UK downgraded from top tier in ‘energy trilemma’ rankings

The Index, produced by the World Energy Council, ranks 130 countries on how they deal with the three dimensions of the energy trilemma – energy security, energy equity and energy sustainability.

The UK ranks fourth in the world, but was downgraded from its ‘AAA’ rating in 2014 to ‘AAB’ this year. Its energy equity score, which measures the accessibility and affordability of energy across the population, has suffered as electricity has become comparatively more expensive.

The UK also remains in the Index’s ‘negative watch list’ because it faces “significant challenges in securing energy supply”, according to the Council.

“Domestic production of fossil fuels has steadily declined, nuclear power plants are being run down, and many coal plants will be forced to close due to changes in European legislation,” reads the report.

“Furthermore, ageing infrastructure and the tightening of reserve capacity margins, called for extraordinary measures by the national grid operator, including tenders, to ensure supply during the winter 2014/2015.”

The report warns that the UK’s energy security rating would likely decrease in future years, with the unexpected removal of subsidies for wind and solar also hindering efforts to diversify supply.

Green challenge

On energy sustainability, the report praises the UK’s decarbonisation and renewable energy targets, but warns that the greatest challenge for policy makers will be executing successful policies.

“Difficulties with implementation are vividly illustrated by the unsatisfactory start to the Green Deal,” the report states. “Consistency of policy is also crucial to secure and maintain investments while reforms are being implemented”.

The UK energy system was recently downgraded in a similar ranking index from consultancy firm EY. In that case, the uncertainty around renewable energy subsidies was deemed to be undermining investor confidence in the sector.

Energy Secretary Amber Rudd was also forced to admit in Parliament yesterday that the UK was currently in doubt to hit its 2020 EU renewable energy targets.

Joan MacNaughton, executive chair of the World Energy Trilemma study, commented: “If the UK is to remain ahead of the pack, and regain its ‘triple A’ positioning, the government must give more predictability to investors in the way the electricity market reforms are progressed.

“More transparency is needed about the future approach to Contracts for Difference and the Levy Control Framework.”

Global outlook

Switzerland, Sweden and Norway took the top spots in the Index, with the report finding that the best-performing nations tend to be developed countries with higher shares of energy coming from low- or zero-carbon energy sources, supported by well-established energy efficiency programmes. 

The World Energy Council also stressed the need for binding targets to be set at COP21 in Paris.

MacNaughton added: “The $48-53trn needed for investment in global energy infrastructure is increasingly contingent on a clear climate framework and a global target for emissions.

“It is clear that the energy industry has embraced the sustainability agenda and is working to help curb greenhouse gas emissions.  It has an important role to play in achieving a successful energy transition, but key actions are required by countries if the full potential of the energy sector is to be realised.”

Brad Allen