Manufacturers demand Government reinstates annual energy statement

MANUFACTURERS in the West Midlands are calling on the government to re-instate an annual energy statement and a series of reforms as part of its commitment to a new industrial strategy.

EEF, the manufacturers’ organisation, said the call came as new survey showed a lack of confidence in the future security of supply.
 
The EEF report, Upgrading Power: Delivering a Flexible Electricity System, examines the UK’s future supply of electricity. It makes a number of recommendations for priority action in a 2017 annual energy statement, together with proposals to deliver a more efficient, flexible and resilient power system.
 
Charlotte Horobin, interim region director for EEF in the West Midlands, said: “Manufacturers’ confidence in the Government’s management of security of supply is tepid at best. The last 18 months have been a high degree of uncertainty in the energy market as a result of numerous policy changes, the Brexit vote and two new administrations in a short period of time.
 
“Decisions on new nuclear and coal phase out have started to steady the ship, we need a meaningful annual statement that sets out a clear and stable direction of travel for energy policy as part of an overarching industrial strategy.
 
“Whilst there has been significant attention paid to how we supply our electricity there continues to be too little focus on how and when we use it. Taking action on this will save significant sums of money, both for the system as a whole and companies. The potential is there, but significant reform will be necessary if we are to realise it.”
 
According to the report, just one third of companies agree that the government has a long-term strategy for security of supply with almost half disagreeing. Less than 4% of companies believe that the UK energy infrastructure has improved in the last two years, while a quarter felt it had worsened.
 
Priorities for 2017 should be:
 
•        A full phase-out strategy for coal power by 2025
•        A strategy for the uptake of Carbon Capture & Storage (CCS). This should include an investigation by the National Infrastructure Commission into the infrastructure requirements and costs of CCS
•        Details on future support for new low-carbon generation
 
The report also outlines how the changing mix of electricity generation will fundamentally alter the way the UK balances supply and demand of electricity.

The organisation said this would require firms to be more efficient and flexible in how we use energy, because as major consumers of electricity, the manufacturing sector had a key role to play.  
 
However, according to EEF the current policy framework was unlikely to deliver this without reform. Despite 15 years of energy efficiency policy, significant amounts of cost-effective opportunities remain within the manufacturing sector.
 
New analysis by EEF showed this amounted to 14% of the manufacturing sector’s electricity consumption, equivalent to 4% of the UK total or, £1bn per annum.

Liam McDonagh, director at CMR Consultants, said: “The report highlights that optimising the supply of and demand for electricity should be a function of flexible and balanced electricity generation and storage, electricity efficiency and demand side management, bound together with an effective policy framework and appropriate incentives.”