Amid soaring prices, political obstacles and pressure for enhanced security, the Government’s new energy playbook needs more than eye-catching targets to tackle the key issues.
Background: A global crisis with UK quirks
On 7 April, the Government published its British energy security strategy amid a period of remarkable turbulence and controversy in the sector. Just consider the background to the launch. Our November 2021 briefing and podcast looked at the worsening global energy crisis and in this briefing and podcast we assessed issues specific to the UK.
On 3 February, the scale of the political impact hit when a 54% increase to the UK’s Default Tariff Cap was announced from 1 April 2022. For the six months prior, consumers were shielded from price rises while 30 energy suppliers went bust. The Government’s Energy Bills Rebate scheme and other measures were announced in response.
Russia’s invasion of Ukraine on 24 February prompted countries across Europe to reassess their energy strategies. See our briefing here on the EU Commission’s plans.
Unlike several European countries, most notably Germany, the UK imports little energy directly from Russia (8% for oil, 4% for gas). However, gas fuels over a third of its electricity generation (and as the marginal generation it largely determines its price) and heats over 80% of homes. So, as the UK imports much of its gas, UK consumers and industry are exposed to global price increases. In March, European gas prices breached recent winter records to levels 13 times higher than a year ago.
In our article available here under each of the strategy’s themes, we summarise key points and provide our own comments and assessments of its impact on UK energy policy and markets.