UK Government Turns Attention From Renewables To Gas

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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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37 thoughts on “UK Government Turns Attention From Renewables To Gas

  • “Opponents of nuclear misread the science.”

    No, most countries went for Light Water. The inventor said that is unstable so he created a better design, Fast Neutron, but no one listened.

  • What impact will have a world wide introduction of carbon taxes have on UK energy policy?

    • More cables will be build, from Norway, Denmark, Ireland, Germany …:)
      Even Iceland is investigating now the chances offered by a carbon tax.

  • ““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.”

    Those damnable green subsidies again! That’s what caused the energy predicament, right?

    • That is what many believe and the govt now seems to be promoting that idea.

    • “Conservatives unfortunately base their energy policies almost everything on ideologies instead of facts.”


  • The graph below shows UK’s consumption, production and reserves of natural gas. Production and consumption is on the left axis and reserves on the right. UK can’t power itself with its own gas. Sure there was a supposed shale revolution going on in the UK. But that doesn’t seem to be the case after actual geology and petroleum reservoir engineering were applied. The “game changing” shale “revolution” seemed to be more sales and marketing driven.

    Natural gas is going to come from somewhere else. I believe the UK is an island, no? So natural gas will have to be shipped via LNG or possibly recovered in the North Sea upon deep sea fracking and piped to shore. Either way, UK produces most of its electricity by fossil fuel and nuke already as presented in the second graph.

    It looks like the new nuke plant will be Chinese built at $30 billion (pre-design estimate I’m assuming):

    This is bad form Brits. It’s almost like UK politicians spawned US republicans. Or is it visa versa.

    • Michael,

      The UK does indeed already import much of its gas and pretty much all of its coal already these days (the last UK deep mine closes this year). LNG imports from alleged ISIS-sponsor Qatar have been a reality for years. So have imports of Russian coal.

      Exploration for unconventional gas under the UK was stopped in its tracks owing to a mix of sensible regulatory caution and hair-on-fire hysteria from parts of the green lobby that spooked the last coalition and the local authorities charged with much of the permitting. It looks highly likely under the current Tory administration that a domestic shale gas industry will become a reality finally, years after the first exploratory well was sunk.

      Good thing too. Coal is so self-evidently dirty. Let’s kill coal quickly and move to the next greenest option while we ramp up a cleaner and more efficient energy system, and it’s great that Rudd has passed down the death sentence on coal and put its execution date in the diary.

      That still leaves the UK dependent for now on imported LNG, which is significantly higher CO2 than domestic gas and finances unsavoury regimes – until US LNG imports start that is.

      As for wind, I’m not up on the detail but from the looks of it the new dose of commercial reality being injected into offshore projects based on auctions rather than whatever the project builders felt they could get away with seems to me to be no bad thing. It may actually drive down costs to where they need to be in order for offshore wind to be truly economic and from there to rapidly drive more fossil fuel generation off the grid.

      It’s a great shame that solar and onshore wind have essentially been stopped dead in their tracks by yet another policy lurch and some petty NIMBYism especially after Rudd’s promise of a solar revolution when she came into office.

      I don’t even begin to understand the dog’s breakfast of new nuclear generation policy. I can only assume it’s more about cosying up to the Chinese and getting trade concessions in other areas for the UK.

      • Thanks for ground truthing by a local. I’m going to steal “dog’s breakfast” from you. The imagery is fantastic. It could be almost anything and nothing appetizing.

        • You’re welcome Michael! Enjoy your dog’s breakfast on me. 🙂

      • I suspect some government officials have bought into the BS that renewables can’t do the job and that nuclear must be part of the solution. The myth of baseload.

        There have been so many people pushing these claims that we shouldn’t be surprised that a few decision makers believe them. If you surround yourself with friends of FF and nuclear you aren’t likely to get an accurate picture of what is actually possible and what makes the most economic sense.

        I expect we’ll see a few governments build ‘one last reactor’ and while they watch the slow progress and the cash bleed hopefully they will observe other government getting cheaper renewable energy online rapidly and learn a needed lesson.

        I think the people of Georgia and South Carolina are starting to catch on. SC has seen six rate increases due to fundraising for their new reactors. Rates have gone up 30% so far.

        • Yes Bob, I fear you are right. The energy elves at DECC are probably still peak oil believers too, no doubt think electricity prices will only ever rise and seem to consistently be a decade behind the times when it comes to markets, technology and policy that incentivises cost effective energy innovation and efficiency. Rudd, Cameron and Osborne quite likely lack the knowledge to see such advice for what it is (although they at least have it broadly right about coal and gas). Sadly they are locking in their errors when it comes to nuclear for more than a decade hence. The result? We (UK power consumers) will be paying the price for massively subsidised, massively expensive nuclear power thanks to the 35-year, £92.50 per megawatt hour “heads-you-win, tails-we-lose” strike price to guarantee a nuclear technology that may not even actually be possible to make work safely at all.

          • I just did a quick google search for “electricity cost by source uk” and the latest government figures that were found were produced in 2013 (based on 2012 data) when Solar was really expensive.
            How do they expect to keep up to date if they’re working on 3 year old figures?

          • “How do they expect to keep up to date if they’re working on 3 year old figures?”

            Maybe they don’t want to keep up to date.

          • I suspect many organizations have been blindsided by how rapidly the cost of renewables have dropped. Their old systems of laying a ruler on the line of history and predicting the future just doesn’t work any longer.

          • Isn’t the price of £92.50 (starting price) CPI indexed from 2013 ? So after 35 years it could be double that price.

        • We might end up with a nuclear baseload of 17.5 GW in the 2030s. I can see a bright and windy weekend providing more renewables on top of that than the grid can handle…

          • Oh, boy, I hope not. Has anyone compared the cost of nukes against a bazillion batteries and the extra renewables needed to keep the batteries full? Nuclear is so expensive that I’m wondering if batteries would be cheaper even now, when the battery price has just barely begun to fall.

      • In fact a contract for Russian gas starts this month: Centrica importing from Russia for first time for UK, equivalent of 7% demand

  • My god, this is about Hinkley Point C nuclear reactor. From the Economist:

    “George Osborne, the chancellor, should have learned a lesson from that. Already the £24.5 billion project to build a nuclear power station called Hinkley Point C in Somerset is expected to finish over-budget and beyond the projected start date of 2023, if it ever starts at all. But on September 21st, after unveiling in Beijing a £2 billion inducement to China to help finance Britain’s first reactor in 20 years, he exposed himself to further criticism. The country should lead the way on nuclear power as it did in the 1950s, he said. But the implication was, it could only do it with China’s help (see Bagehot).”

    UK is building a big thing. It looks like it won’t come under budget, even remotely. It gets China to help. China comes to UK this fall. UK politicians put nuclear on the table after China lends support both financially and engineering wise. Hinkley Point C will apparently generate 7 percent of UK’s needs or “Hinkley Point C is a proposed 3.2 GW nuclear power plant with two EPR reactors (each of 1.6GW). It should produce almost four times more electricity than the Hinkley Point B station’s two reactors.”

    • Banging…head….on….keyboard. As a UK resident it’s just too painful to say anything meaningful on this topic.

      • Feel the same way.
        Next step they will force through fracking 🙁

    • And we are now going for 3 or more with Chinese money after that: Bradwell, Sizewell, Wylfa, etc

  • Nearly all UK coal was ALREADY closing by 2023, so this is a piece of greenwash, announcing what would already happen to make govt look good (better, I should say).
    The offshore wind will also have to get from strike price of £115/119 to match the Hinkley rate of £92 by 2020 to continue to get support (achievable).
    UK govt now clearly intends to build all the new nuclear -I think that’s 17.5GW by end 2030s. But with firt new nukes in 2025, 2029 and old nukes closing around 2023, there’s a second gap after coal goes.
    The announcement makes no sense to me… especially as they claim they can meet 2050 80% drop in CO2 target.

  • And just when you thought that it couldn’t possibly get any worse there is this and believe me it is a direct quote from her speech to the Institute of Civil Engineers. “In the same way generators should pay the cost of pollution, we also want intermittent generators to be responsible for the pressures they add to the system when the wind does not blow or the sun does not shine. Only when different technologies face their full costs can we achieve a more competitive market.” When you read stuff like this you realise it’s ‘Game Over’. Whatever you do, whichever way you turn they will eventually grind you down with their ignorance and stupidity. I was really looking forward to having a nice weekend as well 🙁

    • Are the current FF generators also going to be charged when they don’t produce due to maintenance/failure/lack of fuel?

      • Don’t be silly. The more i see and read about these muppets in charge of the UK the more Canute comes to mind….

  • How in the heck can we know the true cost of any source of electricity when there is no such thing as an unregulated, unsubsidized, consistent free market. We are making assumptions based on forward estimates that are notorious for being inaccurate.

    • Look at the bills still open from the past.

Comments are closed.