energy
sector watch
thegreen
backlash
Clean energy seems to have become a dirty subject of late and
tension is mounting between the three components of UK policy
A
t last November’s annual conference for Energy UK,
the trade association for the energy industry, 200
delegates were asked which government department
best understood the sector.The delegates came from a
wide range of energy companies, environmental groups
and other assorted businesses, and included management consultants,
regulators and civil servants.The response was instructive.
Competition watchdog Ofgem scored highest, with 31%, but the
Department of Energy & Climate Change, which is supposed to know
about this sector, gained just 16% of the votes.The largest share – 43%
– went to‘none of the above’.The results provided a snapshot of opinion
at a time when energy usage and costs were under particular scrutiny.
But the results highlight just how complex the industry has become as
operators battle to satisfy renewable energy obligations and invest in
future supply, while keeping prices at a reasonable level.
‘There are three components to UK energy policy,’ says Ronan
O’Regan, a director at consultancy PwC.‘First, security of supply – in
other words, keeping the lights on. Second, decarbonisation, or investing
in renewable energy.And third, trying to achieve these while keeping
costs down.These can be seen as conflicting objectives.’
In fact, the tension between the three issues has been coined‘the
trilemma’ by industry stakeholders, particularly following the party
conference season last October when Labour leader Ed Miliband
pledged a 20-month price freeze on energy prices if he wins the next
election.The promise came just after the UK’s major energy suppliers
had delivered a series of unwelcome price increases. Even as the
industry itself tried to defend its position, prime minister David
Cameron felt compelled to wade into the debate and promise support
for cash-strapped energy customers.
For many observers, the skirmish was predictable. In common with
the rest of Europe, the UK has pledged to reduce greenhouse gas
emissions by 20% by 2020, increase the amount of renewable energy
used by 20%, and cut overall energy consumption by 20%.The
European Commission is also keen to reduce EU emissions by 40%
By Joanne Hart
THE INVESTOR
|
09
