2018 Energy Barometer takes the pulse of UK energy industry employees, and finds an industry plagued by uncertainty
A Brexit "fog" is shrouding the energy sector with uncertainty, as concerns rise among industry employees over the potential impacts on workforce availability, domestic policy stagnation, and the UK's future relationship with the EU's single energy market.
That's the headline finding from the latest Energy Barometer, an annual survey of more than 400 energy professionals across the country, released today by professional membership body the Energy Institute.
The uncertainty and scepticism surrounding the future of the UK energy sector has largely obscured progress made on green energy for many respondents, despite on-going investment in clean power and transport.
The overall picture is one of an industry that still is not entirely clear of its direction, said Malcolm Brinded, president of the Energy Institute. "The fog surrounding Brexit has thickened despite negotiations being a year further on," he said. "Answers to key questions are needed. Energy is critical to the UK's economic prosperity and social wellbeing and must not be left to chance."
Concern over Brexit was compounded by apparent slow progress in other areas. High capital clean power projects are still suffering from lack of private investment, despite the growing confidence in renewables as a whole. Although investment risk for solar and offshore wind is ranked as the lowest among all kinds of energy production, cash is not so forthcoming for emerging technologies such as hydrogen, carbon capture and storage, and tidal power, the survey suggested.
Many of these technologies are blighted by ongoing policy uncertainty, with respondents calling for a stable policy framework, funding for demonstration projects, and a high carbon price to help boost confidence and encourage inward investment.
Confidence that the UK will meet its legally binding climate targets for 2028-2032 is also wavering, according to the survey. More than 80 per cent of respondents predicted the UK will fall short of the goal to slash emissions 57 per cent on 1990 levels, and only four per cent said the government's current strategy addresses the most pressing needs of the energy system.
In particular, frustrations still abound over the lack of significant action on energy efficiency - widely backed by energy professionals as a swift way to cut carbon emissions without unnecessary cost.
All groups of respondents, regardless of specialism, voiced support for energy efficiency measures, with half of participants describing it as a priority for the UK's decarbonisation strategy.
"Across strategic policy areas, EI members prioritise improving energy efficiency fairly consistently over other policies," the report notes. "EI members believe that all areas targeted by the Clean Growth Strategy regarding home energy efficiency are important: insulation, heating, lighting, and location (urban and rural). This likely reflects their view that energy efficiency is a key, highly cost-effective opportunity, and so potentially merits even more funding."
But perhaps the most serious concerns were reserved for Brexit. It was cited as the second most pressing challenge facing energy professionals in the UK today (after energy policy), up from fifth last year. Confusion over the UK's future relationship with the EU single energy market, and uncertainty over the availability of a skilled workforce, has intensified in the past 12 months.
Energy professionals are also increasingly concerned that the Brexit negotiations are diverting government attention from critical policy challenges, according to the survey. "Brexit is so consuming it is preventing energy issues from being discussed properly or fully," one participant complained.
In contrast, one area where confidence is high is around low-carbon transport. Respondents expect low-carbon transport fuels, including electricity, biofuels and hydrogen, to make up more than half of the fuel mix by 2040 - the date when the government's proposed ban on new petrol and diesel cars is expected to come into force.
"The survey results suggest that the stranglehold of petrol and diesel for road transport will be broken over the next two decades, as we move to a more plural fuel mix," explained Simon Virley, head of energy and natural resources at KPMG.
Yet Virley also pointed out that a slow rollout of charging points and lack of grid capacity could yet slow down EV adoption. "There are still major challenges to overcome, including the grid charging infrastructure needed to cope with the rapid take-up of electric vehicles," he added. Indeed, 32 per cent of respondents highlighted lack of grid capacity as a significant barrier to EV adoption.
Overall, the picture is still uncertain for the energy industry despite bright spots in certain areas. A combination of investment risk for around some renewables, confusion over Brexit, and serious concerns over the UK's course towards decarbonisation should be ringing alarm bells in the corridors of government. As the Energy Institute's Brinded puts it: "While the shift to low carbon in the power sector looks to be a consistent trend, the trajectory and pace of the transition in other sectors is still very uncertain".
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