Utility Week

UTILITY WEEK | 6TH - 12TH APRIL 2018 | 15 Policy & Regulation "If energy security is a real concern, let us do what we know works rather than pursue fantastic, unproven solutions." Comment Paul Massara, former chief executive, Npower T here is nothing like a good energy crisis to bring out calls for fantasy policymaking. So it has proved with the recent set of failures in gas infrastructure that combined with the "Beast from the East" to create an apparent supply crunch. Whether it really was a crisis is debatable. The market worked – scarcity drove prices up, the market responded. Whatever the reality, commentators and some in industry aired all the familiar favourite fantasies in response. The "crisis" proves we should frack our way to energy independence. We must invest in small modu- lar nuclear reactors. Even nuclear fusion was touted as the magical saviour. Russia was invoked, even though we source only 1 per cent of our gas from Mr Putin's dominion. I find it extraordinary that anyone still seriously believes the UK will have a shale gas industry mimicking that of the US. Our land tenure laws are different, so is our geology; ditto our population density and location in the global liquefied natural gas trade. No other Euro- pean nation is making a success of fracking – most have either banned or abandoned it, and Britain is nowhere near making a go of it either. Even if it did take off, the impact on the interconnected European gas market price would be limited. Perhaps the government knows this too but is afraid to admit it, still refusing to publish a 2016 report that vastly downgraded expectations to just 155 wells across the country by 2025. Fracking might happen and it might not, but the experience thus far is not encouraging, and touting it as a solution to anything falls into the fantasy basket. The next fantasy solution on the list is small modular nuclear reactors. Such reactors do exist – they have been powering submarines and aircra carriers for decades – and they may turn out to have some utility in electricity generation. But like shale gas, the econom- ics are unknown, and delivery is at least a decade away even by proponents' own estimates. As for nuclear fusion – yes, it does hold out the promise of virtually unlimited clean energy, but as the saying goes, fusion is at least ten years away and has been for half a century. A fiendishly difficult technology to master, with utterly unknown economics, nuclear fusion has never come close to generating electricity for a power grid and may never do so. In a real crisis, no-one would reach for "solutions" that are unproven on economic grounds and not scalable within a decade. Certainly not when proven and cost-effective solutions are all around. The other curious aspect of support for these technol- ogies is that they all require state intervention. Ministers have already given shale gas companies a succession of sweeteners and rule changes. Rolls Royce, the company most vocally touting a small modular reactor, is chasing more financial support. And nuclear fusion will never attract enough private sector money to bring it anywhere close to market. The support is odd, because generally criticism of energy policy focuses on the electricity sec- tor where the complaint is about too much intervention and the associated costs that consumers end up bearing. You cannot have it both ways. If you hanker for the halcyon days when Nigel Lawson liberalised and priva- tised electricity generation, you must logically also laud his decision to give the UK's only large gas storage to a private company rather than retaining it as a state asset. Similarly with Michael Fallon's decision as energy minis- ter five years ago not to intervene to support new UK gas storage sites. You can either back an interventionist or a free market approach to energy; each has its defensible rationale. Where you get into trouble, and the law of unintended consequences, is if you back a free market and then urge intervention when the market does not deliver what you want. If energy security is a real concern, let us do what we know works. Insulate houses and insist on the most efficient appliances, to cut demand – which also reduces energy bills and tackles fuel poverty. Make it easy for developers to build reliable and increasingly cheap generation, in the form of on and offshore wind turbines and solar panels (the sun and wind are free from Mr Putin's meddling). Ease the market for integrat- ing battery storage into the grid, including the batter- ies of parked electric vehicles. Allow innovators in the demand-shiing business to enter the market on equal terms to generators. None of this is rocket science. It requires no more than tweaks to government policies and Ofgem regula- tions to deliver. It is all real, and it all works, right here, right now – and these industries are already building cutting-edge companies with long-term value for UK plc. It might be a more boring set of solutions than the milk and honey vision of a thousand shale gas wells blooming across the land and nuclear fusion recreating the sun's warmth in every major city. But if the problem is real and pressing, serious solutions must be proven and readily available. Getting energy policy right is tough enough without the distraction of fantasy solutions.

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