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Amber Rudd Energy Policy Reset Speech - Regen SW comment

Amber Rudd's long awaited Energy Policy 'reset' speech today was focused on the welcome goal of giving investors' confidence. Unfortunately, as we head to a key climate change global summit, that is mainly confidence to invest in gas, not renewables.

Click here for a copy of the speech: www.gov.uk/government/speeches/amber-rudds-speech-on-a-new-direction-for-uk-energy-policy
 
Regen is holding a major conference “Renewable Futures: Pathways to Parity” next week on 25th November in Bath focusing what Amber Rudd describes as “a radically different model” with “locally-generated energy supported by storage, interconnection and demand response”. For details and to book see www.renewable-futures.co.uk
 
Key announcements

  • Three auctions of support for Offshore Wind projects to be built in the 2020s – the first auction will take place by the end of 2016, provided “Government’s conditions on cost reduction are met”. This appears to indicate there will no Contracts for Difference for other renewables.
  • A consultation in the spring that will set out proposals to close all unabated coal-fired power stations by 2025 - and restrict its use from 2023
  • A paper ‘shortly’ on enabling smart solutions such as demand side response and storage.

 
Comment

The government’s policies mean that our energy policy is now in the extraordinary position that, apart from coal, pretty much the only new electricity generation not to receive subsidies will be renewables.
 
The government has decided, effectively, to try and cap renewables at about 30% of electricity by 2020, despite being well off track on its overall renewable energy targets. It has clearly decided that dramatic subsidy cuts and trying to ban wind power in England is not enough to achieve this – it will have to subsidise gas power and write blank cheques for nuclear investors as well.
 
We have said for some time that gas needs to replace coal as an interim solution to our energy needs - but the logic that higher levels of renewable energy than 30%, alongside gas, is not affordable doesn’t make much sense given we now have to subsidise the alternatives to get them built.
 
The other argument is that our energy system and grid, designed around centralised fossil fuel power stations for over fifty years, will struggle to provide security of supply with higher levels of renewables which are not ‘dispatchable’ on demand.
 
The solution to the challenge of keeping the lights on with more variable power sources is a much smarter, more responsive energy system with higher levels of embedded storage. In an encouraging passage Amber Rudd half accepts this saying “locally-generated energy supported by storage, interconnection and demand response, offers the possibility of a radically different model”.
 
However, rather than go all out to put the UK in the forefront of this radically different model the government has decided to attempt to prop up the current centralised fossil fuel system.
 
History will show this as a major strategic error.
                       
In April Bloomberg announced “The world is now adding more capacity for renewable power each year than coal, natural gas, and oil combined. And there's no going back.”
 
A policy that aims to prop up fossil fuels and cap renewables is not only a failure to address climate change, it is an attempt to buck the market that is likely to prove as futile and expensive as John Major’s attempt to keep the UK in the European Exchange Rate Mechanism.

I look forward to seeing you on the 25th November in Bath. 

 

Kind regards,

Merlin Hyman
Chief executive
Regen SW
 
T: 01392 494 399 W: www.regensw.co.uk | E: myhman@regensw,co.uk

 





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