The current UK energy crisis illustrates our reliance on volatile fossil fuel markets. However, in every crisis, there’s an opportunity. Let’s find out more.
2021 has not been a great year for the UK energy industry. Wholesale gas prices are soaring, up 250% since the start of the year. Two million consumers have had to switch suppliers due to their chosen supplier going out of business. Perhaps most importantly, when the government revises its six-monthly energy price cap, consumers will see the prices they pay increase dramatically.
In the short term, there is not a huge amount energy suppliers, the government or consumers can do about this situation. We will have to face this crisis and its knock-on effects head-on. However, by focusing on the long-term energy landscape now, we can create a future where this never happens again. Shifting away from fossil fuels towards renewables is an opportunity, but will we seize it?
In this article, we’ll look at the issues with fossil fuel markets and what the UK can do to reduce its reliance on them.
Broken markets
The problem for the UK energy industry is that it is at the mercy of fossil fuel markets. We don’t produce enough coal, oil or gas ourselves, but we need them to power our homes and businesses. So, we need to bring in fossil fuels from the open market.
When the wholesale price of gas rises, as it’s doing now, our energy companies have little choice but to pay the going rate. The markets are volatile and prices rise and fall regularly. At the moment, prices are high due to pent-up demand after the COVID pandemic, as well as increased demand after a cold winter in 2020-21. Another factor is that fossil fuel markets can be easily manipulated by countries that produce them, if they decide to increase or reduce production. Currently, Russia is facing accusations of pushing up gas prices in Europe.
We’re seeing the consequences now – high prices for consumers and energy suppliers going out of business. The knock-on effects include a shortage of CO2, essential for food production.
The solution
The answer for the UK is to end our reliance on the volatile fossil fuel markets by reducing our need for fossil fuels. In short, we create our own renewable energy. Renewable energy is clean and better for the planet. Also, after the initial investment needed for the correct infrastructure, it’s cheaper than fossil fuels.
To end our reliance on fossil fuels, the UK needs to continue its expansion into onshore and offshore wind, solar farms and hydroelectric plants. Once we start producing renewable energy at scale, we can harness advanced technology to augment its impact.
Switching to renewable energy in this way would insulate the UK from the fossil fuel markets, which impact businesses and consumers so dramatically as they move. We would cease to be at the mercy of events in Russia or the Middle East. It would also create more jobs at home.
The shift to renewables
Of course, this move towards renewables is already happening. The UK is already one of the world leaders in wind power. Currently, there are 10,961 wind turbines on land or in the UK’s waters, with a generating capacity of 24.1 gigawatts – making it the sixth-largest generating country in the world. Around 26,000 people are currently employed in the UK wind industry. Wind accounts for 24.8% of electricity in the UK, surpassing coal and nuclear power.
Earlier this year, two new offshore wind projects were announced in the north of England, while the government is investing in renewable energy initiatives on a large scale.
The UK is also shifting towards solar energy. Currently, around 3.5% of electricity comes from solar. However, the UK is more well-known for its wind than its sun, so it makes sense that it focuses more on wind power!
This is excellent news – and the government has set ambitious targets. In 2020, the Prime Minister pledged to power every home in the UK with energy from offshore wind by 2030. But, to truly end our reliance on the fossil fuel markets, we need to move faster and commit more.
Tech solutions
As well as producing renewable energy, the UK needs to focus on using technology to increase the benefits. There are several tech solutions available, including:
- Batteries – High-capacity home batteries mean that if you have solar panels on your roof, you can create and store your own energy, so even if the sun isn’t shining, you can still make use of its power
- Smart meters – Smart meters help consumers run their own domestic grid, regulating power use, consuming power when it’s at its lowest price and selling excess energy back to the grid
- Connected devices – In the future, your Siri or Alexa devices will be able to connect to your smart meter, enabling you to monitor your energy consumption and battery capacity
Technology helps you use your energy more efficiently, so you get more for your money.
Challenges
Of course, this shift to renewables will not be without its challenges.
The initial infrastructure required to set up wind farms, solar farms and other renewable technology is costly. On the other hand, once you make that investment, you see a return in cheaper energy and insulation from the markets.
There are also vested interests that may stand in the way of the shift to renewables, making it more difficult than it needs to be. But, all the signs show that the UK’s giant energy suppliers are happy to make investments in renewables.
Finally, change on this scale should take time. But, can we afford not to move fast? Can we take much more of the disruption caused by fossil fuel markets?
Looking to the future
We are at a crossroads, a tipping point. The UK can choose to carry on the way it is, with fossil fuel markets causing chaos to energy suppliers and consumers. Or, it can commit more resources to changes it has already started to make, which will end our reliance on these markets.
Can we seize this opportunity? We will have to wait and see.