"Energy review: What Price Manufacturing?"
The conference "Energy Review: What Price Manufacturing?" was organised by AMICUS to be part of the Energy Review being carried out by the UK government. Over 250 delegates from Britain and Northern Ireland attended the event in "Our Dynamic Earth", Edinburgh. The bulk of the people came from the power industry and intensive users of energy.
The conference concentrated on the shortfall of power expected in Britain within the next ten years, due to increase of demand and because of the decommissioning of older stations, estimated to be between 15-18GW by 2015. In 2003, there was an excess capacity in the UK of 30%, although that has been whittled away considerably.
The Energy Review three years ago advocated the "Dash for Gas" policy to replace the running down of nuclear generation. It thought that CCGTs would be the saviour for the UK. However, events over the last few months have highlighted problems with pricing and security of supply.
Considering that some of the speakers had vested interests due to the industry background they came from, it appeared that they all seemed to agree that a mix of supply types is the best way forward. The building of coal burning stations using new cleaner technology seems to be gaining in favour. The reasons for this would seem to be that it gives security of supply as reserves of coal can be stockpiled and coal is indigenous to Britain.
The aspiration of renewables taking up some of the slack in the generation capacity seems to be losing favour due to the costs associated with extra grants, networking the small generators and the necessity of having spinning reserves in case the wind doesn't blow. The costs were estimated to be between £2-2.5bn annually from 2010. Germany was quoted as a place where renewables have only shown a superficial benefit.
New nuclear generation capacity was suggested as a way ahead but problems concerning the timescale for planning and regulation mean that they cannot be built as a shortterm solution. It was worth noting that the only voice of concern on nuclear power generation came from Jack McConnell, First Minister for Scotland.
Those giving contributions were very aware of issues of climate change and public attitudes. However, there was almost a consensus that the UK would not be able to make much of a difference in the global context. At the moment, the UK creates about 2.2% of the world's greenhouse gases. By 2020, China will have an energy generation capacity 25-30 times that of the UK. The speakers were aware of Britain needing to take a lead; not too much of a lead, but a lead. The real challenge is in providing realistic viable alternatives.
Chris Parr MD, of Tullis Russell papermakers, gave a very graphic description of how the gas price increases affected his business. Their daily gas bill went from £7000 three years ago to almost £70,000 during the price spikes over the last few months. The increased energy cost has been a major factor in speeding up the decline of the paper industry in Britain. The experience in paper industry is not unique, with a representative from the heavy energy users group suggesting this quickening decline is happening across most of manufacturing. Discussion also took place on methods of addressing "fuel poverty" and reducing the cost impact on the less well-off.
The consensus was that the British Government must produce an Energy Policy which is clear and can be relied upon. Lack of investment in the energy infrastructure was broadly recognised as being due to the uncertainties in government policy. This must happen quickly, otherwise, there may well be an Energy Crisis more than an Energy Review in 10 years.
Derek Gallagher and Harry Wisener FM UK Ltd, Coolkeeragh ESB
