There is considerable confusion in the UK Electricity market as indicators are pointing in different directions. However, the result of this is that we face a very challenging time both in terms of cost and more seriously in terms of availability. In general the country is well served by the electricity grid operator now known as the National Energy System Operator. (NESO) They have considerable expertise and resources. However earlier this year on 8^th January when temperatures were very low, wind power virtually stopped and the UK became dangerously close to compulsory disconnections of electricity supply, the National Grid’s final resort.

NESO was to blame. Its winter forecast had underestimated peak demand and therefore exaggerated its safety margin. They survived by throwing significant financial resources at emergency supplies. The government’s policy on electricity is ill thought through and highly risky. Under Ed Miliband the plan is to increase the electrification of cars and the heating of homes. The electrification of cars has been denounced by senior executives throughout the car industry including the head of Toyota and the risk is that well-known long-established automobile manufacturers in Germany, Italy and France will be forced to close their factories and we will just import electric vehicles from China. These vehicles may have a higher level of carbon emissions than traditional vehicles with petrol engines.

I have written on this subject before. Just to briefly summarise what I've said - first of all you make an electric vehicle in much the same way as you make a petrol combustion engine vehicle and that is using quite a lot of steel or aluminium or other metals. They have a substantial carbon footprint in their mining and manufacture. The carbon footprint of an electric vehicle actually starts off by being higher than that for petrol driven vehicles because the key element in it is the battery which is much heavier and so the vehicle itself is heavier and therefore has a higher carbon footprint. It also does more damage to the road surface and consequent repairs also have a high carbon footprint. The key mineral in the battery is lithium which is mined in countries like Chile, Peru and Argentina but most of the market is actually controlled by the Chinese. Then once we get hold of our electric vehicle we have to charge it and where does that charge come from? In this country at present about half comes from oil and gas. In charging the vehicle we're not able to carry as much energy in storage as you can with the petrol driven vehicles and so that means that there would be substantially less fuel available. To compensate for this we'll need at least four new power stations and we've not built a new one in decades.

Peak electricity demand is set to rise 10% by 2030 and more thereafter so how will the system cope with cold weather in the future? Most electricity will come from intermittent wind and solar power so we will still need other sources of energy like gas and perhaps nuclear if we ever get round to building new nuclear stations. So right now it's the gas that keeps the lights on and here again our government doesn't seem to have a clue. We're no longer importing gas from Russia because of Putin’s war with Ukraine. We've decided not to develop our own gas resources anymore even though there's still plenty in the North Sea. If we imported some from America we will be at the whim of Donald Trump who's already demonstrated how unpredictable he is.  

Our electricity costs double what the French pay and five times what the Americans pay. That shows how out of touch we are and therefore how uncompetitive we are. But although I'm quoting forecasts that demand is set to rise, in the recent past since the new government came into power that has led to significant industrial decline and the amount of electricity has fallen significantly after a series of factories and other businesses have been forced to shut down. Industrial electricity consumption fell by 3.6% in the three months from July to September, one of the sharpest declines on record. Energy consumption by Britain's factories including power derived from fossil fuels fell by 4.4%, the lowest quarterly total this century. Sir Jim Ratcliffe, chairman of Ineos, said high energy prices and carbon taxes are leading to a deindustrialisation of Britain by forcing heavy industries to close and he is shutting down a number of businesses.

In autumn 2024 British industry was being charged the highest electricity prices of anywhere in the developed world averaging 28p to 31p per kilowatt hour. Sweden was charging about 8p. One energy analyst said the premium faced by British businesses was largely down to the raft of levies added by government. She said the UK has added all kinds of carbon related taxes which have pushed prices up and created an incentive to move abroad typically to places like China.

Overall energy consumption by Britain’s factories, including power derived from fossil fuels, fell by 4.4% to the lowest quarterly total this century. Sir Jim Ratcliffe, owner of significant chemical and ethanol businesses, has said that high energy prices and carbon taxes are leading to a “deindustrialisation of Britain by forcing heavy industry to close.” He went on to say that a “deindustrialisation of Britain achieves nothing for the environment. It merely shifts productions and emissions elsewhere.”

Ed Miliband is intent on delivering Net Zero in the next few years. However, in a TV interview this week, the prime minister, Sir Keir Starmer, said that the UK will continue to use oil and gas for decades. They both can’t be right but they sit at the same cabinet table. It just shows how confused they are and if they don’t sort it out soon then Britain and the British face a very uncertain future in which the lights may well go out.

Sources: various