UK Energy Supply: Security or Independence? - Energy and Climate Change Contents

3  DECC's approach to energy security

Definition of energy security

9. Over the course of our inquiry, it became clear that there was no agreed definition of "energy security". It can be used to describe the reliability of supplies, the resilience of the supply infrastructure to attack or natural disaster, the supply of affordable fuels, and the extent of national self-sufficiency. It is also used to refer more generally to the absence of interruptions to supplies of electricity, gas and petroleum products to end users.[13]

10. Despite having a departmental priority to "deliver secure energy on the way to a low carbon energy future",[14] DECC does not appear to have a categorical definition of what "secure energy" is. When asked to provide such a definition, the Minister told us that "It is a combination of matters. It includes the resilience of our energy supplies, inevitably now it includes low carbon issues and it includes an affordability aspect".[15]

11. Our own suggestion is as follows: a secure energy system is one that is able to meet the needs of people and organisations for energy services such as heating, lighting, powering appliances and transportation, in a reliable and affordable way both now and in the future. We recommend that the Government adopts this definition.

Threats to energy security

12. Witnesses identified a large number of potential threats to energy security in the UK. These ranged from generalised concerns—including the growing global demand for energy, and the risk that upgrades to electricity infrastructure might not keep pace with increasing demand—to more specific risks such as the 2011 "Arab Spring" resulting in a setback in oil and gas investment in Libya, Yemen and Syria, and the impact of a failure in the Langeled pipeline[16] on UK gas supplies.[17] (A complete list of all of the threats suggested to us during our inquiry is included in Annex 1 of this report).

13. While a range of potential threats were identified, an agreed set of headline risks did not emerge. Many witnesses found it hard to answer the straightforward question "what are the biggest risks to UK energy security?". Any robust energy security strategy needs to consider the system as a whole; a focus on a small number of specific areas is not sufficient.

14. One approach is to consider the resilience of the system as a whole.[18] This might involve ensuring that there is sufficient spare transmission capacity to cope with the loss of a major power line, or sufficient diversity in the sources and transportation routes of imported fuels to cope with interruptions to any one source or route. A resilience approach would acknowledge how difficult it is to identify and analyse all threats. As Dr Strachan, of University College London, pointed out, there are some threats that fall into the category of "sheer ignorance", which are simply impossible to quantify or predict (for example, a terrorist attack on energy infrastructure).[19] Focusing on resilience is a way of dealing with these kinds of "unknowable" threats.

15. As well as surviving short-term shocks (for example, spikes in fossil fuel prices, terrorist activity and accidental damage), the system needs to be resilient to longer-term changes such as the decline in global reserves of conventional oil or the need to decarbonise the energy system.[20]

16. Focusing on resilience requires a more holistic approach to energy security. The Institute of Engineering and Technology (IET) argued for a "systems approach" to energy security, which acknowledged the linkages between different parts of the energy system as well as the risks associated with individual components of the system.[21] The IET noted that "energy security is a complex and multidimensional problem and solutions with a positive impact in some areas can have negative effects in others".[22] For example, electrification of transport might reduce dependence on imported oil but would increase dependence on electricity infrastructure.[23]

17. Understanding how changes in one part of the energy system will impact on others is an essential part of producing a resilient energy system. We recommend that work on energy security should focus on achieving system resilience—both to short term shocks and longer-term stresses—as well as focusing on individual components of the energy system.

Development of an energy security strategy

18. DECC has not published a strategy for achieving energy security. This contrasts with its approach on climate change, where a headline emission reduction target has been adopted and strategies setting out how subsidiary targets will be achieved are published.[24]

19. The department outlined four key areas of its work on energy security: maximising economic recovery of indigenous reserves; reducing demand for energy; ensuring a strong, resilient market and infrastructure; and influencing other countries.[25] DECC's website states that the Government's approach to energy security "includes policies that encourage: free energy markets, both in the UK and internationally; diverse energy sources; international energy dialogue; and timely and accurate information to the market".[26] While each of these activities may well contribute individually towards greater energy security, they do not amount to a coherent or strategic approach to energy security.

20. An energy security strategy should be published in single, dedicated document.

21. One approach to energy security is to develop different hypothetical scenarios and to conduct "stress tests" on the system to try to understand how resilient it would be to different types of threat. Examples of this kind of approach include Ofgem's Project Discovery, Pöyry's report on gas security of supply for DECC, Wood Mackenzie's report on downstream oil infrastructure for DECC and the UK Energy Research Centre's paper Building a resilient UK energy system.[27] A robust energy security strategy could be built around addressing the vulnerabilities identified in such studies.

22. DECC does carry out its own modelling work to assess the impact of multiple shocks on the energy system.[28] However, we were left unclear about the specific nature of this work. This raises several important questions: does this modelling consider the energy system as a whole, or is separate modelling carried out on individual components (for example, on gas, oil and electricity)? Does this modelling look only at potential shocks that may happen in the short-term, or does it also consider longer-term stresses on the system (such as increasing fossil fuel prices or the need to decarbonise the energy system)? Is modelling carried out at a macro level or does it takes into account the geography of the UK's energy infrastructure? Finally, it is unclear how the findings from this modelling work are used and whether they feed into any kind of comprehensive security strategy.

23. We recommend that the Department describe the scope of its energy security modelling and how the findings are used. In addition, DECC needs to be clear about the "early warning" signals that it uses to assess the risk profile of each threat to energy security and be clear about the resilience measures that it would need to adopt to mitigate risk to energy security. It should then expose its methodology to public challenge.

Assessing progress

24. Part of the Committee on Climate Change's remit is to assess progress towards climate change goals, and it makes a detailed report to Parliament each year. This provides an independent assessment against clearly defined targets. In contrast, DECC and Ofgem jointly publish their own annual Statutory Security of Supply Report, which provides a snapshot of the state of various components of the electricity, gas and oil systems. [29] The information in this report is not organised in a way that makes it easy to assess what progress has been made against the four priority policy objectives that DECC described to us. The way that the document is structured (with chapters headed "electricity", "gas" and "oil") tends to put the focus on the physical security of fuel supplies at the expense of other aspects of the energy system. The "oil" chapter of the 2010 report did not include any comment on the security of the petrol and diesel distribution system.[30]

25. It would be easier to monitor DECC's performance on energy security if a set of indicators were adopted against which DECC reported in the annual Statutory Security of Supply Report.[31] The UK Energy Research Centre has suggested that energy security indicators should cover three broad aspects: resilience of primary energy supply, resilience of energy infrastructure and resilience of energy users. A full list of the indicators suggested by UK ERC is included in Annex 2 as an example.

26. What a comprehensive set of energy security indicators should consist of is for debate. However, they should include:

  • Level of energy demand—reducing demand for energy can help to increase energy security.[32]
  • Diversity of fuel suppliers—a diverse portfolio of fuel supplies (both in terms of number and provenance) is more resilient than relying on a small number of suppliers.[33]
  • Energy prices—Affordability is an aspect of energy security.[34]
  • Fuel stock levels—Fuel stocks enhance energy security and gas storage in particular is an important component of UK energy security.[35]
  • Spare capacity—spare capacity (for example electricity capacity margin) means that the system as a whole is able to withstand unexpected failure in individual parts.[36]
  • Capacity for Demand Side Response (DSR)—the degree to which energy users can voluntarily reduce consumption.[37] Monitoring the level of reduction in demand that can be achieved through DSR measures shows how much disruption to energy supplies can be comfortably absorbed by the system.

27. DECC already collects much of the data that would be needed for a set of energy security indicators for various existing statistical publications (such as the Digest of UK Energy Statistics, Energy Trends and Quarterly Energy Prices). Collating this information and presenting an analysis of the implications for energy security as part of the Statutory Security of Supply Report would make it easier to assess the impact of policies designed to improve energy security. New data might be required for an indicator that measured the capacity for demand side response. The collection and reporting of this information would help Parliament and others to judge the Government's progress towards energy security.

28. The Government's Strategic Defence and Security Review contained a pledge to "strengthen the delivery of energy security objectives by more robust reporting and monitoring, including by putting in place a transparent set of energy security indicators in which the Government and its partners can have confidence".[38]

29. We recommend that the Government now publish a transparent set of energy security indicators as promised in the Strategic Defence and Security Review. These indicators should cover primary supply of fuels, energy infrastructure and energy users and include specific indicators on the overall level of energy demand, diversity of fuel supplies, energy prices, fuel stocks, spare capacity and capacity for demand side response.

30. We recommend that DECC should report against a set of energy security indicators on an annual basis as part of its Statutory Security of Supply Report as its contribution to the reporting on the Strategic Defence and Security Review indicators.

13   Q 1 [Mitchell], Q 2 [Stevens], Q 174 [Meeks], Ev w138, Ev 177, Ev w68, Ev 170 Back

14   DECC, Business Plan 2011-2015, available at, accessed 6 July 2011 Back

15   Q 430 Back

16   The Langeled pipeline transports gas from Norway to the UK and has the capacity to provide up to 20% of the UK's peak demand. Back

17   Ev w21, Ev w55, Ev 148, Ev 180 Back

18   Ev w138 Back

19   Q 55 [Strachan] Back

20   Modassar Chaudry, Paul Ekins, Kannan Ramachandran, Anser Shakoor, Jim Skea, Goran Strbac, Xinxin Wang, Jeanetter Whitaker, Building a Resilient UK Energy System, Research Report, ref UKER/RR/HQ/2011/001, 14 April 2011, pp 14-15 Back

21   Ev 170, Q 360 [Harrison], Q 363 [Harrison] Back

22   For example, using large amounts of wind energy reduces fossil fuel imports but makes the electricity system more difficult to operate. Back

23   Q 363 [Kemp] Back

24   DECC, The UK Low Carbon Transition Plan, 15 July 2009; (a new strategy on achieving the 4th carbon budget will be published in Autumn 2011) Back

25   Ev 112 Back

26 (accessed 16 August 2011) Back

27   Ofgem, Project Discovery Energy Market Scenarios, Ref: 122/09, 9 October 2009; Pöyry, GB Gas security of supply and options for improvement, March 2010; Wood Mackenzie, UK Downstream Oil Infrastructure; Modassar Chaudry, Paul Ekins, Kannan Ramachandran, Anser Shakoor, Jim Skea, Goran Strbac, Xinxin Wang, Jeanetter Whitaker, Building a Resilient UK Energy System, REF UKERC/WP/ES/2009/023, 31 March 2009 Back

28   Q 432, Q 435 Back

29   DECC and Ofgem, Statutory Security of Supply Report, November 2010, HC 542 Back

30   DECC and Ofgem, Statutory Security of Supply Report, November 2010, HC 542, pp 42-46 Back

31   A forthcoming Parliamentary Office of Science and Technology POSTnote will explore this topic in more detail. Back

32   Q 27 [Mitchell], Q 55 [Strachan], Q 57 [Jenkins], Q 70 [Strachan], Q 360 [Harrison], Ev w134, Ev w138, Ev 139, Ev 211, Ev 112, Ev w105, Ev w83, Ev 170, Ev w149, Ev w62, Ev w59, Ev 204, Ev 164, Ev w35, Ev 148, Ev w25, Ev w154, Ev 228 Back

33   Ev 139, Ev 211, Ev 121, Ev 159, Ev 144, Ev 112, Ev w70, Ev w83, Ev w131, Ev w75, Ev 180, Ev w36, Ev w8, Ev 204, Ev w143, Ev 164, Ev 148, Q 59 [Jenkins], Q 86 [Hanafin], Q 103 [Hanafin],  Back

34   Q 1 [Mitchell], Q 2 [Stevens], Q 174 [Meeks], Ev w138, Ev 177, Ev w68,  Back

35   Ev w40, Ev w138, Q 105 [Hanafin], Q 39, Ev 132 Back

36   Q 65 [Strbac], Q 92 [Rigby], Q 148 [Winser], Q 418 [Ling] Back

37   Ev w83, Ev 180, Ev w36, Q 57 [Jenkins, Strbac and Strachan] Back

38   HM Government, Securing Britain in an Age of Uncertainty: The Strategic Defence and Security Review, Cm 7948, 2010, p 51 Back

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© Parliamentary copyright 2011
Prepared 25 October 2011