I have often spoken up for cheaper energy. It is time to do so again, as businesses tell me that the UK – and the rest of the EU – is no longer competitive on energy prices. Much energy intensive business is at risk as the EU gas and electricity prices for industry are more than twice the level of US ones. Assembly manufacture is also damaged by high energy prices, as energy can be a more expensive cost than labour in a modern automated factory.
So what are the barriers to cheaper energy in the UK? We are after all an island of coal and gas surrounded by a sea of oil, coal and gas. In the past we have relied heavily on our coal. More recently we were self sufficient in oil. Today we need to do more to produce and use the abundant oil , gas and coal reserves we have, using new technologies to lessen the environmental impact of extraction. Conservatives in the government are seeking to speed up gas extraction, and Ineos has now announced a major investment programme to help.
We also face the problems of high cost wind energy on our grid. Huge investment in recent years has been committed to try to meet the EU requirement to a high renewable component to our power. The choice of wind power is both high cost and unreliable, as winds do not always blow. As a result our margin of spare electricity capacity has come down and we could be stretched in future winters if cold weather coincides with no wind. It is a pity the renewable investment was not made in hydro or tidal as that would have been more reliable.
Today the imperative must be to find and use more gas, and to provide more back up power stations.