remaing £75 on fine wine or VWRL than heating up my garage a tiny little bit 😉

        These jobs weren’t really worth doing before. As Jam said, the cure for higher prices is higher prices 😉

        Liked by 1 person

  7. @ermine, that boiler safety shutdown also happened to a friend of mine, so in his case the plumber thawed the ice plug at the end of the outlet pipe, then cut it down from protruding a few inches past the external brickwork to only 1 – 2 before restarting the boiler. He told me that that reduces the odds of it happening again since there’s less exposure of overflow water to the extreme end of the temperature. ( I don’t know if that’s appropriate to your setup, but might help someone else here)

    Re: the win-win improvement vis-a-vis Madame L’ermine’s coffee preparation time with your hob change, smooth move Dude, I see what you did there, you can’t put a price on luv ‘n peace innit.

    Liked by 1 person

  8. Just a brief observation from a reader in the States… I’m not arguing with any of the logic in the post or the comments so far.

    BUT life has a way of not turning out the way the most brilliant Harvard and Oxford types predict that it will. And to that end…

    So many people are dumping on Liz Truss right now that I’m wondering if there’s a Liz Truss ETF that I can go long on (or an Anti Truss ETF I can short) it seems like the price would be artificially low. Political arbitrage, if you will. A big chance of losing a little, but a small chance of making a lot. I wasn’t alive when Thatcher took office but I’ve read that many predicted her doom from the get-go, and we know how that turned out.

    Liked by 1 person

    1. > I’m wondering if there’s a Liz Truss ETF that I can go long on (or an Anti Truss ETF I can short) it seems like the price would be artificially low

      To be honest, for someone from the US, VUKE (or the US equivalent, I am sure Vanguard has one) ain’t bad, lots of energy stocks and mining, commodities. Your USD will buy more of it, though a fair few firms are multinational so that effect is diluted a little. I’d say it’s perhaps a little early to go for VMID which is the mid-cap FTSE250, though that is probably where the potential is if La Truss does indeed manage to deliver Britannia Unchained in the next two years. OTOH this will be where the energy crunch roadkill will be found, you pays yer money, you takes yer choice, but I wouldn’t, though I am not selling out of mine, I bought a lot in covid so I am not nursing too much of a loss…

      A straight play on her is perhaps some UK energy firms, I have BP and am not moaning about the performance or yield. We tend to pay decent dividends, which isn’t always ideal for US investors unless in a Roth IRA, so you want to watch that.

      You could buy Great British Pounds, somewhat beaten up of late as the chart against XDRs shows it’s pretty much the same against USD. Your dollars will go a long way, the main hazard is that they will go further, but seems that’s a risk you have an open mind to. I look at VWRL at £86 and ask myself is that dear? Is it cheap? With a falling pound, buggered if I know, all I know is it’s dearer to me than it was a couple of months ago.

      So yeah. VUKE if you want to play it safe, straight forex buy GBP if you want to go for the bareback ride. The CAPE of the FTSE100 ain’t bad at all – about half of the still nosebleed S&P500. The FTSE100 is more of a value play, so if you feel a contrarian Great Rotation then it ticks all the boxes. Our country will appreciate your foreign direct investment too. And by all means pay us a visit, much quaint heritage and probably dirt cheap for US visitors these days 😉 Give it a couple of weeks and the shoulder season is lovely.


      1. A visit this year, I wish. My spouse and I loved walking/taxiing/drinking around London before our twins were born, but at 5 years old they might not be ready to appreciate the specialness of it just yet. We’re more likely to sniff out every McDonald’s in the City just to get them to stop complaining about all the culture we’re stuffing down their throats. It will be easier when the new season of Peppa Pig debuts and makes references to the King, not the Queen. Speaking of, it’s probably due to my membership in Generation X that I’m cheering so much for Charles to sit on the throne for quite a bit. For some reason it feels like he belongs to us, the generation that came of age as the (surviving members of the) Sex Pistols cashed in. He may have cashed in with a few unsavory characters himself, but no matter. When the Boomers pass the baton, can’t we hold it for a little while instead of giving it straight over to the Millennials? Or is it too much to ask…

        You know, buying the GBP now might be perfect. Either it rebounds in 2 years, which would give me a big win, or it doesn’t, in which case we win when we finally drag the kids over to see the mother country. Thanks for raising this point.

        Liked by 1 person

      2. Another option to buying the £, if you’d prefer your money to be in productive assets, is to buy a hedged GBP whatever takes your fancy. For example, IGWD is pretty much like VWRL, but with GBP hedging. It’s not the only GBP hedged ETF out there, so you can get exposure to a favoured market plus the GBP all in one go. I held IGWD for a litte while, on the vain hope brexit would be more of a success though I didn’t expect it to be. Every so often you have to hold stuff you don’t believe in, because as you say

        > life has a way of not turning out the way the most brilliant Harvard and Oxford types predict that it will

        I’m not in that league, but the hazard is still there. I didn’t lose my shirt on IGWD, but I’d have been better off with VWRL, and my ass was only saved by the industry of you industrious lot lifting the capital value of the 50% US faster than the £ continued to tank. Every dog has its day, but not while I held IGWD.

        > but at 5 years old they might not be ready to appreciate the specialness of it just yet.

        yes, probably ‘investing’ in the £ could be an easier ride ;). Charles is probably in for a reasonable time, they are quite long-lived, though it’s rather unlikely he is going to clock up 60-70 years on the throne…


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