The UK has a serious dependency problem with natural gas. Frustratingly, while it’s turning round to bite us now, it actually stems from basically good intentions. By leaning into natural gas energy, we’ve been able to wean ourselves, at least partially, away from more damaging pollutants like coal. However, given that gas accounts for around 40% of our electricity, production problems and insufficient storage capacity have put our energy supply under intense pressure as winter approaches. Over 2.5 million households have needed to switch from collapsing energy businesses and are now facing worse deals with suppliers “of last resort”. Meanwhile, Ofgem has raised the cap on energy prices by 12%, leaving 15 million customers looking at estimated cost increases of £139. Fuel poverty is likely to become even more of an issue with time if the predictions of even greater price rises hold true.
For now, at least, the UK government isn’t anticipating any major supply emergencies in the coming months. However, the current cost and supply issues have exposed a number of key vulnerabilities left in the wake of our necessary drive away from coal. We depend more on gas than ever before, and we’re far from alone in that. Energy markets over the world are creaking under the strain of our recovery from the ongoing COVID-19 chaos.
What are we doing about it?
In the short term, the general advice offered to UK consumers is to continue shopping around for better energy deals. Of course, that guidance will be cold comfort for many, given the scale of the price hikes we’re seeing already – and may continue to see in future.
Looking more broadly, the crisis does clearly and unambiguously highlight some of the dangers of our continued dependence on fossil fuels, however “cleanly” they may burn in comparison to worse alternatives. We’re also seeing the problems associated with a heavy reliance on international energy supplies and markets.
So let’s talk about how the renewable sector factors into this
Some of the arguments that have traditionally slowed down the adoption of renewable energy might be a little short-sighted, given the risks we take by continually clinging to fossil fuels. Set up costs and initial investment might be off-putting to some, but those up-front obstacles don’t take into account how scalable the technologies we’re adopting are. Solar and wind power, for example, have practically negligible costs per unit of energy generated. With renewables, the clue really is in the question.
So, we have to ask, what’s the cost involved in ensuring a reliable, affordable supply of renewable energy to UK households and businesses through the cold months? How does it compare to the cost and chaos of failing to do just that? While the current situation is hardly normal, we’re clearly still too susceptible to “perfect storm” events like this. Investment in renewable energy has the potential to prevent such major shocks to the system, but it’s going to take a broader approach to reap the greatest benefits. That means we’ll need to develop the capacity to store more of the generated energy and ease back on our reliance on gas, as we’ve been trying to with coal and even nuclear.
Flipping the switch
Speaking of nuclear power, while there’s certainly an argument for it as a means of reducing carbon emissions, it’s essentially the opposite of a fast-acting solution to an already pressing problem. A power plant could take as much as 10 years to get up and running and comes with a raft of long-term problems of its own.
None of this is to say that renewable energy is an instant fix, either. Right now, for example, we’re seeing a range of expert fingers pointing at the lower-than-expected energy yield from UK wind farms. Naturally, over-reliance on any one specific means of generating energy leads inevitably to vulnerabilities. However, the best insulation from the kind of turbulence we’re experiencing now will probably be found in domestic low-carbon production methods – and that plays squarely into the renewables sector’s strongest suit.
It’s a pretty clear sign of the way forward that both the government and opposition vocally support cutting our dependence on fossil fuel energy and leaning into renewables. That’s the future we’re all pushing toward. The only question now is whether we’ve left it too late to avoid the worst of the damage. With new subsidies on the way for solar and wind power initiatives and an expected heating strategy announcement from the government coming up, there are at least a few encouraging noises being made.
The key, as always, is to keep the innovations flowing. For some, that might mean finding new ways of eliminating energy wastage within their business. For others, it could be adopting “smart building” technologies within their premises. In all cases, it’s about making sure that innovation always bears fruit.
If you're breaking through barriers and pushing back boundaries in your business, then you could qualify for R&D Tax Relief. RIFT can help you identify historic qualifying activity and get credit for it.