Picture credit: Dan Kitwood/Getty Images

British energy planning (a horror story)

Artillery Row

Looking for a light read? Perhaps a fairy tale to settle the kids before bed?

If so, I highly recommend the publications page of the Department of Business, Energy and Industrial Strategy (BEIS). You will find endless exciting tales about the near future. Stories of a high-tech world, in which humanity has “Built Back Greener” and enjoys prosperous existence in equilibrium with a revitalised natural world. 

But perhaps fantasy is not your thing. Maybe you’d prefer something scary — a horror story to make your hair stand on end. Never fear — BEIS has you covered. As a fellow spookophile, I encourage you to scroll past the utopian titles, right to the bottom. Here we find the department’s “generation capacity” estimates. 

Generation capacity is the amount of electricity our country can generate or import if supplied with sufficient fuel. 

As with most horror stories, the setting will initially appear rosy. Aided by the world’s biggest offshore wind market, the amount of clean electricity the UK can generate is expected to soar ever upwards —  hinting at a carbonless world just around the corner. Indeed, journals spanning from the Guardian to the Spectator have run glossy graphics to this effect.  

But things are not as they seem. Look at the estimates of National Grid’s Energy Systems Operator (ESO) and you’ll begin to feel goosebumps. These projections “de-rate” energy generators based on how reliable they are (generators rarely run at 100 per cent efficiency). Applying this method nearly halves generation capacity — from 115 gigawatts to 62. At this level, supply is barely keeping level with demand. 

Exclude intermittent sources like wind (which quite often doesn’t blow) and solar (which is reliably unavailable at night) and things get really spooky. Predicted peak demand exceeds supply this winter. In other words: if the wind does not blow at the right moment, there will be blackouts.

Official projections also assume the capacity of our interconnectors with the continent to import energy when needed. But these have repeatedly broken down and two projects key to meeting demand have been cancelled

How real is the worry? Last winter, a broken interconnector and low wind speeds meant electricity generation passed within half a gigawatt of demand (for reference: the combined capacity of our scheduled-to-close coal plants is 6GW). This summer, London narrowly avoided blackouts after an emergency appeal to Belgian suppliers. This winter, the ESO warns demand may exceed supply — forcing us to issue emergency notices to auxiliary and European suppliers. 

With capacity due to fall further and an energy crisis gripping Europe, this is deeply troubling. No surprises, National Grid is currently experimenting with rationing household electricity, and the Greater London Authority is advising a halt to housebuilding.    

Who created this horror?

Trawling though the last decade of reports, it is easy to conclude that British energy planners suffer recurring amnesia. 

Who created this horror>

Back in 2012, an Energy Departmental policy paper noted that we’d need 26GW of new gas generated electricity by 2030 to replace retiring coal and nuclear plants. The then Secretary of State Ed Davey responded by promising 20 new gas plants. However, a 2015 plan downgraded the ambition to 14GW, and two years later this was dropped to 6GW. Last year, Boris Johnson updated the goal to zero. In all that time, Britain managed to build a whopping three gas power stations, with 4.4GW capacity, one of which is due to close next year.

There may be something to the amnesia hypothesis. Ministers are rapidly shuffled around (since 2010, there have been eight Secretaries of State and 13 Ministers of State for Energy). At the same time, the Civil Service lost its experienced hands. The civil servant pay cap has meant the surest way to get a higher salary has become jumping between departments (the average manager moves on after only one and a half years). 

A bigger problem, however, is incentives.

The Climate Act 2008 made the UK the first country to legally require itself to hit its CO2 reduction targets, with a target of 80% reduction below 1990 levels by 2050 (since revised to 100%), and carbon budgets limiting the nation’s carbon output over 5-year periods. From this moment, the Department of Energy had two, potentially conflicting, statutory duties — to keep the lights on and cut carbon.   

At first, things seemed to be going well. Conservatives were quick to grasp the PR opportunities of vast offshore wind farms, as well as the electoral importance of shielding voters from the costs of setting them up. The private sector was left to pick up the cost of new infrastructure, as well as a carbon tariff on heavier fuels. The consequence was a resounding climate victory. Energy prices for British heavy industry rose 57% between 2010 and 2020 — 91% above the Western European average — forcing many businesses to relocate their operations (and nasty emissions) onto some other country’s balance sheet. 

Another tactic was to build interconnectors with other countries — allowing us to feed off their energy generation without it counting towards our emissions. Of course, this could not happen fast enough to keep up with the enthusiastic cull of UK energy. 94 per cent of coal, two thirds of oil and a third of gas electricity generation was cut between 2010-2020. 

In time, however, things became more difficult. By the end of the 2010s, Britain’s once-substantial surplus of energy generation had been eaten up and the UK had few heavy industries left to offshore. With ministers making ever more ambitious climate pledges and energy projections looking increasingly dire, civil servants reached for the one tool they had left: making stuff up.  

In 2021’s Smart Systems and Flexibility Plan, civil servants were given the unenviable task of demonstrating how the grid would be carbon-free by 2035. In the real world, this would require us to build 25 Hinkley C-style nuclear EP reactors in a decade, which is impossible. Caught between reality and statutory obligation, civil servants duly responded with accounting tricks. At one point, for example, the report claims we could have an additional 13GW intraday energy storage capacity by 2030 — an exciting possibility. However, a cursory look at the methodology reveals civil servants simply invented this figure using input-based program which can’t make predictions. The (separately published) appendix makes clear this method “does not attempt to determine whether the market, or potential support mechanisms, would deliver this level of flexibility.” To hit their targets, therefore, civil servants simply imaged what technological innovation would be needed and told a computer to predict it.

Increasingly energetic head-burying is evident

Increasingly energetic head-burying is even evident in the tone of BEIS reports. From 2017, Energy Department projection papers embraced a new editorial style. Gone was the neutral, technical jargon of civil servants, in came exciting LinkedIn-friendly buzz phrases like “seizing the opportunities of clean growth” and unprompted reassurances that Britain is “amongst most successful countries in the developed world in growing our economy while reducing emissions”. 

At the same time the government was forcing civil servants to fudge the figures, it was also busy channelling money to experts likely to give it the thumbs up. Enter the Climate Change Committee (CCC) — a quango staffed by activists, tasked with advising the government on energy planning.

When figures needed to be found, the CCC was more than happy to supply “independent advice”. Last year, after a lengthy court battle with an activist group, the Committee, was forced to reveal the basis for the wind energy estimates it had supplied the government. As it turns out, they had assumed that annual windless days would drop by a factor of twenty, even though scientists predict that windless days will become more frequent. When asked for their reasoning, the CCC refused to clarify. In short: the UK Government had based its wind energy strategy on falsehoods.

Shockingly, the revelation didn’t even make the 8 o’clock news. Presumably motivated by a desire to avoid bad PR, the government didn’t pursue any lawsuits and continues to cite the CCC as a model of good governance. In a sign no lessons were learned, the new Energy Bill would give control of energy planning to a CCC-esque “Independent System Operator and Planner” (ISOP), with a statutory duty to promote net zero.

The CCC has also helped insulate the Government from criticism. When, in 2016 the Institution of Mechanical Engineers (IMechE) sounded the alarm about the UK’s “electricity gap”, the ministers were able to point to their CCC-modelling to reassure the public everything was okay. 

So, that’s the backstory. Frankenstein’s energy monster is composed of an assortment of quango nonsense, bureaucratic head-burying and clueless ministerial direction. Legislation created a regressive feedback loop by which ministers forced civil servants to mislead them and then made decisions based on poor data. Job switching and an over-reliance on quango advice robbed the system of accountability and the ability to take a joined-up, long-term view of planning. State-funded activists behaved like activists.  

What’s to be done? 

There is no silver bullet to kill this monster, but disaster may be avoided if we’re prepared to acknowledge it exists. Blackouts remain unlikely if electricity demand is constrained, which means the government must abandon its plans for the grid to go green by 2035, along with the aim to switch to electric cars and heat pumps. Coal stations will need to keep burning, and mothballed generators may require re-recommissioning. Whilst it is too late to build the necessary plants in the next few years, the government can save future pain by loosening restrictions on new gas-fired power plants. It should also be prepared to finance new projects directly (60% of the bill for Hinkley C is borrowing costs, due to the government’s refusal to provide direct funding).

Above all, the Government must tackle the perverse incentives which lead it to walk blindly into this mess. The CCC must be abolished, or at least matched by another quango responsible for scrutinizing climate policy’s impact on energy security. CCC members who might have misled the public should be investigated. Legal requirements to meet impossible climate targets must also go — if the department can meet targets, that’s good, but its priority has to be to keep the lights on. Finally, civil servant pay caps must be removed to promote continuity in departments. 

This tale speaks to a deep dysfunctionality at the heart of the system. Keeping the lights on is a basic function of modern government, and we are close to critical failure. The next PM’s first task must be to exorcise vested interests and create clear lines of accountability. If the eco-blob cannot be tamed, the future of the country looks dark.  

Enjoying The Critic online? It's even better in print

Try five issues of Britain’s newest magazine for £10

Critic magazine cover