UK energy policy 2000-2010: the lost decade
20 February 2013
Alistair Buchanan, the chief executive of UK energy regulator Ofgem, said on February 19 that with not enough generation capacity being built, the UK might have to rely on gas imports to keep the lights on from 2015 to 2018, just as global gas demand soars and prices rocket. “The horror,” he said, “is that this is at the time we are turning to gas power stations to get through this window”.
Ofgem has been warning of this for a number of years. The EU Large Combustion Plant Directive, which forces all coal or oil-fired power plants built before 1987 to install expensive emissions-reducing equipment or face closure by 2015, was signed by the last Labour government in 2001. Unfortunately, little new capacity was commissioned to replace these, or indeed any other, ageing power plants.
Under Labour, the UK saw a bewildering array of Energy Secretaries, some in place for only six months. Heady plans for a green revolution in energy supply were launched, and subsequently shelved.
Utilities often tried their hardest in difficult circumstances. E.On, for example, proposed a reduced carbon output coal-fired generating plant at its Kingsnorth site in 2008, ‘capture ready’ to allow the option of retrofitting with carbon capture and storage (CCS). But prevarication from the then Energy and Climate Change Secretary, Ed Miliband, in the face of protests by environmental groups, killed off the project.
Ofgem’s Buchanan said in 2009: “There could be a potential shortfall in the period 2013-18 … Life might be pretty cold.”
Ed Miliband responded: "The most important thing about Ofgem's report is that it emphasises the need to - as we are doing - get on with new nuclear power, new renewables, including wind - which is unpopular with some people - and clean coal. And we are doing all of those things.”
Except that they were not doing all of those things.
Before the fall of Gordon Brown’s Government in 2010 a tentative nuclear new-build policy was put in place, but, for the most part, the first ten years of the 21st century were a wasted decade in terms of renewing the country’s energy infrastructure.
With this unenviable inheritance, the current Government has made efforts to catch up, and the very complex Energy Bill currently before parliament is the result.
But the wind-power so favoured by the Coalition when it came to office is a less attractive investment for the big six energy companies because of the recent reduction in subsidies.
And ministers have so far failed to come up with a pricing policy that makes development of a new generation of nuclear power stations sufficiently attractive to investors. Centrica recently pulled out of the nuclear new-build venture led by EDF Energy, citing uncertainty over costs and timetables.
Against this backdrop, current Energy Secretary Ed Davey has little option but to make another ‘dash for gas’, despite the large forecast increases in the price of this energy source.
A likely result of this will be a big increase in households entering fuel poverty and energy-intensive companies relocating to countries with more stable and better-planned energy policies.
A heavy, but predictable, price for a decade of political posturing and wishful thinking.