Dash for Gas: Part II?
An impending overhaul of the UK power sector, necessary as old nuclear infrastructure is retired, could be the cause of great disruption or great opportunity.
23rd August 2012 | Peter Rolton: Chairman, Rolton Group
As it stands, there is uncertainty as to what will replace current operations when many of the remaining plants are closed, and a gap in energy provision may occur without swift action. Whilst this may be concerning, it does provide a chance for the widespread implementation of low carbon and renewable alternatives to replace traditional power sources.
The country is slowly advancing its use of renewables, with an installed capacity of 14% predicted by the end of this year, dwarfing the 5% seen in 2006. There is still a long way to go, however, as both investment and governmental policy largely favour the more conventional sectors of non-renewable energy.
Chancellor George Osborne recently announced tax breaks of at least £500 million for gas drilling companies, branding them as ‘remarkable.’ By offering these and other benefits, the Treasury hopes to ‘make the UK an even more attractive place for gas investors,’ which appears to run in opposition to Deputy PM Nick Clegg’s claim earlier this month that ‘this Coalition Government is unreservedly committed to helping our low carbon sector thrive – no ifs; no buts.’
Osborne has vocally propounded his desire to make the UK a ‘gas hub,’ showing the Government to be more than reticent about any change to traditional sources of power. The reason for this may lie in the relative novelty of low carbon and renewable technologies, and is also likely to have a lot to do with their investment model, which requires high levels of start-up capital. When faced with an economic climate such as that which exists in the UK, investing on such a large scale in the comparatively young green industry is an unquestionably difficult decision to take.
However, just as it was a quick fix from Michael Heseltine in 1980 to rely on gas rather than build new nuclear stations, which were very unpopular at the time in the wake of the Chernobyl disaster, it is a quick fix now to make another dash for gas, and this strategy has no staying power. Gas must be seen for what it is: a short-term bandage which temporarily disguises the problem rather than solves it. It cannot be offered as an ‘alternative’ to renewables, not simply because renewables are ethically better, but because, regardless of individual opinion on the topic, it is objectively running out. The ‘easy’ option must start making way for the ‘right’ ones if the country is to develop a sustainable energy plan.
New technology does, to an extent, equal expensive technology, and this poses another obstacle for the green sector: higher costs lead to higher prices for the end-user and this is, of course, extremely undesirable. However, there are subsidies in operation to encourage the use of clean energy, and renewables will cost considerably less than fossil fuels in the future as users see a return from their initial investments and non-renewable sources become scarce.
Besides intimidating start-up costs and the funding barrier facing renewable technologies (see our article, ‘Green Investment Bank: Boom or Bust?’ for a further illustration of this problem), green projects also struggle with an infrastructure which currently lacks the capacity to store any large amount of energy captured, a fact which has seen some companies paid to switch their wind turbines off during what would otherwise be peak energy harvesting times.
Equally problematic for the energy sector as a whole is the fact that only a third of the calorific content of fuel burned to make electricity is successfully converted, with the rest becoming heat as a by-product. Without the infrastructure in place to utilise this energy, such as the district heating used widely in Scandinavia, the UK wastes a huge majority of energy extracted from fossil and bio fuels, which is as economically flawed as it is in terms of carbon emissions.
With this in mind, it is clear that investment in renewable projects must be made in conjunction with improvements to grid infrastructure, as this will not only bolster the UK’s future power sources with certainty and in large quantities, but will also allow for the incorporation of heat utilisation and better connectivity, ensuring that energy is used in the most efficient of ways. Only then will the UK be in a position to progress with a reinforced clean energy sector that is as dependable as traditional, non-renewable power.
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