Last week was clean energy week at the FT. Well, a three-day week actually, but a conference covered the whole energy industry. Look carefully, and you will have spotted a session on nuclear generation, which was at least more than in the paper’s double-page spread ahead of the event. That managed but a single mention of the n-word.

Nobody outside the industry now thinks the future of electricity generation is nuclear fission. The cost of building the plants to comply with safety and anti-terrorism standards is rising all the time, fears of a runaway price for oil and gas now look silly, while advances in wind and solar technology are destroying those projections of ever-dearer energy.

On the same day as the Big Read on energy, the FT reported the appointment of nuclear critic Nicolas Hulot as France’s new energy minister, sending the shares in EDF down by 7 per cent. EDF, of course, is the contractor for that white elephant in the nuclear room, Hinkley Point. If this unproven design ever gets built and produces electricity, the UK consumer will be obliged to pay over twice the current market price for the output.

Hinkley Point was conceived when “peak oil” meant peak supply, and conventional wisdom said that we would start to run out. The term now means the opposite; hydrocarbons are more abundant than we ever dreamed, and peak demand for oil may be less than a decade away.

At the same time, the electricity supply market is changing. The assumption that the grid must be capable of supplying whatever is wanted looks increasingly wasteful. Rather than manage supply, technology allows management of demand. A smart meter would run the dishwasher or charge your electric car when it detected that the cost of juice was low. Unfortunately today’s so-called smart meters, now being rolled out at a hidden cost to consumers of £11bn, are too stupid to do this, and may be vulnerable to hacking.

The UK’s energy market is in an unholy mess, with attention distracted by the vacuous debate about switching electricity suppliers. The real costs lie with the “green initiatives” at the other end of the wires. Scrapping Hinkley Point would not solve all of them, but it would be a start. Perhaps best to wait until after June 8 for another U-turn from Mrs May, though.

We’ll pay you to go away

Aviva shares are close to a nine-year high, so obviously it’s just the right moment to embark on a share buyback programme. With the sort of timing that might contribute to the miserable returns in its internal investment funds, the company is to spend £300m buying in its own stock. This will more than offset the dilution from the last lot of executive awards which vested in March, and which produced such modest gains for the incentivised executives.

They must hope that a new lot of incentives do rather better. These are altogether beefier, with nearly 3.5m shares available at 530p. One day, maybe, CEO Mark Wilson and his team will restore Aviva to its former glory. With him at the helm, Aviva shares have more than doubled, but at 533p are still only half the price they were at the turn of the century.

Vultures can be Co-operative too

The vultures are nibbling at the crumbling carcase of the Co-operative Bank 11 per cent subordinated notes, due 2023. It’s not four years since these bonds were issued at £100 as part of the “liability management exercise”, or rescue, and so high were the hopes then that they went to a useful premium.

Now the bank needs rescuing again, and the bonds have collapsed. With the bank’s equity essentially worthless, the bondholders are next in line for pain, and the price fell to £27, at which point the vultures read the 700-page prospectus, got interested and pushed it back up to £37. These bonds are not so much an investment as a high-risk gamble that the next liability management exercise will be the last, and that the bondholders will end up with shares in a profitable bank. Vultures have their place, after all.

 

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