Low Carbon and the Future of Energy
Today, the energy industry faces unprecedented challenges. Binding and ambitious climate change targets set for the UK dictate that 15% of the country’s total energy use must come from renewable sources by 2020. Furthermore, greenhouse gas levels must be reduced by 34% by 2020 – and 80% by 2050. This adds up to a decarbonisation of the energy industry by the 2030s. At the same time, up to a third of the UK’s existing electricity generation capacity will close over the next decade as it either comes to the end of its operational life or is unable to meet stricter environmental standards.
Access to affordable energy supplies is fundamental to our personal wellbeing and the country’s economic success. For this reason, it is essential that we meet these challenges head-on and find lasting solutions which balance many complex needs. Although the current economic climate of austerity has caused many consumers and businesses to switch their focus from climate change to energy costs, it is essential to remember that the UK’s long-term energy security actually relies on achieving a healthy equilibrium between the three C’s – Cost, Carbon and Continuity of supply. The task of energy companies like npower is to maintain this delicate balance so that fundamental transformations can be made in the ways that we generate and use energy, while also ensuring that power is always there when we need it and at an affordable price.
To achieve this, our business strategy involves taking an innovative approach to the management and development of our generation fleet. We aim to make the best use of our present assets to ensure value to both our customers and our investors.
We have already invested for the future. In recent years, RWE npower has put around £3 billion into new, low-carbon, generation for the UK’s future energy supply. Our £1 billion Pembroke Power Station for example, began full operation in 2012 and provides energy for over three million households. A 2012 Bloomberg report for Greenpeace confirmed that: “RWE npower has been by far the biggest spender in the UK power market since 2006… It has built over 2.5 times the new capacity of any of its Big 6 peers… 60% of investment going into renewables.”
In 2007, we set ourselves the ambitious target of halving our carbon intensity from 1990 levels by 2015 and we are now making significant progress towards this commitment, thanks to the scale of our investment programme.
However, it is predicted that up to £200 billion1 of investment in UK electricity and gas infrastructure will be required by 2020, of which the Government believes around £110 billion2 will be new electricity infrastructure. It is clear that, despite the significant sums already being invested by companies like RWE, the energy industry alone cannot fund this energy revolution.
In order to achieve financial backing from outside the industry, it is crucial that the UK is an attractive market in which to invest. For this reason the Government is currently instigating reforms to the electricity market to pave the way for a new, low-carbon framework.
Moving to low and zero-carbon power generation will go some way to achieving the UK climate change targets, but it is also critical that we all reduce the amount of energy we consume. Demand management, energy efficiency and smarter technology will be essential in helping households and businesses reduce the energy they use. There are also large-scale infrastructural projects, such as the electrification of transport and the switch to smart metering, which can bring huge benefits in the long term, but which will require collaboration and determination in the early stages. We take seriously the part we can play in helping to drive this exciting time of transition to ensure we create a sustainable low-carbon economy that meets our future needs.
1 Ofgem - Project Discovery
2 EMR consultation