Industry responds to Energy Secretary, Amber Rudd’s speech on a new direction for UK energy policy

The Energy Secretary Amber Rudd MP announced sweeping changes to the UK’s energy policy on November 18th (https://www.gov.uk/government/speeches/amber-rudds-speech-on-a-new-direction-for-uk-energy-policy), phasing out ‘dirty’ coal-fired power stations by 2025 in favour of a fleet of new gas and nuclear facilities.

But the plans to reduce carbon emissions through greener generation made little mention of reducing the demand for power through greater energy efficiency.

CIBSE

Hywel Davies, Technical Director of the Chartered Institution of Building Services Engineers, said: “The announcement of the new policy focuses solely on energy supply, and makes no reference to the opportunity to drive energy efficiency and so reduce the need for new generating capacity.

“Using less energy also puts consumers first, reduces the burden on bill-payers and ensures enough electricity generation to power the nation, so why is this not included in the statement?”


Baringa Partners

In response to Amber Rudd’s announcement that the government will phase out the use of coal by 2025 while supporting investment in offshore wind, Phil Grant, Energy Advisor at Baringa Partners said: “The market share decline of coal has been well anticipated. In our latest market simulation we identified that only three coal plants would still be generating energy in 2025 and contributing less than 7% to the overall mix in any event. Gas will be the beneficiary of the coal phase-out and should be welcome news for those planning or investing in new gas plants.

“In addition, Amber Rudd’s commitment to supporting the growth of offshore wind should be welcomed. The competition for funding through the auction mechanism has demonstrated the cost savings and efficiency improvements that can be made and that new renewables offer much better value for money than ever before. There has been considerable competition and innovation in this field in recent years and the UK is well placed to become a world leader if the government provides the necessary support.”

The Aldersgate Group

The Aldersgate Group welcomed the government’s commitment to phase out the UK’s old coal-fired power stations but stressed that more clarity was rapidly needed on the government’s plan to support future investment in renewables and energy efficiency if the UK was to meet its objectives on carbon emissions, affordability and security of supply.

Nick Molho, Executive Director of the Aldersgate Group said: “The closure of the UK’s old coal power stations is a pre-requisite to modernising the UK’s energy system. It will help reduce carbon emissions and make clear that modern gas-fired power stations, not coal, are the best complement to increasing amounts of low carbon generation.”

The announcement that three CfD auction rounds for offshore wind will take place during this Parliament was also a positive step forward. However, the Group stressed that more clarity on the funding available to support these auctions and policies to facilitate investment in other forms of low carbon generation such as mature renewable energy technologies was rapidly needed. This was essential to support continued investment in these technologies and secure further cost reductions for consumers and supply chain benefits for the UK economy.

Nick Molho added: “Having provided over 25% of the UK’s electricity in the second quarter of 2015 and demonstrated significant cost reductions in recent years, renewables have an important and growing role to play as part of a secure, low carbon and affordable energy system but the current lack of specific policy has been undermining further investment. Building on today’s positive announcement on offshore wind, the government must rapidly set out its proposals in more detail as to how it will support continued investment and cost reductions in the renewables sector.”

The Aldersgate Group called on the government to clarify as soon as possible the funds that would be available for investment in low carbon power stations under the levy control framework and under what mechanism investors could still develop mature and cost competitive renewable energy technologies such as onshore wind and solar projects.

The Aldersgate Group also highlighted that clarity was needed as to how the government would support investment in a range of other infrastructure areas that were key to meeting the UK’s carbon targets on time and on budget. This included in particular future policies to guide investments in energy efficiency, carbon capture and storage, low carbon heat and low emission vehicles.

The Energy Institute

In her response to Ms Rudd’s speech, Louise Kingham OBE FEI, Chief Executive of the Energy Institute (EI), said: “In the 2015 Energy Barometer report, our survey of energy professionals published earlier this year, they called for greater policy continuity to encourage long-term investment. Today’s address does provide a framework and direction of travel from Government, which must be welcomed, with particular focus on the UK’s large scale energy generation infrastructure and how to achieve greater affordability and sustainability within it.

“However, the Barometer also identified energy efficiency as having the greatest potential to reduce both costs for consumers and greenhouse gas emissions in the short-term. This opportunity needs greater focus from Government, as does the need to maintain the supply of skilled workers into established and developing sectors. Nuclear, CCS and unconventional oil and gas were cited in the Barometer as the areas of most acute shortage, but more importantly, all sectors bar North Sea oil and gas were expected to experience skills gaps by 2020.

“Developing a secure, affordable and sustainable energy system for the future requires a balanced, holistic approach across the whole energy supply and demand chain. All aspects of the industry, including the skills of its people, need to be fully integrated into the policy process. There’s much still to be done to develop the efficient, resilient energy system needed to support the economy and society and the EI will continue to work to bring all stakeholders together in developing that system.”

Schneider Electric

David Hunter, Energy Analyst, Schneider Electric commented: “Amber Rudd’s decision to slow the pursuit of green energy comes hot on the heels of the National Grid’s emergency action to access greater supply. This doesn’t mean we are facing black-out Britain, but it does confirm that our tightened capacity margins are putting stress on our ageing energy infrastructure.

“The government needs to take a robust approach to ensure that the lights stay on while we decarbonise. A multi-faceted approach that doesn’t ignore the ‘fifth fuel’ – energy efficiency, by combining clever policy with technology will ensure we deliver better bang for our buck.”

The full text of Amber Rudd’s speech can be found here:
https://www.gov.uk/government/speeches/amber-rudds-speech-on-a-new-direction-for-uk-energy-policy