THE BLOG

By Failing to Prepare, We Are Preparing to Fail

29/12/2014 02:09 GMT | Updated 27/02/2015 10:59 GMT

Firms rely on a secure and stable supply of energy to keep production lines running, buildings operational and technology switched on.

Imagine what would happen if these businesses and the millions they employ no longer had enough power to perform their daily tasks? How would we achieve long-term economic growth if there was no longer enough energy to meet demand? These questions may appear somewhat dramatic, but they are issues that businesses, planning for the long term, have to consider.

Recent official announcements do not inspire confidence that Britain will continue to have enough power to keep the lights on. Earlier this year, the National Grid warned that its capacity to supply electricity during winter would fall to a seven-year low, due to generator closures and breakdowns. Spare capacity in the grid was forecast to be 4% in 2014, compared to 17% just three years earlier. And worryingly, spare capacity in 2015 is predicted to be just 2%.

We know that up to one-fifth of the UK's power generating capacity is due to close over the next decade. Consequently a vast amount of investment is needed, and urgently, to replace this lost capacity. This investment will have to come from the private sector.

While the government say that they are 'comfortable' that energy security is in hand, that is not the sentiment of businesses. With spare capacity falling and power plants closing it's not surprising that energy security is a key issue of concern for British firms.

Successive governments have failed to adequately plan to guarantee the energy supplies required for our economy, businesses and consumers. The UK has a poor track at delivering all manner of infrastructure projects. Persistent political short-termism means the UK's infrastructure ranks poorly compared to other developed nations. There is nowhere that this failure is better illustrated than with energy.

The current government has made efforts to improve the situation. Many of the reforms to the electricity market were needed and should make a positive difference. Security of supply has also risen up the political agenda and is more likely now to be considered with the same level of importance as that of the other dimensions of the energy trilemma - low carbon and affordability. Although new nuclear and shale supplies are still a long way from contributing to the UK energy mix, there has been encouraging progress made in both areas. However, on issues such as increasing end-user efficiency and implementing carbon capture and storage, progress has been poor.

OurBusiness Manifesto: A Business Plan for Britain calls on all parties to commit to developing and implementing a 50-year UK Energy Security Strategy. The strategy must articulate a clear vision of how the energy mix will evolve over the next 50 years. The UK needs to get most of its electricity from low carbon sources by the middle of this century, but during the transition it is important to make full use of all available sources. If not, security will become a real issue in the not too distant future. It is difficult to expect businesses to implement long-term efficiency measures if there is no clear energy security plan.

All parties must stop using energy policy as a political football, and instead work towards adopting a comprehensive, long-term strategy to guarantee the security of energy supplies. Complacency, short-sighted policies and an adherence to Green agenda dogma, have led us to this situation - now only bold, long-term strategies will deliver the solutions. As the old adage goes, by failing to prepare, we are preparing to fail. Let's hope all parties takes note before it's too late.