In 2020 it dawned on government that transitioning from mostly fossil fuel energy to zero carbon, i.e. electricity, by 2050 was a big deal and something should be done. What that needed, of course, was a strategic plan but we did not get one and still haven’t. Instead, we got the 2020 White Paper which became the Energy Bill originally devised by the House of Lords. On Tuesday 5th September, the Bill had its last examination in the Commons. MPs were given three hours to debate and decide the 397 page bill they received from the Lords plus the 69 MPs’ amendments and 180 from the government. And then they had 117 pages of explanatory notes prepared by the Department for Energy Security and Net Zero and its (entirely inadequate) 39 page Impact Assessment (IA). IAs are supposed to consider additional costs and whether they are value for money. It doesn’t. Whitehall is renowned for its farces and these 680 pages is the script of one of them. The great majority of the 279 clauses are exactly the type of red tape and regulation any Conservative government should be seeking to eliminate, not enact.
A sane government would work out first how to achieve the energy goals (the strategic plan) and only then add the legislation necessary to bring it about. Trying to do it the other way about pretty much guarantees the current confusion. This is Big Government interfering in what a free market should mostly do. An energy strategic plan requires just six main components: the three principle sources of post 2050 electricity (renewables, nuclear and fossil fuels with carbon capture and storage (CCS)), other energy sources where electricity is not viable, e.g. sustainable aviation fuel, transmission from generation to users, and storage of surplus renewables to help fill deficits gaps. The Energy Select Committee is running two Inquiries into exactly these matters. As the Department for Energy Security and Net Zero (DESNZ) does not seem to know the answers, perhaps it should await the findings of these Inquiries.
Government should next consider how much of the necessary action should be left with the private sector, usually better value for money, and how much requires new legislation, not just to secure the energy but to do so as cheaply as possible. Older readers will recall that electricity was supposedly privatised with that in mind. Government may wish, for example, for cornflakes be available for our breakfasts at competitive prices but it does not need to legislate, beyond ensuring that the market remains competitive.
Renewables, per se, are not mentioned in the Bill but off-shore wind is covered by clauses 245 – 269 mostly addressing environmental effects and decision devolution. No mention either of this being Great Britain’s primary source of electricity by 2050. That contrasts with no offshore contracts being sought in the latest bidding round. Capacity now is 29GW and needs to be 50GW by 2050 according to government and with total electricity requirement at the more likely 209GW, wind capacity will probably need to be closer to 100GW by 2050.
Offshore wind may or may not be the cheapest source of electricity but, round the world, those markets with the highest share of renewables also have is the highest consumer prices. This is due to government interference in the market and this Energy Bill is a classic example.
On the other hand, the Energy Bill incentivises onshore wind through community energy organisations – 89 so far- but the numbers are growing fast and would grow faster still with user discounts for accepting adjacent onshore turbines. One onshore turbine services, on average, 6,000 households. The Bill however (clauses 272 and 273) requires every participating community group to be more than 150,000 households but using less than500MW supply. The Hornsea offshore wind farm was expected to generate 1.3GW of green energy from 165 8MW wind turbines, enough to supply 1.4 million homes. Or about1,000 homes per MW or about 8,000 wind turbines for 150,000 homes or 300,000 homes for a single 300MW small modular reactor. SMRs are not even mentioned in this Bill. Onshore wind is a thoroughly good thing, especially when it is incentivised locally as government now proposes, but the same logic applies to SMRs.
Extraordinarily, though Explanatory Note 90 claims “Nuclear power has an important role to play in domestic energy security and in reducing greenhouse gas emissions to net zero in 2050” the Bill says almost nothing about it. There are a few references to sites, the constabulary, setting up Great British Nuclear and other administrative matters but nothing about the 56GW, or so, we will need to back up renewables. For example, most countries are having to finance the first of a kind (FOAK) SMRs centrally and that will require Parliamentary approval. Our need for SMRs, maybe up to 200, was announced by Prime Minister Johnson three years ago and yet it is now considering ordering just two in the next six years.
Yet the claim is “In order for the UK to reach net zero by 2050 and achieve independence from imported fossil fuels the Government will fully decarbonise the electricity system by 2035, subject to security of supply.” Fat chance! Alongside this, the Government expects electricity demand to double by 2050, when increasing by seven times is more likely.
While the UK government has been asleep at the nuclear wheel, the USA and Eastern Europe have been pushing ahead.
The third of the main power sources, fossil fuels, will be essential for dunkelflaute days when the wind don’t blow and the sun don’t shine but requires CCS- the costs and feasibility of which are entirely unproven at industrial scale. Government should step away from this problem and leave it with the private sector. Those whose generate carbon, post 2050, should pick up the tab for getting rid of it and recover the costs through the pricing of their electricity.
On transmission, the Bill seeks to transfer responsibility to the Independent System Operator and Planner (ISOP), a new public corporation, but without any indication of how it will work, what it will cost and how that huge expenditure will save money, as it claims, for consumers. Why will it be shunting gas around the all-electrified country? The Bill discusses the monopolised regional transmission system, recognises that regulation has been ineffective in bringing competition about but gives up on how to deal with it.
Finally, hydrogen will indeed be useful as storage to bridge renewables surpluses to deficits but the “hydrogen grid” proposed to take the place of natural gas is nonsense. So what is to do? We have an immense Bill, the product of three year’s work, just about to receive the Royal Assent but it is mostly a heap of junk. DESNZ should put together, by end November, the long overdue Energy Strategic Plan using submissions to the Select Committee Inquiries as needs be. A new, slimline Bill, based on that and containing just the essential new legislation, should be made available by the end of January 2024.