No time for predictions

Predicting the future is always a dangerous game. As the American commentator and journalist, George Will, said: “The future has a way of arriving unannounced.” Economists rarely get predictions of economic development correct and politicians’ intentions are blown off course by events happening around the world. Such as the coronavirus. Just a few weeks ago only only those with access to a particularly effective crystal ball would have foreseen such a global event. Now, it’s impossible to say what effect this might have on the economy and the energy sector

But looking back on Government forecasts from 2005 makes interesting reading. The Energy White Paper in that year had reckoned that by 2020 electricity consumption would already have increased by 15 per cent. In reality, it has decreased by 16 per cent. That is a forecasting exaggeration of over 30 per cent. This has been down to a huge increase in energy efficiency, according to Imperial College. Dr Iain Staffell, lead author of a recent report, said: “In the past decade, we’ve seen unprecedented changes in Britain’s power system, which has transformed at a speed never seen before.

“Several factors made significant contributions to falling emissions including carbon prices, coal retirements, conversions to biomass and the growth in wind capacity. But reductions in electricity demand dwarfed all the others – helping to push down power prices and environmental impacts.”

That might be OK for the past, but what of future demand? Government forecasts are for a return to increasing consumption post 2025. However, Imperial College, perhaps knowing better than to make bold predictions, takes a slightly different line.

“Electricity demand may bottom out, and then begin growing towards the end of the 2020s. But on the other hand, they reckon “it may continue its gradual decline.” Very wise to sit on the fence. The great unpredictable here is the growth of electric vehicles that might require 8GW of extra capacity. But smart charging could cut that to below 4GW, according to National Grid.

Now that the UK has made a commitment to reach net zero by 2050 predictions for future energy growth become somewhat irrelevant. We have to maintain that decline in energy consumption. An increase post 2025 just won’t get us to that target. The future has arrived. This time announced loud and clear.