UK drive for low-carbon energy 'faces crucial year'

13:58, June 21, 2011      

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Crucial decisions need to be made this year in order to deliver low-carbon energy for the UK, according to National Grid chief executive Steve Holliday.

Holliday has warned that the UK faces a pivotal year as decisions loom on replacing critical assets, many of which are now 50 years old, with new infrastructure that will enable the country to cut carbon dioxide levels by a third ahead of the 2020 deadline.

"We cannot underestimate the scale of the engineering challenge that will be needed to deliver a sustainable energy future - one which I believe is going to lead to a renaissance in engineering," he said.

He believes the targets are "ambitious and demanding" - because a quarter of the UK’s energy plants will be retired by 2020 - and he stressed that the UK must become less reliant on coal and embrace wind power, nuclear options plus carbon capture and storage (CCS) technologies.

"The biggest increase will be in wind power with current plans set to target 15 per cent of the energy mix by 2020 and up to a third of generation capacity by 2030, from less than two per cent today," said Holliday.

He predicts that gas will continue to play a big part in electricity generation and is likely to provide about a third of the UK’s energy mix in 2030, although it will be used predominately as a back-up to wind technology.

"We are headed for a greater diversity in electricity generation coming from a much greater geographic spread. We have to plan for flexibility in the system to manage more intermittent energy flows because a large share of our energy will rely on when and where the wind blows," he added.

Chief executive Steve Holliday said National Grid expects new renewables to provide about 12 per cent of capacity by 2030 - essential to allow the UK to be flexible in adopting new technology. Reassuringly, he added that venture capitalists invested more than 12 billion pounds in clean technology firms in 2010, a 30 per cent increase from 2009.

National Grid is an international electricity and gas company and one of the largest investor-owned energy groups in the world. It plays a vital role in delivering gas and electricity to many millions of people across Britain and north-eastern United States in an efficient, reliable and safe manner.

The company owns the high-voltage electricity transmission network in England and Wales and operates the system across Britain. It also owns and operates the high pressure gas transmission system in Britain and its distribution business delivers gas to 11 million homes and firms.

Holliday warned that: "Enormous investment in the industry is needed in the next decade. Ofgem [Office of Gas & Electricity Markets - the regulator] says that we need 200 billion pounds of investment by 2020 to upgrade our outdated energy assets. Crucial decisions are being made this year with the upcoming electricity market review and the network regulatory reviews. It is absolutely vital that the frameworks provide the incentives needed."

He believes that investors need conditions that reduce the cost of capital and make sure that much-needed finance becomes available. He also said that the UK’s legislation and regulation needs to be attractive to entice global players.

Holliday stressed the importance of not over-burdening the UK economy with unnecessary costs in today’s precarious financial climate but being efficient with resources in order to meet the renewable energy targets.

"As we embark on this investment programme we need to focus on affordability. But the shift to a low-carbon economy will bring with it new jobs, new businesses, new technologies - and the UK needs to participate in that opportunity and the growth it will create," he added.

Source: British Embassy in China
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