With one speech, energy secretary Amber Rudd has spoken more sense on energy policy than her three predecessors put together. Energy security is now the number one priority, as it always should have been. The quasi-religious obsession with renewables has been ditched – not before time – and the market will have more freedom to deliver ambitious decarbonisation targets at least cost to the consumer. If that means retiring coal plant is largely replaced with gas, so be it. We need power when consumers need to use it, not when the wind happens to be blowing.
Consumers’ money will continue to be poured into offshore wind for the time being, but a clear signal has been sent: unless costs come down, the subsidy trough will be removed. Furthermore, Decc will at last be looking at how to internalise the escalating cost that intermittent, non-dispatchable generation imposes on the rest of the system. This is music to the ears of those of us who have argued for such developments for many years.
Many questions remain, of course. Will the capacity mechanism deliver? Will we actually see final investment decisions on Hinkley C, or CCS demonstration projects? Are unilateral emissions targets sustainable in the absence of global action? But the most important question has been settled: the market is coming back to the heart of energy policy. For the UK’s industrial users, facing the highest electricity prices in Europe, there may be some light at the end of the tunnel.
Jeremy Nicholson, director, Energy Intensive Users Group