Why can't renewable energy sources keep UK energy prices down?
Huge increases in gas prices have sent UK energy bills skyrocketing. Renewable energy has been unable to help but there are other solutions.
From April 2022, average household energy bills will jump by more than 50 per cent as a result of energy providers having to swallow massive increases in the cost of gas. Gas supplies come from global supply chains that are subject to changing market demand and regional geopolitics. And the pandemic, of course, has created all kinds of anomalies.
But why, in an age of renewable energy, is the UK still at the mercy of gas prices? The contribution to UK power generation from renewable sources has more than doubled since 2014. Yet we’re in a situation of dependence on fossil fuels that is going to put a serious strain on people’s finances for the foreseeable future.
The most obvious explanation is that the capacity of our renewable sources isn’t yet big enough. The contribution to the National Grid averages around 40 per cent, mostly from wind power and solar, biomass and hydroelectricity.
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Renewables don't contribute more for very good reasons. By using fossil fuels we have been able to meet variations in demand for power by turning on or off more power stations or running them harder or slower.
With renewables we are always dependent on weather conditions. For example, the third quarter of 2021 saw energy prices rise because of a lack of autumn winds — renewable electricity production dipped by 17 per cent on the previous year and gas had to come to the rescue.
Inter-seasonal storage remains a core challenge for the renewable energy industry. At any one time huge amounts of energy need to be shunting around the UK’s National Grid — an average of more 30 Gigawatts, rising to more 40 Gigawatts at peak times.
For the nation to rely on renewable power there would need to be massive banks of batteries to cope with the overcast, still days. Even then this system would only work for a few days. The technology isn’t yet available to allow for a week or a month of unreliable conditions. So, we still currently need fossil fuels to meet the expectations of power being available whenever we demand it.
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One solution to price hikes would be to have more control over our ‘locally-grown’ gas. After all, around half of our gas supply comes from the North Sea - 30 per cent is imported from Norway, the rest from around Europe.
But the UK has to buy its gas as an international commodity on the global market. We pay a global price that’s subject to the behaviour of other buyers and sellers, and are subject to the global context of threats and risks.
Some practical supply chain issues have been a problem as COVID-19 affected the ebb and flow of gas supplies. When industrial production shut down globally, gas and oil tankers were left sitting around.
Now tankers have been rushing to service Asia where the greatest surge in demand occurred. The US ramped up LNG supply across the Atlantic to prevent Europe from being held to ransom as a result. Global production could be increased to make gas supplies settle and prices come down — but where are the incentives for an energy industry that is enjoying the profits from sky-high prices?
The UK could usefully think long-term about localism to minimise its exposure to global markets. That means renewing our belief in the value of distributed contributions to the Grid, supporting household, local community and residential-scale developments.
In this way, individual households would take back control and choice over what they paid for their energy by producing some for themselves. If more of the population put solar panels on their roof and had a smallish battery for storage, they could dramatically reduce their grid-supplied energy needs, reducing demand for gas and cutting emissions. We could start to change the structure of energy demand and move wholesale to a model of distributed generation.
Reduced dependence would also come from improving the UK’s old and leaky housing stock, with more incentives and private and public money going into insulation of roofs, walls and windows - rather than emergency payments to offset big energy bills.
The easiest win of all would be to introduce more progressive planning rules: insisting all new houses are built with superb energy-efficiency in mind; brilliant insulation, solar panels, car-charging facilities, energy storage and heat pumps; every new home becomes its own little castle of energy generation and efficiency.
The sight of bills in the coming months, and maybe years, should be quite enough motivation to encourage investment into a personal and national energy independence.
Professor Phil Hart is the Director of Energy and Power at Cranfield University. He has held a number of senior roles within the energy and power sector in the UK, Asia and North America as an engineering director, chief technology officer and chief operating officer.