FYI | Feb 08 2008
By Chris Shaw
With more than a third of its capacity set to close over the next twenty years it is well known the UK will have a power problem in the future, a situation compounded by the lack of a definite plan with which to address the issue.
As Barclays Capital notes, putting together a plan for the future has been complicated by the fact it must be in accordance with other policy objectives of dealing with climate change and energy security.
This problem is slowly being addressed as evidenced by plans contained in two recent white papers, the result being the market will gradually move from the current spread of 37% coal, 36% gas, 18% nuclear, 4% renewables, 1% oil and 3% others to what would be a more environmentally friendly balance.
But as Barclays points out the plans will still see nuclear energy halve its contribution, as new nuclear plants won’t be enough to offset the loss from existing nuclear plants being closed as they approach the end of their productive lives.
But with EU carbon emission regulations requiring at least 8GW of coal fired capacity to be closed by 2016 and renewables expected to increase to only 15% of the market, Barclays suggests the only option at present will be a significant increase in gas-fired capacity.
By 2020 the group expects the distribution to be in the order of gas 47%, coal 25%, renewables 15%, nuclear 9%, oil 1% and others 3%, which it suggests implies a substantial increase in the UK’s imports of gas from current levels of around 10% of requirements.
This increased reliance on gas still means the government will face an issue in terms of meeting the goal of a 60% cut in emissions by 2050, leading Barclays to conclude current policy will fall short of meeting the government’s goal of clean, secure and affordable energy.
It suggests an increased reliance on nuclear energy will be the only option to address this, so it expects a stronger emphasis on nuclear power despite the likelihood of public opposition to such a move.
