Industry experts believe that renewable energy and low-carbon heating could have done a great deal to help reduce the effect of this winter’s soaring gas prices. The government needs to expedite the move to low carbon solutions sooner rather than later to assist in alleviating the gas supply problems of the future.
The gas supply crunch has led to a spurt of government meetings with industry and the reassurance from the business secretary Kwasi Kwarteng that “there is no question of the lights going out” and that the UK is “highly resilient”.
The UK is not alone in its energy crisis. Since the beginning of the year, wholesale gas prices in Europe have risen by 250%, the result of economic, natural and political forces. Globally, demand for energy has shot up, as China and other major economies bounce back from the pandemic.
According to Roger Fouquet of the London School of Economics, the supply issue shows that fossil fuels are inherently subject to wild price fluctuations, which occur at least once a decade.
“Price volatility is an inevitable part of the fossil fuel energy system. Renewables do not suffer from these market-related problems.”
Rob Gross of the UCL Energy Institute voiced the view that switching to renewable energy would mitigate the effects of fossil fuel price fluctuations but that the UK was still particularly exposed to international gas prices.
“Gas power stations set prices in the UK, particularly when demand is high and renewables output is low. Countries with a lower share of gas in their power mix experience less volatile prices and we should expect that here too.”
Dan McGrail, chief executive of RenewableUK, which represents wind energy companies, said the government should learn an important lesson from this energy crisis for future years.
The first priority for government and the sector is, of course, protecting consumers in response to this price surge. The only way to do that in the long term is to have an energy system powered by cheap renewables, with flexible storage, hydrogen and other low-carbon technologies to meet demand at lowest cost.”
He called attention to the fact that it was already cheaper to generate electricity by building a new windfarm, even before gas prices began to soar, than run an existing gas power plant. The growth of renewables has reduced the proportion of electricity the UK gets from fossil fuels from 60% to less than 40% in the last few years.
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Dan McGrail went on to say:
“The industry is working with government to accelerate investment in renewables, which is key to ending our reliance on gas for heating our homes and in heavy industries. Alongside massive investment in renewables, we need to shift the dial on electrification and green hydrogen production in the UK to meet net zero at lowest cost.”
Despite the lack of government subsidies, solar power has plummeted in cost in recent years. It is forecast to be the cheapest form of power within a few years exceeding even onshore windfarms. Chief executive of the trade body Solar Energy UK, Chris Hewett, said that solar power could continue to supply electricity during the winter months. Solar currently provides about 4.5% of the UK’s electricity but he said it was “eminently achievable” to triple this by 2030, at no cost to consumers, if the government paves the way by removing regulatory difficulties.
Jan Rosenow, Europe director at the Regulatory Assistance Project, said that even though UK electricity is partly generated by gas, domestic heat pumps that run on electricity could also reduce the UK’s dependence on gas.
“But even if all of the electricity used by heat pumps was generated by gas the much higher efficiency of heat pumps would still result in a reduction of gas use.”
However, as Fouquet notes:
“Wind and solar do suffer from intermittency problems. So, while accelerating the transition to renewable energy sources is welcome for environmental reasons, it is important to develop an energy system that is flexible to these intermittencies.”
There needs to be more investment in large scale battery storage technology which up until now the government has failed to do. Also though controversial, nuclear reactors could provide a steady stream of power to the grid to counterbalance the intermittency of some renewable energy. Plans to build a new fleet of reactors by successive governments over two decades, to replace the UK’s ageing nuclear plants have been mired in difficulties. The Trade union, Prospect, has called on the government to prioritise its strong domestic sources of electricity, including nuclear power, to ensure a safe and resilient low carbon future.
Another crucial measure that needs to be addressed is to reduce the amount of energy that is wasted. British homes are currently among the draughtiest and least efficient in Europe, but little has been done to improve this. The government introduced a scheme last year, the Green Homes Grant which was largely meant to get to grips with the issue of insulation. The grant was part of the government’s much vaunted push to Build Back Greener from the pandemic. However, due to poor administration it was scrapped by the Treasury in March this year after only 6 months, and nothing has yet replaced it.
It will be tempting for ministers to go back to business as usual once the current crisis has passed. However, experts contacted by the Guardian warned that this crisis should be seen as a sign of things to come and that the government should introduce the package of measures needed to protect the UK’s gas supply and shift the economy to a low-carbon footing.
Rob Gross concluded:
“Ultimately, it will depend on the level of storage, interconnection and demand management to make best use of renewable resources and break the link between gas and power prices.”