The report, titled The Great Green Hangover, reveals that Britain is on the verge of an energy crisis, with demand set to outstrip dispatchable supply for the first time from early 2016.
Lodge says that for the first time, Britain will not have enough dispatchable energy generation capacity to cover forecast demand from next year due to the systematic early closure of power plants.
The average dispatchable capacity remaining by the end of March 2016 is calculated to be 52,360 megawatts, which contrasts with National Grid’s 2015/2016 Winter Outlook demand forecast of 54,200MW, he said.
Widespread coal plant closures by winter 2015/16 will leave an average dispatchable electricity capacity of 51,850MW left, which means Britain’s electricity capacity will soon fall below the minimum necessary margin to guarantee secure supplies for a growing economy.
“Action must be taken now if the lights are to be kept on,” Lodge said.
A good start, he said, would be to abandon the UK Carbon Price Support before it forces premature closure of more baseload power plants, which threatens the energy security that the UK government values so highly, to say nothing of the affordability that is already burning a hole through the pockets of the country’s end users.
UK electricity bills have soared by 131% in real terms, up by £705 ($A1.498 million), which easily outstrips any other household essential.
“Britain should enjoy the same carbon prices as its main EU competitors inside the EU Emissions Trading Scheme,” Lodge said.
“In the spirit of the Conservative election pledge to enshrine in law not to raise income tax, national insurance or VAT [value added tax], the government should also legislate to deliver targets to maintain security of energy supply, diversity and affordability.
“In support of this the government should introduce an independent Annual Statement assessing the economic impacts of its energy policy on British industry, consumers, competitiveness, energy security and diversity.”
It’s a different world now since 1991, when Britain’s electricity generating sector started embracing the burning of North Sea gas in new combined cycle gas turbine power plants, a process which the European Economic Community had previously banned.
Back then, the coal market was exposed to market forces which prompted the industry to focus on its economic collieries and close loss-making pits; imports of cheaper coal helped keep power prices down and provided the generators with a vast choice in coal supplies.
However, Lodge lamented that this initial surge in market-led activity, which adhered to the key ambitions of delivering affordability, diversity and security of energy supply, was slowly eroded by Whitehall’s desire to decarbonise the electricity supply industry as quickly as possible”.
“Certain mature energy technologies have now been banned, whilst new ones which are not as economically efficient have been supported,” he said.
“This adherence to EU renewable growth, and self-imposed carbon reduction policies has undermined any semblance of an electricity market and is similarly reducing the diversity of fuel sources from which the UK generates its electricity, whilst increasing costs.”
Now the UK has had no clear or coherent energy policy for nearly 20 years, Lodge said, as a succession of 16 ministers and 13 secretaries of state overseeing energy policy have failed to take timely action to prepare Britain for the future which will see the UK become increasingly reliant on fuel imports as North Sea oil and gas production keeps declining alongside coal production.