The European thermal power plant market is “almost uninvestable” at the moment according to Fatih Birol, chief economist of the International Energy Agency.
But he warned that this situation would have to change as he predicts 100 GW of new thermal power will be needed in Europe by 2025 to “safeguard reliability”.
Speaking at the annual energy conference of the Confederation of British Industry (CBI) in London yesterday, Birol (pictured bottom left) said that despite the rise of renewables in Europe, thermal power had a vital role to play in maintaining energy security.
Security of supply – and the policy decisions that promote it –also formed the basis of a speech by the CBI’s Deputy Director General, Katja Hall.
She revealed the results of a CBI poll of 550 British business leaders, who cited security of supply as a crucial energy objective for the UK.
But 57 per cent of those firms think the UK’s energy security is worse than it was five years ago,
And Hall (pictured top right) said that future investment in the UK energy market was being hindered by short-term political thinking.
With the UK due to go to the general election polls next year, the ruling Conservative and Liberal Democrat coalition parties and the opposition Labour party have turned energy into a political football.
Some vocal Conservative MPs have called for an end to building any new onshore wind farms, while Labour has promised an energy tariff price freeze if it comes to power.
Hall said: “Long-term certainty is needed, but just as policies start to click into place, the political climate heats up again. It feels like a game of snakes and ladders.
“One careless comment or populist proposal – whether we’re talking about cutting support for onshore wind farms or freezing energy prices – can make businesses feel like they’re right back at square one.
“For investors, this is a real worry. And when that investment can go anywhere in the world, it should be a real worry for politicians too.”
Talking of politicians, the CBI conference got to hear from two of them yesterday – Energy Secretary Ed Davey and his Shadow Cabinet counterpart Caroline Flint.
Davey (pictured top left) said Britain would “go green, but at the lowest possible cost”.
“For our move to low carbon market mechanisms is first reducing subsidies, then requiring investors to compete for ever lower subsidies and then will see such subsidies reduced to zero, as new technologies like CCS and offshore wind mature and become competitive in a world where carbon will be properly priced.”
Flint (pictured bottom right) also picked out CCS as a focus for investment, but stressed that current under-development projects in UK such as White Rose and Peterhead “must be the vanguard of a new industry and not technological curiosities”.