What should be the priority of the UK’s energy supply strategy?


Four months ago, the UK’s energy policy was as clear as an open road.

After hosting COP26 in Glasgow, decarbonisation pledges piled up alongside pledges to expand renewables and cut fossil fuels.

COP seems a long time ago. After ongoing supply challenges, back-to-back utility outages, and endless permutations surrounding energy policy following Russia’s invasion of Ukraine, the path now looks like a complex jungle.

That’s why the UK’s new energy supply strategy, due out this week, will be a fascinating read. Remember that whatever is agreed must not only ensure short to medium term energy security, but also dovetail with the overriding need to reach net zero by 2050.

In many ways the government cannot win, with so many competing cases for oil, gas, coal and renewables. Is it safe to expect a wide range of metrics? Lead times will be as crucial as volumes and capacities.

The UK is working closely with the US, EU and other partners to end its reliance on Russian hydrocarbons in response to Russian aggression in Ukraine. Russian oil imports account for 44% of Russian exports and 17% of federal government tax revenue.

A solution to the energy supply strategy is close to home. Business Secretary Kwasi Kwarteng said the UK needed more investment in North Sea oil and gas production during the transition to cheaper and cleaner energy. But could this be reconciled with the positioning of the COP, and the same for any extension or recommissioning of a coal mine?

Then there is the political and economic impact on consumers already reeling from higher bills.

Steve Crolius, president of Carbon Neutral Consulting and former climate adviser to the Clinton Foundation, said moves by countries around the world to reduce or eliminate their purchases of Russian oil and gas would cause economic hardship for many consumers.

“But it will add strong and immediate motivation to accelerate the transition to sustainable energy systems,” he says. “The faster we can move in this direction, the better for the climate and the worse for autocratic regimes supported by the export of fossil fuel feedstocks.

The UK has the most liquid gas market and one of the largest in Europe, according to its government, with UK gas supply infrastructure capable of supplying more than double the amount of gas required daily (700 million m3/day) compared to average daily demand. in winter 2012/3 (at 290mcm/day).

“We are secure now, and the UK gas system is well placed to continue to be secure and robust across a range of supply and demand outcomes over the next two decades,” the government said in a 2017 document. .

Externally, there does not appear to be a shortage of momentum in renewables in the UK – last month Vattenfall’s 1.8GW Norfolk Vanguard offshore wind farm project gained consent – ​​although in the current crisis, it is debatable whether he should have gone faster and earlier.

In the last three months of 2021, wind and solar power was “so cheap” that it actually paid consumers back nearly £160m, according to RenewableUK. Unlike volatile gas, they generate at an agreed price (called the strike price), and when the wholesale price exceeds the strike price, producers pay the difference back to the body the government has set up to manage contracts for difference (CfD). ), the Low Carbon Contracts Company.

Officially, the UK government plans up to 16 GW of new nuclear reactors from 2023. But whether this is due to cost concerns or the risks associated with operating aging plants, or both, is unclear. not what the future holds.

This time last year, Horizon Nuclear Power‘s projects at Wylfa Newydd and Oldbury on Severn in South Gloucestershire were abandoned (click here).

Hitachi withdrew from funding the £16billion nuclear development on Anglesey and while the Horizon Nuclear Power investment vehicle remained in operation as Wylfa’s planning process continued and they attempted to find new investors, the curtain has fallen.

Now speculation is mounting that Sizewell B could get a 20-year extension. Perhaps one solution lies in more nimble, modular concepts such as Rolls-Royce’s plans for 16 mini-reactor sites, but these can take a decade to materialize.

As with most energy and net zero talk, it’s been 10 years since we’ve had it.


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