Sanjoy Sen is a chemical engineer. He contested Alyn & Deeside in the 2019 general election.
Energy is complex. Policymakers constantly wrestle with a trilemma of how to keep prices low, reduce emissions and maintain security of supply. All whilst demand soars (rising population, improved living standards) and new challenges emerge (electric vehicles, environmental legislation). It’s never going to be perfect.
But when the Chancellor has to sub you two hundred quid to keep the lights on, it might be time for a bit of a re-think. Our current energy problems have been a long time in the making and clearly can’t be fixed overnight.
But we do need to start by recognising what is and isn’t working. And coming up with some alternatives, both short- and long-term. The public needs this urgently – and our electoral fortunes depend on it.
Keeping prices low
By 2017, the concept of a price cap had morphed from Milibandian Marxist madness into sound conservatism – and my concern was that we weren’t levelling with the public. Generating energy and distributing it to every single home is an expensive business. Yet we were determined to keep daily utility costs cheaper than a take-out coffee – even whilst factoring in green levies.
The first consequence of promising to drive prices ever downwards was that there could never be a price point which the public would consider acceptable. Meanwhile, attempts to introduce apparent competition ended predictably: the numerous defunct businesses weren’t increasing our energy supply, they were simply buying others’ output and selling it on. Any market shock was always going to leave them exposed. And the price cap that drove them out of business is now meaningless to voters.
The most cost-effective means of delivering the low carbon power needed to meet Net Zero remains large-scale nuclear. (In fact, it’s also the best option even if you don’t much fancy Net Zero, as it delivers big, steady outputs without dependence on imported gas.) Sadly, the much-delayed, over-budget Hinkley Point C is fast becoming a textbook example of how not deliver it. The technology remains unsurprisingly problematic and its delivery lies in the hands of France and China, countries with whom we now enjoy dismal relations.
And as nuclear has faltered, our dependence on alternatives has increased. Renewables clearly have a vital role to play and it is encouraging that the UK is world number one in offshore wind capacity with more to follow. But we need to reflect on whether such heavy reliance on intermittent sources is the most cost-effective and reliable solution, especially when energy storage and the hydrogen economy are still under development.
Security of supply
As I noted after COP26, Narendra Modi recognises the consequences for India of ditching cheap, domestic energy: unemployment and rising prices that disproportionately hit the poorest. Plus the political ramifications of over-dependence on imports. Would that EU leaders felt the same. Proudly shuttering their own generating capacity, their citizens’ energy supply has never been more precarious. Germany is conspicuously silent with Vladimir Putin’s hands on the NordStream gas taps as he surveys Ukraine.
Here in the UK, we might have been in a stronger position thanks to our domestic assets. But we needed to back the giant Cambo North Sea development when it came under fire. And closure of the Rough gas storage facility eliminated our ability to buffer against market spikes.
So, where next?
New policies require a change of mindset. The public have always prioritised the cost of living and job creation – even more so following recent price shocks and Covid. We need to get back to those priorities. And we need to remember where our support now is: banning a Cumbrian coal mine doesn’t gain us much in north London but approving it is likely to go down very well locally.
In the short term, we need to start backing domestic energy production again. The North Sea may be past its peak but viable reserves remain. Options for gas storage re-instatement should also be investigated. Critically, potential investors need to be reassured that the offshore sector enjoys unswerving government support. Far from a political liability, there is much to be gained here, especially with an SNP administration dependent upon Green support.
Longer term, we need to get big nuclear back on track quickly via a range of partners. Plans were shelved in Cumbria, Gloucestershire and Wales in 2019 but interest remains strong if government support exists – it’s time to get after these urgently. (But this time, let’s use some proven technology, please.) And looking further ahead, we need to keep backing Rolls-Royce in their development of Small Modular Reactors. If we’re going to do this, it’s going to need continued support, not a loss of heart if the first one doesn’t go exactly according to plan.
Just as we tackle our current problems, new ones will inevitably emerge. China dominates the battery supply chain, an increasing concern as transport becomes electrified. We already need to start thinking about sourcing domestic supplies (Cornish lithium) and the recycling of spent batteries to hedge against future supply issues. Energy policy doesn’t get any easier but we do need to keep re-assessing – and changing tack where necessary.