Why do policymakers always assume we need more power stations?


andreweibi2013Electricity consumption is falling, yet governments consistently fail to recognise the facts when setting policy that assumes security of supply can be achieved only by energy generation, says Andrew Warren, chairman of the British Energy Efficiency Federation. 

For the past fifty years, the UK Government has issued many projections estimating future demand for energy. These have varied greatly, especially regarding the predicted market share of different fuels 15 or 20 years hence.

But one factor every official projection has always had in common.  Without fail, our Governments always grossly over-estimate the overall amount of energy that will be consumed.

One current example: since 2010, when the Conservative party returned to government, the Hinkley Point C nuclear power station has endlessly been justified by official threats that “without it, the lights will go out.”  In practice, demand for electricity has already fallen during this decade alone by 25 terawatt hours; that is the same realistic output that Hinkley might provide when/if it is finally built. It has not required £24bn to achieve these savings.

It would make extremely tedious reading to go laboriously through every single past official forecast.  But here are just a few examples, each of which validates my basic thesis: that the official mindset always underestimates the ability of UK consumers, big and small, to seek out opportunities to minimise waste. 

In 1976 the then Ministry of Fuel and Power projected that UK annual energy consumption would increase to between 500 and 550 million tonnes of coal equivalent (mtce) by the year 2000. In fact actual consumption has never in any subsequent year risen above 280 million mtce.  And in practice has been falling every year for the past decade.

Nonetheless, thirty years on, precisely the same mistake was being made. Glance back to the Labour Government’s ‘Energy Challenge’ White Paper of 2006, which promoted the importance of investing in nuclear power rather than energy efficiency.

In that White Paper, you will see that the Government projected that between 2005 and 2015 electricity generation would increase by around 12 per cent. Whereas in reality over the same period overall fuel usage went down 18 per cent, with electricity consumption dropping by 13 per cent.   

That is an astonishing margin of error regarding electricity consumption of 25%, all within just ten years.

The Coalition Government of 2010-15 followed precisely the same line of relentless over-estimation. Its first energy National Policy Statement said unequivocally “Department of Energy and Climate Change (DECC) analysis… shows that reductions in electricity consumption resulting from improvements in energy efficiency will be far outweighed by increases in electricity demand, potentially leading to a doubling of demand.” Indeed senior civil servants, led by the late chief scientist Professor David Mackay, were regularly to be heard postulating a tripling of demand by 2050. Upwards of £200 billion was urgently needed to build new generation sources. 

These errors matter. Because time and again the official line has remained that demand for energy will inexorably rise, even as the economy grows.

Alarmingly this reflects precisely the same predict-and-provide thinking which led their mid-20th Century predecessors to get their forecasts for new power stations so woefully inflated.

Meanwhile, those operating in the real world are reaching very different conclusions.  This spring the trade body Energy UK published an in depth survey of current electricity industry opinion about their likely 2030 marketplace. 

Practically nobody working in the retail electricity industry is expecting any serious increases in the market’s size. Almost everybody in the supply industry reckons that demand for electricity will continue to decline overall, or at most remain constant.

In contrast, official government forecasts are still blithely assuming a 17 per cent growth in consumption to 2030, effectively returning electricity sales to peak 2005 levels.  This discrepancy has led to Energy UK concluding that official policy  “overestimates the amount of new large-scale plant to 2050”.

Alas, that didn’t stop the then Energy Minister (now Environment Secretary) Andrea Leadsom posting upon her own Departmental website that energy usage in Britain is inexorably on the increase. She began her blog, in praise of gas fracking, with the absolute (and absolutely incorrect) statement that “we need to meet the UK’s rising demand for energy.”

I have yet to see any statement from any Minister in this Government that truly acknowledges that GDP growth and energy growth have completely decoupled. That celebrates the success by and for consumers, that we are now living in a world where truly more wealth can mean less consumption.

Instead, consistently government ignores and underplays the importance of reducing energy consumption. In their projections, (having uttered a few soothing words about the importance of trying to save energy), Ministers endlessly revert to obeisance to the slogan which a few years ago adorned the old Departmental walls: “Real Men Build Power Stations.”

Since May 2015, and without explanation, the Government has not just abolished the Energy Efficiency Deployment Office – set up deliberately to encourage consideration of demand management and supply investment on similar criteria. It has also issued a new Single Departmental Plan that overtly excludes energy efficiency from any consideration when delivering the primary policy objective, of ensuring a “secure and resilient energy system.”

Nonetheless, we are now using far less energy than we were half a century ago, despite our Gross Domestic Product being almost three times more valuable.

For fifty years, continuous improvements in the energy efficiency of technologies and buildings has led the most successful revolution in improving security and resilience in the entire energy market. So why on earth do our political leaders continue to wilfully pretend it just isn’t happening?

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