Addressing the Energy Policy Trilemma at Making the UK Energy System Work

The University of Nottingham today hosts a conference that challenges us to consider how we make the UK Energy System work. As the debate in Paris gets in to full swing at COP21 it’s pertinent to consider how the trilemma of carbon, cost and resilience can be resolved.

The University’s own Chair in Sustainable Energy and Director of the Energy Technologies Research Institute, Prof Gavin Walker, opened the conference and introduced Prof Paul Ekins – a leading expert and commentator on energy policy – from UCL.

The inclusion of decarbonisation as a challenge alongside cost/competitiveness and energy security has changed everything. As we transition from carbon intensive energy supplies of coal, oil and gas, where do we turn for our primary energy needs and do we have the infrastructure to generate, store and distribute energy to meet current and future demands.

Ekins recognised the challenge and opportunity afforded by cracking the energy storage solutions we need to meet our needs. New demand technologies, e.g. electric cars and electric heat pumps, need to be integrated into the existing systems, offering both infrastructure challenges as well as opportunities to store and transform our systems.

But transformational investments are needed. 4 key ones are:

  1. Large scale renewables
  2. Small Scale renewables
  3. Nuclear
  4. CCS

Possible opportunities, but with significant implications, include bioenergy – recognising the competition for space, biodiversity, food and energy.

Internationalisation, as part of the global system, is central to the debate around fuel supply (bioenergy, gas, oil), technologies and investment and, of course, achieving carbon emissions. Integration of international systems, notably across the EU, through inter-connected grids is uncertain.

These choices are, essentially, political. There is not always compatabiity between these technologies either. It needs to be seen as a whole system.

The 20/20/20 targets by 2020 across the EU is driving change and promoting carbon reduction, renewable energy investments and energy efficiency. The UK’s share is less than the EU average. So, what has been the UK’s response?

The Climate Change Act has created a framework of legal commitments which has led to sizeable carbon reduction but challenges to achieve renewable energy capacity remain. The process, overseen by the Committee on Climate Change, is science-led and has proved challenging for politicians.

The absence of carbon pricing is a barrier to driving faster and deeper change. It’s only the taxes imposed in the UK on carbon-intensive energy that contributes to this approach. Markets, therefore, by themselves, will not decarbonise.

So, what needs to happen to achieve the targets we have set? There are a large number of questions, but before anything is undertaken there should be a  trajectory of future demand needed first and foremost.

What’s the future of gas and their networks? Can they be re-purposed for biogas or hydrogen?

Ekins recognises this is an unprecedented policy challenge and recognised Stern’s work and recommendations to put in place carbon pricing; technology policy, and; promoting behavioural change and the need to remove barriers to that. Will carbon pricing drive investment in energy technologies and behavioural change.

Cities recognised as having a key role in this challenge.

Ekin’s analysis of the current UK Government’s policy is damning, recognising its response has been contradictory to the commitments mdade in law. We have moved from subsidising the most efficient and cheapest forms of energy (solar and on-shore wind) to heavily subsidising the most expensive (nuclear). In combination, the Conservative Government has undermined investor confidence such that we cannot be sure that the investment needed in new energy generation will be forthcoming.

 

 

 

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“Fundamentally, I want energy policy to be boring”. Oh.

I’ve just read Amber Rudd’s speech on a new direction for UK energy policy (Source: Amber Rudd’s speech on a new direction for UK energy policy – Speeches – GOV.UK). I have to say, nothing in it surprised me. She wants it to be boring. I’d like it to be a little more enthusiastic, exciting and innovative. It chimes with the Conservative approach to energy policy we’ve seen before. It even celebrates the sell-off of the UK’s energy assets.

So, read the speech and make up your own mind, but there were some [amusingly?] redacted ‘political content’ that didn’t make it and then it was a case of ‘Tory Bingo’ with some common phrases – these all made it in:

  1. This Government is focused on securing a better future for Britain.
  2. We’re encouraging investment in our shale gas exploration so we can add new sources of home-grown supply to our real diversity of imports.
  3. We know competition works. It keeps costs low and can deliver a clean and reliable energy system.
  4. It’s about the long term security of our energy supply. And my view is that is best served through open, competitive markets.
  5. And I can say to Europe that Britain stands ready to help make this vision a reality.
  6. Opponents of nuclear misread the science. It is safe and reliable.
  7. So our approach will be different – we will not support offshore wind at any cost.

The bits I expected to see were all there:

It’s pro-nuclear, pro-fracking. With regard to heat: “We will set out our approach next year, as part of our strategy to meet our carbon budgets.” Disappointing given the good work done by DECC on its Heat Strategy not so long ago – and still a long way down the contents of her speech unfortunately. Pleasingly: To set an example to the rest of the world, the UK also has to focus on where we can get the biggest carbon cuts, swiftly and cheaply … and Innovative, new suppliers, which range from start-ups to local authorities, are demonstrating how competition is working for people.

Deep, deep in the statement a final mention for energy efficiency: More than 1.2 million households are seeing lower bills due to energy efficiency improvements over the last 5 years. We are committed to ensuring a million more get the same benefits by the end of this Parliament. But no mention of the Green Deal, the commercial opportunities in energy efficiency nor the links with housing policy.

Boring? Is that the same as ‘unsurprising’?

 

Committee on Climate Change Challenge SoS on Commitment

The Government’s department responsible for energy and climate change has been seen to produce a number of statements in recent months that, on the face of it, sweep away commitments to renewables and pave the way for nuclear and fracking solutions.

To its credit, the UK Parliament’s Energy and Climate Change Committee has launched three inquiries into the Conservative Government’s track record on the low-carbon economy and potential policy options going forward. The Committee’s Chairman, Lord Deben, recently wrote to The Rt. Hon. Amber Rudd, Secretary of State for Energy and Climate Change, to request further clarity about the direction of UK low-carbon policy. 

The UK’s ability to meet carbon budgets at least cost depends on firms and households making long-term investments and decisions based on how they think UK policy will unfold over a 10-15 year period. From that perspective, the announcements potentially present problems as the cumulative impression has been of a weakening of the policy framework.

The final consultation of a three pronged approach will be dedicated to looking into the country’s energy infrastructure, including decentralised energies such as district heating and combined heat and power.

4th Gen Heat Networks Coming to Fruition – E.ON renewable heat network demonstration

In January this year DECC funded a number of innovative projects to support heat networks in the UK. Today saw the E.ON ‘s project announced: UK-first renewable heat network demonstration wins DECC funding. It’s encouraging in a week that has been dire for those of us in the sustainability profession, given the Government’s stance on zero carbon homes drop like a stone in the same way its commitment to on-shore wind has fallen, to see something good come from the coalition Government. Ed Davey was clearly able to keep some emphasis on low carbon investment when the Liberal Democrats were in charge at DECC.

E.ON have stood alone as one of the ‘Big 6’ that have recognised the longer term value in heat networks and the scheme in Exeter and the investment in Sheffield are testimony to that. It’s good to see further investment that will decarbonise the heat in the Exeter network through the use of solar thermal energy.

A presentation I made in July 2013 set out what a 4th Generation, 21st Century, heat network should achieve. The scheme in Exeter is clearly edging in that direction. In a previous blog I suggested heat networks should seek to achieve a number of things, including:

  1. Greater resilience, through heat storage, back-up and optimisation;
  2. Lower carbon heat, through the adoption of lower carbon fuel sources, such as geothermal heat, biomass, biogas, solar;
  3. Choice and product differentiation, offered through multiple heat providers inputting to a singular (independent possibly) network over which consumers buy their heat. Products could be differentiated by temperature (return temperatures are lower than those temperatures leaving central plant), carbon intensity (fuels of varying intensities of heat can command different prices and values shaped by carbon markets and carbon targets).

You can read previous blogs on heat networks on consumer protection; the Nottingham city scheme; the use of rivers for heat; the role of cities in heat network development;

£3 million funding to boost low carbon heating

The cynic in me isn’t surprised that this announcement comes less than 60 days before the General Election, but I am not a cynic really. It’s good to see DECC’s continued support for district heating. If there is one thing this Government can be applauded for its understanding of the importance of ‘heat’ and the opportunity for heat networks to reduce carbon emissions and provide cost-effective heat. Well done to Davey and his team in carving out £3 million of funding to boost low carbon heating.

DECC has done some useful enabling work to support the uptake of heat networks. It has established the Heat Network Development Unit (HNDU) to lead this and has produced some useful studies to demonstrate the untapped potential out there – such as the report produced in 2014 on heat opportunities from rivers.

The Government’s own Heat Strategy states that producing heat is the biggest user of energy in the UK and in most cases we burn gas in individual boilers to produce this heat. This is a wasteful method of producing heat and a large emitter of CO2, with heat being responsible for 1/3 of the UK’s greenhouse gas emissions. Household heat demand has risen somewhat over the past 40 years from 400 TWh/y to 450 TWh/y, despite a marked improvement in the energy efficiency of homes and a slight reduction in the severity of winters. The average internal temperature of homes has risen by 6°C since the 1970s, and this combined with growth in housing – the number of households has risen by around 40% since the 1970s – has offset energy efficiency gains in terms of total energy used to heat homes Some studies suggest these temperature increases are due to factors including the move to central heating, rather than householders actively turning up their thermostats.

Heat networks in the UK use a range of heat sources including biomass and gas boilers, combined heat and power (CHP) plants and heat from energy-from-waste plants and, where conditions suit, such as is the case of Southampton, a small amount of geothermal heat. Networks are currently estimated to provide less than 2% of the UK’s heat demand supplying 172,000 domestic buildings (predominantly social housing, tower blocks and public buildings) and a range of commercial and industrial applications (particularly where high temperature heat in the form of steam is required). Despite being of a significant size, Sheffield’s city centre district energy network is estimated to provide 3% of the entire City’s total heat needs.

By comparison, district heating is widespread in many other parts of Europe, in China, Korea, Japan, Russia, and the USA, although the level of sophistication and reliability is very diverse. While having an average market share of 10% in Europe, district heat is particularly widespread in Scandinavia (Denmark nearly 70%, Finland 49%, and Sweden around 50%). It also has a substantial share elsewhere in Europe. For instance, district heat provides around 18% of heat in Austria (and 40% of heat in Vienna). European networks are currently growing at around 2,800 km per year, about 3% of current installed length. With the right planning, economic and market conditions it is clear district energy can play a more prominent role.

Whilst this funding announcement is showing funding going to new players in the district heating community as well as some established ones (Coventry, Leicester, Manchester, for example) there is a need to put money in to those long-established networks in cities that were at the forefront in decades past (Sheffield, Nottingham, Southampton). These ‘4th generation networks’ need to be reviewed, refreshed and developed as much as those ‘greenfield’ sites where district heating is all too new.

All the schemes developed to date have been local authority led. This round of funding allocates £3m across 55 local authorities in England and Wales. I would urge DECC to look at other types of organisation who might exploit heat networks at a medium scale where the conditions are right to do so. Those organisations with a long term stake in the city or town in which they are based are well placed. For example, NHS Trusts, universities and colleges, whilst not as big as an entire city or town often have enough scale in them to warrant district heating networks. Indeed, some of them already do. My own organisation, The University of Nottingham, has two of significance as well as several smaller, interconnected systems on its campuses. Most of them follow the model of high temperature, high pressure systems and don’t allow for storage, cooling or consider CHP. 

In the recent round of HEFCE/Salix Revolving Green Fund projects awarded interest free loans there were a good number of CHP schemes and a smaller number of district heating schemes put forward. I believe there would have been more had these organisations had sufficient revenue to develop shovel-ready projects for capital investment. Like the public sector, universities are often capital rich and revenue poor. That means that complex, integrated and multi-faceted feasibility studies can often become un-affordable – even if the capital is available for it to be delivered in time. I would like to see HNDU looking to other large organisations and helping them in the way that they have helped local authorities. If they could do it in partnership with the funding council and with their established partners, Salix Finance, even better. 

 

 

Develop locally sourced heat from Rivers

Regions given helping hand to develop locally sourced heat 
Earlier posts on this blog advocate the development of heat networks, so it is encouraging to see the UK Government’s support in developing a better understanding of the potential to capture heat from major rivers across England.