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UK Government Turns Attention From Renewables To Gas

UK Energy Secretary Amber Rudd announced on Wednesday the country’s long awaited energy policy “reset,” and it looks as if gas-fired energy has come out on top.

The UK’s renewable energy industry has been waiting for Amber Rudd’s speech for some time now, with rumors of exactly what the energy policy “reset” would look like and what impact it would have on the various renewable energy technologies currently in play around the country. Reports over the weekend from the Sunday Telegraph and Sunday Times suggested that “keeping the lights on” will be the first priority of the new energy policy, blaming green subsidies enacted by her predecessors as the primary cause for the predicament.

Prioritizing Energy Security

“Energy security has to be the number one priority,” Ms Rudd said in her speech. “But no responsible government should take a risk on climate change either. Because it’s one of the greatest long-term threats to our economic security.”

From the speech, four primary decisions were revealed:

  • Consultation on ending unabated coal-fired power stations by 2025
  • New gas-fired power stations a priority
  • Commitment to offshore wind support completes commitment to secure, low-carbon, affordable electricity supplies
  • Move towards a smarter energy system

Overcoming Legacy Issues

The UK’s energy system is beset by a number of issues, not least its ugly reliance upon government help and coal.

“We now have an electricity system where no form of power generation, not even gas-fired power stations, can be built without government intervention. And a legacy of ageing, often unreliable plant,” said Ms Rudd. “Perversely, even with the huge growth in renewables, our dependence on coal – the dirtiest fossil fuel – hasn’t been reduced. Indeed a higher proportion of our electricity came from coal in 2014 than in 1999.

“So despite intervention we still haven’t found the right balance.”

Goodbye Coal, Hello Gas

Subsequently, the UK Government now intends to focus on phasing out coal power by 2025 and replacing them with gas.

Alongside gas will be a new focus on nuclear, with Ms Rudd explaining that “Opponents of nuclear misread the science.”

“It is imperative we do not make the mistakes of the past and just build one nuclear power station,” the Energy Secretary explained. “There are plans for a new fleet of nuclear power stations, including at Wylfa and Moorside. It also means exploring new opportunities like Small Modular Reactors, which hold the promise of low cost, low carbon energy.”

Supporting Offshore Wind, Conditionally

Offshore wind also received some small attention, with the Energy Secretary stating that the Government would support offshore wind development only if the industry can reduce its costs.

“Today I can announce that – if, and only if, the Government’s conditions on cost reduction are met – we will make funding available for three auctions in this Parliament. We intend to hold the first of these auctions by the end of 2016,” she said. “On current plans we expect to see 10 GW of offshore wind installed by 2020.”

“The industry tells us they can meet that challenge, and we will hold them to it. If they don’t there will be no subsidy. No more blank cheques.”

The Response

The focus on gas and nuclear is, unsurprisingly, not the greatest news for the renewable energy industry, which unto now has been the focus of much attention and hope for the UK’s energy security.

“It appears that the Secretary of State is bending over backwards to highlight the benefits of gas-fired and nuclear power, whilst overstating the challenges of increasing our renewable energy capacity,” explained Niall Stuart, Chief Executive of Scottish Renewables. “It is right that we get coal off the system but there is no mention of gas already being the UK’s main source of carbon emissions, the cost of nuclear power being significantly more expensive than onshore wind and solar, nor the challenges of managing large and inflexible nuclear power plants.”

The lack of support for other technologies like onshore wind and solar also raised concerns for proponents of the industry.

“With the promise of future support for gas, nuclear and offshore wind, it is totally unclear if there is any future for investment in onshore wind and solar, despite the fact that these are the cheapest forms of renewable power available,” continued Stuart. “Both have the potential to make a significant contribution to future climate change targets while keeping bills down for consumers, but we will only secure deployment if they too can bid in for the long term contracts for clean power available to other technologies.”

Despite the lack of support for other renewable energy technologies, there is hope among the industry for the growth of offshore wind.

“Today’s speech provides clarity on where the Government stands on the future of offshore wind, which will give developers the confidence to invest in the British economy,” said RenewableUK’s Deputy Chief Executive Maf Smith. “Industry has already shown it can rise to the challenge of reducing costs and offshore wind companies are confident they will be cost competitive with new gas and new nuclear by 2025.”

“The offshore sector will be pleased to see ministers set out ambitions for future growth in the 2020s – as long as costs continue to come down – but the delay to the next auction of long term contracts leaves two major projects off the coast of Scotland in limbo for another 12 months,” added Niall Stuart. “It also pushes back delivery timelines for onshore wind projects on Scotland’s islands which will in turn delay the delivery of grid connections, meaning these developments will not be able to contribute to Scotland’s 100% renewable power target.”

 
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