A Place to Stand

   So if promoting energy production promotes growth but government redirection of of economic resources is normally a very inefficient way of running an economy how do we go about it.

   Carefully.
 
   The early USSR is an example of doing it no holds barred. Stalin simply confiscated the peasants grain and sold it abroad to buy machine tools, generators etc etc. Now in its way that was successful, in that they did build a growing economy, but it also meant several million peasants starving to death. I think a market orientated approach can achieve the growth without the deaths. I think a market orientated approach would have worked better in the USSR at the time but that wasn't an option because the USSR, being poverty struck and coming out of a civil war, had no spare money to invest; because of western anti-communism wasn't able to borrow internationally; because of Soviet anti-capitalism, wasn't willing to allow investment either by foreigners or natives; and because they had grabbed the assets of both foreigners and natives nobody was going to be silly enough to invest there no matter how good the opportunities. The state having destroyed all other options had to do it itself.

   Fortunately none of this applies to us today (well ok there are some politicians ideologically opposed to sanity). There is no shortage of money in the world economy available for commercial investments. Companies are bulging with money. It is simply a shortage of such investment opportunities, at least in the slow growing Luddite economies of the EU and USA. So my proposals involve working with market incentives rather than against them.

   Even better, from our point of view, is the fact that there is a method of greatly reducing the cost of electricity production and producing it in far greater quantity without any technological breakthrough. That method is reducing the regulatory burden on nuclear power, which makes up most of its cost, and allowing/encouraging the mass production of reactors. It seems certain that wholesale electricity prices in Britain could be reduced by 93% by doing this. Since ours is some of the most expensive electricity in the world the effect elsewhere might be as low as only cutting 75%.

   So what should we do to bring this about.

1 - Set a target. I have previously given the calculations that showed a maximum theoretical sustainable growth rate of 23.8%. To achieve that would obviously require a minimum of that rate of increase in energy usage. In practice one would want more than that and suggest we should be prepared to support a growth rate 1 1/2 times that ie 35%.

   We use an average of 40GW per hour  Call it 50 to cover normal variation.

   So we should be wanting to produce 67.5 (increase of 17.5%) after 1 year.; 90 ((inc 22.5) after 2; 120 (30 inc) in the 3rd; 160GW (inc 40) in the 4th; 215 (55 up) in the 5th; 290GW (75 up) in the 6th; and 390GW (100 up) in the 7th.

  In fact, since it takes some time to build reactors I assume we would not get those increases in the first 3 years. However if a mass production reactor factory is involved able to turn out 100 Gigawatt reactors a year, at a flat rate, the production in years 3,4 & 5 should sufficiently exceed the target to catch up.

  However simply ending the subsidy of windmills would reduce prices immediately and investors, knowing that the increased supply/reduced prices were online, would start investing and growing the economy immediately.

   Up till now the normal assumption has been that it takes 3 years to build a new reactor so with building a factory mass producing them one would expect somewhat longer. However there are 2 alternatives. Firstly an X_prize for early completion and secondly the new Westinghouse SMR which is 1/4 GW but designed for mass production & easy delivery within 18 months - it is 1/4 the size but takes up only just over 1/4 the space of a traditional reactor, 1/4 the cost and presumably could be mass produced 4 times as fast.

   With mass produced reactors costing £800 million per GW retail I would expect such a factory, producing 100 GW a year , would cost not more than £200 billion - I'm assuming Westinghouse are expecting  that of the £80 billion they will make a year in turnover, 1/2 will be marginal profit giving them a 20% return on capital - highly profitable but by no means outstanding for a new product. A massive investment indeed but at 4% of GDP, not much to get an economy growing at 24%. In fact it would be in national surplus in a year if we only got it growing at 4.1%.

    It is also close to what the government insist they want to spend on windmills, for no obvious beneficial effect, so clearly they think we can afford.

   That is assuming government has decided they want the ownership and long term profits of the business If government decided it was happy to keep only about 20|% of ownership it could arrange this simply by providing Westinghouse with land, instant planning permission, the end of all unnecessary regulations, ministerial support in negotiating international loans, a guarantee to support purchasers in adding the power to the grid and a holiday on VAT & other taxes for the first 3 years. This would obviously cost virtually nothing since not collecting taxes on an industry which is currently not intended to be allowed to exist, is not a cost.

    I suspect the optimum would be somewhere between government paying the lot and owning it all and government paying nothing and owning 20%.

  A few other ideas which are less hands on:

• Planning permission to be decided for any power project in a matter of days and to go through unless they are very strong reasons against.
• Tax holidays or rebates for the entire industry so long as it isn't growing faster than the target rate.
• A state guarantee a minimum purchase price for up to the target amount of electricity which they then resell at whatever price the market will bear. This could be expensive if demand is seriously overestimated but it does greatly reduce the business risks of  investing in such expansion. (this idea is derived from a similar proposal for orbital launch cargoes and was used by me in a proposal to encourage the modular housebuilding industry.
• Strong programme of cutting unnecessary nuclear regulations.
• A constitutional right to demand the suspension of any regulation that imposes a heavier cost/safety ratio on one industry than comparable regulations in another. Again something previously advocated. With 5 people having died in Britain from windmills in the last 5 years and only 2, because of reactors, anywhere in the world, over the last 20, while nuclear produces orders of magnitude more power, it cannot honestly be argued that we have a level regulatory field.
• Government providing loans at the normal government borrowing rate.
• An X-Prize for the completion of the first new reactor. Smaller ones for 2nd & so on.
• Improving the national grid so that it can handle as much new power as wanted.
• X-Prize for the first commercial thorium reactor. This is based on what the Saltire prize is supposed to be doing for sea-turbines.
• Building links for an International Grid based on high voltage DC current (HVDC). Once such links are in place we have an export market ready to hand. One of the few things government appears to be able to do cost effectively is to improve transport infrastructure and since facilitating transport of electricity, while technically entirely different, follows the same economic arguments as those for facilitating the transport of lorries, this is something government can properly do.

And a number of X-Prize proposals to encourage other methods of power production not involving nuclear electricity. They may not be immediately competitive but good research always pays off, even in unexpected ways.

• Algal oil. The potential for producing oil grown from algae is virtually unlimited if done from mid ocean plants using nutrient heavy water from the ocean depths. Substantial prizes for early successes in developing this should work.
• The Saltire prize. I don't think it will work because i don't think ocean energy i has the necessary energy density to ever be competitive. But if the prize is properly run it will do no harm and might even prove me wrong. If it doesn't no prize is awarded. This is only part of the "renewable" industry that might prove worthwhile
• X-Prize for improved efficiency of solar power. Solar power units are dropping fast in price along with other electronic goods. At some stage, possibly quite soon, they may become cheaper than the electricity we now use. Of course our current prices are far above what they could be.
• X-Prizes for developments in the field of "conventional" fusion
• X-prizes for development in the field of low energy nuclear reactions (LENR) the more respectable & more accurate name for cold fusion.
• X-prizes for development of solar power satellites.
• Funding nuclear pulse launches - anything that can put 10,000 tons in orbit cheaply in one go can quickly fill the sky with solar power satellites .

  Over decades (or millenia if NASA and ESA do it) solar power satellites can produce more power than we can ever want. The radius of geosynchronous orbit is about 8 times the radius of the Earth. That means that the total energy available is 8^2 at least doubled to cover the light stopped by our atmosphere ie 120) times all the sunlight that reaches the planet's surface. SPS also have the advantage of being unaffected by weather and having few if any moving parts and can thus keep delivering power at around zero cost for at least millenia without repair.

   When energy is available in those quantities it will no longer be a limiting factor in growth. Perhaps something else will be. Perhaps wealth will cease to be an issue when we all have everything wealth can supply.

   And if demonstrating that, here and in part 1 and part 2 doesn't get me a Nobel in Economics nothing will ;-)