Britain Business and Technology Short Read

The UK is facing an energy crisis

North Sea oil supplies are running out. Peak oil extraction has been surpassed. The government’s policy of heavily subsidising renewable energy has cost the taxpayer billions and pushed household electricity bills up by £17 a year on average. The pressure to meet targets for carbon emission reductions has left the government forcing the closure of all coal power stations by 2025. Without a plausible reaction to our narrowing energy gap, the UK’s energy system will be left in a shambolic state.

Current energy capacity means that in peak times, the national grid has to rely on France to divert energy across the channel to plug our supply deficit. In the winter of 2011-12 spare electricity margin was roughly 17%, but closures of non-renewable power stations and the unreliability of the renewable successors has reduced this margin to 1%. The Department for Business, Energy and Industrial Strategy contests this and states that taking into account emergency measures, the surplus margin is actually 6.6%.

While the UK does have Hydroelectric plants such as Dinorwig on standby to provide energy during peaks, emergency contingency measures are in place to match supply to short term demand. These measures come in the form of vast fields of privately owned diesel generators, which can increase supply, and industrial firms agreeing to shut down their power usage, which decrease demand. This ‘Demand-side Balancing Reserve’ may be a quick fix and necessary to prevent power outages, but ends up costing the national grid, and therefore bill payers, huge amounts due to the scarcity power of spare electricity and large firms switching themselves off. As more coal and nuclear power stations are decommissioned, the threat of outages will only increase and these emergency measures will certainly not be sustainable.

The government knows the looming risk and plans to plug the ominous gap with more renewable energy, especially nuclear initiatives such as Hinkley Point C. Whilst nuclear energy can provide efficient and reliable form of energy, Hinkley will only hike electricity prices further due to the £92.50 minimum price per megawatt hour promised by the government for 35 years. This will further the squeeze on households, pushing electricity bills up by £10 per year. While Hinkley Point C will provide the electricity supply to power 5.8 million homes, it will only come online in 2030 relying on no building delays. Moreover, Hinkley’s functionality is being questioned with critics labelling the technology as dated, expensive and unproven. Moreover, the £6 billion investment by a Chinese State owned firm has raised questions over whether Hinkley Point C’s construction is an undermining of national security, with China in effect controlling 7% our energy supply. Phillip Hammond suggested Britain would need to invest an ‘eye-wateringly large sum of money’ to prevent blackouts, estimated that £100 billion would need to be invested in the next 20 years. Moreover, an extra £100 billion could be needed for Britain to meet sustainability targets, not just energy demands.

The current subsidy reliant energy market in the UK will likely push up annual household electricity bills by £30 more by 2020. While renewable energy will help the UK to meet transnational emissions targets, its unreliability requires the government to ensure a diversification of energy producing assets. Nuclear energy is the obvious solution but Hinkley alone won’t suffice. A far more efficient plan must be developed by the government to redevelop sufficient spare capacity if it wants to, as it should, maintain its stance on decarbonisation through decommissioning old coal power stations and shutting down out-dated nuclear power stations.

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