Whistling in the dark
Simon Nixon says the government is powerless to prevent an energy crisis that could strike as early as this winter
power cuts and rolling blackouts are about as Old Labour as rising taxes and paranoia about spooks, so it should come as no surprise that astute observers of the political scene are stockpiling candles. A report published this week explains why. According to the Institution of Civil Engineers (Ice), Britain is heading for a repeat of the 1974 three-day week, with the government forced to impose power cuts and homes left without light and heat. Ice says these problems will be upon us by 2020, but many industry experts
think this is too optimistic. Professor Ian Fells, chairman of the New and Renewable Energy Centre, says that there is a 20 per cent chance that power cuts will start this winter, while Nial Trimble of the Energy Contract Company says that, without urgent action now, power cuts are a racing certainty in the winter of 2005-06.
No one should underestimate this threat to our welfare. Power cuts would create havoc with the economy. Businesses — far more reliant on computers now than in 1974 — wouldn't be able to function. The Tube would shut down. Water and gas systems, both of which depend on electronic pumps and compressors, would fail. Worst affected would be hospitals and universities and other big institutional users of gas and electricity. And what is the government doing about this threat to our economic security? Precisely nothing.
The problem is that Britain is running Out of gas. For the past 20 years, we've been addicted to the stuff. It was so cheap and came out of the North Sea in such quantities that we staked much of our electricity system on it. But North Sea gas production has peaked and will soon fall sharply. On current forecasts, we will need to import 50 per cent of our gas by 2010 and 90 per cent by 2020. According to Ice, we are nowhere near prepared for this huge shift in our energy needs.
As things stand, we will be dependent on gas transported thousands of miles from some of the most politically unstable countries on the planet, such as Algeria, Iran and Russia. What's more, these pipelines must first pass through many other gas-needy countries. And Britain has not got the facilities to store the gas when it gets here. Most European countries have the capacity to store up to 20 per cent of their annual needs, but Britain can store only 4 per cent — or enough for about 48 hours' supply in winter. If we don't start building new storage facilities now, we won't be equipped to cope with a cold winter in three years' time, says Nial Trimble. 'The lights will go out. I guarantee it.'
Yet in a recent White Paper, the government effectively dismisses these concerns. It says that since exporting countries want British cash as much as we want their gas, there is nothing to worry about. Yet not even President Putin believes this. The Russian leader is sufficiently worried about the vulnerability of existing pipelines that he wants Britain and Russia to build a new one across the Baltic. But although a memorandum of understanding was signed during Putin's state visit last week, there is little chance of this pipeline ever being built, says Dr Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies. The cost is simply too huge for any UK company to undertake, and the government won't permit the kind of long-term supply contracts that might make the pipeline viable. But without a major new source of supply, says Stern, the winter of 2005-06 will be 'a bet on the weather'.
Not only is the government failing to address the problem, however; it is actually making it worse — by reducing our energy diversity. Coal, which used to deliver 80 per cent of our electricity, is virtually obsolete, a victim of strict new environmental laws. Now the government is determined to run down the nuclear industry, which produces 23 per cent of our power. All but one of our nuclear power stations are to be decommissioned by 2010 and no new ones will be built. Instead, the government says that we will make up the difference from renewable sources — primarily wind. By 2010, it wants 10 per cent of our electricity to come from renewables, rising to 20 per cent by 2020, up from less than 1 per cent today.
These are preposterous targets. Professor Ian Fells, a supporter of wind power, reckons we'll be lucky to get 7 per cent of our electricity from wind by the end of the decade. and 10 per cent by 2020. To meet the government's target, we need to install 20 2MW windmills every week from now until 2020. Yet no one knows where these windmills will go, let alone what they will cost to install. Most will have to be located offshore and new transmission lines will have to be built to bring the electricity to the national grid.
Indeed, the grid itself will have to be substantially reconfigured. It is designed to transport power from large central power stations to the periphery; wind power will require it to do exactly the opposite.
What's more, windmills run at optimal capacity for only a few weeks every year. This means that 100 per cent back-up is needed. But where will this back-up come from? The government hasn't a clue.
What the government does say is that if by the end of the decade it becomes clear that wind power is not going to deliver the expected results, it will review its decision to close down the nuclear industry. But will Britain still have a nuclear industry left to revive? Richard Mason, reactor technology director of BNFL, is becoming increasingly worried about the loss of core skills, including not only 'reactor-specific' skills but also the regulatory skills needed to license new power stations.
What makes the government's recklessness over energy policy all the more extraordinary is that the industry has been warning about this looming crisis for years. But instead of heeding the warnings, the government has sacrificed our security to the twin Labour totems of envi ronmental correctness and the demand for low-cost fuel for the low-paid. It has devised a regulatory structure designed to deliver the lowest possible energy prices to consumers, but the result has been to bring new investment in the energy sector to a standstill, says Dr Dieter Helm, a director of Oxford Economic Research Associates. The government simply
refuses to acknowledge that the system is incapable of delivering low-price energy and meeting its strict environmental targets and guaranteeing security of supply.
The answer, says Helm, is an independent energy authority to oversee this fragmented industry. We should be so luck. Instead, Tony Blair has downgraded the job of energy minister to a part-time role. Stephen Timms is to combine the job with responsibility for e-com merce and postal services. But perhaps Blair's new predilection for part-time ministers is appropriate — for if his government continues in this vein, we may all soon find ourselves forced to become part-time workers, going to work in cold, dark offices without functioning computers and telephones, before returning home at night to huddle around the fire with our families. Then we'll know that Old Labour is well and truly back.
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