I have written before about the threat of physical and cyber attacks on critical energy infrastructure (here) and so my eye was caught by an article highlighting the US Department of Homeland Security’s report into the power outages in Ukraine in December.

The background is that on 23 December 2015 three Ukrainian regional power distribution companies experienced power outages that affected 225,000 customers. A US team with representatives from the National Cybersecurity and Communications Integration Center (NCCIC), the Industrial Systems Cyber Emergency Response Team (ICS-CERT), the US Computer Emergency Readiness Team (US-CERT), Department of Energy, Federal Bureau of Investigation and the North American Electric Reliability Corporation travelled to Ukraine and investigated with the full co-operation of the Ukrainian authorities. Although the team were not able to independently review technical evidence, based on their interviews with those with first hand experience of the attacks, they concluded that the outages were caused by “synchronized and coordinated external cyber-attacks”.

Apparently the attack wiped some systems after the attack using KillDisk, a utility for wiping hard drives. The perpetrators also corrupted the firmware of devices at sub-stations and scheduled disconnects in Uninterruptible Power Supplies, actions designed to interfere with efforts to restore power. Each company also reported that they had been infected with BlackEnergy malware. Apparently there have also similar cyber attacks on a mining company and a train company in Ukraine.

The US Department of Homeland Security has reported that cyber attacks on pipelines and electric power infrastructure have been occurring at an “alarming rate”. In 2015 the former Director of the National Security Agency, General Keith Alexander, warned that the US and their allies were facing a growing cyber security threat and that energy infrastructure was the most likely target. The current NSA chief Michael Rogers has testified that China is capable of cyber-attacks that could cause ‘catastrophic failures’ of the water system or the electricity grid. In January Israel’s Electric Authority was hit by an “extreme cyber attack”. This paralyzed many computers but did not seem to affect power supplies.

The threat of cyber attacks on energy infrastructure is becoming more alarming. It seems to be another argument for aggressively driving demand down through energy efficiency and decentralized power, as long as the various bits of decentralized infrastructure are suitably protected against cyber attacks. A decentralized “smart” energy system sounds attractive but a highly connected system could be just as vulnerable although of course with suitable protection it may be easier to contain problems and any particular problem is likely to have smaller consequences. It also seems to be another argument against large, massively complex systems like nuclear power plants that contain millions of lines of software and potentially massive consequences of failure. We need to design new energy systems that are robust and resilient against cyber attack, as well as physical attack, and rapidly improve the cyber security of existing infrastructure.

As some of my readers know I have been spending some time in Saudi Arabia working on an energy productivity and energy efficiency financing project. This has allowed me to look at the various energy efficiency initiatives in the Gulf Co-operation Council countries. It may surprise some people but the GCC countries, including Saudi Arabia, are paying increasing attention to energy efficiency, driven by various factors including the need to reduce the rate of increase in domestic energy demand and national commitments to sustainability. Clearly there is a long way to go and many issues to face, including the low retail price of energy, but there are some very positive developments. One of the most interesting developments is the Etihad Super ESCO.

The Etihad Super ESCO was established as a 100% owned subsidiary of the Dubai Electricity and Water Authority (DEWA) in 2013. It is a commercial organization with the mission of creating a market for energy performance contracting in Dubai. It has the following targets to be achieved by 2030:

• To retrofit 30,000 buildings
• To reduce energy consumption by 1.7 TWh
• To reduce CO2 emissions by 1 million tonnes

It is targeting to catalyze USD 540 million of capital deployed by 2030. The business model of the Etihad Super ESCO is to develop projects, bundle projects, contract with Energy Service Companies to undertake the work on a guaranteed performance contract, and to source and arrange the capital. It targets government and other organisations with large property portfolios.

To date the Etihad Super ESCO has undertaken several projects including:

• A 16 m AED (USD 4.36 m) project for DEWA in seven buildings including 55 energy efficiency measures covering lighting, cooling and ventilation. The reduction in energy consumption is 31%, 5GWh per year with a saving of 2.6 m AED (USD 0.71 m). A significant improvement in comfort in the HQ building was also achieved. Contract length is six years. Project execution is by MAF Dalkia Middle East.
• A 21 m AED (USD 5.7 m) project to replace lighting in power stations with LED lighting. Reduction in energy consumption for lighting of 68% with savings of 6 m AED (USD 1.6 m) a year. The new lighting also produced better working conditions. Implementation was by Philips Lighting. This is part of an overall 37 m AED (USD 10 m) investment across the DEWA estate including power stations and offices.

It has also signed a number of MoUs that will lead to projects in due course including with the Dubai International Finance Centre, the Dubai Airport Free zone Authority and the Wasl Asset Management Group.

In November 2015 Etihad Super ESCO announced a significant first, the world’s first building retrofit project funded through a Shari’a compliant structure. The project host is the Jebel Ali Free Zone and this will be the largest retrofit to date in the Middle East, covering 157 buildings. It is projected to save 26 GWh of electricity a year and 200 m imperial gallons of water resulting in a 22m AED ($6 m) saving. Capital cost is 64 AED ($17.4 M). The funding is coming from the National Bonds Corporation.

The use of Shari’a compliant funding is interesting as the match between infrastructure investments, including in energy efficiency, and the requirements of Shari’a funding have been discussed before but this is the first application to building retrofit projects. The super ESCO seems to be addressing the various parts of the jigsaw of energy efficiency financing I have described before including:

• using a “captive” portfolio to achieve scale (in this case DEWA buildings and power stations and government buildings)
• creating demand at scale through targeting property owners with large portfolio owners rather than single buildings
• taking on development risk for large portfolios of projects
• building capacity amongst customers and suppliers
• arranging finance at scale

The fact that the super ESCO is part of DEWA is also interesting as it indicates a degree of integration between energy supply planning and energy efficiency.

Dubai, with its rapid growth over the last few decades and famous excesses is perhaps not the first place we think of when we think about energy efficiency but the Etihad Super ESCO seems to be a world class initiative. Other countries in the GCC and beyond, should study the DEWA model carefully.

Like many others I have long been troubled by the UK government’s decision to support new nuclear and particularly by the bizarre decision to guarantee the Hinkley C project by agreeing a strike price of £92.50/MWh and up to £17 billion in Treasury loan guarantees.  I have never been against nuclear power per se although I have serious questions about the choice of basic technology, (uranium cycle pressurized water reactors), and the risks of failure in very complex systems where the consequences of failure can be huge.   I do worry about the wisdom of choosing a reactor design where the two other examples are hugely over-budget and behind schedule.  I seriously worry about relying on Chinese funding and Chinese technology to build future reactors.

Having read a piece in the Sunday Times (“New threat to Hinkley nuclear plant cash”), I am now less worried because it looks less likely that the project will ever go ahead.  The “new” (not actually that new) information is that the EU’s approval of the Treasury’s guarantee is dependent on the French reactor at Flamanville having “completed the trial operation period” and other operational milestones by December 2020.  In September 2015 EDF announced that the Flamanville start-up was now scheduled for Q4 2018 – the latest in a long-line of delays (as well as budget increases).  Even if the French regulator does not force EDF to remove the steel containment vessel, which has been found to have “anomalies” and “lower than expected mechanical toughness values”, I have no confidence in their ability to meet this target given their inability to meet any of the previous ones.

The decision from the regulator on the pressure vessel may not even come until the end of 2016.  Even if EDF hit the Q4 2018 target (a big if) that only leaves 24 months to satisfy the EU’s conditions.  So, in my opinion, Hinkley will never get built and prove to be the biggest in a long line of UK energy policy mistakes (and no doubt the tax payer will end up picking up the bill in some way).  So, time to stop worrying about Hinkley and worry about how to really solve the problem of the short and medium-term electricity capacity shortage caused by years of inaction by successive governments.  The answer is not new nuclear and it is not subsidizing fleets of polluting diesel generators (which we are doing) – the demand side of the answer lies in properly valuing all the multiple benefits of efficiency and making it measurable and an investable asset class, as well as reforming the energy market to allow efficiency to properly compete with supply.

It would be impossible for me not to comment on the terribly sad death of David Bowie. As for many of my generation he was, and remains, a big part of my life and is by a very long way my favourite musician of all time.  His influence on music, art and culture cannot be under-estimated.  Perhaps it can only really be appreciated by those of us who were there and watched the 1972 performance of “Starman” on Top of the Pops on black and white TV, under the dis-approving parental gaze. The world changed at that moment.

In 1976 I was lucky enough to win tickets to see the world premier of his first film, “The Man Who Fell to Earth”.  Apart from the excitement of attending a star studded (minus Bowie) world premier I will never forget the first shot of him on the big screen in Leicester Square or the impact of the movie.  I still have the ticket and the movie poster, bought for the then not inconsiderable sum of 50p.

I first saw him live on the “white light” Isolar II tour in June 1978.  A friend and I managed to get to the front row centre stage, no more than a couple of metres away from Bowie.  Subsequent concerts in stadia, The Glass Spiders tour in June 1987 at Wembley, and the Sound+Vision tour in August 1990, were great but could never beat being in the front row of the New Bingley Hall County Showground in Stafford.

So what was/is the appeal of Bowie?  For those who know of my interest in space it will not be a surprise that the space and science-fiction nature of “Ziggy Stardust & the Spiders from Mars” was the original draw for me.  It soon went far beyond that as his lyrics always seemed to have great meaning about life, love and the universe.  As the cliché goes he always innovated and it seems hard to believe that fans, me included, who loved the sci-fi rock of “Ziggy Stardust” could also like what Bowie called the plastic soul of “Young Americans”, the indefinable “Station to Station”, the techno “Low”, and the dance music of “Let’s Dance”.  There was always that period of adjustment to the new style when a new album came out but with the exception of a few albums they all came good in the end.  Even the low points had their moments of brilliance.

As well as the changes in style he was always at the cutting edge of musical experimentation and technology, and then later video and the internet.  In a 2000 interview with Jeremy Paxman he talked about the power of the internet to disintermediate and break down the barrier between the artist and the consumer.  It is hard to remember the primitive nature of the internet in 2000 but Paxman’s reaction and look of skepticism expresses it well.  Now of course, 16 years later, we take disintermediation and “prosuming” as the norm, and the kind of music and video technology that used to cost a fortune is now available in apps that cost pennies or are even free – meaning anyone can create professional quality music, video and art.

Without a doubt David Bowie was a creative genius, but perhaps more importantly one who was able to channel that creativity into action without worrying about the barriers or what people will think.  We are not all musical, (I know I am not) but we are all more creative than we think, but we allow lots of barriers to get in the way of creating so Bowie’s life should inspire us to always act on the creative drive.  His music, film, art and effect on culture will live on forever.  As he said in “Quicksand”:

“I’m not a prophet or a stone age man

Just a mortal with the potential of a superman.”

The end of the year always brings the pressure of whether or not to write something seasonal.  This year I thought I would do something different by formulating my Laws of Energy Efficiency.  Sir Isaac Newton and the Arthur C. Clarke stopped at three Laws so I apologize for coming up with 12.  They echo some of the themes I have covered in the blog over the last three years.

1. Energy efficiency is boring and seriously uncool to most people most of the time.

2. Never talk about energy efficiency without mentioning the non-energy benefits which can be seriously cool.

3. Talk about energy productivity and not energy efficiency.

4. If you are supposed to be an energy journalist never headline a story about renewables with something about “energy efficiency”.

5. If you put ten people from ten ESCOs in a room there will be 15 different definitions of what an ESCO is.

6. If you have five energy auditors survey any building you will end up with reports in five different formats with savings calculated five different ways, even if they are all recommending the same measures.

7. Energy Performance Contracts and ESCOs are not the magic bullet some enthusiasts and failed investment bankers looking for the next big thing think they are.

8. Never call energy efficiency a “no brainer” or “low hanging fruit”.

9. An exciting energy or energy efficiency discovery in a lab somewhere is not the same as a viable technology, which is not the same as a commercial product, which is not the same as a successful product that has meaningful impact in the world.

10. Any politician who finishes an energy speech by saying “and don’t forget energy efficiency” will promptly forget it the next time he or she meets an energy supply lobbyist.

11. Energy forecasting is easy, getting it right is difficult. The corollary to this law is that prices can go down as well as up – never forget that in 1986 oil went below $10/barrel oil only months after oil industry bosses said “oil will never sell for less than $20/barrel again” and “our doomsday forecast is $20-25 a barrel”.

12. When a distinguished but elderly economist says “what about the Jevons Paradox”, ask him or her if they think improving productivity is a bad idea.

Thanks for reading onlyelevenpercent.com.

Have a Happy Christmas and a healthy, prosperous and energy productive 2016.