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Ed Miliband, UK energy secretary, came to office promising to “move fast and build things” by unleashing £40bn of investment a year to convert Britain’s energy infrastructure to clean power by 2030. He remains a believer but, less than a year later, that prospect is receding.
His grand ambition to rewire Britain’s national grid in six years while adding record amounts of wind and solar power was always at “the limits of what is feasibly deliverable”, as the government’s National Energy System Operator tactfully put it. It is now widely viewed as beyond reach in the industry that must engineer it, although no one wants to tell the government openly.
Ørsted, the world’s largest offshore wind developer, delivered one blow this month by halting work on Hornsea 4, a North Sea project that could power more than 1mn homes. A critical new subsea and underground cable linking Scotland to north-east England to carry wind energy has also been delayed by 16 months amid global competition for industrial equipment.
Spain’s recent blackout as its own grid faced an unusually high level of solar energy indicated the challenge in shifting smoothly from more stable fossil fuel power. Labour meanwhile faces political ructions over plans for transmission lines in the east of England, with Reform’s deputy leader Richard Tice promising: “We will delay, we will hinder, we will obstruct.”
The UK patently needs to transform its ageing electricity transmission grid, which was largely designed to carry power from coal-fired power stations in the north of England to the south. Despite Reform’s wrecking tactics, fresh infrastructure is needed to change the energy mix and bring more and cheaper electricity to homes, data centres and electric vehicles.
Britain also has a valuable resource in wind, which already rivals gas-fired stations in generation, with the government still hoping to triple offshore capacity by 2030. It plans to halt new exploration licences for North Sea oil and gas (in my view wrongly, since it must import liquefied natural gas at a higher carbon intensity). Miliband has placed all his bets on green.
But the rapid timetable the government set comes with a price that is high and rising. Miliband’s original offer was not just to move rapidly to a net zero energy system but to cut household bills by detaching the country from its reliance on high-priced and volatile gas imports. Trying to meet the target by spending so much that they rise would be a gift to opponents.
Ørsted shelved Hornsea 4 despite winning a guaranteed price for electricity from the field in line with recent wholesale rates. The government may need to offer a higher fixed price in future auctions to secure an alternative (or to entice Ørsted back), and it does not have much time. Not only are turbine prices increasing but it has placed itself in a weak bargaining position.
It is also costly to rebuild the grid quickly, even ignoring the battles threatened by Reform. National Grid has promised £30bn capital investment in the UK over five years, but specialist equipment and engineers are in high demand. “Not many supergrid transformers are going spare around the world,” says Tom Edwards, principal modeller at Cornwall Insight.
Grand ambition has a point, even if Britain does not meet the deadline for 95 per cent of generation to come from renewable sources. An entire industry and planning system must be galvanised to build four times the amount of transmission infrastructure that it has managed in 30 years. There is a fair chance of doing so by the early 2030s, despite all of these difficulties.
But it faces a choice of struggling on towards a target that looks increasingly unconvincing or moving it back. The latter would be embarrassing for Miliband but it would mirror the government’s decision last month to relax its 2030 date for the move to electric cars, allowing sales of new hybrid vehicles until 2035. It had no choice but to be pragmatic.
This would be better than locking Britain into long-term generation contracts at inflated prices in an effort to meet a round-number deadline. It would also be wiser than rushing a decision on zonal pricing of electricity as a quick fix for grid pressures. That might help in the long term, but the industry has enough to deal with now.
Britain is at risk of turning a good narrative — the country of the coal-fired industrial revolution is within reach of converting largely to clean, independent power — into one of engineering failure. It should not be beyond Miliband’s wit to change the story.
https://www.ft.com/content/2e740b5a-8b52-480b-9071-329e3eb4d8b8
