News that the government has set up another review into the proposed tidal lagoon in Swansea Bay is further evidence that neither the UK nor the Welsh governments has even the first inkling of the energy crisis that is set to hit the UK.
Anyone taking the slightest interest in energy news in the past couple of years cannot fail to have noticed that the UK is edging ever closer to the edge of an energy cliff from which there may be no return. As former CEO of SSE, Ian Marchant recently put it:
“There are already one million small generators from community-owned wind, small scale biomass, rooftop wind and solar, and a decreasing number of older, large power stations. That trend will continue and in 30 years’ time we will have millions and millions of small power stations in this country… We will need a crisis, one that will lead to squeaky bum time, night after night. The lights won’t go out but the prices will be so high that heavy industry will be self-disconnecting and this will force an apolitical, long-term, rational debate about energy.”
The North Sea oil and gas fields peaked in 1999; and are now producing less than a third of the 1999 output. Low oil and gas prices have decimated what remains of the industry, and almost all investment in future exploration and recovery has been cancelled. Meanwhile, the UK coal industry is producing less coal than was produced at the height of the miners’ strike in 1984/5. There is good evidence that European and UK shale gas will not be profitable, and even if it is, it is doubtful that Britain has the skilled engineers or even the capital needed to build a new fleet of gas-fired power stations. Faced with statutory closure by 2025, many of the UK’s coal power stations are being retired early by companies that do not want to pay to keep them running. The vacuum has been filled temporarily by allowing Britain’s aging nuclear power plants to carry on operating well beyond their use by date. Subsidies to wind and solar have been slashed; preventing these alternatives from growing to a point where they might offer a replacement for coal, gas and nuclear. Other existing renewables – biofuel and hydroelectric – cannot be developed much further. While potential new developments such as wave and tidal power have yet to be started.
If this was not bad enough, the global window of opportunity for deploying new generating capacity is closing fast. For the best part of a decade, interest rates have been so low that governments (whose credit ratings are high) can borrow for nothing (once inflation is taken into account). So the UK government could have borrowed as much as it needed to finance new generating capacity. Moreover, energy prices are currently significantly lower than energy costs (which is why the North Sea is currently going out of business). It will never again be cheaper to build infrastructure than it is today. Once the current global oil surplus has been used, a shrunken global oil and gas industry will be unable to meet demand; most probably driving oil prices well above $200 per barrel by 2020.
There is just one response to this: go with what we’ve got. We don’t have time to mess about with expensive white elephant projects like Hinkley Point C. Nor can we afford to deploy our remaining energy and capital just to discover that, like Poland, Denmark and the Baltic States, Britain does not have sufficient commercial shale gas to make a difference. Carbon capture and storage is too distant a technology to wait for – the lights will have gone out long before this can be done profitably. Nuclear fusion will simply never be affordable. What we have are onshore and offshore wind, solar pv and solar thermal, hydroelectric and micro-hydroelectric, wave and tide, and small-scale modular nuclear.
The key questions are not about the potential price of energy to the consumer or even the rate of return for investors – the current UK government’s main concerns. The real issues concern how much generating capacity does a technology offer (rooftop solar – yes; solar roadways – no!); what resources are needed to deploy it (onshore wind – yes; large scale biofuel – no); and how quickly can it be done (rooftop solar – yes; Hinkley Point C – never!) It is not clear where the Swansea Bay tidal lagoon fits within this. At £2bn, it is on a par with offshore wind; but at just 300MW output it provides just 60 percent of an equivalently priced offshore windfarm. Nor is it a particularly quick project to deliver. However, the Swansea lagoon is intended as a proof of concept that, if successful could see much larger tidal lagoons developed in future. For example, at 1,500-2,000MW, a Cardiff-Newport lagoon would replace the output of the Aberthaw coal power station that is due to close next year. Crucially, unlike wind and solar, tidal lagoons provide a predictable source of electricity.
In the recent Welsh Government election, energy barely got a mention beyond a few platitudes about climate change. This despite the fact that the closure of Wales’ largest (and Europe’s dirtiest) power station at Aberthaw was announced. This was followed a few days later by Exxon’s announcement of the cancellation of the proposed 500MW gas power station next to the LNG storage depot in Pembrokeshire. It is likely, however, that by the next Welsh Government election in 2021, energy – or rather Wales’ lack of energy – will have risen to the number one slot… by which time, the windows of opportunity to do something about it will have slammed firmly shut.