In the Thick of It


October 18, 2012

This content is from our archive. Some formatting or links may be broken.

There’s nothing like uncertainty to shake confidence.

It’s something that was again brought home to the UK Coalition Government this week as Prime Minister David Cameron was accused of making energy policy on the spot, during a Parliamentary Questions debate, as he promised to force energy providers to place all customers on the lowest available tariff.

Often it seems like a barely a week goes by when we don’t touch on this subject. Yet, incomprehensibly, after two years in power, the UK Government still seems to be schizophrenic in its messaging as to future energy supplies, and crucially, costs.

Admittedly, the backdrop provides a perfect storm: emissions legislation spells the end for traditional coal-fired generation in the UK by 2015, nobody can be found to take on the costs of building new nuclear generation privately, and the Treasury seems to have separate ideas to the rest of the Government on the future needs of energy in the UK.

But there’s a real lack of cohesion about how to address these challenges. And this lack of clarity isn’t just evidential in the abstract. When the mechanics of Government policy come to be discussed, Ministers seem happy to contradict each other.

The draft Energy Bill published in May proposed a move for renewable generation to be supported under new Contracts for Difference, rather than the current Renewable Obligation Certificates mechanism, from 2017. The ROC system will continue until 2037, but will have been closed to new joiners.

The Bill will be unveiled before Christmas – setting policy for generations to come.

However, perhaps the problem lies at the feet of the politicians and not the policy makers. By the date of the next election in 2015, there’s a fair chance that domestic energy bills could be rather high. If it is to fight for successful re-election, the Government knows it has to tackle this elephant in the room.

Except, if anything it’s imported gas that is keeping these costs high, not subsidy support for renewables. And experts in some quarters predict that even with shale and North Sea exploitation the UK will still have to import gas to meet future energy needs. Prices therefore are unlikely to fall and the UK will have invested in a gas dependent infrastructure.

And whilst moves to renewable transition to more flexible forms of support should be welcomed, political spats over the detail continue to unsettle investors.
Arguing over what makes domestic fuel bills high isn’t going to secure renewable energy investment.

International politicians often state ‘let me be clear…’ when discussing national policy and in this regard the UK is no exception. However, perhaps it’s time this mantra was genuinely applied to the economics of energy.

Investment expertise. High-quality events. Exclusive content. Lead generation.

Talk to the Tamarindo team today to find out how membership would benefit your business.

Related content


Finland kicks off 3GW offshore wind tender

November 24, 2023


Vestas wins 509MW orders in the US

November 24, 2023