ITM Power - Re: ITM Stream Log - What a curious world we...

What a curious world we live in. It is now conventional wisdom that we have all embarked on a journey to a carbonless future; and this despite there being no scientific unanimity as to the connection between global warming and carbon emissions. Striving to reach this nirvana has resulted in surprising liaisons and compromises, the most important of which is the UK government’s determination to embrace old nuclear technology despite the well-known problems of disposing of hazardous waste — which will be left to be faced by future generations. In the meantime, funding of our uranium-powered future is in the hands of a French state company and our new friends from China, who themselves are busy designing and constructing power plants fuelled by thorium, which is safer and less expensive than uranium. They have been encouraged by our government’s guarantee that we consumers will pay twice the current price of electricity once the power comes on stream, possibly in ten years’ time. In the meantime, as if the good Lord realised some interim help is necessary, we have been presented with a huge opportunity. Deep beneath the north of Britain exists a thick stratum of rock and shale that may contain enough gas to power Great Britain plc (and certainly the Northern Powerhouse) into a new industrial revolution. This gas could fill a looming energy gap created by decommissioning of coal-fired power stations. But a vocal and well-organised populist movement perceives all sorts of possible disasters resulting from the fracking process needed to extract gas and oil from shale. These activists are not convinced that experts from various regulatory bodies are capable of monitoring exploration and exploitation. After three years of delays following one partially drilled exploration well in Lancashire, we still do not know whether this gift from above is exploitable or not. Many more exploration wells need to be drilled before any production decision can be taken. But not even this limited activity is taking place. In the meantime, blackouts are getting nearer and inevitable voltage fluctuations will disrupt the computer-based systems that now dominate most activities in our digital and interconnected world. Those who believe the darkness can be avoided by other means are embracing the renewables sector, oblivious of the fact it depends on variables such as wind and sun and over the next decade is unlikely to account for more than about 20 per cent of our energy mix. And just to confuse matters, the fat subsidies that have encouraged the middle classes to change their roof tiles for solar panels and to construct wind turbines in their fields are now being withdrawn. So where in all of this energy mess might an entrepreneurial investor find opportunities? Here are my bets — on both possible outcomes of the fracking stand-off.