Derailed: The UK's Energy Supply?
The Chief Executive of Ofgem, Alistair Buchanan, last week delivered a severe warning to the nation about the likelihood of energy price hikes in the next few years as the UK feels the repercussions of growing needs and depleting resources.
28th February 2013 | Peter Rolton: Chairman, Rolton Group
He also gave rise to many concerns about blackouts within the next three years, using a base case which considered the unlikely event of ‘no net imports from continental Europe’ along with the construction of no new interconnectors, leaving the nation with a shortage of power. Was there an ulterior motive to be found in this sudden outcry, given that it is based on a report which was released to minimal notice in October last year?
Buchanan’s message was clear: things will get tight in the coming years without swift action, and there is certainly a need for proactive decision making on issues surrounding the current energy mix. He explains it using a fairground analogy: ‘If you can imagine a ride on a roller-coaster at a fairground, then this winter, we are at the top of the circuit and we head downhill – fast. Within three years, we will see the reserve margin of generation fall from about 14pc to less than 5pc. That is uncomfortably tight.’ On this point he is decisive and convincing, reinforcing the thought-provoking speech he gave on the same topic at the CIBSE Annual Lecture in November 2012. This presentation didn’t make many waves in the wider media, however, and by referring instead to the ‘worst case scenario’ some months later, in which extra capacity drops to 0% by 2015 and blackouts start to wreak havoc across the country, he gave the papers something more exciting to shout about.
Perhaps there is a new tactic in town, one which responds to the widespread ambivalence towards integrating low-carbon technologies into the traditional energy equation in order to ensure supply and cost security. It is not surprising that high-profile figures in the industry are sometimes accused of scaremongering; the messages so forcefully promoted are frightening and at times overzealous. Buchanan, however, has no political agenda. He just recognises that highlighting the most worrying scenarios, even if they are highly improbable, is one of very few methods to prove capable of capturing the nation’s attention.
The danger, of course, is that when Ofgem’s base line prediction of 0% capacity is averted, either due to well-considered, integrated solutions or a dash for expensive imports, the important message will be lost or distorted by sustainability sceptics. What needs to be taken from the report and Buchanan's subsequent media presence is that a group of experts, one with no political axe to grind, are very concerned about the direction of the British energy industry, and are calling for remedial action. The combination of an oncoming capacity shortage, the poisoned chalice of private sector nuclear power (see our previous blog on this topic, highlighted below), and the moving goalposts of planning and legislation for energy generation projects, doesn’t create an optimistic picture for the next few years of power supply. The crux of the issue remains the same, whatever the approach: we are headed for difficult times and are in desperate need of clear direction from those entrusted to give it.
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