The kerfuffle in the UK this week about possible disruption to petrol supplies as a result of an industrial dispute involving tanker driver has turned into an astonishing political liability for the coalition government. In part this was because of a remarkably ill-advised comment by a government minister, Francis Maude, suggesting that car owners should keep a little stock of petrol at home, just in case. That a woman should have suffered severe burns after the petrol she was transferring, in her kitchen, caught fire, may have been coincidence but it is a reminder that not all clear and colourless liquids are alike. And that burns units are disagreeable places to have to spend time.
But to me the interesting thing is that here was an over-reaction about an energy issue that didn’t actually happen. And I think there are some very important lessons that need to be learned from this that the government needs to think through very carefully.
To me this sorry little storm is a worrying harbinger of the UK’s very real vulnerability to energy shocks. And as far as I can see, the entire discussion in the major media outlets and from the politicians was about supply and delivery. The issue of demand was seen, presumably, as irrelevant. After all, for forty years there have seldom been more than minor disruptions to supply so no one imagines that something could possibly go wrong, in spite of an increasingly volatile political situation in the Middle East.
The issue comes hard on the heels of an article in the FT two weeks ago “Fears lights will go out as power plants shut” – I won’t link to it as it’s behind the FT’s paywall. The gist of it that several coal-fired electricity plants, 11 GW worth, are due to be closed by 2015. The infamous Kingsnorth plant in Kent, for example, will close in 2013. At the same time, the relative costs of coal and gas mean that gas-fired plants are a lot less profitable than they were before the economic crisis hit, in part due the the disaster that has been the carbon trading market in the UK. In addition, wholesale gas prices for the UK, unlike the US, are linked to the world oil price – this has soared given the uncertainty in the Middle East. Add a lack of clarity from the government, which is mulling over changes to the electricity market, and the electricity companies have put many of their plans for power plant construction on hold. As a result of this contraction in supply some are predicting that there will be an energy “crunch” some time in the next ten years.
The extraordinary thing about the article was that there was no mention at all of the possible role of the consumers/customers, whether domestic or industrial, as if the only thing that matters in all of this is electricity generation.
As I’ve noted before, the Energy Saving Trust has been produced a report “The Elephant in the Living Room” about how domestic electricity demand is rising inexorably as we acquire more and more appliances and assume that they should be available on demand round the clock. This process they say is “ruining the green dream”.
It’s not just electricity where a crunch between supply and demand looms. Thames Water, for example, is imploring everyone not to water their garden and to go easy on water use generally, with ads sprouting on bus shelters and press releases being issued to every newspaper and new channel that will listen. The current drought may be great for cyclists but few others are celebrating. But the approach Thames Water is using is to ask consumers to take action in advance of controls being imposed.
The irony is that Thames Water keep writing to me asking me to go “paperless” so that they don’t have to send me the two sheets of paper a year that list my “estimated use” (they say they can’t install a meter in my house) for that period. To have the convenience of going paperless, of course, Thames Water need a huge datacentre dedicated to ensuring I can “keep up to date” at any time of day or night. And that applies to my bank (where it makes more sense), my gas supplier, my electricity supplier, my phone provider, my data provider and so on and so on. Each of these companies, and their competitors, has to maintain a secure datacentre. And the datacentre is just the beginning because Virgin Media or BT (or whoever) need to have servers and routers needed to keep all this going.
Add in home servers and the digital switchover and it’s not surprising that we’re heading towards an energy crunch. And that’s only electricity.
Isn’t it time that someone (i.e. the government) joined the dots between demand, energy poverty, long term strategic planning, and the UK’s increasingly weak energy position by thinking about both sides of the energy conundrum? Moderating demand has to be part of the solution.