New Report: UK energy crisis “looks inevitable”

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Back in October, I published UKIP’s Energy Policy Statement, warning that “the lights could go out by 2020”.  Many people thought I was being alarmist.  But a new report from analysts at Liberum Capital, a London-based investment bank, suggests that I may have been underplaying the threat.  They foresee a generation capacity crunch in 2014/2017, with a lack of dispatchable generation by the end of the decade, together with spiralling consumer costs which they describe as “untenable”. Find the full report. There’s also a more comprehensive summary on the Global Warming Policy Foundation’s web-site.

Key conclusions:

There will be an inevitable crisis in UK energy policy, which will impact three stakeholders: the government of the day; the consumer; and the investors who have funded the programme.  Government will do its best to protect itself and consumers, so investors will take most of the damage.

UK Energy policy is not plausible: moving to a low-carbon electricity generating system by 2030 may simply be impossible.

Costs are excessive: Estimates £161 bn to 2020 and £376 bn by 2030.

Economic rationale looks weak: This is in effect a huge bet on oil futures.  It’s predicated on massive price rises in fossil fuels.  But that assumption is undermined by the rapid growth of unconventional gas and oil.

Policy amounts to re-nationalisation: risks and costs will be transferred to the public.  We in UKIP believe that the risk should remain with the private sector, but this would require much more long-term regulatory certainty than is available today.

Triggers for the crisis: capacity crunch 2014/17; lack of dispatchable generation by the end of the decade; spiralling costs.

For a more extensive summary, see the Global Warming Policy Foundation. Liberum concludes that utility companies and investors should limit their exposure.  I conclude that the EU should scrap its Climate & Energy Package, and that the British government should focus on gas, nuclear and coal, and abandon its unpopular and disastrous commitment to wind energy.

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7 Responses to New Report: UK energy crisis “looks inevitable”

  1. Having viewed your comments in the past, I made a decision to provide my household with a Gas Fire fuelled by Calor Gar, as we are all electric. That is all of our heating and lighting is electric, so without electricity, we would freeze to death in the event of a power cut during our cold periods.

  2. Mike says:

    I think there is one big difference here in Ontario. The article mentions that the government will protect itself and consumers and the investors will suffer. In Ontario, I would lay a bet based on past experience, that the cost will be passed to consumers. Our government is in so deep with big investors and the little guy suffers.

  3. Meanwhile, Germany are opening six more coal power stations this year.

    The MSM seem to be keeping remarkably quiet about this. I wonder why.

    We need to keep pushing this message out. Coal is still by far the cheapest form of energy (much cheaper than gas) and supply is much more secure.

    That is of course exactly why Germany is going down this route. They have already opened two last year, and, in total, 16 will have been built by 2020, providing about 20% of their electricity.

    All the detail is sourced from the German Energy Association below.

    http://notalotofpeopleknowthat.wordpress.com/2013/04/22/germany-to-open-six-more-coal-power-stations-in-2013/

  4. georgyporgie says:

    Roger

    The UK Electricity Generation and Supply business is in a mess, BUT many industries will be happy to switch-off demand, avoiding paying exhorbitent peak energy prices but at the same time being paid an arm and a leg just to do that. This is what will transpire as the true capacity price, a mechanism that I suggested to the peers of National Grid as a requirement way back in the early 1990’s. I am sure that you will see compensatory rewards of several hundreds of pounds/MWh paid for demand-side management. This outcome is inevitable and what the market has been looking for since 1990. So if you happen to be a demand side manager you could be rewarded £5/kWh for not taking demand. The problem will be that the market balancing costs will inevitably go sky high and we will all be trying to avoid taking a demand at that time only to be clobbered later through the balancing service charges levied by National Grid Someone, in the end inevitably has to pay the costs!!!   

    ________________________________

    • Chris says:

      “BUT many industries will be happy to switch-off demand”.

      What are you on about? Do you think Jaguar Land Rover or British Steel (Tata) can just switch their factories on and off?

      I take it, you don’t work in manufacturing.

  5. Chris says:

    The problem with UK energy policy is that it’s being run by eco loonies such as Ed Davey. These people have no idea on how electricity is produced or that wind farms require back-up (spin reserve) from gas fired power stations.
    As someone said on the Daily Telegraph comments: The world is nuttier than squirrel shit.

  6. Mike Stallard says:

    We have bought a gas fire like Mr Hartland.
    This crisis was foreseen by Christopher Booker some five years ago.
    Vote Tory, get Brown.

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