Neil Schofield, Head of Government and External Affairs for the Worcester Bosch Group, comments on the energy price hike in the UK:
“How much?!” is the question households across the UK will be spluttering into their tea when they get their first bill after April 1st.
Fitting for April Fool’s Day, bill payers in the UK can expect a 54% rise in energy costs, translating to an average rise of £700 per household, a figure which will increase significantly for larger homes.
Reading that, you might ask yourself, how on earth is this happening? How did we get here? Rightly so.
The Energy Minister Greg Hands says Net Zero is not the problem but the answer… really? Me and many others are not quite convinced.
The Trilemma
When it comes to energy, three things need to be balanced: the trilemma of price, availability, and environment / the green agenda.
Straight off the bat, price has clearly not gone well, considering the £700 extra hitting the pocket from April onwards.
So, what can we say about availability and environment?
Availability
In the UK, we have at least 50 years’ worth of gas and oil in the North Sea, or potentially from shale extraction. Due to pressure from the Green Lobby, we can’t access this, so instead, we import over 50% of our gas, largely from Norway.
Some of our gas even comes from shale gas that’s extracted in the US, which is then transported by diesel ships in the form of liquified natural gas (LNG), and the US has six times lower wholesale gas prices in comparison to the UK thanks to fracking.
The Americans have plenty of gas because they controversially allow fracking, and it is significantly cheaper for American bill-payers as a result. To be clear, I am not advocating for fracking to be conducted in the UK, but this explains the disparity in gas prices between the countries.
When it comes to electricity, in the last 12 months 39.5% of the electricity generated in the UK has originated from gas turbines, with wind and solar combined providing just 22.5%.
We also import 10.8% of our electricity a year via interconnectors under the channel, mostly from France.
Without fulfilling price or availability, how will the government fare on environment?
Environment
The environment, the green agenda, Net Zero 2050 – whatever you call it, it has a lot of commentators, me included.
If your energy strategy has been to prioritise environmental over the other two components in the energy trilemma then you get sky-high prices and energy fuel importation despite having plenty of home reserve.
This simply does not make any sense. At the expense of price and availability, we are focusing on the environment. This puts us at the mercy of suppliers who enforce high prices because we do not supply our own energy despite having around 50 years’ worth under the sea in the UK.
That’s why other areas of the world enjoy lower costs; they prioritise price and availability sometimes for the sake of the environment. Forsaking the environment is not correct either – a balance must be found, and that balance has not been met in the UK.
We are no longer self-contained; we are reliant on external markets. This is the reasoning behind the April Fool’s joke of an energy crisis, and one which does not necessarily have to be the case.
P.S. At the time of writing a 20-million-pound wind turbine in Wales was rather ironically blown over by the wind…
