Renewables: In it for the Long Run

Wind Farm

In the ongoing debate about rising energy prices, UK Energy Secretary Chris Huhne said yesterday that it’s up to consumers to shop around for the best tariff.

Reporting on this week’s summit of the UK’s six leading power companies, consumer groups and regulator Ofgem, the BBC also quoted Phil Bentley, the Managing Director of British Gas, who said that due to the increasing cost of importing gas globally, “it is an inconvenient truth that unit prices of energy are going to go up”.

What struck me about the article was the protagonists’ sense of fait accompli and resignation to the fact that there is no way around the issue of overinflated energy prices other than to switch suppliers.

But They’re Forgetting One Thing…

Simply put, it’s a fuel supply risk and as worldwide demand for gas rises so does the price. Similarly, the same price hikes will happen if the cost of Russian, Polish, South Africa or Australian coal rises which again, the UK relies heavily on. In fact any “fuel” has price elasticity of supply and as global demands increase so does the price if supply is constrained….except renewable energy where the fuel is FREE, forever!

We can’t solve long-term pricing through short-term market economics but fuel costs are only expected to rise between now and 2020. If we can increase our generation portfolio to have a greater share of “free fuel” energy we can hedge against future pricing if we bear the higher cost of renewables now to put the industry on the map.

Mixed Renewable Energy Systems

Of the renewables we need, offshore wind is my favorite, rooftop domestic solar must be added, plus bio fuel, waste to energy schemes and the like. There are issues surrounding the variability of renewables, but in a mixed renewable energy system much of this is reduced. Wave and tidal energy for example has the most predictable fuel source on a daily basis we could commercialize the technology at much lower installation cost.

Elizabethan explorer Sir Francis Drake left Plymouth on 13th December, 1577 on board the Pelican, after a six-week delay due to bad weather… That’s the same bad weather from over 450 years ago that would drive 450 offshore wind turbines today and we still won’t have run out of this fuel in 450 years time. That’s what I call long-term fuel planning.

About Michael Buckle

Michael is an Executive Director of Global Markets and leads Willis' Renewable Energy practice. Based in London wit…
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