This warning is brilliantly put and - quite literally - chilling.
His best hope for us seems to be that we get stuck in the recession.
{EUReferendum blog also comments ]
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THE TIMES 16.4.09
We are six years away from an energy crisis
Protesters may object to new power stations, but we need vast
investment right now to prevent a precarious, volatile future
Dieter Helm
the recession has cut our electricity demand and carbon emissions. An
impending energy security crunch has been postponed.
The bad news is that the recession will almost certainly delay
investment in Britain's energy infrastructure and encourage complacency.
Energy security is no longer something that we can take for granted.
This week more than 100 people were arrested in Nottingham over a
suspected plan to disrupt a nearby power station. Will there will be
more disruptions at other coal-fired power stations or against new
nuclear developments now that we know more about where they will be
sited?
Russia's interruptions of its gas supplies to Europe for three weeks
in January was another warning, as well as performance failures at
our existing nuclear power stations. These may be isolated instances,
but our vulnerability to such events indicates that all may not be
entirely well with our energy systems.
For the past two decades we have had ample reserves to absorb the
shocks: now the margins are beginning to wear thin. Many of the
existing power stations were built in the 1970s or earlier. All the
coal-fired stations are more than 30 years old, as are most of the
nuclear ones. They are all coming to the end of their lives and their
reliability is inevitably beginning to suffer. Although significant
numbers of gas power stations have been added, North Sea gas and oil
supplies have been depleted at breakneck speed. After decades as an
energy exporter, Britain now relies increasingly on imports of gas
and coal.
Fast-forward to 2015 and the energy position could be precarious. By
then the remaining coal power stations will be facing closure because
of the pollution control requirements of the EU directive on large
combustion plants. By then all except one of the existing nuclear
stations will also be closed or facing closure. Having to replace so
much coal and nuclear capacity in such a short period is
unprecedented - except perhaps in wartime.
And at the same time because of the EU Renewables Directive the
Government has committed itself to a crash programme to increase
wind's share of electricity generation from the current 5 per cent to
perhaps 35 per cent by 2020.[A total waste to divert resources to
such a useless end- it verges on the criminal -cs] But not only will
wind power do little to combat global climate change (the big issue
is the projected increases in coal burn in China, India and
developing countries), it is also expensive and may even reduce the
security of supply. It is uncertain too. Few think that wind supply
on this scale will be achieved - though, unsurprisingly, few
politicians will admit this in public.
The security problem arises because wind is intermittent. When it
does not blow, back-up capacity is needed; and when it does blow, it
reduces the profitability of power stations whose alternative energy
supplies it displaces.
If current capacity were around 70GWs, by 2020 even if demand stayed
the same we might need as much as 90-100GWs of capacity to meet peak
demand. So not only do we need to replace at least 30GWs of existing
power stations, but we also need to add another big tranche of
capacity to support the vagaries of wind power. Wind power is largely
additional to the existing system: it does not replace the capacity
that is being closed.
The economic effects on non-wind energy investment are more subtle
but no less serious. The economics of nuclear power stations dictate
that they need to run all the time. Turning them on and off is
expensive - it's not like turning a car engine on and off. So once
the wind turbines are built, if the wind blows and they displace
everything else, they could possibly ration nuclear off the system.
Wind and nuclear are not easy bedfellows - as potential investors in
nuclear power will be keenly aware.
What will fill the gap and at the same time back up the intermittent
wind? The answer appears to be gas, gas and more gas. We will be
lucky if even a single new nuclear station comes on stream by 2020.
The carbon emissions from new coal stations will need to be
sequestrated underground, and that technology is not likely to be
commercially available until well after 2020. So before 2020 it would
have to be "unabated" coal - which sits uncomfortably with the
climate change objectives.
The chances of enough gas stations being built on time are not
looking good, so the gas will have to be imported, and at a time when
across Europe everyone is dashing for gas too. The Russians are not
increasing investment in new gas resources and doubts remain about
their ability to meet Europe's demand. Liquefied natural gas will be
used to plug this gap, but the sources of supply are quite limited
and again lots of other countries (especially the US and Japan) will
want it too.
The scale of the investment required to plug the energy gap while
pursuing renewables is enormous. The cost of building not only power
stations, but also new transmission networks and gas storage
facilities, fitting smart meters, developing an offshore wind
industry and implementing energy efficiency measures will run to tens
of billions, possibly more than £100billion in the next decade.
[Brown and Da`rling have thrown more than that away already. We
don't have it and won't be able to borrow it -cs] Though the
recession has brought a breathing space on the demand side of the
equation, it has markedly worsened investment on the supply side. The
credit crisis has made it harder and more expensive to finance
investment; just when the investment is needed, finance has dried up.
Time is now very short in energy terms. Investment does not fit into
neat electoral cycles. With about five years to go if the economy
recovers, there are still things that can be done. Our energy policy
was designed for the years of energy surpluses and North Sea gas. It
is still focused on keeping costs down and sweating assets. What is
needed is a radical rethink, with investment the priority. It will
take a national effort to prevent a serious crisis in the middle of
the next decade.
Without such a redesign, if there is a rapid economic recovery,
things could get nasty quite quickly. As energy systems operate
closer to the margin, small shocks have large consequences. Today a
few demonstrators cannot make any serious impact, and even a
prolonged interruption in Russian gas supply can be withstood. But as
margins tighten, prices respond disproportionately. Britain has
probably already committed itself to higher and more volatile prices.
This matters not only for customers - though they are likely to be
paying a lot more. The rest of the economy depends on energy supply.
Have a bit too much and we pay a small premium. Have too little and
we pay a lot. These costs are the real burden on the economy and they
are felt long before any physical interruption in supply. We should
worry less about the lights going out and more about the costs to the
economy of running our energy system on the edge.
Unless reform is quick, the best hope for Britain's energy supply
from a security perspective is that the economy does not recover
quickly - a long hard Japanese-style recession would keep demand (and
carbon emissions) low. But that's hardly a sound energy policy.
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Dieter Helm is Professor of Energy Policy at the University of Oxford
and a Fellow of New College.
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