World Energy Council warns of potential gap in energy supply due to government’s lack of clarity and myriad changes

The UK has fallen out of the top 10 of a respected international league table of countries’ energy sectors for the first time.

The World Energy Council blamed the government’s lack of clarity and myriad changes which it said have left the country facing a potential gap in energy supply.

The UK has previously been one of the top performers in the council’s “Trillema Index”, which has ranked countries on energy security, costs and decarbonisation efforts for the last six years.

But the Brexit vote, cuts to renewable energy subsidies and planned changes on foreign ownership have created investment uncertainty and significant challenges for the UK, according to the latest edition of the index for the London-headquartered agency, whose members include energy companies across the world.

The UK was also added to a watchlist of countries where negative changes are expected imminently, alongside the US, Germany and Japan. Denmark, Sweden and Switzerland took the top three positive slots in the ranking, with the UK now 11th.

Despite the recent decision to go ahead with new nuclear reactors at Hinkley in Somerset, the UK had a “distinct lack of policy direction”, the council’s chief said.

“Challenges in terms of improving affordability, and delivering security of supply as North Sea assets deplete, coupled with the rundown of worn-out legacy infrastructure, including coal-fired generation, has left the UK with a potential energy gap,” said Joan MacNaughton, executive chair of the council. “Renewables are increasing as a percentage of the UK energy mix but their output is not yet at a level where energy security can be guaranteed.”

She added that ministers had not helped by making “myriad different changes” since 2013. It was not clear if Theresa May’s new government would back the “dash for gas” approach pushed by the former chancellor George Osborne under the last administration, said MacNaughton, adding that no alternative to gas had been made clear either. Gas has come to supply around half of the UK’s electricity generation this year, up from around a third in 2015, as several major coal plants shut.

The result of the EU referendum vote in July has also cast a cloud over the government’s pledge last year to phase out coal power by 2025, as leaving the single market as part of a hard Brexit “could significantly increase the cost of its energy imports”. Imports via interconnectors to the continent accounted for around 6% of the UK’s electricity supply last year.

Planned changes to rules on foreign ownership of energy infrastructure, announced during May’s review of Hinkley Point C contract, added to the investment uncertainty, the report said.

The council also highlighted government cuts to onshore wind and solar subsidies since it took power, which Office for National Statistics figures showed last week had led solar power installations to crash. The changes could hinder investments in those sectors, the council said.

The longer term future of support for low-carbon energy was unclear too, said MacNaughton. “The market knows some of what to expect until 2020 but after this point there are no answers to how the country will finance the low-carbon transition.”

Dr Colin Brown, director of engineering at the Institution of Mechanical Engineers, said: “This report confirms that the UK government’s lack of clear energy policy is threatening the country’s future energy security.”

He added: “The recent approval of the Hinkley Point C nuclear, while promising, is only part of the solution to the UK securing its low carbon energy requirements for the future.”

Former Green party leader, Natalie Bennett, tweeted that the report showed the UK was a case study in “how not to run an energy policy.”

Natalie Bennett (@natalieben) How not to run an energy policy - the UK's a case study https://t.co/lyIow9k2Q6

A spokesman for the government said: “Keeping the lights on is non-negotiable and an absolute priority. We do not leave this up to chance, and the measures we have put in place through the capacity market, mean that homes and businesses will continue to have the supplies they need as we build an energy infrastructure fit for the 21st century.

“The UK is a global leader in attracting investment and we are already seeing the fruits from this in our energy infrastructure with more offshore wind, solar energy and nuclear capacity being developed across the country. We will continue to work with industry and other key stakeholders to ensure that our future energy supplies remain clean, secure and affordable.”

In a speech on Monday, the energy minister Baroness Neville-Rolfe, said that new nuclear would have a key role to play for the UK in ensuring security of supply, affordability and decarbonising the sector.

“What might this look like in practice [meeting those criteria]? Where better to start than with Hinkley and nuclear new-build. Britain has a 60-year history as a global leader in nuclear power. Yet after the completion of the last new nuclear plant, Sizewell B in 1995, which I remember seeing while it was under construction, the nuclear industry was regrettably left to atrophy,” she told a summit in London.

Offshore windfarms could also play a role if the industry drives down costs, and the safe extraction of shale gas could help on affordability and supply, she said.