At last week’s Spectator energy conference Michael Fallon appeared to steer government policy away from green ideology and in a more business and consumer-friendly direction. But there was to be a nasty sting in the tail. Shortly afterwards Ed Davey’s Department for Energy and Climate Change changed the rules on something called Final Investment Decision (FID) enabling. The direct result is that the UK could lose a Yorkshire power station which is responsible for generating 4% of the country’s electricity. Given that the reserve margin between maximum generating output and peak demand is projected to fall to just 2 per cent in the winter of 2015/16, we are back under the threat of blackouts.
The purpose of FID enabling is to encourage power-providers to invest in green energy by guaranteeing them a strike price – thereby ensuring a certain return on what can be very uncertain investments. Until last week, one of the beneficiaries was to be Eggborough, a 2000MW power station near Goole in South Yorkshire. For some time the plant has been under condemnation as a coal-fired station: by 2015 carbon levies will make it uneconomic to run. For this reason it is operators devised a plan to convert it to burn biomass – the same path taken by Britain’s largest power station at nearby Drax.
In return, the government was to guarantee it a strike price of £105 per MWh: more expensive than generating power from coal or gas but cheaper than the strike prices announced for solar power (£125 per MWh) and offshore wind (£155 per MWh). Now, however, the government has cut the amount of subsidy available for biom
ass in favour of offshore wind, putting the project in jeopardy and threatening the plant with outright closure, taking with it 4 per cent of UK electricity generation.
Biomass is only ever going to be (to put it politely) a limited solution to our energy problems. There is only so much biomass in Britain. To provide fuel for Drax and Eggborough requires huge amounts of wood to be imprted from Canada, the harvesting of which raises its own environmental questions. But biomass was at least part of the solution for reaching Britain’s self-imposed energy targets. It is not possible to build enough offshore wind turbines in two years to replace the electricity which would be lost if Eggborough closes. Some local MPs have written to Davey, pointing out that thousands of jobs are at risk.
We are left with an energy policy which is very good at closing down older, polluting generating plant, but is completely lost when it comes to providing enough alternative, cleaner energy to replace the withdrawn capacity.Tags: Ed Davey, Eggborough, Energy, Final Investment Decision