Annual energy statement needed to ‘quell fears’ over security of supply

Manufacturers organisation EEF has called on the government to reintroduce an annual energy statement to quell fears over the security of supply.

Just one in three companies believe the government has a long-term strategy in place ensure access to secure power supplies, a report by the trade body has found. A mere 4 per cent believe Britain’s energy infrastructure has improved over the last two compared to a quarter who say it has worsened.

“Manufacturers’ confidence in the government’s management of security of supply is tepid at best,” said EEF head of climate and environment policy Claire Jakobsson. “The last 18 months have been a high degree of uncertainty in the energy market as a result of numerous policy changes, the Brexit vote and two new administrations in a short period of time.

“Decisions on new nuclear and the coal phase out have started to steady the ship, but we need a meaningful annual statement that sets out a clear and stable direction of travel for energy policy as part of an overarching industrial strategy.”

EEF noted there was previously an annual energy statement under the recent coalition government although it was “largely regarded as inconsequential” by most stakeholders. However, it said the government’s decision in July to merge the business and energy departments has provided an “ideal opportunity” to introduce a revamped annual energy statement.

The trade body said the statement should provide “an unequivocal understanding of the government’s vision for energy policy and decarbonisation” as well as outlining key policies and funding decisions. The first should take place in 2017 and contain announcements on a full-phase out strategy for coal, a strategy for the development of carbon capture and storage and details of the future support available to new low-carbon generation.

The report also highlighted the potential gains from energy efficiency and increased flexibility. It found that a 14 per cent reduction in electricity consumption in the manufacturing sector is achievable but said “the current policy framework is unlikely to deliver this without reform”. Just 9 per cent of companies participate in demand-side response (DSR) activities, the analysis revealed.

EEF urged the government to deliver a “fully-fledged” DSR scheme, building on the transitional arrangements auctions in the capacity market; reform the capacity market to allow DSR to access the main auctions more easily in future; introduce a new energy efficiency discount on the Climate Change Levy; and investigate how to maximise the benefits of smart meters, half-hourly settlement and time-of-use tariffs for manufacturing.