Maximising clean investment for UK energy independence

• 4 months ago (2023-12-29)
• Junior Isles

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Chris  Neilon, Partner, EMEA Energy Consulting Leader at Infosys Consulting

The energy market faces another volatile period as we enter the winter months. Wholesale costs are on the rise again, impacted by geopolitical events. The 5% jump in the price cap, recently announced by Ofgem, highlights the UK’s vulnerability to these global energy shocks.

That’s not to say resiliency isn’t built into the UK energy sector. It weathered last year’s storm of record-high wholesale gas costs, and has ramped up infrastructure for gas storage since then. Now, the sector is more focused than ever on planning ahead and buying in supplies for future demand. Yet, storage can only do so much and isn't a long-term solution, with gas widely considered a transition fuel as we move longer-term into renewables.

The transition to renewables won’t happen overnight – but it must lay at the heart of our long-term national strategy if we are to become energy independent. Decarbonisation is vital to making energy security a reality –using cleaner energy sources, moving further away from fossil fuels, and putting the right infrastructure in place. So, how can the UK maximise clean investment to make this happen?

Connecting renewable’s dots

Access to multiple renewable energy sources like hydro, wind, solar and tidal puts the UK in a unique position. Many countries don’t have this variety of green energy inputs – and the UK should be maximising the advantage these bring to achieve energy security.

Together, these can create a community renewables system which is relatively cheap, plentiful, and environmentally friendly. Yet currently, homes in certain regions of the UK don’t have any real option of clean energy because of a lack of capacity and connectivity in the system.

The UK must find a way of taking the renewable energy it’s producing from more remote locations, typically in the north, to towns and cities throughout the UK. This requires greater investment in the National Grid, which currently faces a considerable backlog to connect renewable energy projects. With more cables and storage across the country, every region can access low carbon electricity – stimulating growth in renewables programmes and the UK’s green economy.

The mini nuclear drive

Mini nuclear energy presents another solution for cleaner energy – with the government already pledging to invest £20 billion in this to meet net zero targets. Similarly with community renewables, these can be deployed close to population centres, and their establishment is far more agile and speedy compared to huge power plant sites like Hinkley and Sizewell which can take years to construct.

Small modular reactor (SMRs) initiatives offer a cheaper, quicker model compared with traditional plant designs, and can power some 400 000 homes. Initiatives like these mean we can significantly speed up the move to net zero and become energy independent, while keeping costs down – making it a viable energy source alongside community renewables.

Cleaning up bad practice

Realistically, we’re not at a point where we can completely decarbonise the industry. With the majority of energy used last year coming from coal, oil and gas (78%) there will still be a mass amount of oil and gas production while we transition to cleaner energy sources. The transition will take time, and it’s likely that fossil fuels will continue on a considerable scale until at least the mid-2030s.

We can, however, combat its effects by reducing waste. With the right strategies in place, investments can be funnelled towards cleaning up bad industry practices that are causing environmental damage, such as the flaring and spillage of oil. Ideally, half of capital expenditure from North Sea oil giants needs to be invested into net zero and low carbon sources of energy, as well as cleaning up bad habits, to truly make an impact whilst maintaining necessary access to energy for the nation.

Working towards a low carbon future

The transition to renewables and increased energy security will happen – but it’s not a simple case of the big players winding down oil and gas production. Lots of different parties need to move in concert with one another to make it happen, and there also needs to be strong alignment from a policy perspective to help optimise low carbon investments from the private sector. We’re also starting to see tech companies working more closely with the energy sector, building platforms that allows for better tracking of carbon from production through to supply chain, meaning more accurate reporting and better alignment with ESG legislation.

With these moving parts working in tandem, the UK can set a global precedent for investment in clean energy. It can also help other countries establish renewable projects like solar, wind and geothermal effectively. Ultimately, every effort needs to be made to unlock the potential for renewables and clean up bad practices – helping pave the way for energy independence and a greener future.