Economy

Why Britain is still hooked on natural gas despite soaring energy bills

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Energy bills for Britons are on the up again, and much of the price rise is down to another leap in the price of methane, or natural gas.

The yearly bill for a typical household will rise to £1,849 per year, an increase of £111, after gas prices hit a two-year high this month of more than €58 per megawatt hour, or about £48.

Last year, the UK generated more than half of its electric power from low-carbon sources – wind, solar and nuclear. But 28.5 per cent of its electricity generation came from natural gas, particularly during dark or still winter days when sun and wind are in short supply.

This flexibility gas offers – it can very quickly be switched on and off to fill the gaps left by the sun at night time or the wind when it is still – means it is still a crucial part of the mix.

How crucial is it?

What were you up to on January 8? It was on this day that the UK came closest in many years to a blackout when gas prices surged to more than £1000 per megawatt hour and two power station companies were paid more than £12m for three hours of electricity because other sources were not available.

According to Professor John Underhill, university director for energy transition at Aberdeen University, about 75 per cent of the energy needs for the UK still comes from natural gas and oil. This is because electricity is only a part of the demand. Transport largely uses petrol and diesel from oil and industry and heating uses large amounts of gas.

Why gas?

In 1964, natural gas was discovered under the North Sea, kick-starting an earlier energy transition to cheap and comparatively clean fuel which Britain could use to heat its homes and sell as an export.

For UK energy, “it was huge” said Prof Underhill.

Before that, homes were often fuelled by coal and another type of gas known as town gas. Both were comparatively dirty – coal was heavy to transport and sooty to burn and handle, while town gas included carbon monoxide, a killer toxin.

The discovery heralded a speedy shift from dirty town gas, which itself was made from coal, to methane usage. Millions of appliances had to be converted in what Sir Denis Rooke, chair of British Gas, from 1976 until 1989, described as “perhaps the greatest peacetime operation in the nation’s history”.

Wind energy is supplanting gas usage, but it is intermittent (Ben Birchall/PA) (PA Wire)

It was cheap, burned fairly cleanly, with carbon dioxide the main byproduct, and the UK had a ready supply.

But this cheapness choked off investment in other modes such as nuclear, leaving the UK exposed if ever gas became scarce.

Now, we want to cut carbon output and the North Sea doesn’t supply nearly enough gas for UK needs.

What’s the plan to get us off foreign supplies?

The government promised it would save households £300 a year by 2030. But the Bank of England expects inflation to rise to 3.7 per cent this year, well above its 2 per cent target, largely because of a rise in energy costs.

To bring prices to heel, many more cheaper generation projects such as wind farms will need to be connected to the grid and ways will have to be found to store the energy for winter days when more is needed.

Progress on this storage is “not going at the speed one would need”, said Prof Underhill.

Ed Miliband, the energy secretary, said: “The way to deliver energy security and bring down bills for good is to deliver our mission to make Britain a clean energy superpower – with homegrown clean power that we in Britain control.”

But this will mean much quicker access to the grid. Currently, there are waits of up to eight years to add new windfarms and other green generation to the grid.

In the meantime, gas will be needed and the government could consider extending the life of the UK’s gas fields since using local gas is more environmentally friendly than shipping it from Qatar, the US and other far-flung places.

Having some sort of permitting whilst being clear that gas use will be on the decline could aid UK energy security, he said. Bad practices such as flaring, where waste gas is burned off should be banned, keeping the gas as low-emissions as possible.

“Make sure that with regulation that you ban flaring and that emissions are captured and stored safely in the ground,” he said.

Are the government’s 2030 targets possible?

By 2030 the government wants the grid to be using renewables 95 per cent of the time, a tough target.

“I don’t think there is any way that they can be achieved,” said Prof Underhill, whilst conceding that ambitious targets are desirable.

Slow development of nuclear power plants, slow access to the power grid for green power projects and other factors are slowing the shift to green power down.

“We’re seeing a lot of zombie projects that are in the system clogging it up,” he said, referring to projects going bust or changing tack and taking up regulators’ time. “There needs to be a way to root them out so that other wind projects come forward.”

Faster access to the grid will be key to speeding up Britain’s green electricity future, he said.

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