ICE urges UK energy infrastructure investment

The UK energy infrastructure is on the brink of collapse and will not be sustainable past 2015 unless billions of pounds are invested to ensure that future electricity generation meets demand.

This stark warning was presented by the Institution of Civil Engineers (ICE) in a report entitled ‘The State of the National Infrastructure 2010’, published today.

Past ICE president David Orr, who chaired the steering group responsible for the report, said that the UK’s water, waste, transport, flood and energy systems are all in need of ‘serious attention’ and will need £40bn to £50bn worth of investment each year until 2030.

Orr added that the ICE is most concerned about the state of the UK’s energy infrastructure. He referred to the ‘looming energy gap’, which is when electricity demands exceed generation capacity or, as it is sometimes more fearfully put, the point at which the nation’s lights begin to flicker.

‘We must plug the looming energy gap, which could be with us in less than five years as ageing coal and nuclear power stations are decommissioned,’ said Orr.

As stated in the report, the UK has 83.5 gigawatts of capacity and imports 2.5 gigawatts from abroad. In the winter, when demand is at its peak, the UK consumes about 60 gigawatts of electricity, mostly met by 30 large power stations.

The issue, pointed out in the report, is that 11 gigawatts of coal and oil power stations will close by 2015 and a further seven gigawatts will be lost when eight nuclear plants reach the end of their functioning life by 2018.

At the same time, demand is expected to increase because of new power-hungry infrastructure due to be rolled out such as high-speed rail.

The ICE warned that the government has ‘very little time to act’ if energy is to be sustainable in the future, but not all are sharing the sense of urgency.

Graham McQuarrie, a spokesman for the National Grid, believes that the ICE’s report is ‘slightly misleading’ about spare electricity capacity.

‘Spare capacity at the moment is healthy, partly as a result of the recession; demand has gone down,’ he said. ‘Even though some power stations are due to close over the next few years, there is a lot of new generation including gas-fired power stations and wind already being built or with planning permission.’

As to whether he shared the ICE’s fear that an energy gap could be reached in five years, McQuarrie said: ’It’s unlikely.’ However, he added that there is no time to be complacent and he supports the ICE’s efforts to prod the construction of the UK’s future low-carbon infrastructure. 

In its report, the ICE said that the government needs to spell out a timeline for rolling a mix of renewable and non-fossil-fuel generation, including nuclear and energy from waste. In order to accommodate these new sustainable energy sources, the grid will need to be upgraded.

It has also called on the UK to increase gas storage capacity, pointing out that the UK has one of the lowest per-capita gas storage capacities in Europe.

When asked to provide a timeline of when the ICE hopes to see each component of its proposed energy infrastructure in place, Orr declined, saying that no specific dates could be decided until the government has given a full commitment to back up energy suppliers on their investment.

‘Nobody is going to build nuclear power stations unless they know there is a return for it in 10 to 15 years,’ he added.

In this ‘age of austerity’, Orr admitted that sort of government investment will be hard to find and this is why the ICE has proposed the creation of a ‘national infrastructure investment bank’. The idea, which is based on the ‘green investment bank’, would lend private investors a loan to build critical infrastructure.

‘The previous government, in its budget report, set up a green investment bank at around about £2bn and that was focused on financing renewable energy,’ he said. ‘We would say that is a good start, but a £2bn green investment bank isn’t going to be enough for infrastructure that requires an investment amount of £40 to £50bn a year. We need to be more ambitious.’

The report also rated the status of rail, local transport, water, flood risk management and waste handling. Within that group, local transport was rated the worst, with flood risk management and waste handling also being noted as ’in need of attention’. Rail and water were rated ‘adequate for now’.

According to the latest World Economic Forum’s annual Global Competitiveness Report, the UK currently sits distinctly mid-table compared with the rest of the world in terms of its basic infrastructure networks. Germany was ranked number one, a position it has held for some time, with particularly good marks for its transport and telecommunications infrastructure.

Orr said that what separates the UK from countries at the top is that most of its road networks and water systems were constructed in Victorian times. ‘They are now needing major refurbishment, which in a developed society causes great disruption and it’s very expensive to refurbish,’ he added. 

Yet Orr admitted that other countries such as France spend much more per head on infrastructure. ‘We’ve got lessons to learn there,’ he said.

Click here to read David Orr’s reaction to the report and his views on wider infrastructure issues.