Electricity Market Reform (EMR) constitutes the single biggest change in the UK electricity market in a generation. EMR is intended to provide the commercial basis for generations of low-carbon electricity at the lowest possible cost, whilst being neutral to the energy source used.
The main objectives of EMR are to ensure all three of the UK government’s key energy objectives are met;
- Ensure security of supply for the UK
- Meet carbon emissions reduction targets
- Provide affordable energy
However, the general lack of understanding of energy issues creates a challenge. Our society needs to become more “energy literate” in order to understand the critical choices now facing us as a country. We need better comprehension of the science behind the issues we are trying to tackle and to develop better ways of debating the environmental impact/benefit, the cost of the options, and how these impact climate change. This is the only way our transition to a sustainable future can be successful.
The term “energy security” is somewhat ill defined. A great deal of the literature simplifies energy security to the area of fossil fuel import dependency. Current concerns also exist with regard to maintaining a secure supply of electricity to UK users, i.e. “keeping the lights on”. EMR is concerned principally with the supply of electricity, although the fuel used has both important security aspects and carbon emissions aspects.
Fossil fuel imports are a relatively recent phenomena for the UK. The UK was forced to move from coal to natural gas and nuclear for its electricity production as the coal miners’ strike constrained its supply in 1984. Coal production never returned to pre-strike levels, and in 2012 it was only 14% of its 1980 level (Parker and Surrey, 1995). Consequently, to meet national demand the UK has been a net importer of coal since 1984 and, with the decline of North Sea production, of gas since 2003 and oil since 2006.
With existing nuclear plants coming to the end of their lives and coal plants planned to close due to emissions regulations, some believe the UK faces an electricity generation gap. EMR is intended to support the investment required for generators and developers to build new generating capacity which at the same time is low carbon and low cost. Renewables have an important role to play here, but pace of development, technology challenges, cost of generation, and environmental impact on the landscape all limit their immediate potential. Coal and gas plants could be built with carbon capture and storage (CCS), but their development costs are significant and most generators believe that the commercial basis under EMR is not yet sufficiently developed, mature or stable.
The increasing demand for energy is forcing us to look for new sources of fossil fuels, such as shale gas. However, it is highly unlikely that the markets characteristics and its influence on gas prices will allow for the replication of the US revolution in the UK. Moreover, the general lack of understanding of technology enabling fracking and its negative perception makes any progress in this field fairly difficult.
While working on securing new sources of low carbon electricity we also need to communicate the importance of reduction in energy demand and its impact on energy security. We could be saving 196TWh in 2020 through cost-effective investment in energy efficiency. That is around 11% lower than the business as usual baseline. Improving energy efficiency could also reduce carbon emissions by 41 MtCO2e, contributing to achieving our carbon budgets (DECC, 2013). This is yet another challenge which needs to be communicated and addressed [Business Risks from Emissions Limits].
In the short term at least, low carbon is likely to mean higher cost electricity. As technologies mature and deployment experience increases, costs will fall, but for now we need to have sufficient desire to address climate change to be prepared to pay more for our electricity. To engage in this debate is challenging. Not only do we need to be “energy literate”, we need to be aware of climate change and its implications.
Communicating energy matters is not a new issue, however the need to renew UK electricity generation capacity, to meet carbon reduction targets, whilst managing costs requires a complex debate the likes of which we have not seen before. This creates a great challenge since the technology choices we face can only be implemented on the scale required when they have public support.
A higher level of understanding of the science behind energy and the issues relating to it would allow the UK to engage society as a whole in making efforts towards our sustainable future. The responsibility associated with climate change lies on each and every one of us. The only thing we need is a better understanding of the issue.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/65602/6927-energy-efficiency-strategy–the-energy-efficiency.pdf Parker, M. & Surrey, J. (1995) Contrasting British policies for coal and nuclear power, 1979–1992, Energy Policy, 23 (9), pp. 821–850.
This article was written by Malgorzata Olesiewicz.