The recent ascent of energy bills in the UK is causing widespread panic and is being labelled by many as a national crisis. Prices are expected to continue to rise by as much as 50% through to Spring. This is particularly distressing for low-income households who may have to ration food and heating for the foreseeable future. There has also been a hard hit on energy providers across the UK, many of which are on the brink of bankruptcy.
The root cause of this problem is attributed to the global rise in wholesale energy prices, markedly due to the squeeze on oil and natural gas supplies that took place over the winter. The impacts are being felt across Europe and should be seen as a wake-up call to move to a more stable and sustainable energy mix over the next decade.
This crisis offers a silver lining in the fact: it will shift focus on integrating more renewable sources of energy. Much like the Covid outbreak exposed slow government reaction and the underlying lack of attention that was being shown to preparing for pandemic responses, this upturn in living costs highlights the necessity to move to a more diverse energy mix.
It also highlights the importance of domestic production of energy. The energy price shocks that prevail in the coming months can help push this into the public agenda and increase the urgency of adopting renewable energy in the long term.
The best way to avoid external price fluctuations affecting our domestic markets is to reduce our reliance on natural gas imports. Adoption of renewable energy sources offers a stable power supply that is not subject to global shocks. The renewable energy sector accounts for over 35% of total energy production in the UK and prices of solar and wind power are getting increasingly cheaper. There is reason to be optimistic, however much more is needed if we are to meet the government’s net-zero targets and move away from the impacts of global energy inflation.
The UK is endowed with a variety of features that are suitable for offshore wind, nuclear and also solar energy despite Britain’s ‘terrible weather.’ We should tap into those and gain an upper hand in the race to become a global leader in renewable energy. There are certain issues with efficiency and intermittency, but these can be addressed with extensive development of storage and smart grid adoption. Nuclear energy can also be used to account for the intermittency problems of wind and solar.
The domestication of our energy production will appeal to both environmentalists on the left as well as right-wing nationalists who fear the implications of importing fossil fuels. Ongoing tensions between Russia and NATO raises concerns over whether we should be importing their natural gas supplies and whether this is damaging to our national sovereignty. Long-term domestic development will be key to avoiding confrontations or disputes over gas imports.
The energy bill crisis also warrants extensive policy response in order to help low-income households and small businesses to weather the storm. The Warm Homes Discount scheme will be important in avoiding an increase in fuel poverty and many are calling for VAT on energy bills to be scrapped. While support from the government is unequivocally needed, do these short term schemes undermine the need for more urgency in adopting a long term strategy?
It is important that the government does not sacrifice moving to a stable energy mix in the long term for policies with the intention of gaining support from the public in the short term. Instead, both short and long term strategies should be used to help the nation emerge from the energy crisis and transition to a sustainable mix that ensures these issues do not impact us in the future.
Ardi is currently undertaking work experience at Bright Blue. Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Image: Gov.uk]
