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Ed Davey “We’re Fine” Message on Energy

Unfazed by the close shave and entirely avoidable capacity constraint of 2014/15, Ed Davey, Secretary of State for Energy and Climate Change is belatedly developing plans to prepare the UK for the ongoing prospect of winter energy shortages.

With a bad winter raising the prospect of spare generation capacity being just 2.8% compared to 17% in 2011/12, action is sorely needed, but the marginal benefit of bringing previously mothballed plant back online ahead of the coming season is nowhere near enough to deliver a long term solution.

However Davey feels far more confident:

“We’re planning currently for two years but of course we’ve left ourselves the flexibility, as you would expect, to have another year if we felt we needed it.”

“When I asked National Grid about how I should view Didcot B in terms of an unplanned outage . . . they said we have an unplanned outage of 600MW one or two times every week.

“This is business as usual. But because there was a nice big fire that people could look at and point a camera at, everyone got worried.

“17% was well above what is normal in a liberalised market. It has been much more in the 8-10% range, so we are below that.

“Power stations aren’t built in a day and since 2010 we have had a massive increase in investment, the problem was the last government, including Ed Miliband, were asleep on the job.

“The reason why I’m rather more calm than most people are about this is we’ve looked at the numbers in detail, we’ve talked to National Grid, we’ve talked to Ofgem [the energy market regulator], we’ve been working at this for several years and frankly we are going to be absolutely fine”

Of course as the minister in charge you could be expected to ‘talk up’ your situation but is such confidence really well placed?

Given the alarming statements from Ofgem and National Grid in recent weeks it seems that Davey’s optimistic outlook has not always been shared.

One interested party who certainly doesn’t agree is John Cridland, Director-General of the CBI, Cridland castigated energy policy saying:

“The sclerotic nature of our infrastructure investment actually has a bigger implication: it reduces the capacity to create energy and builds a bigger risk of us not having enough generation.

“We’ve got to get on with the capacity auction, we’ve got to get on with a settlement of the emissions trading scheme, so that the price of carbon generates sufficient investment, and all of that has got to feed in to the Paris talks on climate change, where we need a global deal, so we don’t put Europe at competitive risk.”

With a relatively mild winter beckoning and emergency measures in place on both the demand and supply side, Davey will most likely be proved right that “we are going to be absolutely fine” but that should not be mistaken in anyway for “we were always going to be fine” and most defintiely not “we’ll be fine in the future”.

Governments are transitional, energy investment really should not be.