5 years on from "greenest government ever" speech - Schneider Electric considers next move on energy policy
15/05/2015 Schneider Electric UK Ltd
May is the 5th anniversary of David Cameron saying he wanted the coalition administration to be 'the greenest government ever'. Amber Rudd, recently appointed as energy minister, will no doubt be reviewing this commitment.David Hunter, energy analyst at Schneider Electric comments;
"The energy landscape is changing rapidly and with it comes complex challenges. Bearing this in mind, each policy decision must be considered in the context of the UK's energy 'trilemma'. Much work needs to be done to hit the 'sweet spot' in balancing the three goals of security of supply, affordability and sustainability.
Here are some of the challenges on the UK's energy plate:
Security of supply: Keeping the lights on will require an infrastructure overhaul
The UK's ageing energy infrastructure presents a major challenge. One area that needs attention is the UK's gas supply for this winter. Rough, the country's most important gas storage facility, has been contending with operational issues that are restricting its summer 'injection' capacity, leaving reserves well short of normal ahead of the winter withdrawal season. Given it accounts for 70 per cent of the UK's existing storage and can provide a tenth of winter peak demand, plans must be put in place to address this risk. Of course, the transition to renewables will help keep the lights on in the UK, but this brings a very different dimension to the ageing UK grid. The traditional model of plentiful top-down centralised supply capacity is fading into history and investment is urgently needed to better connect renewable power to the grid, and ensure the system can flex to cope with intermittent wind and solar supply.
Affordability; Home energy bills are likely to fall in the near term
The knock-on effect of the removal of the energy price freeze from the policy landscape could help consumer budgets in the coming months. There is evidence that suppliers limited previous price cuts due to the risk of not being able to raise bills later even if costs rose. Now domestic bills could fall by as much as 3-4 per cent, as the fall in wholesale energy prices looks set to get passed along. Of course in the long term, investment in the UK's energy infrastructure and support for renewable energy will place upward pressure on energy bills. Subsidies have played an important role in helping to balance the energy mix and make it attractive to invest in new forms of renewable energy, but there must be a balance to ensure the bill payer receives value for money.
Sustainability: The UK is on track to meet its renewable energy targets.
Wind power has put the UK in a good position to meet its 2020 clean energy goals, with the commitment of transitioning 15% of the UK's energy use to renewables within reach - given a fair wind! The knock-on challenge has been how the UK handles intermittent low carbon energy supplies. The recent emergence of new energy storage technology from Tesla was welcomed as a vital piece of the decarbonisation puzzle. There must be support for a virtuous cycle of energy efficiency, green power, storage and demand response as clean-tech develops. In the meantime, the debate is now moving towards the relative merits of offshore and onshore wind farms, and how to overcome the intrusive nature of wind farms on local communities.
For more information, please contact:
Schneider Electric Ltd
Stafford Park 5
Telford
Shropshire
TF3 3BL
Tel: 0870 608 8 608
Fax: 0870 608 8 606
Email: gb-customerservices@schneider-electric.com
Web: www.schneider-electric.com/uk
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