Comment

“We need to build a new energy infrastructure, fit for the 21st century”

This is what Amber Rudd, Secretary of State for Energy and Climate Change, has said. But, counters Clive Arup, current policy means she’s in danger of throwing away the UK’s growing advantage in renewable energy.

Let’s understand why we are where we are today.

Years of indecision about investing in nuclear energy led to an inertia in deciding where our electricity was going to come from in future.

Ed Miliband, in his role as Secretary of State for Energy and Climate Change, led the way towards the promotion of renewable energy and introduced the Feed in Tariff regime in 2010 towards the end of the last Labour government. Due to several factors, subsequent governments have sought to reduce the FITs as quickly as possible citing perverse rewards (for miscalculated FIT levels for solar PV in 2011-2012) and using the protection of consumers’ energy bills following the inevitable aggressive take up.

"Picking on Renewables as the bad guys is a distortion of the reality of the energy market and is grossly misleading for consumers."

At the same time the totally unpredicted fall in the cost of oil following the recession and the advent of the shale gas boom has taken the wind out of the grand plans to decarbonise the energy sector. Ed Davey of the coalition government started this and now Amber Rudd is taking it further and faster.

On the surface of it, these arguments appear laudable, politicians responding to their constituents – what is there to criticise about that?

Quite a lot actually.

Firstly, the amount on consumer bills which actually funds the support of renewable energy is around £45 on the average £1369 household dual fuel bill, a figure that barely ever gets mentioned. A much larger percentage, about 5%, goes towards supporting other government initiatives like the Green Deal, insulating homes etc. which in the past would have been funded by general taxation.

Secondly, and Amber Rudd has admitted this, no electricity production can these days be developed without Government intervention. So picking on Renewables as the bad guys is a distortion of the reality of the energy market and is grossly misleading for consumers.

The Government will miss a trick if it cuts its support for Renewables now. This sector is a fast growth success story bringing in vast amounts of private capital and supporting the development of new jobs and expertise across the UK.

New research shows that far from increasing consumers’ bills, Renewables are already helping reduce them, and will do so more dramatically in the future as Feed in Tariffs are gradually phased out over 20 years, as was originally envisaged when they were first introduced .

"Those technologies that can realistically be sustained without subsidy must put their business cases forward so that Government can avoid killing off a developing sector in its entirety before it has the chance to prove its real value."

The draconian reductions in the FITs now being introduced will stifle the Renewables sector before it has had the chance to mature to the point where it is sustainable without external support. If this is allowed to happen thousands of jobs will be lost, a generation of expertise in delivering renewable energy will go elsewhere and private investors will go and not return. Our opportunity to get beyond our targets and obligations for Renewables by 2020 and 2050 will be lost.

All the various renewable technologies have their own arguments for special treatment and no doubt some are more deserving than others. Those technologies that can realistically be sustained without subsidy must put their business cases forward so that Government can avoid killing off a developing sector in its entirety before it has the chance to prove its real value.

Government must create the right environment for these arguments to be heard in an atmosphere of calmness, and not use the current method of announcing planned changes under the cloak of consultation, which has existential consequences for many nascent businesses. This leads to bad planning, bad decisions and above all a dramatic lowering of morale in a sector where investor confidence is already ebbing away. 

Failure by government to get this right will shape our energy policy for years to come and leave the UK unnecessarily exposed to risks to our energy supply. Get it right and the legacy will be historically on a par with the Industrial Revolution.

Clive Arup is a director of Barn Energy Ltd a company that specialises in Low Head Hydro on English rivers, the most cost effective renewable energy technology, and a member of the acumen7 networking group.

www.barnenergy.co.uk

www.acumen7.com

 

 

If you would like to contact Jackie Whitelaw about this, or any other story, please email jackie.whitelaw@infrastructure-intelligence.com.