The UK government published its long-awaited energy security strategy today and it was, frankly, underwhelming. At first reading, the strategy strikes me as being lopsided on long lead-time supply side measures (mostly power generation) that won’t address the energy affordability crisis facing millions of British consumers right now.

I’ve set out a few initial thoughts below, but first I wanted to flag up the next live episode of the podcast. I’ll be discussing the strategy in more depth tomorrow with special guest Bill Bullen, CEO of independent energy retailer Utilita Energy. We will chew over the good, the bad and the ugly in the British government’s latest major energy policy announcement at this critical moment in energy.

Join us for a live conversation tomorrow, Friday 8th April, at 2pm BST / 9am ET. Make sure you download the Callin app to listen live and join the debate. Here the link to the room:

Take me to the show!

Premium members will receive a write-up of the show after the recording is published, replete with links to hand-picked audio highlights and pull quotes. Not yet a member? Get full access here:

So, on to the UK energy security strategy. As I said, it is quite disappointing. The ‘strategy’, such that it is, focusses heavily on newbuild nuclear, with a special mention for small modular reactors (SMRs) that are — at best — a decade or two away from scaling up.

Offshore wind deployment will be fast-tracked with ambitions to go from 11 GW today to 50 GW by 2030 (up from the previous 40 GW target). This seems like a good idea on the face of it, so long as the industry can deliver at this unprecedented pace.

Ongoing supply chain disruptions and rampant materials and labour cost inflation present tricky, but not insurmountable, challenges. That being said, if the industry does deliver a whopping 39 GW this decade much of the industrial momentum will be lost because the (anticipated) ramp-up in nuclear would replace the need for ongoing offshore wind growth.

There’s also a surprising amount of emphasis on hydrogen, with ambition doubled to 10 GW of “low carbon” hydrogen production capacity by 2030 (at least half of which will come from green H2 via electrolysis using wind/solar power). That’s another humungous undertaking. When you ‘concertina’ big-ticket infrastructure deployment in this way, the risk of non-delivery rises sharply — especially when you’re reliant on overseas suppliers of components.

Of course, a massive ramp-up in green H2 is contingent on renewables deployment scaling up in tandem. There’s a welcome push to scale up solar PV capacity, but it seems odd that the same ambition is not extended to onshore wind (other than a cursory attempt to develop “partnerships” with communities that want to host turbines in exchange for lower energy bills).

There’s been a de-facto moratorium on onshore wind development since the 2015 coalition government gave local planning authorities greater powers to veto projects. Onshore wind is quicker and cheaper to deploy than offshore, so if you’re going big on green hydrogen it would make sense to fast-track deployment of the lowest-cost renewable power source. Call me fussy, but it is the sort of joined-up thinking one might expect in a document purporting to be a ‘strategy’.

There is a welcome softening in tone towards near-term production of North Sea oil and gas, which will be needed for many years during the UK’s energy transition. And it seems that shale gas proponents could get a chance to establish, once and for all, the economic viability of fracking in the UK. It all depends on whether stringent seismicity limits are relaxed, which hinges on a new technical review by the British Geological Society.

Personally I am doubtful about the economics, but if wholesale gas prices remain structurally inflated then higher cost resources such as UK shale might fly.

If it can be done cleanly, safely and in a way that respects property rights then domestic fracking is probably preferable to importing fracked American gas via LNG, which has a much higher emissions footprint due to the energy cost of liquefaction and transatlantic transportation. Whether a renewed shale push can survive Britain’s many well-organised anti-fracking activist groups is another matter entirely, of course.

So, the key takeaway is this: the UK energy security strategy won’t do much for security and is not particularly strategic. It places a big focus on long-term supply side measures but is deafeningly silent on the only real energy lever available to government that can actually improve energy security right now: energy efficiency and demand reduction.

Energy efficiency is by far the lowest-hanging, cheapest and quickest fruit on the energy security tree that also tackles that other pressing energy issue: decarbonisation. Rather than go into depth on this topic, I’ll leave it to tomorrow’s podcast guest, Bill Bullen, who is a passionate advocate for promoting energy efficiency and reducing energy waste.

To whet your appetite, have a read of his white paper on cutting energy waste (pdf). And I’ll leave you with this recent tweet of his:

Bill Bullen @BillBullen

Based on @IEA’s data, by my calculations, Putin’s pockets would be £2.8bn lighter if every home in Europe turned its thermostat down by just one degree from now until the end of April. #justsaying #ukraine #kyiv

March 9th 2022

10 Retweets17 Likes

That’s all for now, join us tomorrow if you can for a lively conversation about all of the above!

Seb