Sunday, 18 January 2009

EU stupidity in Wales

From Booker's column:

Another British industry which may soon disappear, thanks to our masters in Brussels, is production of that remarkably useful metal aluminium. Although we rank only 19th in the world production league, our two main plants, in Anglesey and Northumberland, are as efficient as any of their competitors. But aluminium relies heavily on constant supplies of electricity.

The Holyhead plant, Wales's largest electricity user, is supplied at a discount price by the nearby Wylfa nuclear power station, state-owned through the Nuclear Decommissioning Authoritty (NDA). If the NDA was privately owned, it says it would be happy to carry on selling power to its largest customer at a discount. But under EU state-aid rules this is now "against the law".

This is willful stupidity on the part of the EU. The major cost in producing aluminium is electricity. So much so that you normally build your smelters right next to a long term source of cheap power. So much so in fact that you might deliberately go and build a dam (as has been done in many parts of the world) and then build your smelter right beside it so as to get cheap electricity.

In a country like the UK, where we've not got much hydro power possibility unused, we might build our smelter close to a nuclear plant. And the nuclear plant would be very happy to have you next door as you're going to be a reliable customer for a good percentage of their power, decade after decade.

In fact, this symbiotic relationship is so strong that the decision to build or not to build a nuclear plant will be informed by whether someone would like to build an aluminium smelter next door. And this is indeed what happened here. There is no coincidence in Wylfa and the smelter both opening in 1971. They were both built knowing that the other would be. The smelter gets a guarantee of low cost electricity, the nuclear plant knows that they have a long term customer for a substantial chunk of output and is willing to offer a discount to get one.

Think about it in any other line of business. "I'd like to take 30% of the production of that new plant you're thinking of building for the entire lifetime of the plant but I would like a discount".

Is he going to get his discount? Sure he is. And the EU now says this is illegal.

They're fools.

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