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13 April 2022

UK should scrap security strategy for new wind, efficiency measures

The new British Energy Security Strategy, unveiled this week, has highlighted the sheer confusion within UK policymaking. In a bid to tackle two frontiers of climate change and eliminating Russian imports, the country’s plan is paradoxical in that its pledges will not bear fruit until long-after the current crisis is over, and until we have left it too late to reach net zero emissions by 2050. This strategy must be reevaluated to place more attention on energy efficiency and onshore wind, if the UK is to have anything of an impact of the immediate crisis it faces.

The strategy comes at a crucial time for the UK’s energy sector. Without Covid-19 restrictions for the first time since March 2020, the country’s energy demand has rapidly returned to pre-pandemic levels. But with global supply of oil and gas recovering at a slower rate – made worse by Russia’s invasion of Ukraine – the price of fuels across the UK have risen at record rates.

Facilitated by a partial embargo on Russian oil and gas, European gas prices have soared by more than 200% over the past year, leading to a huge increase in the cost of living and plunging millions into a state of energy poverty. The UK is currently dependent on Russia for around 8% of its oil and 4% of its natural gas supply.

But the nationalist push of Prime Minister Boris Johnsons’ agenda has fallen short of the mark. Instead, it has been used as a facade to push his expensive pro-nuclear agenda, while opening the door for new oil and gas that will see the UK pumping out CO2 well beyond its net zero by 2050 target.

With half-baked suggestions across all corners of the energy industry, the strategy seems confused as to whether it should be solving the climate crisis or the issue of energy security in an era beyond Russian imports. It is also fails to address how immediate both issues are.

Rather than acknowledging the immediate easy wins that can address both – namely, energy efficiency investment and accelerated onshore wind – the UK government has approached the two issues separately: more renewables for the climate, more British oil and gas to replace Russian oil and gas. The conflict between the two is unbearable.

There are some positives to take home. Under the government’s new plans, up to 95% of the UK’s electricity could come from low-carbon sources by 2030. New measures have pushed the country’s target for offshore wind from 40 GW by 2030 to 50 GW of capacity, including up to 5 GW of floating wind, with plans to speed up approvals for new leasing areas. It’s an ambitious but achievable target.

It fails, however, to solve the near-term energy issues plaguing the UK. Offshore wind projects take at least six years to develop. With a limited domestic supply chain for the extensive components needed for these projects, upping the pace to 50 GW will also drive-up costs, meaning little for those struggling to afford their energy bills.

The UK government seems only to be able to think in 30-year timeframes, rather than 30-month timeframes. This long-term obsession – allowing the government to survive on the delivery of pledges rather than the delivery of projects – is most clear in its continued persistence with nuclear. As many as eight new nuclear reactors, worth up to 24 GW, could be built as part of the new plans, including two at the existing Sizewell facility in Suffolk, with a new body created to oversee the delivery of the new projects.

Boris Johnson wants the UK to get 25% of its electricity from nuclear power by 2050, although new plants will also need to account for the eight existing plants – worth 9.4 GW – which are set to be retired by 2035.

He claims that this can be done in a cost-effective way. But with projected cost of electricity at the hugely delayed Hinkley Point C sitting 75% higher than the UK average, and with the proposals like the 3.2 GW Sizewell C project likely to follow the same fate, Johnson’s love of nuclear will only go down well if success can be seen in Roll’s Royce’s Small Modular Reactors or through upcoming fusion pilots in 2025. Either way, no significant help on either frontier can be expected to come from nuclear at scale by 2030, not least because long standing internationally agreed safety requirements mean that it takes ten years to build anything.

With coal-fired power set to be phase out from the UK power mix by the end of this year, the UK’s short term energy strategy should boil down to one key objective: eliminating the immediate need for imported fossil fuels, without increasing domestic production. From a consumer perspective, it should be focusing on getting natural gas out of its electricity and heat networks – currently gas supplies 27% of electricity and 78% of home heat.

On the demand side, this should focus on efficiency. Incentivizing the replacement of gas-fired boilers with electric heat-pumps is an obvious pick to reduce gas demand, but the £30 million “heat pump investment accelerator competition” in the energy strategy is paltry. There is also very little mention of incentivizing consumers to switch from petrol/diesel vehicles to electric, which would have the same impact on imported oil.

It is also inexcusable that the government has offered no new policies on saving energy by insulating buildings. Perhaps it is trying to quell the optimism that protest groups like Insulate Britain have about instigating change. If heat pumps and insulation were deployed across just 23% of UK homes by 2027, it would be enough to completely offset the country’s current dependence on Russian gas imports, while slashing energy bills by over 20%.

Naturally, all of this electrification does nothing to solve the issue of gas-fired power generation in the UK, nor the imported gas used to fuel it. But the UK has also fallen short of the two key technologies that can have a near-term impact on the supply-side of natural gas: onshore wind and solar, with projects that take less than two years to develop.

For obvious reasons for anyone who has ever spent a prolonged period under the grey UK skies, solar has limited potential. There is currently 14 GW of solar capacity in the UK, with the government now aiming to increase this five-fold by 2035. Steps to facilitate this include: reviewing planning rules; supporting projects that are co-located with other functions; removing tax on solar panels; and providing low-cost finance for developers.

The target for green hydrogen production, required to decarbonize sectors from steelmaking to heavy transport, has also risen from 5 GW of electrolysis to 10 GW by 2030.

The real hope for immediate impact should focus on onshore wind, where the UK government has failed to deliver time and time again. The most that the strategy provides is vague suggestions given to promote “supportive communities” who want to host turbines in exchange for reduced rates on their energy bills.

Onshore wind – the cheapest for of new generation capacity in the UK – was cut from UK support schemes back in 2015 under the guise of higher electricity costs, which masked a greater sense of Nimbyism from UK politicians not wanting to see wind turbines spoiling the views of their second homes in the countryside. As a result, annual installations have fallen to just 108 MW for the entirety of 2020, while over 800 ‘shovel-ready’ projects wait for funding – most have already been approved for planning.

At this stage, with wind turbines bought off the shelf, these projects could be brought online in a matter of months, with an immediate impact on the carbon-intensity and import-dependency of the UK’s power supply.

The final failure of the energy security strategy is a large one. The UK government has confirmed plans to issue new licenses for North Sea oil and gas production this year. With much of the country’s reserves already depleted, this will not only result in a huge amount of CO2 from the subsequent burning of the fossil, but will also come at a high cost, as the last drops of oil becoming harder and more expensive to extract, and either way will be sold to the highest bidders in Europe, not kept exclusively for the UK.

The government has done this based on the premise that producing gas in the UK will have a lower carbon footprint and will be more secure than importing it from abroad. But with oil fields often having a lifetime of over 30 years, the UK will be responsible for the burning of fossil fuels – at home or abroad – well beyond its 2050 net zero target. Indeed, it states its intention to have a “net zero compatible oil and gas sector, supplying the UK economy in 2050.” Such a sector cannot exist.