Why politicians fail at energy policy

This week, the UK’s opposition leader, Keir Starmer, outlined his plans for the United Kingdom’s energy policy, delivering his party’s national mission on clean energy. The key plank of this is to do for oil and gas what Maggie Thatcher did for coal. Margaret Thatcher had an ulterior motive, which was to try and break the power of the coal unions. Keir Starmer appears to have no ulterior motive, other than a desire for a glib soundbite. In explaining the policy, he posited that stopping any new North Sea oil and gas exploration licences would let the UK concentrate on more renewables. Explaining why he thought that was a good idea, he claimed that as renewable energy isn’t subject to global price surges, we would not be held to ransom when global demand causes costs to soar. Instead, we would have a British energy company making British energy for British people.

Putting aside his sudden Brexit-like rhetoric, he was rather light on the detail and largely devoid of understanding. In particular he made no mention of storage. The problem with renewables, particularly wind and solar, is that generation doesn’t line up very well with demand. If you look at UK electricity demand, it peaks in the morning and evening. That behaviour is fairly consistent throughout the year. We use more electricity in winter than in summer, but we still see the daily peaks. As we move to a more electrified society, with electric vehicles and heat pumps, those peaks are likely to become even more exaggerated. 

If you look at when renewable generation occurs, there’s no matching variation. Power is generated when the wind blows, or when the sun shines. In the UK, the sun generally shines at the wrong time. Offshore wind tends to be more even, as long as we build lots of it all around our coast, as the wind is normally blowing somewhere, except for those occasions when it isn’t. But it doesn’t rise and fall throughout the day to line up with our energy usage. And it’s not always there, as several pioneering countries have discovered.

There are a number of ways to solve this mismatch. The first is to have alternatives to hand to cope with the peaks. Today that generally comes from baseline generation from nuclear, which is always there; firing up gas generators, which can be done quickly and efficiently when extra capacity is needed, or buying electricity from another country using interconnects. Each option has its own problems. Nuclear takes a long time to build, so isn’t going to affect generation much in the short term. Keir wants to get rid of gas, which means nobody will want to risk investing in further gas generation, and we don’t have enough interconnects.  A point which he also appears to miss is that interconnects suffer the same price pressure as gas - when demand is high, prices go up.

Interconnects, which are essentially very large, underwater extension leads to somebody else’s grid, are expensive and take time to lay. Currently we have interconnects which can import around 10% of our demand. That’s projected to double in the next ten years, but it’s nowhere near enough to fill in the holes in renewable generation. In contrast, Denmark, which is cited as one of the countries leading the move to wind generation, has interconnect capacity of around 85%, which comes in useful when the wind stops blowing. Much less than that runs the risk of power cuts, or a lot of gas generators on standby, which won’t reduce prices. Interconnects also provide a single point of failure, much like Russian gas pipelines. 

Unlike gas, you can’t easily store electricity in advance when the price is low, which brings us to the giant hole in this policy, which is that if we want to rely on renewables, we need to add in storage, as well as managing energy demand. 

Storage comes in many forms. Denmark exports electricity to Norway which “stores” it in pumped hydropower, exporting it again when the price goes up. In effect, Norway is setting itself up to be Europe’s battery for renewables, but It’s questionable how scalable Norway’s storage capacity will be. It also needs a lot of interconnect, which gets very expensive when it needs to cross the North Sea. Our current cable to Norway is the longest (and most expensive) in the world. Outside Norway’s pumped hydropower, batteries will play an increasing role, both within the grid and in individual homes. You don’t need an enormous battery in every house to smooth out demand. Deployed and managed at scale, they might not cost much more than the ongoing smart meter deployment, but we’ve not got past pilots and trials. We are also seeing the start of large-scale storage for the grid, but it has a long way to go if it’s going to match the scale of interconnect. 

None of these options are impossible, as most of the technology is already there, but they are all long-term projects, which need investors and industry to have confidence that the next administration isn’t going to change its mind and turn them off. Which is why Starmer’s announcement is so worrying. To be fair, he’s not that different from previous party leaders, who have been equally clueless. The question is why they all seem to be unable to plan for the long term?

Politicians don’t understand transitions

It’s often claimed that the problem with politicians making decisions is that they only have a horizon that extends to the next election, leading to short term policies which they hope will influence the voters. There is obviously truth in that, but there may be a more important aspect, which is that they don’t understand transitions. We should probably never allow lawyers into Parliament, as they’re trained to see black and white; to win and lose. Both are binary propositions which fit with the “first past the post” approach of our electoral system. Our leaders seem to lack the ability to comprehend the complexities of getting from A to B, and have little understanding of how to balance risk. As my father-in-law puts it, they don’t comprehend that there are rainbow coloured solutions to black and white problems. (He’s an ex-civil engineer, so knows that well.)

Unfortunately, if we want to get to net zero, it’s a journey of multiple transitions. We will need to reduce our use of gas and oil; we need to change domestic heating and upgrade our housing stock. We need to improve energy security (and 20% interconnect doesn’t achieve that), as well as innovating in storage. All of these requirements interact with each other and will proceed at different paces, much of which we can’t predict, but most importantly, we need to provide confidence for industry and investors to innovate and build these new solutions. Glib statements about stopping North Sea exploration licences only highlight the lack of understanding. Net zero is not a party-political issue to score points over – it is too important for that.

There is an uncomfortable sting in the tail, which is that we don’t really know how the overall electricity demand will change as we move towards a fully electric future. Bans on petrol vehicles and gas boilers will both lead to a tipping point where the supply infrastructure for each starts to collapse, leading to rapid changes in energy demand. We have plenty of academic simulations about what future demand might look like, but we don’t really know what will happen, other than it probably won’t follow any of those predictions. It’s why we need to give the industry confidence to plan for the long term, and to do that now. All that Keir Starmer’s announcement will achieve is to deflect attention from what needs to be done, making investors nervous and further delaying progress. 

Our energy security is too important to leave to politicians using it to spout uninformed policies. The one thing we don’t need is a party-political divide. What we need is a consensus on a long-term approach. Maybe it’s time to wrest it from them and acknowledge that energy security is a human right, not a political football.