October 18, 2021

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Our feckless Government has condemned Britain to a decade of crippling energy crises

Energy suppliers are collapsing. Gas prices are rocketing. Bills will soon follow. And I have bad news for you. We are just at the start of the big British energy crunch.

In a sense, we’ve been extraordinarily lucky to get this far. Price spikes, potential blackouts and attendant chaos have been in the works for decades. Fifteen years ago, an expert called Dieter Helm warned MPs of what to expect “just before the lights go out”. We should look out for “volatility and sharp price rises”. Sound familiar?

That it should come to this is a political failure of the most outrageous magnitude that I wish I could say it was unbelievable. But it isn’t. It is about as unbelievable as a tanker that has been heading towards us at a known speed for two decades. Our politicians didn’t have to guess or speculate about what would happen. All they had to do was take action to avoid it. They didn’t.

It is popular in this debate to level blame at the Left and their “green c–p”, as David Cameron once did. But let’s not let the current batch off the hook so easily. When Labour left power in 2010, they left most things in a terrible mess. One area where they did leave a plan, however, was in energy policy.

The plan was ambitious, to be sure, but it did at least exist. The idea was to shut down coal, ramp up renewables and, to deal with the unreliability of the wind and the sun, replace coal with new nuclear. Under the coalition and then Tory governments, the renewable part of the plan happened. What fell by the wayside was nuclear.

At the time, Britain had a small but viable nuclear supply chain. Companies had signalled interest in projects that would be enough to replace ageing plants and add capacity on top. Eleven sites were identified for new plants. The first were meant to begin operating in 2018, with the promise that planning and regulatory approvals would be “streamlined” to deliver. Then there was an election.

The Fukushima disaster in Japan – when a vast earthquake triggered a tsunami that flooded a nuclear plant built on a coastal fault line – was more of an excuse than a reason for what happened next. Under Tory leadership, the government insisted that all new nuclear plants would have to finance themselves, something that had never been done in the history of the industry.

At the same time, nuclear companies would have to build plants able to withstand the direct impact of a 747 and a tsunami simultaneously, in places where even earthquakes strong enough to spill a cup of tea were practically unknown. A succession of foreign, state-owned companies tried valiantly to source the “private” financing the government was demanding. Then, one by one, they gave up.

And so we arrive at our current predicament. In the next two years, Britain’s last coal plants and more than half of our ageing nuclear fleet will be shut down. Together, this will take out 15 per cent of the country’s electricity generation even as the Government keeps announcing exciting new plans to make all our cars and buses and trains electric.

More renewables might be able to help a bit, but because weather-generated power isn’t consistent, the grid cannot handle much more of it. To plug the gap, just as with our declining gas production, we will have to import more and more.

In practice, this means the UK is now reliant on sources of energy that are exempt from all of our green targets and whose price is entirely controlled by Vladimir Putin.

It is eight years since our government agreed a pricing contract to build a new nuclear power plant. Hinkley C was viable only when the government guaranteed an electricity price that was nearly double the market rate at the time. Politicians and commentators lined up to denounce the deal. Yet here’s a strange fact: in August of this year, UK electricity prices shot over that price point. They only fall when Mr Putin decides to turn the gas back on.

The irony is that nuclear power doesn’t even have to be anywhere near that expensive. As we have learnt with wind and solar, new technologies are always expensive at the start. But experience and economies of scale are marvellous things. If the Government gave up its ahistorical insistence that nuclear plants rely on “private” financing (which in effect means partial foreign state funding) and if it committed to a consistent plan for a dozen new plants, costs would soon start dropping through the floor. This is exactly what has happened in countries that have run their nuclear programmes well, like South Korea. The first time you build a plant with a new reactor design is always the most expensive. The sixth time, everyone knows what they are doing.

Unfortunately, even in a best-case scenario, we won’t be able to get nuclear capacity back to its peak for another decade. To build it up to what’s really required will take even longer. The Government is pinning its hopes on a series of mini Rolls-Royce reactors still in development, but the earliest one won’t start operating before 2030. We are facing a decade of crippling energy crises and this is a mess entirely of our own making.

Unlike in most situations, there is a relatively quick fix. We are still sitting on more than a decade’s worth of gas supplies in one form or another. Our shale and remaining undersea resources are like a gift from a fairy godmother. We could start granting permissions tomorrow and within a few years get the gas flowing to plug the gap until the new nuclear plants can take over.

Such a plan wouldn’t even have an environmental downside. If we don’t produce our own gas, we will simply import gas from elsewhere or use electricity generated by others, some of which will involve burning coal. Yet in an act of almost unparalleled stupidity, we have designed our regulations to incentivise precisely the opposite.

Domestic gas is logged on the dastardly ledger of carbon emissions. Foreign gas and electricity are literally greenwashed the moment they pass through the big undersea pipes and cables.

This winter, thousands of British people will simply not be able to afford to keep themselves warm. This cannot just be pinned on hemp-munching Lefties. It is a consequence of a feckless Conservative government that has wasted a decade in power failing to plan for the consequences of its own green policies. It has failed to stand up to the fundamentalist protesters and the Nimby naysayers. It has failed to display an iota of administrative prudence or entrepreneurial vision. It has failed in its basic duty to keep the lights on and the factories running. Its forebears would be ashamed.

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