Can Britain Build The Energy Storage It Desperately Needs?

The Prime Minister’s grand plans to “turbocharge AI” through every fibre, circuit and byte of Britain contain a catch.

They require a massive building up of Britain’s digital infrastructure, including the construction of 200 new data centres. The kind which, according to the International Energy Agency, each consumes around 100 megawatts (MW) or more of energy every year, “equivalent to the electricity demand from around 350,000 to 400,000 electric cars”.

Do the sums, and the price of becoming a future “AI superpower” – for the data centres alone – is the same in energy consumption as that of, conservatively, 70 million electric vehicles annually, requiring roughly the power supply of the entire Hinkley Point C reactor currently under construction in Somerset.

The government has set Britain on a course of relentless transformation and ceaseless change. It has also committed us to a vast increase in the amount of energy we will by necessity consume in the future, just as net-zero targets are set to push up prices across various sectors.

This is the fulcrum of today’s highly complex modern energy debates: as the world lives with immense anxiety over the consequences of its own overconsumption of power, the world’s power consumption is going up immensely.

Britain wants energy security unbeholden to the dangerous price fluctuations of the international markets. It wants to ramp up its future energy consumption to maintain living standards and keep up with phenomenally powerful emerging technologies. And it wants to reduce its carbon emissions.

It’s what Mike Foster, chief executive of the Energy and Utilities Alliance, calls the “trilemma” of energy policy: the “balance that policymakers are trying to find between the needs of providing energy security set against the desire to hit net-zero targets, all bearing in mind costs to consumers”.

Is the Labour government prepared for the daunting task? Within a month of each other, either side of Christmas, two major policy announcements were made, providing plenty of material for judgment.

In December there was the comprehensive Clean Power 2030 Action Plan, heralding, in the words of Energy Secretary Ed Miliband, a “new era of clean electricity for our country” and a “positive vision of Britain’s future with energy security, lower bills, good jobs and climate action”.

All that will be achieved, we were told, through a transformative programme of reforms to our national energy infrastructure, to clean up the “dysfunctional grid” with all its long “connection queues”; a rebalancing of the UK’s “energy mix”, reducing gas reliance to a minimum; the removal of all obstacles to onshore wind farming; and an ambitious pipeline of construction and development projects required to see it all through to 2030.

Then, in January, came Starmer’s big AI play: the “turbocharge” agenda. Intensified with the PM’s warning, that the “race is speeding up and we must continue to move fast”. Welcome to the age of powering up, and powering down.

With the argument over the best way to meet our onerous duties comes a second trilemma – of supply, demand and storage.

While the increase of clean supply, and the encouragement of lower demand through reduced consumption might be easier to grasp in the public’s mind, within the energy industry one of the major debates focuses around the third front: storage.

Some say the UK can’t have a secure future energy supply without a higher capacity for storage, both of energy itself, and the gas that is used both for generating energy and heating homes.

Cue announcements in February when the government launched new funding and policy adjustments to support energy storage and AI-related electricity demand.

In the words of a Department for Energy Security and Net Zero (DESNZ) spokesperson, “reversing a legacy that has seen no new long duration electricity storage built for 40 years” has become a key priority.

And Foster says this is the right course, even if it’s tougher politically than building more wind farms.

He says: “Both types of storage help us become more energy independent and, crucially, avoid being the victim of price spikes when global market forces are shocked, as happened when Putin invaded Ukraine.”

Others argue investing in gas storage especially removes the incentive to develop renewable technologies to meet demand, exposing the economy to the same kind of shock.

Both sides may have felt vindicated, though for contrasting reasons, when a severe cold snap in January revealed a problem at the heart of the system. We don’t have enough gas. Not stored at least, for when demand is peaking – at one point in January, the headlines screamed, Britain had “less than a week’s worth of gas” remaining.

Data from Centrica estimates average UK gas storage capacity at “10 per cent or less than in France, Germany or the Netherlands”. When we get close to running out, as happened in January, we have to import gas at whatever price the market dictates.

The opponents of gas power say this is precisely why we shouldn’t rely on it too heavily in the future. In the other corner, UK energy analyst Gaurav Sharma says the UK’s “woeful” storage capacity must be redressed as a short-term necessity.

Could Labour’s 2030 energy policy of reducing the ratio of gas in the future energy mix, and discouraging North Sea production through taxation, just be exacerbating that problem?

Sharma says: “Miliband has now made a bad situation worse by discouraging UK gas investment without first boosting viable renewables alternatives.

“So even that abysmal 3.2 bcm gas capacity was only 42 per cent full [in January] just as wind farm power output fell, leading us to pay the Danes over the odds to import electricity directly through an interconnector.

“All the stuff you read about the UK being hours away from a 70s-style power blackout was true.”

In response, a DESNZ spokesperson says: “It is categorically untrue that our electricity or gas supplies have been at risk this winter. We are confident we will have sufficient energy supply to meet demand, due to our diverse and resilient energy system.”

Either way, if the nation’s energy security is the priority, clearly the status quo won’t do. Will a new generation of cleaner energy sources be fit for the job when we phase gas right down, and then out, of the mix?

The government says they will, and that the grid will be ready. Sharma is sceptical on both fronts.

“We need to go in phases,” he says. “From lower carbon then to zero. A phased reduction.

“We have plenty of wind farms. We are leading Europe in renewable power generation; there’s no question about it. We are streets ahead.

“The question is not about wind farms, it’s about the grid.”

Then there’s the question of nuclear power. At its peak in the late 1990s nuclear provided a quarter of all the UK’s energy. By the end of 2024 that had fallen to 14 per cent.

The government’s 2030 Clean Energy plans make clear that nuclear power is still in the future mix. In February the government pledged to make additional sites available for nuclear power, focusing on small modular reactors (SMRs) as a key component of the future energy mix. Indeed, huge increases in demand from, say, a large rollout of data centres, may be impossible without numerous SMRs.

That will be the work of the AI Energy Council formed in January to “provide expert insight on the energy needs of AI”, with SMRs as a potential solution.

But nuclear has its critics, on safety grounds and over waste disposal, which might be why the government isn’t shouting about it – the word ‘nuclear’ only made it once into a lengthy press release announcing the policy.

Which baffles many, like Foster, who says that the opponents of nuclear power aren’t helping the net-zero fight.

He adds: “What they miss sight of is that if the enemy is carbon, if you can stop it being emitted that’s how you get that victory in the battle to net-zero.

“If you eliminate certain options and technologies you make it far more difficult to do.”

The debate goes on. Meanwhile, the government’s own plans demand that future power consumption will be massively higher than it is today.

That future feels like an inevitability when one sees the grand ambitions of AI-champions in the tech world and global governments.

What isn’t so inevitable is a sure answer as to how we get there.

Coal is gone. Gas is being phased out. Nuclear power is at a fraction of its former level. Renewables are the great green hope.

But without colossal investment in the grid, storage in particular, could all the great strides the UK has made in building clean energy sources prove to be premature?

“Where we are lacking and what is holding us back,” says Sharma, “is that we have not invested in storage and grid stability for when the wind is not blowing. This is not something that can be done overnight. It will take 20 years.”

And while the UK pushes forward with its net-zero targets, the world’s largest fossil fuel consumers – the US, India and China – are increasing their consumption. This underscores a critical reality: energy is a global problem, and Britain’s transition cannot be viewed in isolation.

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