Category Archives: Energy

Britain, Economic, Energy, Environment, Government, Politics, Society

Great British Energy risks decimating energy security

UK ENERGY POLICY

KEIR Starmer’s aspirations for a carbon-free and energy-secure nation fulfilled at a stroke through the creation of his new quango, Great British Energy (GBE), is at odds with the reality of the situation.

The UK would, of course, welcome a green and pleasant land with cleaner air, lower carbon emissions, cheaper fuel bills, and a reduced dependence on Vladimir Putin and his gas pipelines that run from Russia to the West.

But the truth is the creation of GBE will deliver few, if any, of the bold pledges that Sir Keir Starmer and his Energy Secretary, Ed Miliband, are making.

In the King’s Speech, Sir Keir’s new government confirmed that GBE, the state-owned energy company, will develop, own and operate energy projects such as wind farms, using public money to help spur further private sector investment.

But the £8.3billion of money promised by the Exchequer for Britain’s energy transformation over the term of the current parliament will be a mere drop in the ocean.

In spite of the overblown language, this is a fraction of the sums of money already devoted to “climate reduction” goals by our UK-listed oil firms Shell and BP, as well as domestically owned power suppliers Centrica and Scottish & Southern Electricity (SSE).

Some argue it is reassuring that GBE will be headed up by Juergen Maier, the former boss of German multinational Siemens’s British arm, who might bring some much-needed private-sector experience to the job.

What is less reassuring, however, is the disastrous financial performance of Siemens Energy. It ran up losses of £3.7billion in 2023 alone. Combined with the desperate track record of past Labour governments to command and control the economy through grandiose quangos such as the National Enterprise Board of the 1970s, it looks almost inevitable that GBE will become yet another vast black hole, drawing vast public cash at the expense of other strained public services.

Most critically, by blocking future North Sea oil licences, as Starmer has done, and holding fire on the prospects for new nuclear production, the nation’s energy security is being sacrificed in order to pursue unproven green energy “solutions”.

In doing so, the UK is exposed to the danger of factories being closed, the elderly and poor freezing in their homes, and the lights going out when the wind fails to blow and the sun doesn’t shine.

It is also critical that the UK can maintain a minimum level of electricity production at all times – especially if the Government pursues a mad rush towards electric vehicles which, in many cases, are proving notoriously unreliable.

That is why Centrica-owned British Gas is investing heavily in renewing the nation’s gas storage capacity at Rough off the East Yorkshire coast and exploring other potential sites in Wales.

Not to mention that Starmer and Miliband appear willing to trash 100,000 North Sea oil-related jobs, sabotage Aberdeen, and lose £30billion of new investment in fossil fuels, and the engineering services which go with them, to drive the “green revolution”. Labour believes that by signing an agreement with the Crown Estate – which has command over most of the nation’s coastal waters – it can generate £60billion of new investment. The link to the monarchy alone could potentially attract some foreign investors on the grounds of offering a kind of royal imprimatur. But we shouldn’t get carried away by Labour’s hoopla.

The Crown Estate has much more skill and expertise on redeveloping real estate, such as Dumfries House in Scotland, than it does in energy projects. Despite its prestigious reputation, the Crown Estate’s new agreement with Labour, is at the hands of hard economic facts. The only thing that will attract investors is a competitive entry price. If the price at which energy generated at the offshore windfarms can be sold is set too low to make the projects viable, it will deter bidders.

We learnt this the hard way in a crucial auction last year, when not a single company bid to run a new offshore wind farm. That was because the Tory government had set the energy price too low. Even more seriously, a major proposed investment off the Norfolk coast was temporarily put on hold.

The same thing happened in the US last year when Ørsted cancelled £3.3billion of wind projects because it could not make the financial returns.

Earlier this year, BP also pulled out of its involvement in New York state wind farms – at a heavy cost to investors – because of the difficulty of getting decent returns.

The ultimate goal in all of these wind farm projects may have been lower prices for consumers. The reality is that only by offering a higher energy price to investors will they come forward – and the projects be built. It’s an uncomfortable truth for Labour, who want to be seen to be providing the cheapest energy possible to its citizens.

They have been repeatedly questioned about when, or even if, their “Green New Deal” would deliver lower prices for consumers, but Labour have been unable to answer. So much for cheaper bills and the election manifesto pledge that consumers would be £300 a year better off.

A secondary aim of GBE is to boost our manufacturing sector, creating new skills and employment opportunities to replace those in fossil fuels.

Certainly, this is a perfectly noble aim. But in Britain, we have already sold ourselves out. Most of the solar panels being installed on the roofs of homes and factories across the UK are being built in China at a fraction of the cost they can be made in the UK.

One only has to look at how Beijing is dominating the market for electric cars – and the 50 per cent tariffs imposed by the US and Europe to slow imports – to understand how difficult it is going to be to compete with Asian production.

There is also evidence that Chinese suppliers of wind farm equipment are using cheap Uyghur labour to manufacture wind turbines. It will be all but impossible for UK manufacturers to compete (currently responsible for less than 10 per cent of wind farm components).

There is one area of green technology where Britian does have a competitive quality and engineering advantage. Rolls-Royce, with the assistance of government funding, leads the world in the development of “small modular reactors”. These are mini, simple-to-construct nuclear reactors based on the turbines that power nuclear-powered submarines.

Rolls-Royce believes it is capable of capturing a £250billion global market if it receives the go-ahead from Whitehall for UK production. The Czech Republic has already expressed an interest in buying them.

Tens of thousands of real jobs – not the Potemkin quango roles envisioned by the UK’s new Government – are there to be created.

We can only hope for the success of Great British Energy and the zero-carbon nirvana envisaged by our mission-driven Government.

But there are huge fears in creating a taxpayer-funded white elephant which will decimate our energy security.

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Britain, Economic, Energy, Environment, Government, Society

The looming crisis of an energy shortage

ENERGY RESERVES

NEVER in history have modern societies relied so heavily on secure supplies of electricity. Half a century ago, when the nation was last subjected to major power cuts, the effect was mainly on heating and lighting.

Now, however, the computer revolution has changed that completely.

People shop online, we work online, and much study is also done online. International trade and financial transactions depend entirely on a functioning computer network.

The same is true of everything from the police to the transport system. And a power shutdown or outage of only a few hours, even if scheduled, could do lasting damage.

In the same period, we have grown accustomed to a more or less regular and reliable power supply.

Thanks partly to investments made decades ago, the country still has a significant amount of reliable nuclear-generated electricity, plus a small, dwindling reserve of coal generation.

But both these sources are shrinking, because we have phased out coal for a greener environment and because we have failed to plan effectively to replace ageing nuclear plants. A great deal of our remaining energy now depends on gas, much of it imported.

The revolutionary switch to renewable energy, made in response to global warming and the climate change crisis, has been for some years the main focus of planning and building.

This is excellent when it works, but it is completely dependent on the caprice of weather, or on the simple realities of climate.

Solar power, predictably, is of little use here in winter. Wind power can vanish without warning or can be made unusable because the wind is actually too strong for safe generation. Proud announcements that the country has generated 50 per cent of its power through wind on any given day should be greeted with caution. On a windless day, that figure could be tiny.

Some of these problems are alleviated, but not solved, by connectors from our neighbours.

These can rescue us at awkward moments, but France, for instance, has run into major maintenance problems with its elderly nuclear generators, and winter weather simply increases pressure on scarce resources, everywhere. Up to a point, sudden shortages may be dealt with by paying large consumers to switch off, or by bringing in banks of costly and far-from-green diesel generators.

But the risk of actual power cuts, especially in weather such as we have recently been experiencing, is worryingly high.

We really are not very far away from imposed power cuts in our homes and offices, which – as well as leaving the old and vulnerable in the cold and the dark – will do serious damage to the economy.

So, it is perplexing to find that the Government has been relying on predictions by the Met Office in making its plans and calculations. Not only is the Met Office honest about the difficulty of long-distance forecasting, but winters in the UK can be very severe indeed.

Who knows what we would do if Britain once again faced a relentless long-term freeze such as that of 1962-63, itself the coldest since that of 1895?

Events such as the “Troll of Trondheim” often come with little warning. So do interruptions in supply, hugely important now we are no longer self-sufficient in gas.

The one thing that the Government can do is to be prepared for all eventualities. It has been many months since the poor state of our reserve capacity was revealed.  Let us hope that Ministers and officials have not wasted a single second in getting ready.

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Energy, Government, Politics, Scotland, Society

Energy crisis: Taking back control of our energy supplies?

ENERGY ALTERNATIVES

JUST seventeen years ago the UK produced enough gas for all its domestic needs, but we are now reliant on an international market and the whims of President Putin. But there are ample alternatives to imported gas that could put the energy market on a sustainable footing:

New North Sea Gas

PRODUCTION in the North Sea has dwindled because older gas fields have become too expensive to run, and new ones have taken a long time to come on stream.

Last year about 48% of UK gas came from the North Sea, down from 100% in 2004, and this is projected to keep falling.

If the Government does not subsidise investment, then by 2025 domestic gas will only meet around one third of UK demand, making the country even more reliant on global markets.

Refinitiv, a European Gas Research body, said there are untapped gas fields in the North Sea, but that more investment is needed. It says there are up to four new gas fields that will be starting early next year, but highlights the fact that, “we’ve seen falling investment in the last 18 months.”

Restart Fracking

The Government halted fracking in England at the end of November 2019 after a series of confrontations between shale gas companies and local communities.

Supporters claim there is enough shale gas in the UK to support the country’s needs for decades.

Fracking has boomed in the US, making the country a powerhouse in global oil and gas production, and securing its energy security. The technique, also known as hydraulic fracturing, involves pumping water and sand underground at high pressure to fracture the rock and release trapped oil and gas.

Fracking has effectively been banned in Scotland since 2015, with ministers announcing in 2019 that the moratorium would be extended indefinitely.

An active fracking site near Blackpool caused several earthquakes up to a magnitude of 2.9, which left houses in the local area shaking. Opponents of fracking also complain that sites require significant infrastructure and sand and water must be transported to and fro in large trucks leading to traffic, noise and disruption.

The Government took its decision after a scientific study found there would be “unacceptable” consequences for those living near fracking sites. But it said it could agree to new sites if there was “compelling new evidence” that fracking was safe.

More Gas Storage

The UK has around 18 times less gas storage than European nations such as Italy, Germany and France, making the country extremely vulnerable to volatile prices.

A focus on renewables and developing better connectivity with neighbours such as Norway, to enable the UK to import gas effectively, meant little new storage has been built.

In fact, the Rough storage facility off the Yorkshire coast, which accounted for two-thirds of our gas capacity, was retired in 2017. Experts said politicians believed that there was no need to spend vast sums on new storage plants because prices had been stable between the summer and winter for many years.

Shetland Oil Fields

The UK could look to new oil fields – at the risk of being accused of climate hypocrisy.

The area to the west of the Shetland Islands has been named as “the place to be” by energy experts advising firms on growing Britain’s oil output. Siccar Point Energy, backed by Shell, is preparing to start drilling in the Cambo oil field, situated 75 miles to the west of the Shetlands.

It is thought to contain 800 million barrels of oil, which will be released over the next 25 years. The company previously said: “The Cambo development supports the country’s energy transition, maintaining secure UK supply.” Such words appear prophetic against the recent wild swings in gas prices, but more licences to drill oil will enrage environmental campaigners.

It could also be against the law as the Government has created legislation committing the country to a 78 per cent reduction in carbon emissions by 2035, and a 100 per cent reduction by 2050.

Go Nuclear

LAST month, ministers said they were considering a “change of focus” towards nuclear power to find a more reliable source of green energy than wind and solar.

Industry leaders have lambasted the Government for failing to replace Britain’s ageing reactors sooner, despite repeated warnings.

Next year alone the country will lose more than a fifth of its nuclear power generation when plants in Dungeness, Kent, and Hunterston, in Ayrshire, are decommissioned. There is then a procession through the 2020s as plants in Hartlepool, in County Durham, Heysham in Lancashire, and Torness in East Lothian, are retired. Any investment in nuclear energy today will not provide energy until the 2030s and the UK will need at least two large reactors and ten small plants just to maintain current levels of energy production.

There is some hope. A consortium led by Rolls-Royce, which makes nuclear reactors for submarines, has just secured a £210million investment that will allow it to put its plans for mini reactors to regulators. It hopes it can build the smaller plants, which will require £2billion investment each, more quickly than traditional reactors, and hopes to build up to 16.

In its last energy policy, published in 2017, the Scottish Government opposed new nuclear power stations being constructed.

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