The long awaited speech from the Energy and Climate Change Secretary arrived yesterday.
It does represent a shift in thinking, to give greater prominence to security of supply and price compared to controlling carbon dioxide. The government still has the three aims of enough power, cheaper power, and less CO2. Past governments have found it impossible to deliver cheaper power, or even enough power, given the ways they and the EU have chosen to pursue lower CO2.
First the good news. The government now recognises that we do not have sufficient power available. There are risks if a day of no wind or high wind coincides with low temperatures and power station failures. To overcome this the government is organising further “capacity auctions” to offer contracts to power suppliers to have more power available. These need to encourage more gas capacity. The speech does not go into the detail of how this might work.
Then the other news. The government wishes to cut carbon by organising a large switch out of coal generation into gas generation. They need to be careful. Premature closure of all coal will leave us with too little power. They need to have the gas stations up and running before the coal can be phased out.They say they know that, but EU rules are speeding coal closures too soon.
The government has removed subsidies for future onshore wind farms, and cut the subsidies for solar. It still presides over a very controlled and subsidised market. One of the ironies of the present position is that the government will have to intervene and offer favourable terms to get new gas stations. In a free market gas stations would offer the cheapest power, but in a subsidised world where gas stations have to close when the wind blows they end up being subsidised as well. Meanwhile the government is still offering quite large subsidies for offshore wind which will not offer good value for money.