Britain’s energy future is bright – but we still need Ed Drilliband
Amid soaring oil prices and growing fears of jet fuel shortages, it feels as though Britain is trapped in an energy permacrisis of its own making.
So here’s a note of optimism to counter the doom and gloom: Britain has a bright energy future ahead of it. A few examples:
Nuclear power output is going to get massively ramped up with the opening of two new plants in Hinkley Point C in Somerset and Sizewell C in Suffolk. With a combined output of 6.4 gigawatts, they are enough to power about one-seventh of the UK’s electricity demand.
Innovative nuclear technology will boost that capacity further. This week’s announcement that the government is funding the Rolls-Royce small modular reactor (SMR) programme opens the way for the installation of mini nuclear plants across the country, speeding up building and deployment times.
And Dogger Bank, off the coast of Yorkshire, is set to be the world’s largest offshore wind farm. Its individual sections are expected to deliver a combined 8.1 gigawatts, enough to power more than 12m homes.
Taken together, that means a lot more capacity added to the UK, getting us closer to energy independence.
OK, that’s enough optimism for one day. Because there’s one small problem with all this: it’s years away.
Hinkley C is expected to begin operation in 2030. Dogger Bank won’t be completed till 2031. Rolls-Royce’s SMR scheme is expected at some point in the mid-2030s and Sizewell C isn’t due to be finished till the late 2030s.
By 2040, therefore, we could be in a good place. There’s just the small matter of getting through the next 14 years.
And that matters because in the here and now, Britain has the most expensive electricity of any major country in the world. This is the main driver of industrial decline. Firms are already going bust left right and centre.
A survey of more than 600 senior business leaders, conducted by advisory firm FRP as hostilities in the Middle East began, found that 43 per cent cited rising energy costs as the most important trigger event for their business since the 2024 general election – ahead of AI (35 per cent), government policy (31 per cent) and regulation (28 per cent).
Even if the 2040s looks bright, how much of a toll will high electricity prices have taken on our industrial heartlands? By then, what will be left?
There is another problem, too: the increased domestic capacity won’t bring down prices.
As lobby group Electrify Britain notes in its latest report:
“Even if the generation mix becomes cheaper at the margin, retail bills may remain elevated because legacy policy costs remain embedded in electricity prices and network cost recovery continues to rise…That gap between explanation and household experience is precisely what erodes trust and fuels political anger.”
Electrify Britain, which notes that wholesale costs only account for about a third of household energy bills, has called for other aspects like policy costs and VAT to be stripped out.
Time for Ed Drilliband
All this makes it look less like an oversight and more of an act of economic vandalism that the energy secretary, Ed Miliband, is refusing to offer new oil and gas drilling licences in the North Sea.
Miliband’s ambitions for net zero are noble. But the lesson from the leaders in green energy, Canada and Norway, is that expanding renewable power capacity need not come at the expense of domestic oil production. Instead, taxes from traditional sources can be deployed on expanding electricity infrastructure and bringing down prices.
So yes, Britain’s energy capacity looks to have a bright future. Only it’s years away and we may get little benefit from it.