It's game on for gas, says the Chancellor. In the gas strategy that accompanied today's Autumn Statement, George Osborne announced up to 37GW of new gas power stations.
Let's accept that building anything like that much gas would be incompatible with our climate change commitments ("plan z", as the head of the CCC, David Kennedy, accurately described it) and look at the data that underpins it.
Buried in the annexes of several year's worth of DECC forecasting are some oddities: facts and figures that seem out of place. To shamelessly quote from Indiana Jones and the Temple of Doom, "something's very wrong here."
If you want to check any of this stuff, here are the key links:
- Gas Generation Strategy, DECC, 2012
- Updated Energy & Emissions Projections, DECC, 2012 - Major Power Producers generation by source
- Updated Energy & Emissions Projections, DECC, 2012 - Major Power Producers cumulative new capacity
- Updated Energy & Emissions Projections, DECC, 2012 - Major Power Producers capacity
- Updated Energy & Emissions Projections, DECC, 2011 - Major Power Producers generation by source
- Updated Energy & Emissions Projections, DECC, 2011 - Major Power Producers cumulative new capacity
- Updated Energy & Emissions Projections, DECC, 2011 - Major Power Producers capacity
Let's start with the government's latest forecast. By 2030, the government says that we will have a total of 37.4 GW of gas capacity in the UK.
That's their central scenario - on page 22 of the Gas Generation Stratey we see that that would entail building 26GW of new capacity between now and 2030. That would bring us in at 100g/kwh of CO2, double the 50g/kwh level needed to meet the Climate Change Act.
Each plant would only run 27% of the time - hardly the sort of headline figure that encourages energy companies to make wanton investments.
What did they say last year? That's where it starts getting really bizarre.
In 2011 the government thought we'd have 29.3GW of gas capacity in 2030. To get there, they said we'd only need to build 7.5GW of new capacity.
It seems that sometime in the last twelve months, someone decided that we needed to build an extra 19GW of new gas capacity in order to have a total of 8GW extra capacity that operates less than a third of the time.
It is not clear why we suddenly need to build lots of new gas plant. Presumably it is replacing other gas plant that last year DECC expected to still be running in 2030. Quite why DECC suddenly changed its mind about how early energy companies would replace their gas plant is unclear.
So if we're building more gas plant and planning on having more capacity, we must be generating more electricity from gas, right?
Wrong.
In 2011, we were planning to be generating 127.7TWh of electricity from gas in 2030. Yet in 2012, the government revised the amount of electricity from gas in 2030 downwards, to 123.9TWh.
That's not a massive difference, but still, it seems very foolhardy to be building lots of new gas plant to get marginally more capacity and generate less electricity.
Turning back to the 2012 forecasts, what would you expect to happen if fossil fuel prices were low?
According to DECC, we'll build (marginally) fewer new gas plant and generate less electricity from gas when the cost of fossil fuels falls below the median.
| Central scenario | Low fossil fuel prices | High fossil fuel prices | |
| Generation | 123.9TWh | 121.9TWh | 112.2TWh |
| Total capacity | 37.4GW | 37.5GW | 35.5GW |
| New gas capacity | 25.6GW | 25.3GW | 24.2GW |
I have no idea why the total amount of generated electricity from gas falls - and before you ask, we generate marginally less electricity from coal in the low price scenario too - so it's not as though the utilties are being constrained to meet the decarbonisation targets.
Finally, the increase in new gas construction between the 2011 and 2012 forecast is not replacing coal, or nuclear, or renewables. DECC thinks we would build slightly less coal (about 1GW) and about 3GW less nuclear than it did a year before.
However, for some reason, DECC now envisages a massive increase in new build capacity: an additional 9GW of renewables alongside the additional 18GW of gas. But we don't generate any more electricity, just 8TWh (1.9% of the total of 414TWh).
Presumably DECC believed that the utilties will be so bouyed by how coherent our energy policy has appeared in the last few months of energy policy that they splash out on loads of new capacity out of gratitude.
To be brutally honest, these forecasts have the dirty fingers of politics all over them. They simply do not stack up - even if you leave aside the blatant error in the low fuel price modelling.
The increase in build is particularly galling - it reeks of the two Coalition camps squabbling over our energy future until some poor civil servant was ordered to rearrange the numbers so that everyone got a prize.
If I were an investor looking at investing in the UK, the one thing I'd take away from all this is that the government has no idea what will happen in future - and cannot even reach agreement on what it would like to happen. Which is unlikely to encourage the level of investment our energy infrastructure so desperately needs.
