Britain’s final coal-fired power station and its penultimate steel plant shut their doors today, a consequence of the government’s hard push for decarbonisation, even at the cost of affordable energy or an indigenous steel making capacity, crucial for the defence industry.
They’re hundreds of miles away from each other but two of the final bastions of the British industrial revolution shut forever today, their respective demises very linked through the slow-burning but very much ongoing British electricity price crisis. Ratcliffe on Soar, once the cutting-edge in coal-fired steam turbine electricity production and the blast furnace at Port Talbot both close on Monday, coincidentally just days after fresh figures show Britain has the most expensive electricity prices in the world by a considerable margin.
Ratcliffe-on-Soar, a familiar sight to the people of the East Midlands where its cooling towers commanded the flat landscape for miles around was originally meant to have shut down in 2022 but was granted a stay of execution after Russia invaded Ukraine, sending the global energy market into crisis as the supply of gas to Europe suddenly became unpredictable and fraught with political difficulties. Britain had been the first country in the world to build a coal-fired power plant 142 years ago and today is the first major economy to close all of its coal power plants, although smaller states like Portugal and Sweden got there first.
The power station is now to be pulled down and the land redeveloped, removing any chance of reactivating the plant should a sudden change in the global energy picture again impact supply.
The route to today’s closure stretches back decades, from the Margaret Thatcher administration’s clashes with the powerful coal unions which attempted to shut the country down with strikes which precipitated a dash for gas in the 1990s. Coal has serious advantages over other sources of energy, not least among them it is cheap, available in large quantities domestically, reducing Britain’s reliance on unreliable foreign partners, and it can easily be stockpiled ready for use.
On the other hand it is the bête noire of environmentalists, and has been aggressively targeted by the British government in its push to decarbonise. Nominally Conservative former finance minister George Osborne introduced a ‘carbon price’ in 2013, making generating electricity with coal artificially more expensive through taxes to force generators to other sources. By 2015, the government was announcing it would force the phase-out of all coal power generation within a decade, that target being met today. As one report in 2020 found, UK carbon taxes killed 93 per cent of coal-fired energy generation. University College London said:
British electricity generated from coal fell from 13.1 TWh (terawatt hours) in 2013 to 0.97 TWh in September 2019, and was replaced by other less emission-heavy forms of generation such as gas… Increased electricity imports from the continent reduced the price impact in the UK.
The problem is electricity is now extremely expensive in the United Kingdom. Indeed, it is now the most expensive in the world, thanks in large part to government intervention forcing a green push without addressing the nation’s underlying problems with energy storage. Indeed, the latest figures reveal price of electricity has increased 124 per cent in the past five years — as the final coal plants tailed off, although other factors were also at play — and power in Britain is half as expensive again as it is in Europe.
Contrasting to the United States, which embraced fracking to become a major producer of power in its own right, electricity in the United Kingdom is four times more expensive, it is reported.
High energy costs are seriously damaging to the competitiveness to energy intense industries and discourage investment. The apex example of heavy industry fleeing expensive energy is the production of steel, which is now probably in its final months in the United Kingdom. In a remarkable sort of coincidence, the closure of the Ratcliffe-on-Soar power station comes the same day as the closure of the final blast furnace at Port Talbot, south Wales.
This closure has attracted months of interest given the very high number of job losses expected in a Labour-voting area. But nevertheless the government declined to prevent the closure and in a way subsidised its demolition, with a half-billion sterling pay-out to help build a new electric arc furnaces in the town to replace the blast furnace.
The problem is of course, even in an intensely energy-demanding industry like steel production, electric arc furnaces use even more electricity, and can’t actually produce new steel, they are merely used to recycle old. The only other location in the United Kingdom left that can produce virgin steel is Chinese-owned Scunthorpe in Lincolnshire, and that could very well close this year too, potentially creating another national security question.
As the GMB Union had said earlier this year: “Fresh steel is vital for warships and other parts of the defence industry”. Their spokesman said of the issue that both the UK government and NATO had warned war was around the corner and yet the state was allowing domestic steel production to slip through its fingers. He said: “we are on the brink of losing our full ability to make our own steel, vital to our defence industry – not least in building warships. It’s utter folly.”
The fact is British steel is very expensive to produce, and energy prices are a contributing factor to that where they aren’t, for instance, in competitors like China which continue to depress the global market by dumping vast quantities of coal-made cheap steel. UK Steel complained in July its plants were paying double for electricity what was paid in France and Spain at £113 per megawatt including wholesale electricity costs, grid connection charges, and carbon taxes.
Recent figures for Chinese energy costs show they are a fraction of what is paid by European businesses, and China still relies on coal in a way the West no longer does. The United Kingdom still imports steel, having effectively offshored its emissions — for steel still produces carbon wherever it is made — and its jobs, too.
The United Kingdom now faces the coming winter without the capacity to fire up a reserve coal fired power plant to even out market price fluctuations, or even to simply keep the lights on in a crisis. Just last Spring a bout of cloudy, cold weather with no wind saw coal brought back to make up for lost renewables.
