Utility Week

6 | 7TH - 13TH DECEMBER 2018 | UTILITY WEEK News Inside story I t can't have been the most comfortable lis- tening for Dieter Helm. Halfway through November, on the same day the UK gov- ernment appeared to be imploding aer the release of the EU withdrawal agreement, the Oxford University professor of energy policy hosted a speech by Greg Clark at the Institute of Directors. The secretary of state for the Department of Business, Energy and Industry Strategy (BEIS) had found time to make a wide-rang- ing speech that was billed as a response to Helm's cost of energy review, which the academic had submitted to the government more than a year before. The cost of energy review was the fruit of a Conservative election pledge understood to have been inserted into the manifesto by Theresa May's erstwhile head of policy, the climate change sceptic Nick Timothy. But it appears to have been heading into the long grass ever since it was published. The government's unusual step of launch- ing a call for evidence into a study that it had itself commissioned didn't exactly look like a ringing vote of confidence in Helm's conclusions. Clark was scrupulously polite about Helm, recalling how he had studied the pro- fessor while a student at Cambridge. How- ever, the secretary of state appeared to have taken on board few of the professor's many and detailed recommendations. "Greg Clark's speech was a masterpiece in praising Dieter Helm but then ignoring him," says Sir Ed Davey, former energy secretary in the coalition government. Jeremy Nicholson, former director of the Energy Intensive Users Group, observes that hardly any of Helm's recommendations are being enacted by BEIS, with Clark seemingly using the report as a starting point for dis- cussion rather than a blueprint for action. "Clark's remarks are not an adequate response to the report," he says. Richard Howard, head of research at Aurora Energy, agrees. "Although Clark thanked him for the review and seemed to agree with the logic, it didn't seem to result in policy change: far from it." Clark's own starting point was the claim that the "trilemma" is dead. This is the idea that a balance has to be struck in energy policy between the goals of affordability, sus- tainability and security of supply. Clark's argument that the plunging cost of renewable energy means there is no longer an automatic tension between these three objectives is hardly contentious in energy cir- cles these days. "The fact they are acknowledging it is good," says Dr Jonathan Marshall, head of analysis at the Energy and Climate Intelli- gence Unit. With solar and wind rapidly approaching the point where they will become the cheap- est form of electricity generation, Davey says: "That part of the trilemma is already dead." But Howard suggests Clark has been a lit- tle premature in burying the trilemma. "The trilemma hasn't gone away entirely. While renewables are quickly becoming the cheap- est form of power, that's not true in other parts of the energy system. A useful framework "In the power sector you could argue that it's diminished but it remains a useful frame- work for thinking about other parts of the energy system where decarbonisation is still difficult and poses security of supply and affordability questions." He points to the decarbonisation of heat as particularly chal- lenging in this respect. Whichever path the UK takes to decar- bonise its heating mix will pose security of supply issues, he says. "Figuring out how to supply that much electricity or hydrogen in the winter is pretty difficult." Clark then went on to outline four princi- ples that he argued should inform the future direction of energy policy (see box). These, in turn, are informed by Helm's thinking – but only to an extent. As an example, Howard points to Clark's half-hearted embrace of Helm's recommen- dation that auctions for low-carbon supply should be run on a completely technology- blind basis. "He [Clark] agreed with the principle of using the market mechanism but overlays a narrative of supporting particular tech- nologies, which contradicts Dieter's origi- nal point," he says, namechecking offshore wind, CCS and nuclear as examples of tech- nologies that Clark has said should continue to be supported. And onshore wind, which increasingly looks like the cheapest electricity generation option of all, still doesn't get a look-in. Doug Parr, head of policy at Greenpeace, doesn't expect to see a shi on this hard line until the government begins to emerge from the Brexit woods. He says: "People who oppose onshore wind are generally in the Brexit camp. Num- ber 10 is very anxious not to rile them and has been for a while. There's no doubt within government that it would be sensible to reo- pen onshore wind but they don't feel in a position to do it." Similarly, he believes that Clark's insur- ance principle can be used to justify favoured outcomes that don't stack up com- mercially. "Diversification stops at tidal but it's very important when you get to nuclear… It sounds like it's been invented to justify what is preordained." Davey argues that the government is A matter of principles Energy secretary Greg Clark has set out four principles he says should inform energy policy, but David Blackman asks if he has ignored the recommendations in Dieter Helm's cost of energy review. Clark's four principles Greg Clark set out four key principles that he said should guide energy policy. They are: Market mechanisms should wherever possible take full advantage of innovation and competition. Government should intervene to insure against shortfalls in supply and maintain options. There should be an agile and responsive system of energy regulation to reap the opportunities of digitalisation. All consumers should pay a fair share of system costs.

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