Experts split over achieving UK low carbon energy mix

By Laura Syrett
Published: Friday, 18 March 2016

Lack of certainty undermines confidence, with experts saying that the UK has lost time on nuclear, solar and wind; EV tech investment is “chicken and egg”.

Transitioning the UK to low carbon energy generation needs to be driven by sustainability goals, rather than political interest, delegates heard at the Crude Awakening energy panel in London in March.

Speaking at the meeting, hosted by Instinctif Partners, Sir John Baker, former chair of the World Energy Council and current chair of micro gas turbine developer, Bladon Jets, said that the UK must have stable and certain policies to derisk the renewables market.

"What we need to do is not what we’ve done for the last 30 years. There needs to be more consistency, less tinkering with financial incentives (…) and a longer term strategy on decarbonisation," Baker said.

He added that the UK energy market has been "bedevilled by regulatory uncertainty", resulting in the loss of time and investor confidence in the development of new technologies, such as next generation nuclear, as well as wind, solar, batteries and gas turbines.

Many of these so-called "green energy" initiatives may now struggle to get off the ground in the UK, after the incumbent Conservative government announced plans to cut subsidies for renewable technologies at the end of last year. 

Charles Hendry, former UK energy minister and a Conservative MP, told the Instinctif meeting that subsidies should be available to support early stage growth of renewables, but that such payments should not become a prop and the price of energy should not rise to meet the cost of implementation.

He added that offshore wind energy forms a key part of the government’s current energy strategy and expressed confidence that a new nuclear power plant, such as the one planned for Hinkley Point in Somerset, southwest England, by French government-owned company EDF, would go ahead.

"If [Hinkley Point] does not go ahead, I think the prospects for nuclear in this country are very challenging," Hendry said. "If state-owned entities can’t make it happen, who can?".

According Diego Biasi, CEO of renewable energy fund, Quercus Investment Partners, among the chief barriers to nuclear energy are unanswered questions about the cost and safety of managing radioactive waste.

He implied that while faith in a nuclear future is receding in many parts of the world, confidence in renewable energy has shown a linear progression, with investment in the sector rising from $45bn in 2004 to around $270bn last year.

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EV technology needs to mature before investors commit to building the necessary infrastructure to support it, according to former UK energy minister, Charles Hendry. (MR38, via Flickr)

Transparency and competition

Andrew Mayer, head of public affairs in the UK and Ireland for German chemicals group, BASF, challenged the notion that government-backed operations and rigid policies would underpin economically viable energy generation.

Referring to the projected price of the proposed Tidal Lagoon Power project in Swansea Bay, Wales, which has reportedly been reduced to around £96.50/MWh ($137.32/MWh*) from an initial estimate of £168/MWh, Mayer suggested that the renewables industry needs "competition, rather than certainty".

Energy UK CEO, Lawrence Slade, argued for transparency in energy policy and criticised the opacity of the levy framework for renewable technologies.

He said that potential investors in electric vehicle (EV) charging infrastructure would be looking for a roll-out plan on which to base their decisions – something that he said is currently lacking from UK government strategies.

Hendry disagreed with Slade over EVs, however, saying that the industry needs to mature further before long-term decisions can be made. 

"It’s a chicken and egg situation," he told IM. "Nobody wants to invest in infrastructure for what could turn out to be the wrong technology."

"We need to wait and see where EVs go and what kind of technology comes out on top. EVs used to be a sort of 'gee-whizz’ curiosity, but now you’ve got BMW and Tesla bringing out cars."

He said that German manufacturer Volkswagen (VW) was likely to be the first of the established car makers to become fully electric, in the wake of last year’s scandal over disguised diesel emissions from new VW models.

Baker noted that a pathway to greater electrification across all industries looked the most likely route to a lower carbon economy but that a "gas bridge" was needed to facilitate this shift.

Hendry agreed that gas will probably prove to be the enabler of any meaningful transition to decarbonised energy, but said that this would be effected without the exploitation of shale gas in the UK.

He suggested that OPEC’s refusal to cut oil production was designed to "freeze out" shale oil and gas and that while this would not succeed in the US, it had made European shale a "fairly risky proposition" – with the UK at the riskiest end of the spectrum.

Hendry added that the UK government was right to ascertain domestic reserves of shale gas but did not envisage a situation where shale oil and gas would become a significant part of the UK’s energy mix.

*Conversion made March 2016

Minerals in renewable energy

WIND TURBINES

  • Rare earths 
  • Boron

ELECTRIC VEHICLES

  • Graphite
  • Lithium
  • Talc

SOLAR

  • SiC 
  • Borates
  • Quartz
  • Soda ash