With the net zero transition looming ever closer and the eyes of the world turning to the UK ahead of COP 26, the time is now to put in place an integrated, detailed energy strategy. The long-awaited Energy White Paper published by the Government late last year gave impetus to many priority actions, but momentum has to continue to build to answer the urgent questions and detailed aspects to delivering these bold visions in the run-up to the COP.
Most recently, the Business Secretary, Kwasi Kwarteng, in setting out the Government’s net-zero priorities ahead of COP 26, stressed that the UK’s 10-point climate plan released last year is not a definitive, watertight plan. The key challenge will be joining up all of these well-intentioned pledges to create a holistic strategy for the energy system of the future. As an industry we must go further and faster and there are still many untapped synergies across the UK’s energy plans that need addressing if we are to meet those goals.
Most notably, the role of district heating in heat decarbonisation and balancing the energy system. District heating is a fundamental element of the UK Government’s plan with existing funding support in place and developing policy and regulation underway. The Climate Change Committee have estimated that around 18% of UK heat will need to come from heat networks by 2050 if the UK is to meet carbon targets. However although the Business Secretary has more recently acknowledged the importance of decarbonising the domestic heating space, district heating was left out altogether in the Prime Minister’s 10-point climate plan and was only given a relatively short reference in the Energy White Paper. The greater focus seems to be on the more headline-grabbing emerging technologies – notably hydrogen and Carbon Capture Utilisation and Storage technologies.
Rather than narrowing the public discourse to a handful of exciting technologies, a holistic strategy needs to be applied to raise the profile of clusters of opportunities and allow technologies to work in synergy. We must work more collaboratively across the industry to communicate a broad public awareness of the benefits of an integrated energy system.
Above all, a communal approach must be applied across the whole energy system. While electricity decarbonisation is happening rapidly and is much easier for consumers to adapt to by simply changing tariff to a green supplier, decarbonising heat and transport requires much more active participation.
Changing to a decarbonised heat solution or a decarbonised transport solution currently puts the burden on consumers to substantially change behaviours and invest money, such as by installing a charging point for an electrical vehicle or having a heat pump installed in the home. For instance, promising £1.3 billion to accelerate the rollout of charge points for EVs marks progress in encouraging uptake, but we must ensure the support is there at a local level. The consumer awareness to change to more environmental habits is already there, but more support is needed from local authorities to take the lead and accelerate this learning process in the wider community.
Whether we are consumers, businesses or community groups, there are now many more organisations actively participating and choosing to make decisions about how they generate and consume their energy. Rather than the traditional ‘top-down’ system, controlled by a relatively small number of actors, we are moving to a more consumer-led and participatory environment. Renewables is one of the key reasons for that – from micro-renewables to small, community-scale projects. There is also no reason why cooperative community projects cannot become larger city scale projects where a contribution to the investment, and consequently control and benefits, is held by residents and institutions within towns and cities.
The next step in the challenge towards a more holistic net zero energy strategy is that we currently have a centralised energy system; electricity is generated centrally, and gas imported centrally from the North Sea and international suppliers, which is then moved around the country via national transmission and distribution networks. Moving to a more decentralised solution would mean no longer transferring money out of local economies for systems operating costs. It would mean keeping it more local by buying and trading energy in a local context, using resources that are already there. This is not to say we need full decentralisation to the level of self-generation at an individual property level, but instead we can use smart systems to place more control within communities and local economies.
There is still going to be a crucial role for central generation and distribution of power, but local generation and storage can play a greater role in supplying and balancing the power system. In particular, heat networks have the capacity to become more localised.
There have been some efforts made to democratise the UK’s energy system thus far and contained within the Energy White Paper is a commitment to expand the Warm Home Discount to around 3 million homes, representing £1.9billion of extra support for households in fuel poverty. However, while this extra support for consumers is welcome, the Government must do more to democratise the energy system from the ground up and address the fundamental inequality in energy pricing. Energy supply is currently heavily skewed towards big energy companies, wherever they sit in the supply chain – from generating to retailing energy. Democratisation of energy should mean greater access to, and control of, energy generation and supply, arising from decentralisation and local investment in renewable energy.
The big challenge is the status quo is still being propped up: the gas retail sector benefits from reduced VAT and, unlike electricity where domestic consumers pay about 25% of their bill towards environmental obligation costs, gas is almost nothing. It’s a no-brainer: if we want to drive the same decarbonisation principles in the gas system then we should learn from those applied to the electricity sector.
The holistic energy system of the future
As an industry, we can go further. Currently, there is a gap between national energy plans and implementation which relies on driving progress of viable technical and commercial solutions in local energy systems. It is hoped that greater clarity from the Government, such as from the heat and building strategy expected in the next few weeks, will help further define the UK’s path to decarbonisation.
Fundamentally, the concept of energy efficiency must be placed front and centre of all the Government’s energy policies if we are to accelerate towards net zero at the rate needed. We need to work collaboratively to bring together, and build broad public awareness of, the binding principles and benefits of decentralisation, democratisation and decarbonisation if we are to meet net zero targets.