Is the UK’s energy policy in crisis?

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Recent announcements that the UK is facing a possible 10% drop in domestic energy output has compounded earlier reports that the government policy on supporting the UK’s energy infrastructure is falling short of expectations.

The result, according to industry experts EDW, is a potential crisis not
just in energy supply, but in consumer confidence as well.

“The last thing that anyone wanted to hear was that their already-record
high energy bills are going to keep on going up while supplies could
potentially become unreliable at best,” comments Graham Paul, Service
Delivery Director of EDW Technology Limited. “The fact that the government’s
lack of delivering investment in what is an essential utility for every
single person in the country could mean that we face an uncertain future
peppered with power outages merely compounds the problem,” he adds.

It is estimated that £110billion of investment in the next 10 years is
needed if the UK is to meet the future demand for energy. The fact that four
coal-powered stations have gone off line early hasn’t helped matters, and
has in fact made the need for investment all the more urgent.

Please sir, can I have some more?

It’s not just the industry watchers who realise that things are reaching a
critical point – the suppliers are well aware of the fact that we’re facing
a tipping point as far as energy infrastructure versus supply is concerned.
They’re not afraid to go straight to the government in a modern version of
Oliver Twist and ask, bowl in hand, for ‘some more investment’ either.

EDF, one of the biggest energy suppliers in the UK, has recently asked the
Treasury to provide a UK Guarantee to ensure that the costs of the proposed
redevelopment of the Hinkley Point C nuclear power project. The FT reported
that talks were at an early stage and that the outcome would depend on a
strike price being agreed from the outset.

Foreign investment scaled back

Meanwhile, Centrica have already said that they are to withdraw from any new
UK nuclear projects. The announcement by German energy giant RWE that it
would ‘significantly scale back’ investment in the UK unless the government
displayed a marked improvement in the clarity of its energy policy makes
industry watchers wonder whether this could be one of the biggest political
crises the coalition government could face. “Energy costs are really
becoming a major concern for consumers, with around 10% of UK households now
classified as living in ‘fuel poverty’, comments Graham Paul of EDW. “The
lack of a clear energy policy and the utter confusion surrounding the future
of the UK’s energy supply could potentially be a fatal blow to this
government’s stability. Without a sound energy policy we risk isolation from
our energy partners in Europe, as has already been demonstrated by the
withdrawal of Centrica and the announcement from RWE. But if the lights
start going out on a regular basis then the government could be faced with a
real political crisis, as they suddenly realise that energy consumers are
also voters,” he adds.

“The bottom line is that we’re at a crossroads when it comes to the UK’s
energy policies and if we want to develop a sustainable and cost-efficient
energy supply for the future then we have to act now,” he concludes.