Alexander Temerko — one of the biggest supporters of Britain’s Conservative government and one of the biggest names in the UK oil and gas industry — just slammed Whitehall’s latest move in the energy sector as “unprofessional, immature, and a PR illusion.”
In an exclusive interview with Business Insider, Ukrainian-born millionaire Temerko slammed the announcement as “a big mistake.”
Today, the energy secretary Amber Rudd revealed that Britain will eventually phase out coal-fired power plants by 2025.
“We are tackling a legacy of under-investment and ageing power stations which we need to replace with alternatives that are reliable, good value for money and help to reduce emissions,” said Rudd in her speech.
But Temerko, who is the deputy chairman of the OGN Group which provides construction services for the oil and gas industry and is one of the Conservative party’s biggest donors, said the announcement showed Rudd and Chancellor George Osborne’s “detachment from reality.”
“To be honest, I am not surprised but I am disappointed in the speech. I expected more professionalism and equality when it came to dealing with energy. The government has also scrapped renewable energy subsidies and now with phasing out coal plants in 10 years, it’s just going to create more problems,” said Temerko to Business Insider.
“We have a lot of serious problems in the energy sector in Britain. We have oil and gas production issues, we have a lack of electricity capacity, National Grid’s infrastructure and capability is like that of the 1980s and is not in the 21st century — it’s not fit for purpose. It’s creating a massive problem and we have the potential for lots of black outs.”
Temerko is a member of the British Conservative Party, where he is a member of the Leader’s Group. He is also a major donor to the Tories and has given around £800,000 of his own money to the party. His total net worth was not confirmed to Business Insider.
He has long argued that the National Grid has essentially failed British households and industry by not future-proofing the UK power grid.
As a result, the country faces the highest risk of blackouts in a decade this winter and Rudd’s new announcement will place further pressure on the already strained electricity grid.
“I am not sure where the government is going to get the money from to make this happen. Coal supplies around a third of Britain’s electricity and if you say, ‘OK, we want to substitute this in 10 years’ time’ this will still mean you have to get the investment from somewhere and start building straight away,” said Temerko.
“We import 50% of our gas from overseas already, if the government want this to work it needs to double gas production in the UK or build 12-15 LNG terminals across the country. This will cost around £70 billion or more.”
Britain is on the verge of an energy crisis
Temerko’s concerns are supported by the Centre for Policy Studies which said in a report recently that Britain is on the verge of an energy crisis. Tony Lodge, one of the report’s authors, said electricity demand will outstrip supply and “we could be in real trouble in 18 months.”
“The main point is for the government is that it wants to do something but doesn’t have a money programme to fund it,” said Temerko. “An electricity shortage is a huge problem for Britain and if the government plan to build one million houses over the next five years, at the same time as phasing out coal, I can guarantee there won’t be any electricity to power these houses.”
“And where are they going to get investment from? Investors from India and China are practical and cynical and why will they invest when there are all these changes. The only way is to increase tax by 70-80% or stop financing the NHS. The speech was a bad signal and negative.”
Rudd also said in her speech that nuclear power a key part of the government’s energy policy. This follows only one month after China agreed to take a 33% slice of EDF Energy’s project to construct the Hinkley Point C plant. It will also mean China will take shares in two further plants.
“The cost of expanding our nuclear power would be even more than for gas and would deliver nothing like the capacity. Rudd today admitted that the challenge for nuclear is to make it low-cost, but again she didn’t talk numbers,” said Temerko. “The total cost of Hinkley C looks set to come to £27 billion — for a capacity of 3.2GW that won’t be available until 2025.”
“This is madness, not least as when it does come online we are committed to pay EDF and CGN for electricity at more than twice the current wholesale price. Amber Rudd is proposing a ‘fleet’ of such stations — we can only imagine what the overall cost of this might be.”
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