A No-Regret Energy Policy: Reduce, flatten and flex
This is the first blog in the no resource is 100% reliable series
Catherine Mitchell, IGov Team, 28th July 2015
The last few weeks has been pretty dire for those in Britain that care about moving towards a sustainable, secure and affordable energy system. GB no longer has a credible energy policy. Government support for nuclear power may lead, at best, to one or two new power plants in GB – but by when we do not know and for how much money. They are almost immaterial to meeting our carbon commitments whilst at the same time making it harder to move to the necessary integrated system operation and management to reduce our total energy use, to flatten our total capacity and to improve flexibility – all good for reducing overall costs to the customer. Carbon capture and storage is going nowhere fast – see Simon Evans of Carbon Brief’s excellent overview (but see also a separate, forthcoming blog). Natural Gas is the default provider – no doubt as wanted by the Treasury. IEA predictions for future demand (and costs) are uncertain – but it certainly is not compatible with environmental goals. And fracking – which may get some gas through (but may not – again, we do know yet) – will never replace natural gas, will be expensive and may well have major environmental consequences. All in all, an irresponsible position to place us in.
Meanwhile elsewhere in the world, RE investment and implementation is soaring; nuclear power is stagnating; and CCS is also currently stagnant although the recent Aviva threat to disinvest in companies without CCS may prove to be a driver for change. So on the basis that renewable energy (RE) and energy efficiency (EE) is all that is open to us, but anyway is the direction of global energy travel, why not explore a ‘no regrets’ policy option for a secure, sustainable and affordable energy?
There are 11 key points here:
1) We have to transform British energy efficiency of use, buildings (domestic and commercial) and appliances so that we use as little energy as possible – and this makes good economic sense anyway.
2) The energy system around the world is changing rapidly in terms of available low carbon supply technologies and their costs, ownership, business models, customer involvement – and so a policy which may have been economic or technically (in)feasible 5 or even 2 years ago is likely to need reassessment today – the changing economics of storage is one such issue. As a result, it is very important to have a no regrets energy policy – and that is one which is flexible and based on keeping options open.
3) The foundation and building blocks we need to put in place for a credible GB energy policy can be summed up as ‘reduce, flatten and flex’. These are energy efficiency and RE policies; demand side flexibility policies (in part to bring down peak demand); increasing our interconnection; developing storage options; developing and increasing system operation and management to improve integration between electricity, heat and transport; maintaining fossil fuel flexibility as a short bridge; and the governance to make it happen.
4) These building blocks are not radical, unusual or technically difficult to implement and are already the means of operating and managing many energy system around the world, including some US States. These building blocks are necessary to run an efficient energy system which minimizes energy use and minimizes infrastructure expenditure thereby reducing costs to consumers.
5) Not only are these the building blocks of an efficient energy system but they are also the building blocks of a sustainable energy system. Whether the energy system currently has 5% of energy from renewables (as GB currently does) or 50%, or intends to move to 100% RE, these building blocks are the necessary foundation for any efficiently run energy system.
6) We need to learn by doing and from best practice – by understanding how energy system operation is evolving, and keeping up with it.
7) We can never absolutely ‘know’ or ‘understand’ what is the ‘right’ thing to do or what is the ‘most’ cost effective action over the (short or) long term because of the speed of change. All we can do is keep a very close eye on what is happening around the world with technology development, practice change (for example, new services and business models) and costs and understand where the direction of energy change / travel is, and what the building blocks of that direction is. This also has implications for the way we use models, and for the type of models we use (see future blog on this).
8) We may need a somewhat bigger capacity electricity system – to allow for a switch to electric vehicles (from petrol) and to top-up water heating (assuming mass solar thermal use for water heating) but this is not necessarily electricity generating capacity – it may be interconnectors, storage of different types as discussed below, and is very dependent on the efficiency of buildings. If our building stock is very energy efficient, we will need much less energy for heating.
9) Experience has repeatedly demonstrated that energy systems can absorb and use more renewables than was ever thought possible without security incident and at lower than expected cost. We need to look at the whole system – and this is at the EU not just GB level.
10) Energy sector investments are very long-term and the market won’t drive the required integrative changes in time. We have to start now but if we make mistakes, they are around for a very long time. An example of this is the recently implemented GB capacity mechanism – see here and here. This is a classic example of a new policy mechanism which locks us in to 15 years of doing the wrong thing. GB should never have done this. There was an enormous body of evidence and alliance of stakeholders arguing against this policy and yet it was still implemented. We need to understand how not to make these kinds of poor energy policy decisions.
11) We need appropriate governance change to get there.
Energy systems are able to be more flexible because of new technologies which allow new ways of operating energy systems. These include information and communication technologies (ICT). Moreover, characteristics of renewables are somewhat different from fossil fuels and a more flexible demand side fits better with a more flexible supply side. Increasing the flexibility of our demand side can occur through demand side response; via a very wide range of storage technologies; through better use of technological characteristics such as rapid ramping times of supply technologies etc; and by increasing interconnection.
New ways of operating and managing our energy system bring many improvements:
- We are able to increase the flexibility of our demand side (as discussed above) thereby fitting better with less flexible supply options
- We can shave off the high peak electricity demand through demand side response – to reduce the need for idle power plants used just for peak demand, thereby bringing down wholesale electricity prices
- We can reap benefits from interconnectedness – this is not only with other electricity markets via interconnections but also between GB energy sectors ie heat and electricity and transport so that they become better integrated to do the same or better job, using energy more efficiently (which also makes good economic sense); and between customers and distribution network operators, aggregator and so on via the smart grid
- By increasing the use of storage so that we increase our flexibility we can help to reduce peak capacity requirements (as above) but also we do not waste the renewable electricity and energy we generate / produce (whether by dumping or constraining off) and also that we do not ‘overbuild’ our energy system to the detriment of customers which have to pay for it
All in all – this is the way GB energy policy should go. We should be supporting renewables and energy efficiency. As part of this we should be integrating our energy system better. This needs to align with new consumer wishes. It is very different from what we have in place now – but it is the norm in many other countries. It is these areas where our R&D and our skills policies should be focused.
As we know, this is very different from the current energy policy. It would be great if everyone who thinks this is a credible and sensible energy policy, or is interested in one small part of it, does their bit to getting it talked about so that we try and get some momentum going for it to happen!
No resource is 100% reliable series:
- Blog 1: This blog
- Blog 2: The Belgian nuclear winter
- Blog 3: US polar vortex and energy
- Blog 4: A 100% renewable energy system operation on no wind, no sun days
- Blog 5: A realistic ‘what if’ model
This blog was updated on 3rd August – to provide links to the wider series.