The debate about Britain's future energy seems to be a political hot potato at the moment. The main gas and electricity suppliers are pushing for further massive price increases, although wholesale prices have increased by only a small amount. Furthermore, I am told that I now must pay a standing charge of £100 per year for each utility, which I understand is a government directive.
Ed Miliband has suggested a price freeze, which has a lot of political mileage. Although it isn't possible to control international wholesale gas prices, this is only half the bill and could be absorbed by taking less profit for shareholders, or reducing executive pay and bonuses. I wonder if the latest round of massive price hikes are the energy companies' attempt to pre-empt such a move? In any case, the Prime Minister seems unable to answer any of his questions on the subject at recent PMQs.
Meanwhile, we learn that approval is being given for a new nuclear reactor at Hinkley Point, to be built by the French with Chinese money. Uranium is a diminishing commodity and prices may rise as steeply as with fossil fuels. The other main issue is safety. As well as the need to store waste almost indefinitely and the possibility of material being used for weapons, the main danger with pressurised Uranium reactors is that if things go wrong, they can go spectacularly wrong, such as at Chernobyl or Fukushima.
An alternative would be to build a Thorium based reactor. Although the technology is less well developed, it is safer, as a system can be built that automatically shuts down in the event of failure. Thorium, although still a rare earth element, is much more readily available than Uranium and the potential for weapons use is less. For an interesting overview on Thorium, please watch this Youtube video, at least the first few minutes:
Thorium: Possible Future Energy?
However, my view is that the most sustainable source of energy long term is geothermal. It is well known that the centre of the Earth is hot, because of the residual heat from the Earth's formation and the decay of radioactive elements, including Potassium, Uranium and particularly Thorium, which has a half-life of 4.5 billion years, comparable to the age of the Earth, meaning much of the original quantity still remains.
Heat for entire cities could be extracted simply by boring deep shafts into the ground and circulating water through them. Surely this is the kind of technology we should be developing for a truly sustainable future.
Far-reaching reform of the UK electricity market is needed to meet our renewables and carbon targets while maintaining security of supply and minimising consumer bills. Contracts for Difference (CfDs) will provide efficient long term support for all forms of low carbon generation - including nuclear, renewables and Carbon Capture & Storage (CCS).
The Capacity Market will provide an insurance policy against future blackouts or price spikes - for example, during cold, windless periods - and so help ensure that consumers continue to receive reliable electricity supplies at an affordable cost.
The UK has vast and varied renewable energy resources, including some of the best wind and tidal sources in Europe.
We need to move from finite, high-carbon fossil fuels to clean, secure energy. The UK faces an unprecedented energy challenge- we must replace around a fifth of our existing electricity generation over the next decade - and as such we need to call on all the tools at our disposal to keep the lights on. This means having a balanced energy policy, comprising a mix of nuclear, fossil fuels with carbon capture, and a major roll out of renewables. As well as onshore wind, we want to see large expansions in both offshore wind and sustainable bio energy.
The RO is an obligation on electricity suppliers to source a specific and annually increasing proportion of electricity from eligible renewable sources or pay a penalty. The proportion is measured against total electricity sales. Examples of RO eligible sources include wind energy, wave and tidal energy, landfill gas, sewage gas, geothermal, hydro, solar PV, energy from waste, biomass, energy crops and anaerobic digestion.
Progress has been made against the UK's 15 per cent target introduced in 2009 by the EU. Last year we exceeded the amount of renewable energy required by our 2011/12 interim target, reaching 4.10% of total energy compared with a target of 4.04%.
UK oil and gas remain an important part of the UK's energy mix as we make the transition to a low carbon economy. In 2012, oil produced on the UK Continental Shelf (UKCS) was equivalent to 63% of UK oil product demand, while gas produced in the UK was equivalent to 53% of gross UK gas demand.
Around 41 billion barrels of oil and gas have so far been produced from the UK Continental Shelf, but around 20 billion more might be produced, so we need to maintain momentum. Bringing forward new UK fields while the existing infrastructure is in place (before it is decommissioned) will ensure that as much as possible of the potential of UK oil and gas is tapped while it is cost-effective to do so.
The Government believe it would be irresponsible not to explore the economic opportunities which shale gas can potentially offer the UK, and we are keen to build momentum. The Office of Unconventional Gas and Oil will join up responsibilities across Government, provide a single point of contact for investors, and ensure a simplified and streamlined regulatory process.
Nuclear is vital for our energy security now and we want it to be part of the energy mix in the future alongside renewables and clean coal and gas.
The UK Government estimates that significant amounts of low carbon electricity are needed by 2030. New nuclear is needed alongside renewables and CCS to meet this new capacity because:
The lifecycle CO2 emissions from new nuclear power stations are similar to those from wind power and much less than fossil fuelled plant;
nuclear is the only non-renewable low carbon technology that is currently proven and can be deployed on a large scale, providing continuous supply;
new nuclear is expected to be the lowest cost form of low carbon generation.
Government remains firmly committed to its efforts to ensure that the conditions are right for investment in new nuclear power in the UK.
It is the Government's policy that there will be no public subsidy for new nuclear power, as defined in a written statement made to Parliament in October 2010 , and in a debate in Parliament in February 2013 . This means that new nuclear will receive no levy, direct payment or market support for electricity supplied or capacity provided by a private sector new nuclear operator, unless similar support is also made available more widely to other types of generation.
Safety at nuclear sites is paramount and is kept under regular review. The Office for Nuclear Regulation has regulatory and operational independence and is staffed with professional nuclear safety personnel. It carries out inspections to ensure robust safety requirements are met across the industry.
It is estimated that replacing and upgrading our electricity infrastructure alone will require approximately £110 billion of capital investment in the decade to 2020 - this is like building 20 Olympic stadiums every year.
The scale of investment is significant compared with other parts of the economy: It makes up over half the total infrastructure investment pipeline in the UK and nearly doubles the amount for transport.
Unlike many sectors a great number of energy investments are ready to begin now. For example:
Construction has just commenced at the RWE offshore wind farm off the north coast of Wales. This project is anticipated to create around 1,000 UK jobs directly related to the component supply and construction of the project.
Offshore Group Newcastle recently secured planning permission for a £50m fabrication plant in Wallsend - this could support up to 700 local jobs during operations plus another 100 during the construction.
Further to the earlier response, the Rt Hon Edward Davey MP, Secretary of State for Energy and Climate Change has provided a more in depth answer, in a letter dated 3 December 2013.
Mr Davey acknowledges the difficulties faced by many due to rising energy bills. He asserts the Government's belief that a price freeze could limit competition, have a detrimental effect on investment and lead to suppliers increasing prices in anticipation. Instead the Government wish to help people save energy, ensure fair tariffs and encourage competition.
From 31 December, all suppliers will need to charge a single rate for supply and a separate amount for a standing charge. Mr Davey notes that some people with low usage may be worse off, but high use, fuel poor customers, such as the elderly, disabled and those with less energy efficient homes were previously at risk of paying more. The reforms are intended to simplify price comparisons and allow suppliers to set a low, or even zero rate standing charge with higher energy tariff, if they wish.
Mr Davey confirms the 21 October announcement of the Government's agreement in principle with EDF to construct and operate a new nuclear power plant at Hinkley, subject to state aid, stating his belief that this represents a good deal for consumers whilst contributing to decarbonisation objectives and security of supply at least cost to consumers.
Mr Davey then continues:
'Turning to the points raised by Mr Garwood, I am clear that new nuclear can play a significant role in the UK's energy mix - safely, reliably and affordably - and make a material contribution to our long term energy security. We have undertaken a number of facilitative actions in the policy and regulatory framework to enable developers to come forward with projects. The UK also has, in the Office for Nuclear Regulation, one of the best safety and security regimes in the world to ensure that nuclear operates to the highest health and safety standards. We have addressed waste and decommissioning so that generators, not the taxpayer, bears these costs.
'Financing the investment in new energy infrastructure is a commercial matter for project sponsors and their investors and lenders. The UK is an economy which has benefited very significantly from foreign direct investment, including in the energy sector, and it is to the benefit of UK energy and the economy more generally, should EDF ultimately secure Chinese or other foreign investment which enables Hinckley to proceed. However, the scale of the energy investment needed in the UK - £110bn in this decade alone - means that there will be many opportunities for both UK-based and international investors. Through our Electricity Market reform programme, we are creating the right market framework to attract this capital and I and my department are working hard to ensure that we secure it. I would be delighted to think that as many British investors as foreign take advantage.
'DECC is aware of the potential of thorium as a nuclear fuel and thorium fuel cycles fall within the scope of the Department's analysis of future nuclear scenarios. We have regular contact with the Weinberg Foundation, ThorEA and other thorium interest groups across a range of thorium reactor and fuel technologies. The UK is also actively involved in thorium cycle research through organisations such as the National Nuclear Laboratory and the UK Research Councils' Energy Programme. It has drawn on the expertise of these to model future nuclear scenarios that include the use of thorium. These are not exhaustive, but a current overview is presented in the document "Nuclear Energy Research and Development Roadmap: Future Pathways", which is available from:
https://www.gov.uk/government/publications/nuclear-energy-research-and-development-roadmap-future-pathways
'Amongst its conclusions are the expectations that thorium reactors would be subject to the same fuelling limitations in roll-out as fast reactors, in which the rate of commissioning is constrained by the rate of production of start-up fuel from the existing reactor fleet. Thorium fuels are also likely to differ from uranium fuels in their waste characteristics, including their radiological properties and the amount of heat they generate. These waste characteristics will vary with the type of reactor in which thorium fuels are used and individual systems may offer significant advantages or barriers to the waste's management and final disposal. Further analysis and fuel cycle modelling will be necessary to understand the implications and limitations in waste management and disposal of using thorium fuels.
'The Department recognises that deep geothermal will have a part to play in the UK's energy mix going forward. But when considering deep geothermal it is important to separate deep geothermal for direct heat use from that for power generation.
'For direct heat use, the geothermal source of heat tends to be hot water aquifers. At temperatures of over 60 C the heat can be used for local heat networks. In the case of power generation created when cold water is pumped down one borehole, heated up as it moves through fractures in hot rocks (at temperatures over 120 C) and returned to the surface via another borehole to drive an electricity-generating turbine. The lower temperature resource for heat only tends to be shallower and more accessible. Power generation schemes can involve drilling boreholes that are 4-5km deep and can require fracking.
'The UK does not have the geothermal resource potential of volcanic regions, for example in New Zealand and Iceland where geothermal is an established technology. But in some locations in the UK underground temperatures have the potential to support deep geothermal projects.
'There have been significant developments on deep geothermal for direct heat use in the UK. Last September the Government launched a Consultation on revisions to the non-domestic Renewable Heat Incentive scheme. Included in the Consultation was the proposal for a separate, higher tariff for deep geothermal heat. In particular, we see significant potential in linking up deep geothermal heat sources to city heat networks, which ties in with the Government's strategic framework for low carbon heat, published last March. There are new deep geothermal projects linked to district heating schemes planned in Manchester and North Tyneside, and with further interest in other regions. The one existing scheme in Southampton is currently being refurbished.
'Despite earlier grant awards, no deep geothermal power projects have commenced in the UK. It appears that potential commercial backers are sceptical of the viability of the resource and so are waiting for the first well to be drilled and the resource to be proved. The Department has therefore initiated a two stage process to try to move the deep geothermal power sector forward. The first phase is an expert feasibility study to draw together all the evidence to explore and test the case for additional Government support. Subject to the outcome of this first step, and the usual value for money constraints, the various options for further support will be analysed. The feasibility study which is being undertaken by Atkins will conclude shortly. We need this further analysis to help gauge the realisable potential of deep geothermal power and the extent of any support it may need.'