Renewable energy and low-carbon heating could do much more to alleviate the gas supply problems of the future – and could have done much to reduce the impact of this winter’s soaring gas prices, if the government had done more to shift the UK’s energy market sooner, industry experts have said.
The gas supply crunch has prompted a flurry of government meetings with industry, and reassurances in parliament on Monday from the business secretary, Kwasi Kwarteng, that “there is no question of the lights going out” and that the UK is “highly resilient”.
But the supply issue demonstrates that fossil fuels are inherently subject to wild price fluctuations, which happen at least once a decade, according to Roger Fouquet, of the London School of Economics. “Price volatility is an inevitable part of the fossil fuel energy system,” he said. “Renewables do not suffer from these market-related problems.”
Switching to renewables reduces the impact of fossil fuel price fluctuation, but the UK is still “particularly exposed to international gas prices”, said Rob Gross of UCL. “Gas power stations set prices [in the UK], particularly when demand is high and renewables output is low. Countries with a lower share of gas in their power mix experience less volatile prices and we should expect that here too.”
Dan McGrail, chief executive of RenewableUK, which represents wind energy companies, said the government should learn the lesson for future years. “The first priority for government and the sector is, of course, protecting consumers in response to this price surge. The only way to do that in the long term is to have an energy system powered by cheap renewables, with flexible storage, hydrogen and other low-carbon technologies to meet demand at lowest cost.”
He pointed out that it was already cheaper, even before the gas price began soaring, to generate electricity by building a new windfarm than running an existing gas power plant. The growth of renewables has cut the proportion of power the UK gets from fossil fuels from 60% to under 40% in the last few years.
McGrail said: “The industry is working with government to accelerate investment in renewables, which is key to ending our reliance on gas for heating our homes and in heavy industries. Alongside massive investment in renewables, we need to shift the dial on electrification and green hydrogen production in the UK to meet net zero at lowest cost.”
Solar power has also plummeted in cost in recent years, despite a lack of support from the government, and is forecast to be the cheapest form of power within a few years, surpassing even onshore windfarms. Chris Hewett, chief executive of the trade body Solar Energy UK, said solar power could continue to provide electricity through the winter months. Solar currently provides about 4.5% of the UK’s electricity, but he said it was “eminently achievable” to triple that by 2030, at no cost to consumers, if the government would clear the way by removing regulatory difficulties.
Heat pumps for homes could also reduce the UK’s reliance on gas, added Jan Rosenow, Europe director at the Regulatory Assistance Project, as they run on electricity, though electricity in the UK is partly generated by gas. “But even if all of the electricity used by heat pumps was generated by gas the much higher efficiency of heat pumps would still result in a reduction of gas use.”
However, as Fouquet notes, “wind and solar do suffer from intermittency problems. So, while accelerating the transition to renewable energy sources is welcome for environmental reasons, it is important to develop an energy system that is flexible to these intermittencies.”
That can involve investing in large-scale battery storage technologies, which the UK has signally failed to do, or in backup power. Nuclear reactors, though controversial, can supply a steady stream of power to the grid that can counterbalance the intermittency of some renewable energy, but plans by successive governments for more than two decades to build a new fleet of reactors that would replace the UK’s current ageing nuclear plants have been mired in difficulties.
The trade union Prospect called on the government to beef up its commitment to nuclear power. Sue Ferns, senior deputy secretary general of the union, said: “This is a wake-up call for the government, which must intervene immediately to ensure short-term security of supply. The current crisis is a product of an over-reliance on imports and weather-dependent renewables leaving us dangerously exposed to fluctuations in global natural-gas markets. The UK must prioritise domestic sources of firm power, particularly nuclear, to ensure a secure, resilient and low-carbon future.”
Another vital measure is to reduce the amount of energy that is wasted. British homes are among the draughtiest and least efficient in Europe, but little has been done to improve that. The government introduced an insulation scheme, the green homes grant, last year as part of its much-vaunted push to “build back greener” from the pandemic. Within six months, however, it had all but collapsed owing to poor administration and in March this year it was scrapped by the Treasury, with nothing to replace it.
After the current crisis has passed, it will be tempting for ministers to return to normal. But experts contacted by the Guardian warned that this should be a wakeup call to the government to introduce the suite of measures needed to protect the UK’s gas supply and shift the economy to a low-carbon footing. Gross concluded: “Ultimately, it will depend on the level of storage, interconnection and demand management to make best use of renewable resources and break the link between gas and power prices.”