Britain faces a looming energy crunch that is in its way as bad as the credit crunch of 2008. The crisis is threefold. First, the UK’s internal supply of fossil fuels has been falling rapidly. The North Sea is now producing just a third of the oil and gas that was being recovered in 1999. The coal industry is in even worse shape; producing less coal today than was extracted at the height of the 1984-5 miners’ strike. Second, Britain is becoming increasingly dependent upon supplies of oil and gas from some of the least secure regimes on Earth. Third, Britain’s capacity to use fuel has been gradually eroded by successive governments that have put lower prices to consumers ahead of investment in essential infrastructure. So we are left with insufficient fuel and insufficient generating and refining capacity.
For the last three winters, the National Grid has issued warnings that demand is on the verge of outstripping supply. It is luck rather than good judgement that the lights have stayed on. The last three winters have been unseasonably warm; allowing most of us to minimise our winter fuel consumption. Even so, on three occasions since 2009, National Grid has had to ask large industrial users to lower their consumption in order to avoid power cuts – the most recent of these just two weeks ago!
Were these industry shutdowns just occasional blips in an otherwise energy-abundant system, it would be wrong to view them as evidence of a crisis. However, when the emergency measures are institutionalised and marketed as a response to energy efficiency, you know you have a problem. In an article for Reuters, Karolin Schaps and Susanna Twidale explain how the extraordinary is becoming the new normal:
“Britain is turning to a new way of making sure it doesn’t run out of power, one that could turn the energy market on its head: rather than paying utilities to produce more electricity, it is paying firms that guarantee to cut industrial demand.
“So-called aggregator firms secure commitments from businesses across the country to reduce power usage; supermarkets can turn down refrigerators by a few degrees for a short period without any impact, for example, while water treatment plants can turn off pumps at certain times.
“The aggregators then sell the megawatt reduction they secure to power network operator National Grid (NG.L), which is increasingly favouring this “demand-side response” (DSR) method to paying big utilities to ramp up power generation. Aggregators pass on the revenue to the businesses, taking a cut.”
From a climate standpoint, the development is welcome. Without doubt, most businesses and households are not as energy efficient as they could be. Indeed, if ordinary households and businesses were offered cashback for cutting our energy use, I’m sure we could save energy without too much inconvenience. This said, this is not being done for environmental reasons. It is a direct response to the mess that successive governments since energy privatisation in the mid-1980s have allowed us to sink into. Underinvestment and a failure to grasp the fundamental physics of energy have left us dangerously exposed to energy shortages that ultimately threaten our way of life.