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The challenge of uncertainty

I’m not often one to mix work with pleasure, but I went to the watch ‘The Heretic’ recently, a play about climate change.  It got me thinking about the challenges we face in Government when making long-term decisions about how we tackle climate change, whilst dealing with a range of uncertainties about what the future might hold, how technologies might develop and how human behaviour might change.

This problem of uncertainty is equally applicable to Electricity Market Reform.  The Government will shortly introduce the Energy Bill into parliament, which will contain a number of provisions to dramatically alter the way the country’s electricity market functions, and by extension the way we produce and consume electricity, for the next few decades.  Thinking about the challenge in these terms can be downright scary!   But we can’t afford to delay reforms until we know for certain that the market is broken, we need to take bold decisions now to ensure we can keep the lights on for future generations.

I won’t get into the details of the reforms here – DECC has published a number of documents outlining these previously and will provide further information alongside the introduction of the Bill.  But one of the key principles behind EMR is the need to maintain flexibility in terms of our future electricity generation mix given the amount of uncertainty we face, but at the same time providing enough certainty to drive the investment needed to bring about the changes we think are necessary.  And there is so much uncertainty. 

How, for example, can we say with any confidence what the future price of gas will be?  Which renewable technologies will mature the quickest and therefore become the most cost-effective?  Will CCS work?  How will the cost of nuclear change over time?  Will a technology that we haven’t even heard of yet come along and blow the rest out of the water – the much sought after silver bullet?  And outside the world of energy – what political, economic and technological changes can we expect in coming decades? 

I would be interested to know, for example, if 30 years ago or so the advent of offshore wind technology would have even been contemplated, and now the UK has more offshore wind capacity than any other nation.

I don’t pretend to have an answer to this flexibility versus certainty conundrum, but it is clear that it will continue to present a challenge to Government in developing long term energy policy. After spending the majority of this blog raising uncertainty and asking questions, I was tempted to end it by making some predictions about the future of my own.  But instead, I thought I would heed the wise advice of Chinese Poet Lao Tzu who once said, “Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.”

7 Responses to “The challenge of uncertainty”

  1. Matt robet says:

    It was edison who once said ” we are but tennant farmers, cutting our fences and tree down to fuel our desire, we should be harvesting the earths abundant resources like the sun, the wind and the sea”
    We need to look into providing for ourselves as much as we can, finding a way that can all take the strain of the enviroment and our wallets and not having to rely somebody else to give us the answer.

  2. Astute says:

    As Aldous Huxley once said:

    “Technological progress has merely provided us with more efficient means for going backwards.”

    When the tide turns and new methods and technologies are implemented; everybody, the public, the businesses, the scientists will be pulled along with it.

  3. Robert Sansom says:

    Or how about the Arab proverb:

    “Those who foretell the future lies, even if he tells the truth.”

    or another Chinese one (my favourite):

    “When men speak of the future, the Gods laugh.”

    But being a little more serious, 30 years ago the Marshall Inquiry recommended that we proceed with district heating even though gas was cheaper. The reason given was that by 2000 the gas would have run out and we could then use coal and nuclear CHP plant for heating. With lots of gas, coal plant closures and no new nuclear or coal plant for 20 years they clearly got it very wrong.

    But should we be glad that we didn’t proceed with district heating? Possibly not. One of the benefits of district heating is that it opens up options that we don’t have with gas for example. We don’t have to use coal or nuclear CHP. We could use waste, biomass, solar thermal, geothermal, large network heat pumps, etc.

    The lesson to be learnt is that when dealing with uncertainty it’s a good idea to ensure consideration is given to the flexibility of the choices available.

    • Flexibiliy – – – I agree; there is no shortage of available energy. It is just that the problem of generation, storage and distribution must be tackled urgently. The technology exists today to provide hydrogen filling stations on all motorways drawing electrical power from photovoltaic units lining the motorway edges This offers an ‘on-site’ generation of electricity and non CO2- polluting fuel for motorway traffic. The ‘roadblock factors’ to this development include short-term political and economic expediency. Over a time span measured in decades, hydrogen will become much cheaper than petrol. In combination with geothermal and photovoltaically-derived energy the potential capacity for ‘on-site’ electrical energy power generation is enormous. It is the lack of political will in combination with economic expediency which is blocking such development

      • Dave_G says:

        Whilst the technology to produce hydrogen ‘alongside motorways’ may exist, the actualities, practicalities and inefficiencies make your proposal preposterous as a viable suggestion.

  4. Cetainty – we are using fossil fuels about 1,000,000 times faster than they are being generated, so fossil fuels will disappear in time.

    Certainty – Alternative electrical and locomotive fuels must be developed and soon. Besides nuclear, much more must be made of photovoltaic, hydrogen-derived and geo thermal sources.

    Observation – The Olympics opening ceremony rightly celebrated the Industrial Revolution – however, it has come at a cost: changes in atmospheric and ocean chemistry. We have a matter of one or two decades to bring about a Second Industrial Revolution which does not damage the environment to anything like the short-sighted ‘ fossil burning’ energy generation. Invest far, far more in alternatives.

    • Dave_G says:

      ‘so fossil fuels will disappear in time’ – true, but care to give some lifetime supply figures on the likes of coal or gas or even oil? (at current consumption rates). Any figures you may quote do not necessarily require adjustment for ‘currently undiscovered/unexploited’ resources.

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