According to the Energy Secretary Edward Davey, the UK enjoys a relatively high level of energy security. This security is built on a framework of regulated, competitive markets that incentivise reliable supply.
This framework is supported by home grown resource, with oil and gas from the North Sea, nuclear power and the new boom in renewable energy. Renewables now provide approximately 15% of UK electricity needs and, alongside a strong drive for energy efficiency, help the country to meet carbon reduction targets.
Rising reliance on imports
However, the Davey insisted that the country must not become complacent. Despite considerable reserves still remaining in the North Sea, the UK is increasingly dependent on imports and therefore more at the mercy of volatile global markets that serve a more competitive, and energy hungry, world. Events in Ukraine have clearly demonstrated how quickly circumstances can change.
In addition, the UK faces more than a decade of structural transition as networks are upgraded and approximately 20% of generating capacity is replaced. This will require approximately £ 110 billion of capital investment in electricity infrastructure. The priority is to ensure that the country have sufficient power capability at all points during this transition.
Davey explained that the UK Energy Security Strategy tackles both the physical challenge of new power generation and grid infrastructure and the price challenge that requires the country to balance risk with affordability. Solutions are designed to be lasting, to 2050 and beyond, alongside decarbonisation timescales.
Critical to delivering energy security in the long term is making sure that the energy mix is diverse. Hence, the government has embarked on a significant Electricity Market Reform in order to create one of the world’s first low carbon electricity markets. Long term fixed price contracts will incentivise investment in low carbon electricity generation. A capacity market will help to guarantee supply security, and a new regulatory regime in the wholesale and retail markets will boost competition, encourage new entrants and bear down on prices for consumers.
In support of the single European energy market
Davey outlined that energy security requires working with neighbours for mutual benefit. According to him, the UK must step up integration and interconnection so that countries can buy clean, competitive, low carbon electricity from wherever it is cheapest. Europe must not fail to exploit the potential of the single energy market. This means that across Europe, the EU’s energy liberalisation legislation must be fully implemented in order to facilitate the investment needed in physical links between countries.
Adapted from a press release by Emma McAleavey.
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