Professor Sir Dieter Helm has branded the government’s decision to opt out of the EU’s internal energy market (IEM) while increasing its reliance on interconnectors a “mistake”, which threatens the UK’s security of supply during cold snaps.
Giving evidence to the House of Lords industry and regulation committee yesterday (20 July), the Oxford university professor of energy policy warned about the risks thrown up by the UK’s growing reliance on energy interconnectors after pulling out of the IEM, which facilitates trading of energy across the EU
“Now we are on the outside, imagine if there is a cold weather period with high pressure and dark clouds across Continental Europe in February.”
Helm said in this scenario it is likely that lack of wind could make the UK reliant on interconnectors when the IEM’s members are likely to suffer similar power shortfalls.
“We have chosen to be outside: it may be OK because there may not be similar problems in the future, but it’s not something I would rest easy about.
“I respect the (Brexit) choice but don’t be deluded that everyone on the other side will play by the rules,” he said, adding that interconnectors should be derated to reflect the political and economic risks of being outside the IEM.
Helm, who carried out a review of energy costs for the government in 2017, also told the peers that Ofgem should be “largely” abolished because there are “too many institutions” overseeing energy governance.
He said that Ofgem had “largely” lost its role in generation and policing networks could be transferred to a new body that would also cover water.
And he said that the concept of a new Energy System Transformation Commission, which has been championed by Exeter University professor Catherine Mitchell, is “precisely the wrong way to deal” with the problem of overhauling the UK’s power system.
He said, particularly given that the UK has only 14 years to cut its emissions by 78 per cent on 1990 levels, it would be better to use existing institutions, such as the Climate Change Committee and the system operator, which the government has just announced will be split off from National Grid.
Helm, who advocated the division of the system operator from National Grid in his BEIS energy review, said he favoured a “small, focused” organisation that would oversee auctions and modelling rather than carrying out the day to day running of the system.
And he expressed a lack of confidence that the UK will hit its 2035 emissions reduction target.
“This is the greatest transformation of the energy sector in a short period of time anyone has ever come up with,” Sir Dieter said, adding that the UK is a “long way adrift” of meeting its targets because the government is continuing to “faff” about decarbonisation.
“The root cause of faffing is the political problem of coming to terms with the fact this is going to be painful and costly and someone is going to have to pay: no politician over the last 20 years has been prepared to say that.”