David Bamford
Director at Future Energy Publishing

Energy supply in the UK – and Europe – is a mess with consumers of all types facing exponentiating price rises, especially for gas, collapse of suppliers, lack of ‘non-geopolitical’ domestic gas supply. An object lesson for the USA, Australia – our friends everywhere!

How did it come to this?

For the UK, the seeds were sown during the 2010-2015 Conservative/Liberal Democrat Coalition Government whose ‘energy policy’ you can find here. To save you scrolling down to the relevant years, here’s what is said:

“In February 2012 I was promoted to the Cabinet as Secretary of State for Energy and Climate Change. My proudest achievements as Secretary of State included:

• Leading the policy and implementing a new legal framework to enable a massive increase in renewable electricity in the UK – which more than trebled under Liberal Democrat Ministers
• Within renewable electricity, focusing on the development of Britain’s offshore wind potential, including an ambitious push for the supply chain to be more UK-based with successes such as Siemens and ABP Ports investment in Hull
• Securing a major EU-wide agreement for new climate change targets for 2030 in October 2014, by establishing and leading the “Green Growth Group” within the EU, bringing together Member States who shared the then UK’s ambition to take strong action against climate change
• Radical reform of competition in the UK’s retail supply of gas and electricity – reducing barriers to entry and making switching suppliers easier and faster – which has resulted in a huge increase in the number of suppliers and a dramatic reduction in the market share of the Big 6, and a much better deal for consumers
• A range of smaller policy initiatives including Britain’s first ever Community Energy Strategy, a regulation to force private sector landlords to bring properties up to a minimum energy efficiency level, initiatives on district heating and water source heat pumps, promotion of Tidal Lagoons, ensuring the Capacity Market I established was technology neutral and allowed new electricity storage technologies to compete
• Developing a range of policies to promote every form of energy security (electricity, gas diversification, transport fuels, nuclear security) and getting the EU to adopt a tough policy on energy security, to reduce EU dependence on imports from Russia
• Getting the price of the Hinkley Point C nuclear power station was lower than the Conservatives would have been happy to accept, and ensuring, in that price, the cost of future decommissioning was included and that the risk of cost overruns, delays and non-completion were all transferred to EDF (thus, if HPC isn’t completed, we don’t pay a penny)”

I guess each of these bullets is worth retrospective analysis but I want to concentrate on the impact on ‘big picture’ gas supply.

Domestic gas supply became frowned upon, thus dropping quickly over the last 10+ years, and so the UK became exposed to the risk that in the event of a cold winter, access to uncontracted LNG from the global spot market would be needed.

The potential for this to result – as it has - in paying much higher prices in a highly competitive market could have been mitigated by having adequate gas storage facilities but the very low level of gas storage in the UK was not dealt with – in fact proposals for new sites (eg Saltfleetby) were not approved and indeed the UK’s main storage site – the Rough facility – was closed as unneeded.

If the word OmniShambles is new to you - here’s a dictionary definition:

“a situation that has been comprehensively mismanaged, characterized by a string of blunders and miscalculations.”

Oh, dear, I suppose that’s a Knighthood out of the question for me!

KeyFacts Energy Industry Directory: Future Energy Partners   l   KeyFacts Energy: Commentary