Last week the chief corporate officer of Scottish Power, Keith Anderson, claimed that he feared that there may not be enough energy produced to meet the UK’s requirements.
He went on to say that he thought that there was a chance that some business energy customers may have to turn off their power in some situations and that domestic energy bills may also be on the rise soon.
This news will frustrate many industry experts and politicians due to the large amount of investment that the British energy industry has received in recent times. Most of this investment has gone into green subsidies, which are already costing £4.5bn this year- 15% of the total cost of energy.
However the National Grid, the largest transmission company in the UK, has stated that the difference between supply and demand will be down to 1.5% in the winter months of this year. This figure was much higher than this four years ago, when it sat at 17%. This means that a prolonged period of cold weather or a large power station going offline could cause the loss of energy for millions around the country.
Several policy analysts believe that this shortfall in supply has been caused by the government’s attempts to hit the targets that have been set regarding climate change. This government action has resulted in large levels of investment in renewable, low carbon methods of energy production. Renewable sources now account for around 15% of the country’s energy supply, with methods such as wind power, solar and biomass making up the bulk. There are also plans for more nuclear power to be introduced, although many have criticised the government’s willingness to pay above the odds for this source.
In spite of all of this investment, there are many who claim that none of these policies have actually increased the amount of energy that we can produce. The creation of many new renewable sources has been accompanied by the closure of a large number of older power stations that use coal to produce energy. In total it is estimated that 21,400MW of energy production capacity has been decommissioned, whilst at the same time only 6,000MW of new sources have been created.
Figures released by Ofgem, the regulator of gas and electricity markets in the UK, revealed that the biggest generating companies in the country lost a total of £500m for thermal generation last year. This means that many plants are now being forced into closure due to the fact that they are no longer economically viable to run.
Jonathan Ford, of the Financial Times, stated that government’s plan to introduce renewable energy depended on two assumptions that have not come to fruition.
He said:
“The original plan depended both on fossil fuels rising relentlessly in cost and renewables rapidly becoming much more efficient, thus removing the need for subsidy. Both assumptions now look optimistic. The immediate task is threefold. The government must rein back support for the current generation of renewables, avoid throwing unnecessary billions at new nuclear, and restore the supply balance by boosting thermal generation.”
