Wow, what a week that was

27th Sep 2021

 

Well energy has certainly been in the news recently; the energy crisis has captured the attention of the media and politicians. Consumers too, are getting wind of the problem. But we need to make sure that whatever actions flow from dealing with the crisis, the right conclusions have been drawn.

So let’s get straight to the point. Globally gas prices are high as we exit the pandemic and countries try to reduce coal burning for power. Why the UK is affected more severely is because of the way we generate electricity. Some nuclear plants are under maintenance, one of our interconnectors is down and the wind hasn’t been blowing as much as usual. So gas has filled the gap; it has come to the rescue of the electricity system (as it is designed to) and stopped the lights going out.

As a result of the higher demand for gas, globally and in the UK, prices to all gas consumers have increased. That’s just basic economics. But gas isn’t the enemy here, it’s just saved us because electricity generators failed to have sufficient capacity when it was needed.

So what’s the conclusion?

Firstly, do not think we can switch peak winter heat demand from gas to electricity. Power was bailed out during a warm week in autumn; imagine what would happen on a cold day in winter. Forcing all the UK’s heat demand onto the power sector would be reckless, irresponsible and it poses a risk to consumers that no sensible figure would take.

Secondly, the energy trilemma just got real. Not using dirty coal comes with a cost. Relying on the wind, without providing for a backup, comes with a security of supply risk. Consumers have to pick up the bill and frankly, they don’t like it.

My final point is that consumers object to paying more for their energy. Switching from gas central heating to a heat pump will force the average consumer to pay more. An increase of £150 brings a further 500,000 into fuel poverty according to campaigners. So additional costs of running a heat pump of £300 a year is a serious problem. For those connected to gas, worried about carbon and bills but wishing to stay connected for warmth, the message is simple, Keep the boiler, change the gas.

 

Best wishes

Mike Foster, CEO

Mike Foster

EUA's Chief Executive

 

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