The Coalition’s inheritance on energy was a poor one. The previous government signed up to renewable obligations, to coal fired station retirement and carbon policies at EU level without accelerating the investment necessary to provide alternative energy outputs. They spent many years asking for a debate on nuclear, without getting round to building replacement power stations for the old nuclear about to retire. This government now needs to accelerate progress, not just to try to get fuel prices under some control, but to keep the lights on and ensure enough power for business requirements.
What are the options?
1. Negotiate with the EU an extension to the life of coal stations pending the construction of alternatives
2. Accelerate the building of new gas powered generating stations
3. Press on with nuclear replacement build
4. Accept that the large amount of renewables now in build will require almost 100% back up by conventional power stations, as so much of the alternative energy depends on the wind blowing
5. Expedite shale gas extraction onshore
6. Continue or strengthen a favourable tax regime for offshore oil and gas, to raise the investment and exploration rate further in the North Sea and other offshore waters.
7. Improve import facilities and contract arrangements for gas
All or any of these approaches requires stability in the framework which will now require firm contractual commitments or clear promises which all political parties will keep to reassure investors. Government has to allow energy producers the opportunity to make a fair profit. It also needs to ensure enough competition in the market to avoid monopoly exploitation of customers.