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UK energy crisis the tip of a melting iceberg

This week has seen a marked difference between the UK and the Europe Union it decided in 2016 to leave behind.

Boris Johnson made a shambolic, much-derided ‘speech’ to the Confederation of British Industry on Monday that referenced, for some reason, Peppa Pig. Johnson somehow managed to tell everyone that Peppa and her family had originally been offered to the BBC, which had ‘rejected’ it before it snowballed into the billion-dollar bane of every parent’s life. That was quickly proven to be a porky (pun intended), as the makers attested in 2010.

The UK’s top representative was doing this as yet another energy company went under. Earlier in the week, Bulb Energy went bust and is now, according to The Guardian, going into ‘[…] an untested bailout process that will rely on public money to manage the fallout’.

“The company,” said The Guardian, “will be handed to a ‘special administrator’ that will have access to government funds to keep it running to supply gas and electricity to its 1.7 million household customers. The cost to taxpayers is expected to soar through the winter and could also be shared by households in the form of higher home energy bills in the future if the government cannot recover the costs from a new company through a rescue deal.”

Given that this is a government that spent £37bn on a test-and-trace system that lasted about a week-and-a-half, and countless billions on unusable PPE equipment, it is probably best to start stocking up on blankets.

Absence of leadership

Bulb is not the tip of the iceberg. Multiple energy firms have gone under in the UK in recent months. It is, however, the biggest by far. According to the BBC on 2 November, regulator Ofgem said that Omni Energy Limited, MA Energy Limited, Zebra Power Limited, and Ampoweruk Ltd had ceased trading, four more energy companies added to the list of 15 that have gone bust since August this year.

This would be a crisis for most governments, and crises need serious leaders. But this is far from Johnson’s first attempt at shirking his job at a moment of need. There was also the time he posed for a Churchillian photograph announcing his resignation as foreign minister days after the Russian state murdered a British civilian on British soil.

Johnson is a throwback, a Billy Bunter-ish character that Dickens would have created. The jolly old chap character, the absent-minded uncle role who jokes about in Latin is one that he has been playing ad nauseum. He is a man reliant on the past because he has no concept of how to shape the future. In short, he is the type of prime minister the UK currently wants and, frankly, deserves.

Different state of affairs

But over here on the continent, things are looking… warmer (another intended pun).

Earlier this week, the German energy company EON nonchalantly announced that it is to invest €27bn over five years into an energy transition programme. This will consist of €22bn for the expansion of energy networks, with another €5bn to do the same for its customer solutions business.

Said Leonhard Birnbaum, chief executive of EON, in a statement: “The decarbonisation of Europe’s economies places the energy industry at the threshold of a key decade of growth. Having roughly 50 million customers in Europe and the continent’s biggest distribution network – which is the backbone of this transition – positions EON superbly to seize this opportunity. We can, therefore, today issue a long term forecast for EON that is characterised by continual, profitable growth.”

EON, the company went on to say, ‘[it] will focus entirely on growth, sustainability, and digitalisation’.

So how do we tie those two things together? Well, we can’t because this harkens back to a piece I wrote last week outlining that the world, in rushing towards cleaner energy, had not put much thinking about an energy transition between the past and the future.

What we have here with the UK and Germany are two countries in which the approach to energy differs markedly. One seems to be standing still in the middle of an energy crisis, and the other seems to be looking towards the future.

And while Rolls Royce is looking to spearhead a £400m investment into mini nuclear reactors, that does not compare well to the €27bn that EON is putting into the game over five years.

Looking in the wrong direction

The last few years have not been kind to the UK in terms of its international reputation. I was in Berlin the morning after the referendum in 2016 and the response from my colleagues, mostly Germans and Poles, was, “Why? Why are you doing this?”

They could not understand in 2016 why the UK had decided to Leave. Five years on and they probably still don’t.

In that time, the UK has seemingly lost interest in protecting its international reputation. It has set itself on a collision course against the EU when it was trying to negotiate a deal that only came about at last minute following a chaotic and messy multi-year period of infighting, silly mistakes, and backstabbing.

If the UK does want to improve its reputation and not just have its carcass picked over by other nations, it needs to not only begin harnessing its internal strengths, but to start looking abroad to see and welcome those that will help it develop. It needs to invest in education and infrastructure and adopt a tone that encourages foreign nationals to move there.

Unfortunately, that does not seem to be the case. And not only do potential citizens from other nations see it, but so do investors.

Who will go elsewhere.

Pete Carvill

Pete Carvill is a reporter, writer, and editor based in Berlin who has been writing for the B2B and mainstream media since 2007. He is a contributing writer for Expert Investor and, in addition, has...

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