Fighting for a bigger slice of the pie


March 19, 2012

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It’s no secret that as we approach the middle of the decade, many European nations are heading for an energy supply crunch. And the UK is no exception.

In fact, over recent months the situation’s been compounded further, as energy companies rapidly burn through their remaining EU production allowances.

The situation is particularly severe when it comes to coal. Currently eight UK power stations are scheduled to shut down operations by 2015.

However, that figure may well escalate given recent price hikes within European natural gas – a scenario that has reduced per MW profit margins and pushed power producers to quickly dial up the operating capacity of coal fired stations and shift the balance away from increasingly expensive gas.

In the short term, it’s a switch that helps the energy giants maintain the margins.

In the longer term however, it only serves to shorten future permitted operating hours and makes the business case for new natural gas power plant sites all the more unpalatable. Yes, there are a number of new sites in planning – actually building them however, is an entirely different matter, despite Ed Davey’s comments over the weekend.

So what does this mean for wind power – an industry that currently represents less than 4% of the country’s energy consumption mix? Actually, it means a lot.

Let’s be absolutely clear – no European nation is about to weaned off a diet of coal overnight. Globally, nuclear is pushing on despite the Fukushima disaster. And national electricity grid infrastructures – particularly within the UK (but also within continental Europe) are currently ill equipped to handle a very different approach to the transport and distribution of alternative energy.

Nevertheless the opportunity remains. Put simply government’s no longer want to be at the mercy of international fuel price fluctuations and the risk of a halt in supply.

Yet despite a suppressed demand for power as a result of the current economic weakness, in the longer term the demand for energy is only set to increase.

For the renewable market, and for wind energy in particular, that fact is key. As the future energy mix begins to take shape, it’s time to engage, expand and fight for slightly bigger slice of the pie.

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