There is something quite nostalgic about the way we discuss powering and heating our homes.
It is the one remaining area where we still seem to believe we are an Island in every sense - cut off from the rest of the world.
Ofgem’s suggestion that the UK could face blackouts was bizarrely predicated on an assumption that the UK’s power connections to Europe would not only fail to provide power when we needed it - but that we must assume they would be exporting at full pelt.
When the fear of blackouts, due to gas shortages, returned the attention focused on storage. Fewer looked to our pipelines to Europe and Norway which had caused the price spikes.
Since the 1990’s the UK has led European efforts to create a liberalised market in energy. Not just in oil and gas - flowing across pipes from Norway and Belgium - but also in power.
Now we want to change the rules - to drive new investment in nuclear, gas or renewables (it really depends who’s talking), but the structure we helped to create makes doing that alone increasingly hard.
As a new paper by Malcolm Keay from the Oxford Energy Institute points out an early effort to support nuclear power - the Non Fossil Fuel Obligation - resulted in payments being made to Nuclear generators... in France.
The coalition’s latest reforms - seeking variously to encourage a dash for gas, a nuclear renaissance and to make the UK the world leader in marine renewables - may also suffer a similar fate.
Not least if the structures they implement reflect confusion in the government’s objectives.
It starts with Nuclear...
Nuclear is understandably where most of the tension between the UK’s reforms and the EU’s market structure has initially been focused.
As Malcolm explains governments are not meant to unfairly advantage their own suppliers by providing them with any form of state help.
In practice the EU has allowed a number of exemptions to this.
Feed in Tariffs for renewable energy are often paid directly by consumers through their bills - so the European courts have ruled in the past that this didn’t classify as ‘state aid’.
But the UK’s proposed support mechanism for low-carbon power “Contracts for Difference” (CfDs) involve the state as the ultimate backstop should energy companies not be able to pay.
The EU commission also has the right to allow governments to give state aid under certain conditions - for example if it is to help meet commonly agreed environmental objectives.
There is legally binding target to get 20% of our energy from renewable sources across Europe by 2020, for example. But there is no agreed target for nuclear - or even ‘carbon free’ power.
The EU guidelines for allowing state aid are also meant to encourage temporary support to new technologies - like offshore wind.
The idea is that they are not yet ready to compete so need a little extra help to move down the cost curve and the distortion to free market competition is not permanent.
Nuclear may have new reactor designs, but that is unlikely to sway the commission. Onshore wind and solar PV may soon encounter similar problems and subsidies for both are falling fast.
Duration is also an issue. If you are looking to prevent permanent distortions to competition a proposed 40 year contract for a huge nuclear plant is particularly unappealing.
A paper prepared for the EU Green party by Greenwich academic Steve Thomas and lawyer Dorte Fourqet suggests UK support for nuclear is very unlikely to pass.
But there are others who disagree.
Nuclear’s long history includes a number of international agreements (including the TFU, TFEU and Eurotrom treaty) allowing investment in nuclear power, which may allow exemptions to the usual state aid rules.
But goes well beyond it...
Even if the UK can hammer out an opt out on state support for nuclear the tensions between our own reforms and a European structure set up to mimic the market system we are now abolishing are likely to increase.
In addition to support for nuclear the government wants to promote the construction of a new generation of gas power plants through a ‘capacity payment’ which rewards generators for dispatchable capacity.
Such payments may be necessary to balance intermittency in renewable generation and could - in theory - be used across Europe to support integrated grids, pumped storage and demand response as well as gas.
But rolling them out in the UK alone at significant scale could simply work as another subsidy, artificially reducing the price of power from gas and artificially making the payments only available to UK generators. It’s easy to see how this could be a problem.
Before you even get to carbon...
Europe has failed to agree on any targets beyond 2020 and, partly as a result of this - and a surplus of credits in eastern europe - the European Carbon market has crashed.
Yet the UK has just introduced a minimum price for carbon - The Carbon Floor Price - designed to prop up the carbon price in the UK and, many would say, generate revenues for the Treasury.
By 2030 if the EU fails to take action (and action is being planned) DECC figures suggest the price of carbon in the UK could be several times higher than in Europe.
Whilst this is unlikely to hit UK industry - which will be exempted from the charge - it could have the perverse effect of encouraging EU generators, not subject to the floor price, to sell power to the UK’s more expensive market.
Do nothing?
None of this is a reason why the UK must do nothing.
Many aspects of the government's reforms, including support for renewables and emissions limits on fossil fuels are probably compatible with the existing EU framework.
But even support for renewables would be far more efficient in context of a European policy and - possibly - targets beyond 2020.
If Ofgem knew that interconnectors could be used to provide reserve supply would we need gas backup? If developers knew there would be EU wide demand for offshore wind - would the cost not fall? How much more wind power could we build if we knew there was a market to export it?
There is the potential for the UK to once again play the role of a pioneer in establishing a long-term legal framework which forces energy policy to reflect climate objectives.
But the reforms will create a tension which will only increase over time if Europe fails to move beyond it’s limited ambitions for 2020.
The risk is that confusion in government about what it is trying to do will result in a confused structure which nobody will want to adopt.
A structure designed to ensure nuclear power can be supported without it appearing in the Westminster village to be a ‘public subsidy’ - for example - may not travel well.
What happens in the UK will be watched closely in Europe - and not just by it’s lawyers, also by its policy-makers.
If the reforms go down well in it could, again, give the UK an edge as the first mover. If they are mimicked soon enough the lights may cost far less to keep on.
Or the UK could find itself adopting a perhaps more familiar role of confrontation, seeking opt outs and policy changes to preserve the delicate compromise they’ve thrashed out. The EU has no common energy policy - the UK could do a lot to ensure it stays that way.
That might prove popular and retain independence - but it would arguably do little to help lower bills for consumers. But as the new interconnector through the channel tunnel showed one way or another, the UK will never again be an energy Island.
