The UK Needs Reform To Keep The Lights On.

Net Zero is the road to a dark ruin...

Our Prime Minister is a maths fanatic. However it’s taken him a very long time to take his calculator to the UK’s electricity supply and work out that net zero has put the country on a trajectory to black outs. The only available solution is gas power. We need lots of it and soon. Not only is electricity demand rising but many power stations are being decommissioned as they’ve reached the end of their lives. (While it is possible to extend a power stations life, that decision needs to be made early to prevent the rundown of maintenance.) According to the excellent Watt Logic site the UK is to lose a further 10GW of power generation in the next six years. To understand the scale of the challenge Pembroke  gas fired power station, the largest in Europe, has an output of around 2GW  - the government needs to persuade lots of companies to invest heavily in building electricity generation.

In that context it is unfortunate that Mr Sunak’s government continues to subsidise wind generation and to encourage more wind farms. That reduces the demand from a gas power plant, rendering it’s revenue unpredictable and therefore more risky and more expensive. Sunak’s ship of fools has gone further and is also deterring investment in producing gas in the North Sea by taxing profits at 75% until (at least) 2028. That’s not a windfall, it’s lunacy which pushes up the cost of a oil and gas company’s capital, which they can only recover from their customers. Unsurprisingly, the price and availability of gas has a significant impact on the costs of running a gas fired power station. Increases can only be passed on to the customer, that is you, me and the companies that employ us.

It gets worse.

The government is also contemplating regional pricing for electricity – the closer to a green energy plant you live the more your electricity will cost. It mistakenly thinks that this will trigger more onshore wind development. Somehow it has not noticed that most of the UK’s people, services, data centres and industry are in the southeast – where there is seldom viable wind onshore – while most onshore windfarms are in places like Caithness & Sutherland. The latter has a population of 30,000 people, several hundred thousand sheep and a billion of so midges, with little electricity demand. Kent is half the size with 50 times the population. The policy idea is merely a sop to NIMBYs and avoid one of the many expensive consequences of net zero, the need to massively increase the capacity of the national electricity transmission grid. (For a detailed demolition of the policy Watt Logic has another excellent article )

In addition to that, the great energy hope of the Bozo years – Small Modular Reactors (SMR) – are being delayed. Great British Nuclear, as British Nuclear Fuels is now known, has delayed its decision over where to build the first factory until after the next election. Why? Thermodynamics and engineering are politically neutral?

SMR are vital to keeping the lights on, let alone the net zero lunacy. Rolls Royce has had a solution for several years which is currently in the regulatory approval process, a necessary but slow step that is due to complete this year. In 2022 Rolls Royce ran a competition to see where it wants to build its UK factories; it’s far from clear how Great British Nuclear are adding value (and their shortlist is different). Other nuclear reactor manufacturers also have SMR designs. It’s entirely possible that they could be adopted, exporting jobs, value and cash from the UK. It’s also entirely possible that Rolls Royce will build its first factory outside the UK, which makes no sense to anyone other than Sir Humphrey (and maybe not to him).

This government’s policies are no way to deliver electrons at the point of need and a heck of a way to run a country. Then again, this and previous governments have repeatedly demonstrated that they couldn’t organise a piss up in a brewery. To be fair, Bozo’s crew did manage wine parties in a lockdown, but that’s another story.  The net zero policy is an exemplar of clueless uncoordinated government enslaved to flawed ideology acting against the economic interests of this country, just like lockdown.

In normal times in an election year one would have some hope of a change of direction if things were going badly. Unfortunately the major parties now have almost identical policies, with the Tories “stealing” the labour policy on non-doms and even Rachel Reeves working out that an additional £28 billion a year on green energy isn’t viable. But they remain committed to net-zero, even though it came from Ed Milliband who charisma and intellect have done little for the Labour Party (or anyone else). They have just hired Mark Carney to help them find more money in the UK economy. Has the  Labour party has finally discovered that money doesn’t grow on trees? I doubt it; Mark Carney was a fan of the magic money tree theories behind quantitive easing..

Mr Carney’s job is to create a £7.3 billion national wealth fund to invest in decarbonisation of industry. If that was such a sure route to wealth private capital would already be investing. There are some £10,000 billion (that is £10 trillion) of assets under management (meaning looking for a profit) in the City of London alone. If they don’t want to invest there’s a reason. Note also the puny scale of £7 billion, although of course its £7 billion the government doesn’t have as the national debts is now over £2,600 billion. There isn’t much industry left in the UK in any case and it’s not the biggest source of emissions. According to the latest government figures industry uses just 13% of the UK’s energy. Domestic use is 20%.

There is just one party that is offering a coherent suite of policies, predicated upon reality not dogma. They will keep the lights on by ending the lunatic drive to net zero. That yields time and money to move swiftly into sorting taxation and delivering the conditions for growth. That party is Reform UK. You can read their costed policies here.  Neither Labour nor the Tories have published theirs, which is telling.

The lights are likely to go out in the next few years. When that happens what little industry there is will die, the financial services will struggle (computer data centres need electrons too), hospital care will be compromised and many homes will be cold and dark. This last happened in the 1970s and it ended badly. It is avoidable; the country and the government need Reform.

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