24 September, 2023
The Times, by Robert Covile

If you want to understand what Rishi Sunak’s speech last week meant for net zero, start by ignoring pretty much all the commentary. Especially the stuff using exclamation marks, or accusing the PM of committing genocide. In fact, you can even ignore most of the speech itself.

As recent events have made abundantly clear, our modern economy runs on energy. The net zero agenda involves three simultaneous, enormous transformations in how that works. First, a massive increase in the amount of electricity we use, both in absolute terms and as a proportion of our energy mix. Second, a massive increase in the amount of it generated by nuclear and/or renewables. Third, a massive decentralisation of the National Grid, to accommodate numerous tiny power sources and storage media (solar panels, car batteries, etc) rather than a few big power stations.

To see how ambitious this is, look at the two big items in Sunak’s speech. He announced that the deadline for selling new petrol and diesel cars was moving back to 2035, and that no one would be forced to rip out a gas boiler for a heat pump (but if they want to, there will be more money available).

Now look at the statistics on UK energy demand. The most energy-hungry sector is transport. Which is dominated by road transport — ie, cars. Next comes residential — ie, houses. Roughly 85 per cent of household energy usage goes towards heating the air and heating the water. So a transition to electric vehicles (EVs) and heat pumps means taking arguably the two biggest chunks of energy demand in the UK and hooking them up to the grid, at the same time.

In short, when we talk about net zero, we are actually talking about electrification — either directly, by plugging things into sockets, or indirectly, for example via the use of green hydrogen (an emission-free fuel generated by electrolysis, which has applications in both transport and heating). And the most important limiting factor is not the government’s deadlines, or whether the technology is ready. It’s whether we have the power.

And this is where the problems start. So far, we’ve been very good at decarbonising our electricity. But we’ve been much worse at expanding capacity. There’s an infamous video from 2010 of Nick Clegg explaining that he doesn’t support new nuclear because it won’t come on stream until “2021 or 2022”. This lack of supply has fed into prices: companies in America now pay half as much for their energy as ours, which helps explain why the US is growing and we’re not.

Building the generating capacity we need for decarbonisation will take huge amounts of money. If you think the bills for HS2 or Hinkley Point are bad, take a look at the “Holistic Network Design”, the plan for rewiring the grid to accommodate 50GW of offshore wind by 2030. The estimated cost is nearly £54 billion — not for the turbines; just for the wiring. A firm called Xlinks has an even more ambitious £18 billion plan to lay a 2,300-mile cable from Morocco to Devon to pipe solar and wind power back to the UK — a second Hinkley Point in the desert.

But it’s not just about money. It’s about policy.

Back in the day, the energy regulator, Ofgem, was ordered to keep bills low. So it discouraged firms from making “anticipatory investments” — building extra capacity we might need later. The same happened with the water companies. Now we’re paying the price.

But how high will that price be? That depends on whether we can learn to build stuff an awful lot faster and more cheaply — and to find ways to accommodate local discontent. The bill for new cables, for example, will be vastly higher if we bury them underground rather than stringing them up on pylons — and if those building the grid, or who want to connect to it, have to get approval council by council or field by field.

But that’s only the start of the obstacles. We need to create the right investment incentives, at a time when everyone in the world is competing for green projects — which is putting a corresponding crimp on supply chains. (In the most recent auction round for generating capacity, the government set the unit price for the electricity generated by new offshore wind so low that it got no bids at all.) We need the right skill base. And so on and on.

For those on the front line, there are many frustrations. Recently, the head of one charging network insisted that he didn’t need more government money; the problem was planning permission, or waiting for grid operators to flick the switch or for highways teams to approve the kerb design. At the moment, only two electricity distributors provide up-to-date information on which substations have spare capacity. So we have charging points ready that cannot be connected to the grid, and renewables companies being told there is a ten-year waiting list. Sam Dumitriu of the pressure group Britain Remade points out that more than 100 local councils have declared a “climate emergency” without adopting a plan for EV charging.

There is a system in place to speed up the biggest projects. But it isn’t working. As Dumitriu notes, half of applications for new solar farms are coming in at between 49 and 49.999MW of capacity. The “fast track” threshold for “nationally significant” projects kicks in at 50MW. Firms have obviously decided that the fast track is more of a slow train.

Sunak’s brief speech did not go into any of this. But the accompanying press release promised action on many of these fronts. Yet even that is only the start. For example, there is a massive review under way of how our electricity markets work, exploring whether it makes sense to vary wholesale energy costs by area, or to have separate prices for wind and gas. We are frequently paying Scottish wind farms to curb their output at the same time as paying the French to send us power. We need a proper strategy for hydrogen. And to think about battery storage. And to do something about insulation and energy efficiency, the redheaded stepchild of the energy debate.

What will make or break Britain’s net zero ambitions, in other words, is not how many bins we have to put out, or whether we’ll be taxed for eating meat. It’s whether we can rise to the enormous policy challenge of rewiring our entire energy economy to be greener, more efficient, more secure and more abundant, and somehow keep it all affordable. The detail may be less than electrifying to the average punter. But it will be all-important for their bills.