Since the general election, energy policy has become a major debate within the conservative movement. Conservative MPs in rural areas have become more vocal in opposing the expansion of large-scale solar farms and the construction of pylons. Claire Coutinho ended the party’s long-standing support for a controversial biomass with carbon capture and storage scheme. And during the leadership contest, candidates expressed scepticism about renewables on both cost and security grounds.
To feed into this timely discussion, I have written a two part blog series, examining firstly the energy security imperative of increasing supply and secondly the cost of electricity.
As with most types of infrastructure, the UK has not built enough new energy generation capacity in recent years. As a result, our electricity consumption rates are now the lowest in the G7 per unit of GDP. The recent trend of declining demand is expected to be reversed, as transport, industrial processes, and home heating are electrified. While some of this new demand on the grid will be flexible (people will charge their cars overnight, for example, rather than at peak times), National Grid estimates it will add 50% to total demand by 2036. The growth in power-hungry AI, which is vital for the economy and keeping the UK at the forefront of technological innovation, will also require more supply.
Added to this, we already have a growing reliance on imported electricity through interconnectors, which supplied 20% of our power in three months this year. These subsea cables linking to Europe are important for balancing the grid, diversifying energy supplies, and exporting surplus wind, but they should not be a substitute for domestic generation.
In short, we need to get building. Becoming more self-reliant for energy is vital for our national security and for our balance of payments. Greater energy independence will make it harder for autocratic regimes to blackmail us for geopolitical ends. Energy abundance will make us stronger too by enabling the onshoring of more critical supply chains and industries. Yet unfortunately the UK’s options for new domestic energy production are limited.
North Sea oil and gas has provided the bedrock of UK energy security for decades. It has driven many of our energy policy choices over that time - from the move away from town gas for heating, to the halting of the expansion of nuclear power. But reserves are now running out and getting more expensive to extract. That’s why production is declining by 7% a year even with new licences.
There have been multiple attempts to kick-start fracking in the UK, which were ultimately thwarted by strong local opposition. Even if communities could be brought on board, there is significant uncertainty about how much shale gas is recoverable, with a 2019 academic study suggesting the true figure was likely 80% smaller than the government’s official estimate.
Compared to North America, the shale geology of the UK is considerably more complex, our population is denser, and drilling costs are substantially higher. And because of our interconnectors with the much larger European gas market, fracking would not lower prices, although it would increase tax receipts.
The last government was right about the need to build some new gas power stations. With big increases in variable renewable generation and some existing gas plants set to retire, they will provide vital back-up to keep the lights on. But as North Sea gas declines, they will be increasingly fuelled by imported liquified natural gas (LNG). To become more energy self-sufficient therefore, we have to move gas from baseload, when it runs all the time, to back-up when the wind doesn’t blow.
Nuclear is an important source of firm low-carbon power. But unfortunately, our four nuclear plants, which currently provide just over 10% of our power, are due to come offline this decade. That will leave only one nuclear reactor running, Sizewell B, generating into the 2030s, although there may be scope to extend the life of one of the retiring reactors. While we are dependent on imported uranium, the last government took welcome steps to onshore advanced nuclear fuel processing which will further weaken Russia’s grip on European energy markets.
But new nuclear is not a near-term fix. Even Hinkley Point C, which is under construction and set to be the world’s most expensive power station, is now not expected to start generating before 2030. Small modular reactors (SMRs) aren’t expected to come online until the mid-2030s. There have been some very promising recent breakthroughs in nuclear fusion - the holy grail of clean energy - but plants won’t be operational until at least the 2040s.
The government should nonetheless do all it can to secure new nuclear capacity for the 2030s and 2040s. We must not repeat Nick Clegg’s mistake of shunning investing in nuclear due to the long timeframes. There are worrying suggestions the new government is going slow on nuclear as it won’t contribute to their 2030 clean power mission, abandoning plans to build a new reactor at Wylfa, delaying the timeline for the SMR competition, and not backing innovative advanced nuclear technologies. This is a mistake.
Mature renewable technologies, such as wind and solar, do have potential to strengthen our energy security in the 2020s because of the big existing pipeline of projects. The UK now has the biggest offshore wind sector in the world after China and renewables made up over 50% of the electricity mix in the second quarter of 2024.
Offshore wind is expected to be the mainstay of a decarbonised grid. Due to our high wind speeds, long coastlines, and relatively shallow seas, we are well-placed to be world leaders. If it can come down in cost, floating offshore wind will enable us to access higher wind speeds in the deeper waters off the North East coast of Scotland and South West coast of England. Onshore wind has lower capacity factors than offshore wind (i.e. they generate less power), but can be situated closer to demand, meaning less transmission infrastructure, and is cheaper than putting the wind farms offshore.
While we have one of the worst solar resources in Europe, the technology’s steep cost reduction (prices have fallen by 20% every time global capacity has doubled) means it is economic in parts of the UK and in fact was the cheapest new capacity procured in the recent renewables auction. Ground-mounted solar can therefore provide an important contribution to domestic energy security provided it is not sited on our most productive farmland. We have one of the lowest rates of rooftop solar in Europe (just 6% of UK homes have panels compared to 25% in the Netherlands). This must be increased, but we must be mindful it is around twice the cost of ground-mounted. Expanding solar on commercial rooftops should also be a priority but is currently held back by long grid connections and restrictive leasing agreements between tenants and landlords.
Less established, but more predictable, renewable technologies like geothermal and tidal do have potential, as reviews by Kieran Mullan and Charles Hendry have established, but are currently prohibitively expensive to form major parts of our energy system. Similarly, because of our low levels of forest cover (just 13% across the UK), we don’t produce enough waste wood to support large-scale biomass power without relying on imports.
Progress on all these technologies has been frustratingly slow in recent years, but the new government looks to be focusing on a narrower set of energy sources and putting longer-term options like nuclear on the backburner. In addition, the UK still hasn’t fully reckoned with the implications of its declining North Sea basin or the imperative to expand domestic energy production post-Russian invasion of Ukraine. The election of Donald Trump also raises the stakes for UK energy security. It could spell a new US gas glut, meaning lower LNG prices, or his protectionist policies could severely damage global trade, pushing up gas prices.
In any event, there is a strong case that renewables are needed to reduce near-term dependence on imported gas and deliver greater UK energy independence. Yet scepticism about their economic benefits has been growing on the centre-right, most recently expressed in the excellent Foundations essay by Sam Bowman, Ben Southwood, and Samuel Hughes. This is leading some conservatives to favour dropping support for renewables. I discuss these economic arguments in the second part of the blog series.
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