Asks Graham Borét, senior energy consultant at Energy Renewals.
Power station closures and lack of replacements means the UK is facing an energy shortage and the devaluation of the pound following the Brexit vote has resulted in energy tariffs beginning to rise.
If you’re a homeowner, tenant or landlord, don’t make the mistake of thinking ‘it doesn’t affect me’.
Everyone – businesses and consumers, will feel the pinch, we are already seeing more expensive energy tariffs replacing cheaper ones. The short term solution is to shop around to find the best fixed plan tariff (or use the services of a broker to secure it on your behalf).
The impact of the UK’s energy shortage is rather less tangible. The lights won’t be going out, but that doesn’t mean we don’t have a problem and we should all ‘do our bit’ to reduce our energy usage. By doing so, we would collectively take some of the pressure off a sector which just doesn’t currently have the means to generate power in the same capacity it had a few years ago despite our insatiable demand.
So, the simple answer to our headline question is ‘yes’ although it’s never that straightforward and here we attempt to unravel the headlines and make sense of some of the issues.
With sun still blazing in September, it’s difficult to conceive of cold winter days, but we also know the most important factor to consumers and business is cost. Energy prices are rising because the drop in the value of the pound after we voted to leave the EU has made imports more expensive and so some suppliers have increased prices.
Price comparison website Energy Helpline does point out prices are still lower than they were three years ago, although cheaper deals are being replaced with more expensive ones. Uswitch, another price comparison website, reports of the 12 suppliers providing new fixed energy plans, they are more expensive than those which have been withdrawn.
Inevitably, smaller providers find it more difficult to absorb fluctuations in the market than the sector’s ‘big six’ (ref: The Guardian) for example, Co-op Energy, increased prices by 3% on their standard tariffs whilst GB Energy’s rose by 7%.
If you’re casting your mind back pre-referendum and thinking you’re sure you remember cheaper energy a leave plus point, you would indeed be right. Leave campaigners raised the possibility of axing the EU VAT on our energy) although, clearly, all that has yet to be thrashed out.
It does, however, bring us nicely onto the problem of the UK energy shortage. In a pre-referendum article for The Telegraph, Tony Lodge, a research fellow at the Centre for Policy Studies who provided evidence to the Commons Energy Select Committee ahead of the vote, placed the blame squarely at the door of EU policy which demanded the closure of UK oil and coal fired power stations despite cleaner alternatives yet to be built.
For an understanding of the energy challenges we face, turn to a report from law firm Bircham Dyson Bell LLP. The Energy Crunch highlights the gap between our ability to generate energy versus our appetite to consume it and it falls far short.
To put it into both figures and relating it to something which is more easily conceivable – homes, here’s the reality:-
- The UK’s generated electricity capacity has reduced by 13,767MW since 2012 (power for 1.6 million homes) as a result of power station closures.
- We will experience another 6,827MW decline in capacity (0.8 million homes) in the years prior to 2020.
- In the following years, we will lose the capacity to generate a further 18,009MW (2.2 million homes).
- In total from 2012-2030 the UK would have lost the means to generate of 38,603MW, enough to power 4.6 million homes or 18.4% of total UK homes.
Now that’s a scary prospect. Ideally, we need investment in our energy sector to kick start the replacement of old power stations which have closed. But, like we said, it’s the responsibility of us all to reduce our usage, which, also very helpfully, means a lower bill and whether we’re business people, consumers or both, that’s a worthwhile undertaking.
Energy Renewals are specialists in energy management for blocks of flats and apartments, as well as small and medium businesses, large corporations, and multi-site companies.
Contact them on 01753 208 125 or follow them on Twitter to stay up to date with energy news.
