More dependent on gas… if we mess up climate targets
Outgoing chief executive of energy regulator Ofgem Alistair Buchanan has made several front pages today, arguing in a speech that the UK energy system faces ‘near crisis’ over the next few years over a crunch in energy supply – and that gas generation could meet sixty to seventy per cent of Britain’s electricity needs by 2020.
Given that at the moment around 40 per cent of our electricity comes from gas, that’s a startling increase. But while Ofgem believes the proportion of our electricity generated by gas could go up, the amount of gas we consume is projected to stay about the same. And we’ll only end up this dependent on gas if the government fails to meet green targets.
Energy crunch
The UK faces a decline in its ability to produce electricity as coal power stations close due to European legislation.
Ofgem’s report on the security of Britain’s gas supplies, published last November, outlines two scenarios for what might happen to the country’s energy system. In the ‘Gone Green’ scenario, the government meets its targets for expansion of renewable power and reductions in greenhouse gas emissions. Gas use falls.
But in the ‘Energy Crunch’ scenario, commitment to nuclear, renewables and energy efficiency is “reduced” and the country sources more of its power from gas. In this scenario, the proportion of electricity sourced from gas “grows to almost 60 per cent by 2020”.
The growth in the amount of electricity generated by gas in the two scenarios is illustrated by the following graph, taken from an appendix to the report:
Image - Screen Shot 2013-02-20 At 13.02.27 (note)
The ‘energy crunch’ scenario is what Ofgem’s chief executive has been warning about – and it’s the scenario which appears to assume that the country fails to meet its targets for reducing emissions and expanding the amount of power sourced from renewable energy.
Gas dependent
Over the past three months, Ofgem have upped their assessment of the proportion of electricity that could be generated using gas by 2020 from “almost 60 per cent” to “60 to 70 per cent”. Why? Ofgem told us:
“The rise to seventy per cent accounts for a peak in gas demand when the wind is not blowing and therefore more gas will be required under those circumstances”.
Being seventy per cent dependent on gas in just seven years would be a step change in the way the UK generated power.
But even if we use more gas to produce electricity, Ofgem don’t project that we’ll use more gas overall. The energy crunch scenario predicts that energy efficiency measures will drive down the amount of gas needed by industry and to heat the country’s homes. It also projects that more heating will come from electricity, not gas, in the future. Ofgem says that under the energy crunch scenario, demand for gas remains “roughly level”.
Failing to hit green targets
A key assumption of the ‘energy crunch’ scenario is that the UK fails to meet its commitments to targets for emissions reductions and increased renewable use.
In the ‘green’ scenario, where emissions reductions and renewables targets are achieved, Ofgem projects that gas use will fall, and their projections are similar to those produced by the National Grid:
Image - Screen Shot 2013-02-20 At 13.00.21 (note)
To provide a comparison, a scenario produced by the National Grid called ‘ slow progression‘ – under which Britain fails to meet its 2020 renewables target, but does reduce emissions on a slightly longer timescale – also involves a slight reduction in gas demand by 2020.
Crunch time?
Ofgem has a statutory duty to protect the interests of existing and future consumers including ensuring security of supply. With UK energy policy currently characterised by uncertainty, the warning about gas dependency appears to be a precautionary one.
The claim that “sixty to seventy per cent” of the country’s electricity appears to be towards the upper end of the scale of possibilities. It also doesn’t highlight that overall – even if the energy crunch scenario – Ofgem’s report does not predict an increase in gas consumption. And if current legally binding targets for renewables and emissions reductions are met, gas use is projected to fall.
Given the importance of ‘keeping the lights on’, such warnings are presumably useful. But, as ever, the significant uncertainty is over how successfully the government will deliver on its decarbonisation agenda. And the standard caveat about predicting the future applies – the development of energy policy is messy and often unexpected.