I don’t know what will be in the Government’s energy strategy to be announced any day soon but there are some fundamental things the Government and the UK energy sector must and could do to reflect how energy generation has changed in the past decade. The need for the strategy is to react to rising costs of energy that domestic customers and businesses are now exposed to. This rapid rise in the cost of energy is linked to the global gas price – so right now it doesn’t matter if we’re using nuclear, wind, coal or gas, the price of electrons remains the same. Your energy bill may tell you how your electricity is generated. In some cases, the electricity generated by gas is as low as 7%. But your bill has rocketed!
Energy suppliers buy their electricity and gas on the wholesale market. The wholesale market is broader than UK generation and includes both European markets and global gas market. The price for the wholesale market is set by marginal plant, which in the current case is gas, so even if nuclear/renewables/etc are cheaper than gas, or a domestic property has a single fuel electricity bill, the price the customer is paying is not the literal price of the electrons at generation, but the price of the market.
The Government’s approach will certainly focus on increasing the percentage of other technologies in our mix to reduce the need to import gas. By this I mean developing more offshore and onshore wind, solar, green hydrogen (hydrogen from renewable sources) and new nuclear development. As we reduce our reliance on gas then we will not be as beholden to the global energy market. The Government must also invest in more efficiency and other technologies on our grid and in our homes as it will make us less dependent on an international commodity. This could include energy efficiency in our homes, helping us reduce the amount of energy we use.
Fundamentally, to address the volatile pricing structure of energy and reflect the modern energy generation mix in the UK (as we move forward with the low carbon energy transition), we need to consider how we decouple from the global gas price. This will help further drive investment in low carbon generation. The Government strategy must address this and the sooner it starts the better because it will help with our transition towards low carbon energy and net zero, incentivise investment in low carbon energy sources, and in the long run keep bills down for customers. However, this is a long-term ambition and will not help with the high cost of energy bills, that we are experiencing right now. Right now, the Chancellor needs to demonstrate a keener understanding of the pressure on low-income households including our state pensioners. During the pandemic he loved to say ‘I will do whatever it takes’ and, whilst we know borrowing more money for day-to-day public spending is a potentially expensive long-term pressure, he could be smarter with the funds he does have access to!
This week Parliament is not sitting which provides me with a greater opportunity to meet with various representative groups across West Cornwall. I met with fishermen in Cadgwith and Porthleven to discuss with them the pressures they are under. Not necessarily caused by the weather, foreign fishing vessels and the market itself. Unfortunately, much of the change is being imposed or proposed by the Marine Management Organisation (MMO) and the Maritime and Coastguard Agency (MCA).
I’ve read of fishermen who have fished for years without incident and who are careful at sea but find themselves unable to put to sea due to some changes that are being applied. Next week I will be talking through these concerns with the Marine Minister who has invited coastal MPs to work with him to find a safe and acceptable compromise.
Another such meeting was with representatives of tourism to discuss the opportunity to improve the skills and careers of people working in hospitality. The sector across Cornwall and Scilly employs a massive number of people so why not create a top training opportunity to enable the workforce not just to excel here but take their skills and expertise around the world?
