18 Nov

It needn’t have been the case, but what with all the recent faffing around concerning energy policy, it looks like it might be. National Grid (NG.) voiced concern in early November about this, suggesting that by early 2016 the UK might be facing an energy shortage because of an ageing family of under-invested-in coal fired power plants. The result? An electricity version of a hosepipe ban. So how do we excavate ourselves from this particular mineshaft?

Rather than ranting about the fact that Canary Wharf and most of her peers are lit up like Christmas trees 24 hours a day, 7 days a week while we the public are made to feel like supervillains hell bent on world destruction because we leave our TVs on standby, I’ll move on to what my job is, which is to try and find something a) opportune and b) profitable about the current and impending crisis.

The government has been intenton building – sorry, getting French and Chinese companies to build – very expensive and slow to go up nuclear power stations which, let’s not forget, are essentially just really posh steam engines. We’re nowhere near nuclear fusion right now. I don’t mind much about toxic nuclear waste, but going nuclear seems like a weird thing to do when you can just burn really cheap and abundant gas instead, which doesn’t produce toxic nuclear waste…

Building power stations is great – we need to. Nuclear is not going to solve the immediate problem:  the very real prospect that we may all soon be persecuted….. sorry, prosecuted for leaving our televisions on standby or, heaven forbid, a ban on using toasters. We need to replace coal with gas, not nuclear.

The UK’s energy secretary Amber Rudd is seeing a smidgeon of sense in this argument. As a species, we produce a lot of waste. We defecate, there are islands in the Pacific made entirely from plastic rubbish, even renewable energy emanates from hardware that has consumed energy and produced pollutants in its manufacture – often meaning it would take years to offset that through clean energy production. Let’s stop getting unduly hung up on emissions then.

With a 10 year plan announced on 18 November for the replacement of coal power plants with gas ones, now might be a good time to have a look at massively discounted UK Index energy stocks like Royal Dutch Shell (RDSB), its future prey BG Group (BG.) and British Gas’s owner Centrica (CNA), which also operates in energy generation.

One good thing about commodity prices is that they’re cheap. The only potential bad thing about that is that everyone keeps moaning about it. But wait.  That may not actually be a bad thing either – undue worry in the markets may actually have uncovered some great opportunities!

 Augustin Eden, Research Analyst