A recent
Ofgem report prepared for the government suggested there was a high risk of a
shortage of UK electricity capacity as early as 2015 under certain conditions,
and with it the possibility of blackouts. However, a new index suggests that
the UK is one of the most energy secure countries in the world.
The Ofgem report cited the possibility of lower electricity
capacity margins in 2015 in light of older coal and oil power stations coming
offline under the European Union (EU) Large Combustion Plant Directive.
However, in a recent article "The lights will stay on in the UK"
Datamonitor expressed the opinion that the actual likelihood of blackouts is
slim. The possibility of such an outcome has simply been exaggerated by the
media and those with an interest in receiving rapid approval for capacity
construction in the short term.
The low risk of electricity blackouts is reinforced by impartial
analysis from outside of Europe. An offshoot of sorts from the US Energy
Security Risk Index, the first edition of the International Index of Energy
Security Risk ranks 25 developed and emerging countries according to 28
metrics. The quantitative index - which covers 1980-2010 and focuses on larger
energy users - was put together by the US Chamber of Commerce Institute for
21st Century Energy.
In general, countries with large energy resource bases and
efficient economies enjoy the greatest comparative energy security in the
index. Metrics included the resources available for a wide range of fuel
supplies, the amount of fuel imports, environmental emissions, energy
intensity, price volatility, consumption levels, reliability of generation, and
geopolitical risk to name a few.
The index underlines the fact that energy policies matter greatly,
as they influence energy efficiency, technology development, and how resources
are built or used. Despite its shortcomings - for example, each metric was
assigned a weight aligned with that in the US index - it does provide insight
into the opportunities and options that a government must consider to maintain
or increase its energy security.
Anyone having read the press of late may be surprised to see that
the UK was ranked the second most energy secure country in the whole group,
making it the most secure European nation. Not only does the UK have a
relatively stable political environment, but its high score (and thus low
energy security risk) is due to the fact that it still has relatively high
quantities of oil, gas, and to a lesser extent coal relative to its EU
neighbors. Only Norway has more crude oil than the UK, and only Norway and the
Netherlands have more gas.
Source: International
Index of Energy security risk 2012
However, year-on-year change shows that the UK's security risk has
been increasing since the early 2000s, at a rate comparable with the rate
change of the Organisation for Economic Co-operation and Development average.
This higher risk in the UK is due to the larger amount of fuel
imports, especially oil and natural gas. Future risks will stem from even
higher expected import levels. In particular, gas imports will be a source of
insecurity if the UK turns to gas-fired electricity generation as a backup
source should new nuclear investment fail.
Even so, there is little cause for concern. On the basis of
natural resources, the UK should remain one of the most secure countries if it
can exploit new and existing oil and gas fields in the North Sea and its
reserves of shale gas. The new brown field tax allowance approved by the
government in September 2012 to encourage investment in older oil and gas
fields in the North Sea indicates that the government has no qualms about
maintaining energy security through hydrocarbon-based energy.
Looking at it from a resource viewpoint, lights in the UK will stay
on. While Datamonitor acknowledges the danger of a simplistic resource-based
view of energy security, it also points out that policy decisions - influenced
by public opinion on prices, carbon emissions, and perceptions of safety - are
just as important in understanding the UK's real energy security now and in the
future.
Written by Yasmin Valji
Analyst in Datamonitor's Energy team
Follow Yasmin on Twitter: @YasminV_DMEN
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