Renewable Projects Decline As Big Six Build New Gas Plants
The Big Six energy suppliers appear to have cut down on renewable energy projects and decided to concentrate on building new gas plants which could mean higher energy bills.
The number of renewable energy projects built this year has fallen significantly and it appears the Big Six energy providers are keen to build more gas fired power plants. This move, however, could mean the UK fails to meet climate change targets and leaves householders and businesses with even higher energy bills.
Compared with last year the number of new wind turbines constructed this year is down by 50% – only 540MW compared with 1,192MW of capacity last year. But the number of planned projects has also fallen significantly since last year.
In comparison there are a number of gas fired power plants in the planning stage and the majority of the funds for these power plants will come from the Big Six energy suppliers.
As Utility Exchange reported recently the cost of wholesale gas has fallen over the last few months and is cheaper than renewables. However, the cost of renewable energy is falling while more countries are moving away from for example, nuclear power, to gas generated electricity. The cost of gas has fallen recently as demand has dropped largely as a result of the global economic conditions. However, as soon as the economy picks up, gas prices are expected to increase again and therefore domestic and business gas prices and electricity prices will undoubtedly increase again.
The problem however, is that the UK has very little of its own gas and therefore has to import the majority of it. It’s obviously more expensive to import gas and over half of the energy price rises over the last year were as a result of the increased cost of importing fuel.
The Government recently decided to cut the subsidies for solar power and as a result, Carillion, the construction group, warned that as many as 4,500 jobs could be at risk as a result of this decision. It’s not just wind and solar plans that have slowed down – the number of new biomass plants have been delayed e.g. Drax has decided to delay plans to build two new straw burning biomass plants. Utility Exchange reported in August that the chief executive of Drax, Dorothy Thompson, said subsidies were currently insufficient to make it economical to burn biomass.
However, plans for 30GW of gas-fired plants have been brought forward and some are even in the construction stage.
Many gas businesses have been trying to get themselves seen as green, largely because burning gas produces half of the CO2 of burning coal. Even so, there’s concern that the UK will become too dependent on gas. High wholesale gas prices will mean energy bills increase as demand throughout the world goes up.
Chris Huhne, the energy secretary, has said that the UK needs to be less dependent on fossil fuels and said “The energy mix will depend on what happens in the world gas markets. If there is a low gas price in the UK, then you will see more gas and carbon capture and storage and less renewable energy and nuclear”.
However, a partner at Roland Berger Strategy Consultants, Paul Sloman, said “The UK cannot afford to be reliant mainly on gas-fired generation as energy security is also a very pertinent issue and increasing reliance on gas is not the solution, particularly as the UK’s own gas production from the North Sea declines”.