The Gap in Generation Capacity.
By Rupert Redesdale, CEO of the Energy Managers Association
The energy gap, the difference between generating capacity and demand should not be a surprise; it has been predicted for years. The surprise is that nothing has been done to fill the gap. Britain’s energy rating has been downgraded from AAA to AAB due to concerns over supply. This will send the price of investment finance up. This is not a short term problem. Power generation cannot just be built over night. The issue is that it is really difficult for governments to make 40 years investments which will send bills up whilst working on a 24 hour news cycle.
Wind was meant to fill the gap but it is at major scale a new technology and sticking it in one of the harshest environments around, the North Sea, does not reduce the cost. Wind is coming down in price but the Tory funding policy has destroyed any hope that future investment will be forthcoming in the next five years. The same has happened for solar. The investors who have taken a beating on wind and solar are not going to fund gas at its present profit margin with the risk that the Government will not stick to long term funding policies. This leaves nuclear. The funding of Hinckley Point C is, according to the City, insane.
So not only will there will be a gap at peak times between supply and demand form next year, 10% of available power will be gone by March 2016, this is not a short term problem. Even if the Government invested in a major building campaign, which would significantly hike bills, surplus power is a number of years away.
There are solutions such as large scale implementation of dynamic demand, but to make this work the country needs a vast number of trained energy managers. The EMA is helping to train them and the energy shortage will be fantastic boost to the profession, just don’t expect this to be in place next year. As my mother said stoically “It’s all right dear, there are candles under the stairs”.