As the nights shorten and the countdown to Christmas commences, commerce in general and manufacturing industry in particular is beginning to worry about the possibilities of power supply problems over this winter and the increasing difficulties likely over the next three years.
Government has decided not to give subsidies to energy supplier, Centrica, to develop gas storage facilities doubling the UK’s present capacity of 15 days’ supply.
The company has therefore abandoned its plans, which mean that should we have a very cold winter and demand leaps, there could be major shortages, creating difficulties for industry. Very expensive liquid gas would have to be imported which would inevitably result in a substantial price hike.
Then Government has the problem of closing down existing “dirty” electricity producing power stations, with replacements not yet under way.
This is bound to affect supplies, and industry pundits are already forecasting the possibility of widespread power cuts in 2017/18. The building of the replacement nuclear station in Somerset, has been suspended whilst electricity supplier EDF and Government battle over the strike price and levels of subsidies. This has already delayed construction by over 12 months.
Government faces a very tricky problem. There are few companies in the power supply business, and as a result, they can drive hard bargains. No business person likes to be in such a position, but decisions have to be taken. I well remember the hardship caused during the Miners’ Strike, when a 24- hour working week was imposed.
It would cause great damage to industry and much hardship to the public if either a suspension of supplies or a substantial price hike came about as a result of indecision or lack of investment.
I would ignore European regulations and keep the coal-fired stations working until other firm can be implemented. The storage of gas is another matter, for a 15-day cushion is huge risk.
I do not envy Ed Davey, Minister of Power. Get this wrong, and his career could be at an end.
* Russell Luckock is chairman of pressings firm AE Harris