LibLink: Ed Davey – my long battle for a ‘grand energy bargain’

Lib Dem energy secretary Edward Davey was interviewed in The Guardian this weekend about the energy bill to be announced this week. The paper fillets the main points Ed made here:

• Insists that energy prices overall will be 7% lower than they otherwise would have been in the medium term as a result of government policy, even if prices in real terms may rise due to the worldwide energy market.

• Rejects talk of a government-sanctioned dash for gas as overblown, even if he concedes the Conservatives will big this up.

• Says shale gas will not have a significant short-term contribution to the UK energy mix.

The dispute between Davey and Hayes over the role of onshore windfarms in the energy mix spilled out into the TV studios and became so intense that at one point, Davey discloses, he felt compelled to seek legal advice on whether Hayes’s approach was making the department liable to accusations of bias and judicial review.

And here are a couple of choice quotes from his interview…

Davey emerged from the deal-making to talk up a victory. “Yes, it has taken a bit longer than I expected. It has been a bit more acrimonious than I expected in the sense that we had the statements by John Hayes, my deputy, which was never coalition policy. His behaviour probably made it appear more fractious than it was under the surface.” Davey had Hayes foisted on him as minister of state, and immediately stripped him of renewable energy strategy, leaving him only with his renewable deployment. Davey now discloses: “When he made his statements on renewables against coalition policy, I did think there was a question mark over whether he should even continue to have responsibility for renewable energy deployment. I asked the legal department here whether there was a danger John had prejudiced himself because he had made these statements, and they said there was a danger. They said they could not say it would end up in judicial review, and challenging decisions in which he was involved, but there was a greater potential danger.”

“What we have agreed does not hit the Treasury at all. You get the investment, construction, jobs and growth now, while the cost is spread over 25 years, and you only start paying when the power station is constructed and starts generating. It will only hit bills much later on, by which time the economy will hopefully be doing a lot better and when other policies designed to reduce bills take effect and more than offset the impact on bills.”

He calls projections suggesting that his proposals could increase bills by as much as £180 “nonsense figures”. “The impact on bills is that the costs will rise from today’s 2% figure on average bills, roughly £20, so that by the end of the decade it will gradually rise to 7% on average bills – just under £100. I have never hidden that this will have an impact. It’s what we have said will happen for many years. But equally, if you look at all our green policies, the help on fuel poverty and green efficiency, our estimate is that by 2020 the average bill will be 7% lower than it would have otherwise been – in today’s prices, £94. If we do the energy efficiency, this can be afforded.”

You can read Ed’s interview in full here.

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11 Comments

  • @Jedibeeftrix
    The answer to your question perhaps?:
    “The last estimate by BGS [British Geological Survey] put UK onshore shale reserves at 5.3 trillion cubic feet (150 billion cubic metres), which would be enough to meet its gas consumption for one and a half years.”
    [ http://uk.reuters.com/article/2012/10/16/uk-shale-idUKBRE89F0JW20121016 ]

  • Michael Parsons 26th Nov '12 - 10:52am

    Well. isn’t it true that “help on fuel poverty and green efficiency” means concealing the impact of the green tax levy on fuel by getting the tax that pays for these policies elsewhere? Apart from not being cost-effective, the “green alternatives” rely on materials like lithium (found in Bolivia etc) and Rare Earth minerals – 90% plus found in China. Since businesses relocate close to supply-sources, the policy will strip UK of even more manufacturing and employment and further decrease our energy self-sufficiency. Meanwhile tax-money is thrown at windmills and the like with no thought given for the emergence of alternative cheap-fuel technology. Surely by concentrating now on the cheapest fossil fuel we could put the money saved into the research towards development of thorium-powered nuclear generators, the development of synthetic duplication of plant -leaf chemistry, a 50 -80 year tidal-wave power project linking Cornball to Wales etc.
    This whole “green policy” seems more crazy and short-sighted by the day! not to mention the vanishing of “peak oil”. predictions!

  • “a 50 -80 year tidal-wave power project linking Cornball to Wales …”

    Some mistake surely?

  • @Jedibeeftrix
    Yes I did find the final analysis figures extremely surprising and suspect they have been asked to go back and check their results…
    However, the question is just how big must the error be for the final conclusion to impact the role of shale gas in the UK energy mix and for the reliability and credibility of the British Geological Survey not to be brought into question.

  • Returning to a theme in the original article, I’m fully supportive of John Hayes position (on wind farms) as the evidence todate from the national experiment fully supports his conclusion. Additionally, because of this evidence, I’m a little surprised that Ed Davey isn’t taking advantage of John’s lead and use it to gain a further real-terms reduction in energy prices.

    As has been pointed out elsewhere, wind in the UK has shown itself to be an unreliable energy source and hence has resulted in the strange position where we (the consumers) are paying a premium to wind farms to produce electricity whilst at the same time also paying traditional generators to provide a more usable consistent flow of electricity. Additionally, we are also paying wind farms to stand idle because there is either little/no demand at that moment in time or demand is being covered by traditional power stations. What this experiment has shown is that whilst there is energy to be had from wind, plugging it into the electricity grid is not the most effective way to utilise it. Hence having sufficient data to make informed decisions, it makes sense to act on that data – primarily by ending the consumer funded wind power gravy train; doing this would enable further reductions in the price of electricity to consumers .

    This isn’t to say that we shouldn’t build wind farms, only that directly connecting them to the grid and expecting to be able to run a 24x7x365 economy is plain stupid. What is sensible is to use wind to permanently off-load demand from the electricity (and gas) grids, by directly linking a wind farm to a process that can handle a variable energy supply (and charging such consumers a premium for falling back onto the national energy grid).

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