Britain Business and Technology Short Read

To burn or not to burn? Fuelling the future

The European Union has set the target for the energy consumption of all it’s member states to be 20% renewable by 2020. While currently Brexit is being negotiated, in 2015, the UK was given its own special target of 15% because of it’s its “low starting point”. The UK Great Britain has consistently lagged behind its European counterparts, ranking 24th out of 28 neighbouring states in February 2017, in terms of the total proportion of renewable energy generated. To put this into context, only 8.2% of UK’s energy is produced from renewable sources compared to Sweden with 54%.

Breakdown of Renewable UK energy Generation

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Other than the masochistic joy, why are we bringing this up? The Government’s “Cost-of-Energy Review” is underway. The review is intended to understand how power prices can be reduced while honouring the UK’s Carbon promise. Curiously, the man heading the review is fiercely skeptical of today’s renewable energy efforts. The government’s pick, Dieter Helm, is an economist at the University of Oxford and an experienced critic of contemporary renewable energies.

While Helm recognises the importance of renewable alternatives in his book the Carbon Crunch (2012) and more recently, Burn Out: The Endgame for Fossil Fuels – on the slow demise of oil companies in the face of energy trend – he is a strong critic of wind and solar power. Helm’s assessment of today’s solar and wind farms is one of regretful criticism as he labels them overly “expensive” and as such, ironically, unsustainable. Helm has stated: “Current renewables like wind turbines, rooftop solar and biomass stand no serious chance of making much difference to decarbonisation. It’s simply a matter of scale”.

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Helm believes that “the primary focus on the climate change side” should be geared towards “new and emerging technologies”. He would like to see future investment target the next generation of renewable technologies. He backs regular improvements such as more efficient solar panels but also new innovations, such as smart grids and battery storage, both of which are to increase the efficiency of electricity produced, bringing down associated costs.

Helm believes the lack of focus on newer technology is the root of uncertainty around our ability to reach our 2020 target. Predictions, based on 2010-2014 figures on growth of the “green” energy sector, see us falling short of the 15% target. However, more recent figures suggest our insouciance towards the matter to be passing. Last year, 86% of new energy capacity added to the UK was made up of wind, solar, biomass and hydro energies, outdoing the previous 79% record of 2014. While this represents a positive trend in the desired direction, we must look at its sustainability in the energy market.

A 2015 report stated that it costs UK households £214 a year to support renewable energy. While the majority of these costs stem from the aforementioned expansion of the renewable grid, subtler costs arise from the integration of growing amounts of renewable energy into the system. It is estimated

 by Energy Research Centre (UKERC) that current domestic costs measure around £10 per megawatt hour. These increased costs in public consumption are off-putting but supporters hope to see prices continue to drastically fall over the next decade.

The essence of these costs is systemic because of the inflexibility of the UK National Grid. To accommodate for the incoming renewables, power grids need strengthening in lieu of greater electrical traffic. Furthermore, a backup infrastructure needs to be provided for intermittent renewables. Investment in a more flexible grid would help secure electricity supplies and keep down integration costs. Predictions of a more flexible system promise savings of up to £8bn per year from 2030.

Jon Ferris, Head of Energy Markets for consultancy Utilitywise, insists that, although “inflexible renewables and nuclear [power] may reduce the ability of [electricity] generation to match fluctuations in demand,” this will “create market conditions in which demand response, electricity storage and interconnection can be rewarded for providing flexibility.”

Despite Helm’s objections concerning current-age renewables, Gordon Edge, Director of Policy for Renewable UK, insists that costs are overexerted and that onshore wind and solar power are becoming increasingly competitive with gas. He has gone so far as to state that they are on trend by 2025 to be the cheapest sources of electricity generation (in price per MWh).

This all comes at a perhaps naïve assumption that investment in this sector will continue and even pick up pace. Concerns are widespread around the lack of political engagement. Soon to exit the EU, we alone are responsible for our targets but are still part of a wider international social and economic community. As for the EU, many critics express concerns over apparent lack of foresight. Giles Dickson, Chief Executive of WindEurope, is one such critic. He has stated that while current installation numbers are “OK”, we “today see less political and policy ambition for renewables than we did 5 or even 3 years ago.”

For just over two decades, renewable energies have contributed to the National Grid. The Autumn governmental cost report will play an important role in the UK government’s future political engagement. Longer term, only 7 of the EU’s 28 members have clear policies for wind power in place for any time period beyond 2020.

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