We often mock the catastrophic mind set of National Grid in always looking on the dark, and cold, or both, side of life when it comes to issuing energy forecasts, but the reality is that we wouldn't have it any other way.Their job is to search for worst case scenarios, so they can be avoided. A little gold plating is a small price to pay for security.
Which is why it was a pleasant surprise to see at Transporting Britain's Energy this week to see that the reality contradicted the usual heavy on the caution words trailing the event:
On the supply side considerable uncertainty remains regarding the future supply makeup to the UK. In the short to medium term, security of supply is a key concern, not only for gas but for electricity, as more gas-fired power plant is built. In the longer term, the current economic climate may make the EU renewable energy targets even more challenging and delay the development of new infrastructure, including wind, biogas and other renewable energy sources.
But those in attendance remarked how different this was compared to the usual upward lines of demand crossing declining supply. National Grid flattened previous curves and flattened them for years to come. Bears like us thought there may be chances of a price recovery post 2015, but National Grid's line still went off far into the future, but horizontally not vertically. In other words, everything is just fine. Supply is set to be just fine, and that is usually where National Grid has to be as pessimistic as possible. But the big news was one of our favourite subjects: demand.
Yesterday's vertical graphs went to nosebleed territory based not only on supply pessimism but from demand going up, up and away. But NG's figures, even after assuming a relatively near side recovery, show the growing and continuing impact of demand reduction.
Demand reduction is happening to an extent due to high prices and recession, but it's also happening for deeper reasons. Simply put, it is not only the end of energy obesity, it's the end of energy stupidity. Add in efficiency, smart metering and the new found viability of wind power and throw in exciting developments in heat pumps and decarbonising heat use and demand was considered flat to falling through 2018.
Supply, without mentioning any shale gas potential entirely, showed a similar healthy balance. In fact they said "Import Capacity far exceeds import requirements".
The energy market is going to be falling to flat. Fixing an energy price is about as useful, and far more expensive, than buying earthquake insurance.
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