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“Policies to secure supply could be a false economy”
The Tory government may be riddled with a eurosceptic wariness of foreign “interference”, but the same cannot be said for its energy policy. In recent weeks, it has bent over backwards to bring forward the costly new nuclear plans led by French state-owned EDF. And no sooner had George Osborne concluded talks with EDF’s Chinese partners, than David Cameron acted to pave the way for future Icelandic power imports.
Greater use of interconnectors to import renewable power may seem like a foolproof plan to meet the UK’s decarbonisation targets. But by doubling its dependence on cheaper European energy sources, homegrown thermal generation might prove unable to compete, widening the supply gap and leaving consumers even more vulnerable to a capacity crunch.
Consumers are already required to pay for UK renewables, then pay again for a capacity auction to ensure conventional plants don’t disappear by 2018. And in the meantime consumers will pay for National Grid’s much-needed backstop reserve measures too.
Many are now wondering whether policies designed to secure supply are a false economy: by continuing to throw money at the problem, more and more money is needed.
Rather than looking to Europe, perhaps it’s time the government looked closer to home. To break its chronic and expensive supply-side addiction, the energy agenda needs rehabilitation – energy efficiency and demand-side management might be just the place to start.
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