Over the coming months we are expecting some significant decisions from government that could have far reaching consequences for the energy sector for the next decade.
Beyond the policy positioning from the new ministers in the new Department for Business, Energy and Industrial Strategy (BEIS), we expect soon an announcement of the next CfD auction; the emergency capacity mechanism auction, which is hoped to attract new gas; the publication of Charles Hendry’s tidal review report; the first round of the SMR competition; the significant commencement of the smart meter rollout; and the official signing of the Paris climate change agreement.
One thing is clear, though, the government is keen for now to signal the continuation for supporting clean tech with a battery storage consultation set to get underway. This consultation won’t impact hugely on short and medium-term energy delivery but it has significant value for UK plc as a market leader and for revolutionising the way we reach our middle century energy targets.
And so to Her Majesty’s Official Opposition. Labour’s problems have dominated the political news and has somewhat competed with Brexit for the headlines. However, the current shadow energy minister is an energy sector “sage” who has devoted a huge amount of his political career in and around the energy and climate change agenda. Barry Gardiner MP, who is a former member of the Energy and Climate Change Select Committee, has taken up Labour’s energy lead in Corbyn’s shadow cabinet.
Gardiner has commented on energy matters throughout the summer, including on Hinkley, and stated that Labour supports new nuclear as part of an energy mix but at a more respectable cost. Labour continues for now to support renewable energy and clean tech as well as gas.
Overall, both the PM and BEIS minister’s energy in-tray’s are bursting with decisions that have to be taken in order to ensure investment and delivery of enough energy capacity both in the short and medium term as traditional generation comes offline.
I end this short overview by sticking my neck out by commenting on UK winter capacity and resilience. The UK gas storage capacity is currently running at three to four days winter capacity compared with the 14 days the UK has had for a number of years. This is set to continue throughout the winter months due to British Gas closing significant parts of its Rough gas storage unit. For energy intensive users this is a worry and they have longed called for government intervention to secure investment in gas storage to make it as secure as other European countries (for example, France and Germany have between 80 and 100 days of storage each).
If we have a cold and prolonged winter that leaves gas supplies at dangerous levels, it will impact government, industry, and public support for low carbon and renewables – and may lead to a handbrake turn on energy policy early next year.