Welcome to the Government’s New Value Range?
Ahead of next week’s much delayed Energy Bill comes an announcement from the DECC marking the Government’s overdue agreement on the direction of energy policy.
23rd November 2012 | Peter Rolton: Chairman, Rolton Group
Ed Davey has called the result a ‘durable agreement… against which companies can invest and support jobs and our economic recovery;’ it certainly needs to be, given the potential size of the oncoming energy crisis. As one fifth of national generating capacity moves towards closure within the decade, a £110 billion private sector investment is being sought to reverse the fortunes of UK energy. This vast sum is larger than the cost of running the NHS for an entire year, succinctly demonstrating the magnitude of the problem.
Today’s press release contains some good news, detailing for example the inclusion of long term Contracts for Difference. This could signal good news for investors, particularly if it allows for the carbon benefit to be directed locally rather than be funnelled back to the grid. The opportunity exists for decentralised generation on a district scale, which would go towards shifting power away from the big power companies and changing public perception of renewable energy for the better.
Less encouraging is the lack of any decision on decarbonisation, which has proved a bitter pill for green organisations to swallow. It has now been definitively placed in the ‘too difficult to deal with’ box, and will remain shelved until after the next election, once more making a political animal out of a far more pressing issue. The inclusion in secondary legislation of a ‘range’ rather than ‘target’ has been put in place to soften the blow, and though many remain dissatisfied, the issue hasn’t been quite so marginalised as to be swept under the rug completely.
Osborne hasn’t surprised anyone by maintaining his view of cost as king, and the chief concern going forward is that enduring quality could still give way to yet more quick fixes chosen for their comparatively low price tag. The Chancellor continues to rewrite his own definition of ‘eco’ as a contraction of economy rather than ecology, and already today there have been headlines exclaiming a ‘hike’ in consumer bills. It is true that an increase will follow as a result of investment in sustainable energy sources, but these dissenting parties are framing the argument in a hugely misleading way. Really, the UK is faced with two options:
A) Bills will go up, but the lights will stay on
B) Bills will go up, and the lights will go out
The idea that remaining committed to fossil fuels, or option B, is the more financially viable of the two is a fallacy; their wholesale price is increasingly unstable, and the longer we rely so fully on them, the longer we keep ourselves hostage to the global energy market and the politics which come with it. In contrast, the more self-sufficient our energy stock becomes, the cheaper it will be in the future as technologies continue to advance and the end-user regains some control. Support needs to be rallied for the renewable industry, as it surely holds the safest key to reliable energy both in terms of
generation and cost control.
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