Open Europe Blog

Will EU policies switch off the lights?

When 100 years ago a British Foreign Secretary observed that:

“The lamps are going out all over Europe, we shall not see them lit again in our life-time”

he was referring to a particularly bad phase in European politics.

100 years later EU energy and climate change policies mean Europe could soon be trying to relight those same lamps in the face of impending power cuts.

Today OFGEM the UK’s energy regulator has issued its latest report on the UK’s generation capacity and it makes interesting reading (by candlelight).

Firstly they predict that by the winter of 2015 (election year) there are likely to be several hours of power cuts (figure 24). This has been brought about because of the closure of coal plants and a growing reliance on wind (figure 1). The report names the EU’s Large Combustion Plant Directive and the fact that only 17% of wind generation can be relied upon compared to 80-90% for other generation methods. OFGEM concludes “reasonably small changes in conventional generation availability have a material impact on the risk of supply shortfalls”. Worryingly wind seems to be there least when we need it most. Key graphs here:

Power cuts in election year?
Gerneration capacity in the UK will be less reliable

So why has this come about? A large part of the problem emanates from climate change policies locked in at the EU-level (it has to be said, promoted by the UK Government at the time). Open Europe has long pointed out that EU policies are riddled with contradictions and inflexible targets. Here is a recap:

  • The Emissions Trading System (ETS) – a market based system of cap and trade that in theory should produce the most cost effective emission reductions. In practice, an over allocation of permits and the economic downturn have lead to such a low price of carbon and it is not doing its job.
  • The EU’s renewables target -This imposes a mandatory level of renewable electricity production from renewable energy. This flatly contradicts the first policy as renewables are not always or often the cheapest way to reduce CO2 emissions. And, even if they were, by mandating them you push the price of carbon down yet further so reducing the pressure for lower emissions in other sectors.
  • Large Combustion Plants Directive – this mandates that many coal fired plants should close on pollution grounds.

In the UK these policies have been supplemented by the Treasury’s self-imposed carbon price floor which effectively funnels more cash to non fossil fuel electricity production. As renewables are already heavily subsidised this is in effect a subsidy for nuclear. And if no new nuclear plants are built it is really a pointless bung to existing plants.

So how has the UK got itself into a position of not having enough electricity generation? Well underinvestment caused by a changing regulatory environment led by unrealistic and contradictory EU climate policies that have lead to a closure of coal plants and their replacement by unreliable wind energy.

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