ACE

18 MAR 2022

NEW ENERGY SECURITY STRATEGY PROVIDES OPPORTUNITY TO FAST-TRACK NET ZERO

The government’s soon to be announced energy security strategy is an opportunity to fast-track the UK’s net zero plans, deliver transformational change and achieve a functioning energy system for decades to come, argues David Cole of Atkins.

The current energy crisis has brought into sharp focus the need to bolster security of supply and shift reliance away from imported gas. Six months of spiralling wholesale costs and supply constraints have been exacerbated by the horrendous events in Ukraine and its far-reaching impact. 

At the very moment when Europe is grappling with the challenges of climate change and an unprecedented demand for total transition of its energy systems, the Russian attack on Ukraine has vividly reinforced the constant truth that is so eloquently captured in the energy trilemma - the delicate balance of sustainability, affordability and security of supply is ever present and unrelenting.

A functioning energy system is the backbone of a functioning economy. The rapid rise in energy costs, coupled with a need for greater energy resilience, has exposed flaws in our current system that must be addressed and reinforced how energy is the base price from which almost everything is set. 

Tipping point toward transformation

Energy crises have created tipping points in the past, where the immediacy of a challenge also brings about transformational change that would otherwise have been slow to achieve. The energy crisis of the early 1970s showed that energy transition can indeed be greatly accelerated in the face of an imminent threat. Back then, in the UK, the fivefold increase in the price of oil unleashed an unprecedented flood of investment and technological development to access the resources in the North Sea. In France, with no alternative domestic hydrocarbon resource, the nuclear industry built more than 50 GW of new generation in just 15 years.

The goal of net zero was easily set, with a cushion of comfort was that the ‘crunch date’ was decades away. A crisis spread over decades does not feel like an urgent issue, and early slippage of a few years can be excused by optimistic assumptions of future progress or new technological breakthroughs that can be imagined to be deployable at national scales.

The need to bolster security of supply swifter than previously planned is a tipping point to accelerate action. Security of supply is both the security of our fuel supplies but also the resilience of our energy system to ensure supply matches demand at any given time. Boosting security of supply is one part of delivering an affordable, reliable and clean energy system that will power our transition to net zero: it is not possible to fast-track one of these three critical issues without causing shockwaves in the other two.

A resilient response 

The imminent energy security strategy will undoubtedly consider actions to stem the short-term supply gap, but there will have to be a dramatic change in the energy policy landscape to create the medium- to long-term changes required to achieve sustained impact.

The trajectory towards a net zero system means clean energy must be prioritised – there is no future for fossil fuel generation beyond the short term. However, new generation does not appear overnight.  In the interim, we need to review the generation assets we currently have and the options for life extension in this new energy world, to ensure any investment required to maintain their safe operation of those assets delivers value.

Balancing supply and demand is vital. A conservative estimate of both future demand and the UK’s current deficit of flexible capacity suggests a gap of 15GW by 2030 and 30GW by 2035, so any new energy strategy must consider how to plug this gap and prevent a knock-on impact of a large bill to balance the system. This has already increased significantly in response to the supply constraints of the last six months: Q4 2021 saw a 294% year-on-year cost increase, with a total £2.65bn bill for 2021.)

Fast-tracking the roll-out of renewables such as offshore wind could speed up the decarbonisation of our energy system – it has a critical role to play in our net zero transition. Yet any increase in renewable capacity to increase sovereign supply must also be delivered in tandem with more back-up power, energy storage, and increased demand management and efficiency.  

We also know the UK needs significant nuclear capacity to replace gas as a reliable and clean baseload power – we need a plan for nuclear that will bring forward investment and accelerate the development of new plants and reduce costs by applying a fleet approach, as well as a successful roll-out of SMRs by the 2030s. Add to this the need to accelerate carbon capture and storage, develop and roll-out hydrogen infrastructure and significantly speed up energy storage plans and it becomes clear that security of supply can’t be tackled in isolation – it needs a whole system approach.

A whole system approach

The first prerequisite for an accelerated energy transition is the creation of a fully resourced, independent authoritative and empowered energy system architect charged with responsibility for system delivery and the standing required for such a task. 

This architect should lead the analysis and plan of how we can deliver the country’s decarbonisation goals whilst maintaining the balance of the energy trilemma. Ultimately, the responsibility for the energy system rests with government and will require political judgements on the balance between sustainability, affordability and the operational and system resilience that make up security of supply. To sustain consumer support and investor confidence there must be transparency of the data and analyses upon which those judgements are made.

An energy system architect, armed with a plan and strong government support, can get on with building everything we need to at the colossal pace required. This has been shown to be possible in previous energy crises. This new security strategy is an opportunity to fast-track the UK’s net zero plans and create a roadmap to deliver transformational change and achieve a functioning energy system for the decades to come.  

David Cole is the market director for net zero energy at Atkins.

For a more detailed analysis into the UK’s trilemma and how the policies of the last two decades have helped to create the current energy crisis, read the full Towards Net Zero report.

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