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There Goes our Energy

Britain is in very serious trouble. We have a clear long-term energy strategy, but that will be no consolation if our lights go out before we get there, says B&ES head of sustainability David Frise*…

There goes our energy

Britain is in very serious trouble. We have a clear long-term energy strategy, but that will be no consolation if our lights go out before we get there, says B&ES head of sustainability David Frise*.

Over the next four months 8% of our total national capacity is to be shut down as several coal and oil-fired power stations are taken off line. Over the next three years we will lose 25% of our power generation as ageing and polluting generators are switched off.

That would be fine if we had something to step into the breach, but the Government is fiddling while the last of the fossil fuel is burned. It has a clear vision of where it wants to be in 2020 and 2030 in terms of new types of low carbon generation – but what do we do in the meantime? Renewables currently account for less than 10% of our needs and even the head of our energy regulator Ofgem doesn’t have any real answers.

Alistair Buchanan gave this year’s CIBSE Annual Lecture at the Wellcome Foundation. The audience filtering out afterwards looked visibly shocked. Not surprising as Ofgem’s chief executive had just told them the UK could have no spare capacity at all in three years time – at best it will have 4%. The regulator’s already gloomy predictions about an energy gap have just been pulled forward by two years.

The answer to the question posed by his lecture title: “How secure is Great Britain’s electricity and gas supply over the next decade?” was “not very”.

We have already had one very close call. During the very cold winter of 2010/11, Centrica said it would run out of gas on February 19. By sheer chance, we then had the warmest January and February on record and got out of jail.

“The Government’s visionary energy policies have been sucked into the financial crash,” said Mr Buchanan, who has been in charge of Ofgem since 2003. “Just at the time we were expecting to lead the world in energy renewal, we had the carpet pulled from under our feet.”

He added that the country’s renewables development programme was moving “profoundly slowly” with offshore wind proving very expensive. Currently our electricity costs around £50 per MW to produce, but if we switch over to wind the cost rises to between £160 and £180. The country’s one major biomass development (Siemens/Drax) is on hold. He also pointed out that, although we are a gas import/export hub for Western Europe, we do not have anything like enough gas storage capacity for our own needs when traditional generators are gone.

“The UK’s power demand is falling, but our capacity is falling faster,” he said.

One consolation is that we are not alone. Germany might be relatively successful economically, but they are deeply in the energy mire. Mr Buchanan revealed that Bavaria was just one day from a total energy meltdown last winter following Chancellor Merkel’s decision to shut down the country’s nuclear capacity. France stands ready to divert some of its nuclear power to Germany if it gets into trouble again, but that might mean there is none left for us if we hit trouble too.

The start of the carbon floor tax next April will finish off the remaining coal-fired energy plants because they will be uneconomic to run at £16 per tonne of carbon emissions. Last year, according to Ofgem, coal provided 45% of the UK’s entire electricity capacity. The tax will also hasten the closure of many ageing gas-fired stations that have not been upgraded.

Four major UK power stations are closing next March. One new gas-fired power station is under construction, but will not be running until 2017 – at the earliest.

Meanwhile, how is our nuclear programme going? Hinkley B, which will be our first new nuclear power plant is at least two years behind schedule, according to Mr Buchanan. It is now expected to come onstream in 2021. Following recent loss of confidence from our overseas investors, the next tranch of nuclear power is a further five years behind that.

So, could we go back and reverse our decision to close down coal and gas by tackling their emissions problem? Apparently not. Mr Buchanan told his audience that there was “nothing happening” with clean coal technology and the Government would be in a tricky legal position with the European Union if it turned its back on the agreement to reduce pollution by reopening ‘unclean’ coal stations.

However, there is plenty of gas around, particularly with the emergence of the massive global reserves of shale gas. Again Ofgem has revised its predictions: Gas was expected to fall back from providing around 40% of our power needs to between 20 and 30% by 2020. In fact, according to Mr Buchanan it will need to be providing as much as 70% by the end of the decade – to keep our lights on.

However, even here there are some big clouds on our horizon. The EU is very nervous about relying on Russia and ‘The Stans’, particularly as the former has a track record in shutting the pipelines. In February this year, it arbitrarily reduced supplies to the West by 10%.

There is also huge competition for gas from all of our European partners and also from the Far East, where prices are much higher which makes it a much more attractive market for the leading exporter of shale gas – the US. Shale gas is $2.50 per therm (mmBTU) in the US; $9 in Europe; and $18 in Asia. The Americans are also determined to become energy independent so are retaining a lot of supplies for their own use. This is a policy supported by re-elected President Obama.

Shale gas is more expensive anyway so, if we go down that route, European bills will rise by between 20% and 50% assuming shale gas extractors get over their legislative hurdles because of the links between fracking and earthquakes.

Liquefied Natural Gas (LNG) from Australia was the great hope before shale, but transportation costs have rocketed recently and the industry has been hit by delays. Also, the main route for bringing it to Europe is via the Straits of Hormuz – right through the middle of the politically unstable Middle East. Japan and China are also lining up to take a huge slice out of LNG supplies.

Despite these problems, gas is the best we can do. It clearly represents our best hope of keeping the lights on while we count down to the age of renewables. It is going to be very expensive, but we it looks like we will just have to swallow the cost – or get really serious about the demand side.

Buildings are responsible for over 40% of total energy demand. There surely can be no more persuasive argument for a comprehensive programme of energy efficiency than this bleak energy supply picture.

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