A diverse energy supply in action

Stories about gas storage shortages which resurfaced last week perhaps oversimplified what are a series of very challenging issues.


28 May 2013

London Array Offshore Wind Farm-2

The UK has just experienced one of the coldest and prolonged winters. Official records show the coldest for 20 years. This March, the coldest since 1963, it was widely reported that gas demand was higher than normal therefore gas storage reserves were significantly depleted. During that time, gas supplies from Norway and Belgium were also temporarily interrupted for short periods and with the depleted gas reserves there was a much greater importance on acquiring liquefied natural gas (LNG) imports into the UK.

Coal and nuclear power stations were running at high capacity, as were the electrical interconnectors with France and the Netherlands. No LNG shipments were planned until the summer but three tankers were re-directed to the UK at a premium price due to global demand for LNG. Fortunately with the cold weather came strong winds, resulting in wind power generation being high and demonstrating good diversity of energy supply in action.

As such, the UK's windfarms were operating at nearly maximum capacity for a significant part of March and on certain occasions they contributed as much as twice the electricity to the grid as gas fired power stations.

The news stories about gas storage shortages that ran this March resurfaced last week and perhaps oversimplified what are a series of very challenging issues that faced the nation.

In reality, it's actually difficult to know exactly what the outcome would have been had UK wind energy not generated so much power during this period.  Without modelling data it's hard to know exactly how gas supply would have responded to demand. Gas spot prices did substantially increase, but only initially impacting the industrial consumer, who also have interruptible contracts to protect gas supply continuity for commercial and most importantly domestic consumers. However it is safe to say that wind energy generation did add to the UK power supply, clearly demonstrating that the diversity of energy infrastructure is working.

What the situation outlined above does demonstrate clearly is that the government's strategy to diversify the UK's energy supply to provide secure low-carbon and affordable energy is paying off. According to Renewable UK, in the last three months of 2012 renewables contributed 12.5% to the UK's electricity supply. This figure is set to rapidly increase as we harness the power of the wind, waves and tides.

Both industry and government are rightly working to expand the UK's energy supply to provide a diverse, affordable and secure supply. The offshore wind industry could be investing up to £100bn over the next ten years to achieve this and The Crown Estate will continue to play its part by facilitating renewables and other low carbon energy programmes.  This includes investing £100m into offshore wind and looking to invest £20m into wave and tidal arrays, to help bring that industry to commercial scale, helping the UK to retain its position as the world leader in marine renewables development.

So it seems impossible to conclude anything other than that the solution to the UK's energy needs is a diversity of supply with a significant element coming from indigenous resources, decoupled from global fuel price risk. Offshore wind energy with its significant capacity and reliable production, free of fuel price risk, is one obvious solution to the problem of providing the UK with much needed energy at an affordable cost.