The UK Minister of State for Energy, John Hayes, speaking at the Marketforce conference in London on Tuesday, emphasised the need for flexibility to be built into the country’s energy policy in order to meet the unpredictable energy landscape demands of the future.

At the event, entitled ‘The Future of Utilities’, Hayes also warned his audience of power utility executives that the public had for too long seen energy as a right, and highlighted the inherent dangers for the sector of that perception.

John Hayes MP
The minister said policy, which aimed to develop the country’s energy infrastructure over a long term had limitations, and future government and industry needed room to manoeuvre.

“How could you predict with any degree of confidence the changing patterns of demand over those many decades? The fundamental rising salient is an acceptance that it is vitally important that policy is adaptable to change.”

“Responsiveness becomes the absolute bottom line in delivering strategy.”

Mr Hayes also highlighted the problem utilities may have with society’s perception of the value of electricity, because of its invisibility.

“We face a particular challenge. The invisibility of electricity makes it hard to perceive its value. Once upon a time there wasn’t an assumption of on demand availability of electricity. It is not too much of an exaggeration to say, in an age that is preoccupied by rights, that power has become a perceived right.”

“That means most people don’t think about how we provide it,” he added.

In relation to that perception of value, Hayes warned of the potential consequences: “I am the champion of commerce, but when the perceived worth of a product is in decline in relation to its price that must be addressed by utilities as a matter of business. If we get it wrong it could be the difference between heating and eating.

The minister said that the present government and its successors will have to ensure delivery meets demand and energy security is achieved in an affordable way, while meeting emissions targets and coming to terms with that overall challenge despite the uncertainty of future demand patterns.

He told the gathering that the energy bill should have been introduced a lot sooner but the reasons that it wasn’t were ‘understandable, if not excusable.’

He indicated that that context for reticence means the bill that was eventually brought through should be viewed in a positive light.

“The reason for hesitance is down to reluctance by government to commit to long term policy when one is unable to predict outcomes and there is also a reluctance to bite the hand of successors, on the ground that the decision being made may be the wrong one and this understandable where ministers are accountable.”

“So this government’s willingness to address these matters is important, and has brought more clarity. We have done something of real significance.”

In subtle reference to a perception that he is vehemently anti-wind power, the minister said he was interested in having the broadest energy mix of energy possible, but that it should be done while paying attention to an imperative of affordability.

“I don’t by the way support any technology as an article of faith… I see all of these things as measured against their purpose…. The mix is not something I take a quasi-religious view about.”

“It is a pragmatic response to the dynamism that prevails in the sector. It’s about ensuring we keep our options open. It means having nuclear power and gas in the system while continuing with renewables, ensuring increases in renewables by driving costs down with the individual sources involved, and CCS and also coal can play a part but only if it is clean coal.”

Hayes also referred to the importance of driving recent policy aimed at improving the country’s energy efficiency, pointing out that Britain has the oldest housing stock in Europe.

“There is a new emphasis on demand response within the system. Energy efficiency is currently extremely variable- varying between good to abysmal. We are using a lot more energy than we need to. It is extraordinary that the debate until now has been solely confined to production and not consumption.”

Marketforce event, London

In his concluding comments the minister referred to the challenge the government faced with the potential energy gap looming large.

“We face real challenges in capacity – we are taking this on with alacrity.”

“I suspect more gas coming into the system and the government is unapologetic about that. It has a big part to play in the future.

There is also a determination that barriers to entry be reduced and made more appealing. We want to get more independents in, and increase competition to bring the price down.”

Asked during the conference if the decarbonisation targets to which the UK signed up to should now be revisited given the harsher economic reality, the minister was clear.

We are right to decarbonise. We hope CCS comes on stream by 2020 and that impacts perception of gas and coal. We must be sufficiently responsive to allow us to meet targets.”

“We don’t need to see this as a burden; it’s about signposting the route to the future.”

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