The UK energy policy debate seems to reaching some sort of political break point. The Labour government is continuing to push net zero, but the right of centre view is that it, and renewables, are undermining the UK economy by pushing up energy costs. And, instead, coal, gas & nuclear are favoured, as in a new report from Tory-leaning think tank Onward, backed by shadow energy secretary Claire Coutinho. But there were bitter green responses. And the Onward report was challenged by Carbon Brief- gas won’t be cheap. Neither will new nuclear.
However, Labour also has another, slightly separate, problem. It is under pressure from industry and some unions to support more gas drilling, even though few see new drilling as very helpful economically, and some say it could be disastrous in climate terms. Or would it? Some say not, if carbon capture and storage (CCS) was backed as a compensatory measures. But CCS is still unproven at scale and likely to be very expensive, as George Monbiot has argued. Maybe not a good bet then…
Under current plans, assuming the net zero policy survives, there will be a need for some gas generation to back up variable renewables, but not that much, assuming energy storage expands and flexible smart grid systems are developed. While some talk of a pragmatic slow down (which may just be code for stopping renewables and net zero), it seems we are nearing an energy supply technology-choice crunch point. Expand renewables and storage or back off them and go for gas with CCS and also nuclear. Some mixes may be possible, e.g. if you are so inclined, and assuming they acceptable locally, add in a few SMRs to see if they work. But that’s risky and will take time.
By contrast, we know that renewables work - they now supply over 50% of UK power, at low direct costs, and they can be accelerated to supply much more, solar and on and offshore wind especially, but also others like tidal power. While storage technology, including green gas and heat storage, is advancing rapidly, with long duration storage, including green hydrogen, being especially important for grid balancing. Far better to store green energy than fossil fuel derived carbon dioxide….
Some big urgent energy policy issues and choices, with the boom in the take up of Artificial Intelligence (AI), also being a factor, since it and data centres generally, will push up power demand. Labour had earlier seen AI being powered by nuclear SMRs at some point, although that may be some way off, with power from gas plants being more likely for now, although, arguably, green energy technology, backed by storage, would be better - it is cheaper. Indeed, some say that the UK could pioneer sustainable AI powered by renewables.
Is that really likely? Would it be the best use of renewables? Plenty of policy issues there- especially given that the demand to expand AI use fast seems unstoppable, with there being something of a global race underway, with, so far, the USA using twice as much gas to power AI than China - and Trump's weakened environmental policies making its impact worse in the USA. China does have a huge renewable resource and, unlike the USA, it is expanding it fast, but who knows what the net impact of AI energy demand will be - it has been predicted that China’s rapidly expanding data centres will use more power than South Korea by 2030.
Back in the UK, Labour has resisted green calls for an AI/data centre halt or slow down. But there are worrying signs that gas will be the AI/data centre energy source of choice, with significant emission implications. Some say there could be compensations if the waste heat produced can be fed to local communities. But shouldn’t we all be pushing for renewables instead - with some sort of planning mandate? Sadly, Australia seems to be having problems enforcing something like this, but there the coal lobby is still powerful. Could the UK, with coal now abandoned, do better?
Labour has already made some moves to cut power costs - under Ed Milibands plan, old ‘legacy’ green power generators will be encouraged to move to competitive pricing via wholesale contracts for difference- 30% are on older higher subsidy schemes like the Renewables Obligation. If they don’t move, from next year on, they will have to pay more, via the existing Energy Generation Levy- the ‘windfall tax’. That is being moved from 45% to 55% at peak gas price times, the funds raised being used to cut household power bills. But although that should help a bit, there is pressure to revamp the whole CfD support system and, more radically, to break the link between gas prices and power prices- arguably the main reason why retail power prices are high .
It does all seem to be urgent, and it may be that PM Andy Burnham will make changes soon- for example as part of the autumn budget. However he may prefer to wait until the results of the next round of the Contacts of Difference (CfD) emerge, although that is not until later this year - November at the earliest. But it could change things in cost and capacity terms. Wind, at over 30% is leading in output terms, though solar, so far only at around 6%, may soon do better, with solar farms getting cheaper: the administrative strike price cap for large scale PV in the forthcoming 8th round of the CfD has been set at £75/MWh, compared to £92/MWh for on shore wind and £113 for offshore wind. But clearly there will also be a lot of new wind power projects- something the Tory shadow energy secretary was not happy about. Would she be any happier with improvements on the energy use side, with some calling for renewed efforts to get heat pumps widely adopted? Probably not. Like Reform, the Tories nowadays seem to be backing off most things green!
There are still plenty of local objections to things like solar farms, including some in the North Bucks area where I live. Some do seem to be invasively large. But it’s not all bad news re solar farms – although it usually costs more, roof tops arguably are best in land use terms, but agri-solar does has real potential. Clearly, with on land wind also now back in the mix, and offshore wind pushing ahead, there will be cost and location battles ahead. But with the results of climate change arguably being plain to see globally, and also now in the UK, the case for change will grow. So, a political crunch on UK energy policy seems likely to be coming soon…
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