November 29, 2013

expert reaction to the proposed freezes in energy prices and the Ed Miliband announced Green paper

Ed Miliband published a green paper on energy, including details of Labour’s plan for a 20-month price freeze.

Dame Sue Ion, Visiting Professor, Imperial College London and member of Royal Academy of Engineering energy working group said:

“While politicians may wish to scrutinise dividends etc, given energy infrastructure is not funded out of general taxation, the power companies have to be able to finance new (and expensive whatever the technology) plants.

“Current politicking is not good for long term secure supplies of electricity. The scale of the engineering challenge and its cost needs to be acknowledged and proper plans made to facilitate the necessary investment and the behavioural awareness which will make energy the precious resource it should be rather than a political commodity.”

Professor Roger Kemp, Lancaster University, and member of the Royal Academy of Engineering energy working group said:

“Despite politicians’ hopes, there is not an engineering solution that will allow a reduction in energy prices, a reduction in greenhouse gases and will guarantee security of supply. If we want to decarbonise the UK and we want security of supply, then prices will rise.

“Almost all the coal-fired power stations are at least 30 years old and will have to be replaced before long; many are being closed under the Large Combustion Plants Directive because they emit too much sulphur dioxide (SO₂) and the owners reckon it is not worthwhile fitting desulphurisation equipment to plant that is almost life-expired.  Most nuclear power stations are nearing the end of their useful lives.

“New investment is needed but the present uncertainty caused by the hiatus in Energy Market Reform, political debate about cutting green taxes (and presumably subsidies) and about restructuring the industry make that increasingly risky to potential investors.

“At present, onshore wind energy costs around £100/MWh and offshore wind energy around £140/MWh; energy from new nuclear power stations will cost much the same as onshore wind. These compare with the cost of generating electricity from (fully depreciated) coal-fired power stations of around £50/MWh, at current coal prices.  Even if investment in new power infrastructure can be kick-started wholesale prices are unlikely to remain at present levels.”