HUMPHRYS: You may not have noticed it
in your bills, but the cost of electricity has fallen through the floor.
Or, rather, the price the power companies get paid for generating the stuff
has collapsed. Sounds good - but not necessarily. The industry is in
serious trouble and the big companies say the Government hasn't a clue
what to do about it. It's all part of the much bigger problem: how do we
provide for our energy needs over the next fifty years? We can't rely
on gas-powered electricity stations for ever, gas is running out, so does
that mean we'll have to rely more heavily on nuclear power? The nuclear
industry is on its knees and wants more help from the Government simply
to stay in business. All of this is supposed to be addressed in a Government
White Paper but, as Terry Dignan reports, there's little sign yet that
the Government knows what it wants to do.
TERRY DIGNAN: Welcome to BedZed, Beddington
Zero Energy Development. Here in a London suburb architects have designed
homes for an eco-friendly future. From first thing in the morning to the
end of the day there's no shortage of energy. But it's produced without
causing global warming.
Wouldn't it be great
if we could all live our lives like this - heating our homes and using
electricity in ways which do not damage our environment or change our climate
- for the worse. Easier said than done. Indeed, if the Government fails
to make some really brave decisions - and soon - we'll go on using energy
which produces greenhouse gases for many, many years to come.
DR DIETER HELM: Now the Government
realises it has to something, but I think it genuinely doesn't know what
DIGNAN: How will we get electricity
for the daily chores of the future? Ministers face dilemmas over guaranteeing
secure supplies of gas from abroad when North Sea gas runs out, expanding
renewable energy and deciding on the future of nuclear power.
In meeting these challenges the government says low electricity prices
will remain its objective. Opposition politicians says ministers have
dithered too long over energy policy.
TIM YEO MP: We have to look at how
else we're going to meet our energy needs fifteen years down the road,
how much will come from renewables, how much may come from other sources,
whether it's coal, whether it's nuclear. And as I say, because the decisions
about new energy investment are very long term, can take ten years to get
a new energy generation plant up and running, now is the time to address
those issues, and there has been this year, a bit of a void at the heart
of government policy.
DIGNAN: Here at BedZed, you
can make a quick cuppa before dashing to work without adding to global
warming. But, increasingly, most of us will have to rely on gas for our
energy because coal and nuclear are in decline. The problem with gas is
that, as a carbon fuel, it's a major cause of climate change.
HELM: Gas is a carbon fuel
and if you want to move towards a non carbon economy, gas is not the answer.
It buys you a bit of breathing space because it's better than coal but
it's not non carbon and in the end, an economy based on sixty, seventy
per cent gas, would not be environmentally very attractive economy at all.
DIGNAN: From breakfast to
bedtime, BedZed homes use eco-friendly energy. Yet, as a country, most
of our energy contributes to global warming. The two big culprits are gas,
which provides thirty-seven per cent of our needs, and coal, thirty-three
point five per cent. Nuclear power, now being run down, meets twenty two
per cent of our requirements. Renewables, a pathetic two point eight per
cent. Yet environmentally-minded MPs say the future lies with the wind
JOAN RUDDOCK MP: Well I think one of the most
attractive things about renewables is that we can produce them at home.
We've got tremendous off shore wind. We're the windiest country in Europe.
We've got quite a reasonable amount of solar energy and of course we already
use some energy from hydro schemes, and we will have wave energy in the
future. So, for all those reasons, we - if we develop renewables - we
get home energy production, and through crops.
DIGNAN: Ideally we'd all
start the day with an environmentally-friendly hot shower. The Government's
target is for ten per cent of our energy to be renewable by 2010. This
figure should be doubled to twenty per cent by 2020 says a report commissioned
by Tony Blair. But some government supporters fear the policy is too timid.
RUDDOCK: The regret is that
it wasn't started sooner and that we don't have much more ambitious plans
for the future. We've got to create the market and that requires more
incentives by government to make renewables more attractive, and more affordable.
DIGNAN: At BedZed, you can
top up your electric car with energy from solar panels in your own home
so the journey to work won't add to pollution or global warming. Sounds
simple, doesn't it but in reality if we're to see a really big expansion
in all forms of renewable energy, there are some very serious obstacles
to overcome. The biggest problem is cost. Tony Blair says he
wants cheap electricity. Well that's not possible if you're serious about
HELM: Our electricity system
is designed for big power stations. Since the Second World War, we've
relied on ever bigger coal stations and ever bigger nuclear power stations
and now quite large gas stations. Now renewables are the absolute opposite
of such a system. They are tiny small plants, they are at the periphery
of the system, they require major investment in the networks, the distribution
systems, as well as building the renewables themselves, so therefore almost
automatically they're going to be expensive, and if we really do want to
have a renewables based economy, then we're talking about a much higher
price for electricity.
YEO: It would be
misleading to tell the public that somehow you can have very very low energy
prices, and also the satisfaction of playing your part in contributing
towards achieving climate change goals.
DIGNAN: We could produce lots
of greener energy by converting wind power into electricity. But in windy
rural Britain, the public says not in my backyard and government ministers
fear their renewable energy targets are now at risk.
BRIAN WILSON MP: The biggest problem we face
is that roughly two thirds of the projects which are put forward never
come to fruition and if you ask people in the... in the wind power industry
for instance, what their biggest problem is, they won't say lack of government
encouragement for renewables, they'll say planning, planning, planning
and actually turning these projects in to reality.
DIGNAN: Could more nuclear power
help to reduce dependence on fuels which emit greenhouse gases? Far from
it if current policy is anything to go by. The industry is a loss maker
- indeed, the Government has just bailed out British Energy which operates
power stations like this one in Kent, Dungeness B.
In just six years' time - or so it's planned - these controls will switch
off the supply of electricity to hundreds of thousands of homes. Indeed,
the entire nuclear industry will eventually close down and what will replace
it? Well, there's always gas or coal if you don't care about global warming.
What about renewables? Well, even the government is increasingly sceptical
there'll be enough renewable energy to replace the electricity currently
supplied by these nuclear power stations, which means Dungeness B may well
be getting a stay of execution.
WILSON: You have to consider
the impact of nuclear power on our carbon emissions targets. And you then
have to say that if you allow the nuclear industry to run down in this
country as some people would wish to see, but the implication of that is
that you become more dependent on gas, and you have to recognise that by
2020 we'd be seventy per cent dependent on gas, ninety per cent of which
would be imported.
RUDDOCK: I think regarding
nuclear energy as a clean source of energy is a real misnomer. Yes, it
doesn't produce CO2 emissions, but it produces radio active emissions all
the time both into the air, and into the sea. We now have a Irish Sea
which is terribly polluted with radiation as a result of the Sellafield
operations. So it continues to produce emissions whenever it's operating,
and even more seriously there is this enormous legacy of nuclear waste,
much of which is highly radioactive, will be there for thousands of years.
DIGNAN: The government says
a new generation of nuclear power stations would create less radioactive
waste, yet the cost of nuclear-produced electricity is higher than energy
from gas, so ministers are considering a carbon tax on gas and coal. They
might even force the power generators to buy more of their supplies from
nuclear - or will they be really radical?
HELM: Either the government
says, well, we're not going to have nuclear power, we're not going to build
any more nuclear power stations, we're just going to look after handling
the waste of what we've got at the moment. Then they have to get really
radical about renewables, about energy efficiency and about a host of other
ancillary policies, changing the grids, the distribution systems, and the
price will go up a lot. Or they say we really do mean nuclear power, in
which case they ought to build several of them because one on its own is
RUDDOCK: I think the government
needs to make a hard political decision, and that decision is not to go
for new nuclear build. If they go for new nuclear build, I fear that they
won't put sufficient support and sufficient resources, sufficient incentives
behind developing renewables. So, it is that decision more than anything
else I think, that is the key to developing renewables.
DIGNAN: The critics say this is
a government in search of an energy policy. It needs to find one quickly.
Ministers are alarmed that it's not just the nuclear sector which is failing
to attract investment; they fear it's an industry-wide problem. A market
which is good at keeping prices down is also producing low levels of investment.
WILSON: There's very little incentive
at present for anyone to invest in any form of generation, and that is
a function of the low price that generators are getting for the product
that they produce. Now that has to be part of the White Paper discussion.
DIGNAN: In nuclear power stations,
safety regulations must be obeyed religiously. There are also rules for
ensuring there's competition within the energy industry. Criticisms that
the market is drying up investment - and could lead to power cuts - are
forcefully rejected by the industry's regulator.
CALLUM McCARTHY: We have inherited a position where
for ten years, after privatisation, there were artificial arrangements
for rewarding generators. That resulted in prices that were too high.
It resulted in very high investment and very high levels of spare capacity,
and we are faced with unwinding that and that is sometimes a painful process,
but there is absolutely no evidence that the market signals are wrong,
and that the basic market functioning is in any way wrong.
HELM: The way the energy market
is organised at the moment, particularly electricity, is that it's extremely
good at sweating the existing assets, at getting out power at the lowest
possible cost in price from the stations we've got. It is almost uniquely
badly designed to deal with encouraging almost any form of investment,
what we need is to replace our assets. Remember, all our coals stations
bar one were built before 1970. They're all very old, even Drax is 74.
All our nuclear power stations are coming to the end of their lives.
We've sweated the assets and got the benefit in the 1990s, but in this
decade and the next one, what we're in the business of is thinking about
how to make investments.
DIGNAN: It's argued that power
cuts in California in the 1990s should act as a warning to politicians
who fail to make the right choices. New investment - especially in power
plant - can't be switched on overnight.
YEO: You've got to look
at a lead time probably of seven or ten years for a new electricity generator,
and that does mean knowing what the government's overall strategy is pretty
soon, so those decisions can be made in time to avoid the situation whereby
capacity has fallen too far.
HELM: If we carry on as we are,
if the government takes the soft option and says you know, we're in favour
of everything but actually we'll do very little because there's too many
hard choices to make, it goes down the easy route. Then I think two things
will happen. The first is that the instability and volatility of prices
will, if anything, increase, and that means that the sorts of problems
we've seen in the electricity market can only get worse. The word "California"
jumps to mind in that sort of scenario. The other consequence is that
the only technology that people will invest in, in the current structure
without further intervention, is gas.
DIGNAN: Energy is the one thing
we are not short of. With homes like this it's used without harming our
environment. Now the Government has to decide where we'll get our future
energy from and whether we can produce it without contributing to global