The Centre for Policy Studies today welcomed the Government’s new energy security strategy, but warned that it may do little to bring down bills in the short term.
The CPS welcomed the core decision to bolster domestic energy supply, having led the way in warning about the threats to our energy security.
- It also welcomed the planned expansion of nuclear, hydrogen and offshore wind, as called for in recent CPS papers, as well as the overdue return to annual North Sea licensing rounds for oil and gas.
- However, the lack of significant support for onshore wind, fracking and demand-side measures such as home insulation represents a significant missed opportunity. The idea of incentivising communities to accept onshore wind is a good one – and was proposed by Simon Clarke MP for the CPS – but there was room to be much more ambitious.
- There are also significant delivery challenges. As the CPS has pointed out, the offshore wind industry is facing lengthy delays and cost inflation due to ongoing Covid related supply chain issues. There is already a real risk that the existing 40GW target by 2030 will be missed, let alone the new 50GW target.
- We also need greater clarity on the extension of the coal and nuclear plants due to shut down by September 2024, taking 8GW out of the system.
- The CPS is also deeply sceptical about the plan to establish a new nationalised body to oversee these reforms. These would move the grid in precisely the wrong direction, planning future electricity system needs from the centre through a state-owned bureaucracy rather than using markets and the price mechanism.
Robert Colvile, Director of the Centre for Policy Studies, said:
‘As the view for household energy bills gets bleaker by the day, the government is right to plan ahead to bolster domestic supply and boost UK energy security. The role of hydrogen and nuclear in this is key, as we have argued, and the Government’s recognition of this is extremely welcome.
‘Despite this, it is disappointing to see that the Government’s ambitions have not carried over to other alternative energy sources, such as onshore wind and fracking. Nor have they taken the opportunity to promote demand-side energy efficiency, including via insulation – which in turn will help reduce the most significant costs and support the push for Net Zero. The decision to nationalise core National Grid responsibilities is also highly alarming.
‘While this strategy will expand power supply, it will take several years for its full effects to be felt. In the meantime, consumers and businesses should brace themselves for painfully high energy costs to continue.’
Date Added: Thursday 7th April 2022