D-Day for UK Energy Policy: Is there a plan?

by Claire Copeland and Donal Brown

The British Institute of Energy Economics (BIEE) held a one day conference on 21 September at the Department of Business, Energy and Industrial Strategy (BEIS) somewhat cheekily titled: “Is There a Plan? UK Energy Policy for the 2020s”, coming as it did ahead of the Government’s publication of the Clean Growth Strategy

While there was much acknowledgement of failings in UK energy policy and the enormous challenges ahead, particularly when it comes to decarbonising heat, there was palpable optimism in the room when looking to the future. One of the key messages was that the traditional “trilemma” is no more. Several experts said that the three dimensions of low costs, security of supply and reduction in carbon emissions no longer represent a challenge. Instead, according to one expert, we are now facing a 3D challenge: Digitisation, Decentralisation and Decarbonisation. Another expert went further and suggested that the energy sector is actually facing a 5-dimensional challenge: Decarbonisation, Decentralisation, Digitisation, Democratisation, and Disintermediation. Yet another suggested that Diversity should also be added to the list.

In this brave new “D” world, issues of low cost and security of supply are sure to remain. For example, it is unlikely that the annual press obsession with winter blackouts will disappear. Yet at the heart of the shift in the thinking on future challenges is the potential that can be harnessed from “smart” systems. This conference also demonstrated this shift by focusing on how “smart” systems could change the way energy is generated, supplied and consumed.

prosumers

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Colin Calder from PassivSystems gave illuminating insights into how blockchain technology could be used to harness the ability for consumers to trade energy they are generating (for example from solar panels on their roof) in a trusted secure way. Blockchain is the technology behind Bitcoin and is much lauded for its robustness and extremely low risk of corruption. It appears to be a good choice for providing a means for “prosumers” (both producing and consuming energy) to trade with each other. So-called “learning algorithms” could use smart systems to keep a home or office environment at particular temperature, while using pricing signals on the grid to do this in the most cost-effective way. Learning algorithms process data to determine patterns for a particular situation and therefore useful in automating comfort conditions in a home environment.

Catherine O’Kelly, from British Gas, talked about a forthcoming pioneering trial of 100 households in Cornwall. The aim of this trial is to test and demonstrate flexible demand, generation and storage. The homes are to be given the kit to generate and store their own energy. and connect to a virtual marketplace where the flexible energy is traded.

ev charging points

©Copyright Walter Baxter and licensed for reuse under this Creative Commons Licence.

There were also positive discussions on the rapid current progress in the electric vehicle (EV) sector. With many mainstream car manufacturers announcing electrification of their fleets in the coming years, there was a mood of cautious optimism that the age of the electric car may finally be dawning. However, Darran Messem, Chairman of the Low Carbon Vehicle Partnership, emphasised that EVs still constitute less than two per cent of new car sales. In addition, much more work needs to be done in developing the technology for freight and the integration with emerging smart business models. Given the rate of change in this sector it was also argued that the policy landscape is largely playing catch-up; with big questions remaining over the lack of charging infrastructure and the capacity of EVs to offer demand-side response in the current distribution network arrangements.

Perhaps the most heated debate surrounded the Chair of the Committee on Climate Change, Lord Deben’s claim that the energy companies are still not doing enough to address energy demand in the residential sector. In particular, Lord Deben emphasised the lack of progress on residential energy efficiency, and chastised the energy retail sector for sitting on its hands and continuing to profit from the UK’s woefully inefficient housing stock. One solution he offered was the possibility for variable stamp duty for more efficient properties, as a means for stimulating demand for low carbon retrofits. Indeed, recent research by the Centre on Innovation and Energy Demand (CIED) and the UK Energy Research Centre (UKERC) has shown that the huge cost savings from the sector are not being realised by the current suite of policies.

To conclude, the UK is set to fail to meet the 4th carbon budget unless radical new policies are put in place, and decarbonising heat still looks an incredibly tough nut to crack. But learning is well underway in how we can leverage sophisticated information technology to help us meet our energy needs in a secure, cost-effective way. Simon Sharpe from BEIS ended the conference confirming that there is much government support for innovation and that smart systems have the potential to provide the most flexible energy systems in the world.

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