In October 2013, the Royal Academy of Engineering published GB Electricity Capacity Margin*, a report, commissioned by government to investigate the reality of Britain’s energy security in the immediate and medium-term future.
The findings of this report are clear. The UK’s energy capacity margin is precariously thin to survive in the event of parallel stresses being put on the Grid – like a bought of cold weather coinciding with an outage at a single generation plant.
But the reasons for this, and the proposed solutions, are less clear cut. There’s a complex interplay between political and market forces which is both the cause and effect of energy strategy uncertainty. As the RAEng report observes, these conditions have caused supply shortages and price spike crises in other countries in the past – for example in Ontario Canada in 2002-2003 and in Victoria, Australia in 2000.
With six major energy companies hauled before the Energy and Climate Change Committee last month to explain the wave of significant price increases they had just announced, there are ominous signs that the UK could be on the brink of a similar fiasco.
On the other hand, there have been recent announcements which suggest the longer term future of energy security in the UK is being attended to.
October saw confirmation that GDF Suez will invest £25m in UK shale gas, partnering with UK-based Dart Energy to explore the reserves in Cheshire and the East Midlands. Jean-Marie Dauger, chief executive of GDF Suez, said: “We are very confident about the potential of shale gas in the UK, and its anticipated contributions to UK energy security.”
Also last month, the UK had confirmation that the its first new nuclear power station in almost 60 years will go ahead.
Many in industry welcomed the confirmation of Hinkley Point C. For those in the nuclear supply chain who have been chewing their nails awaiting a strike price agreement for years, the October announcement hails movement on contracts, orders and cash flow at long last. For those outside the supply chain, the prospect of new nuclear capacity in the UK also offers hope of a reliable, low carbon energy source to supply their operations in years to come.
Putting other controversies about nuclear power aside, the question which remains for industry is; will it come too late? And what can manufacturers do in the decade before Hinkley Point C, and other sizable investments in Britain’s energy infrastructure, become operational? The following pages explore the challenges and opportunities in securing energy supplies for competitive UK-based manufacturing.