More interconnection, storage and demand flexibility will transform electricity

Three organisations have published reports on Britain’s gradual shift to a cleaner energy system in the last month, with the new National Infrastructure Commission (NIC) leading the way on the room for low cost ‘smart’ technologies to play a large role. Meanwhile the Commons Energy and Climate Change Committee and trade association Energy UK both pointed to a need for more consistent and helpful energy policies from the government.

Three ‘smart power’ innovations – more electricity system interconnection; more electricity storage; and more use of demand flexibility – are the keys to better balanced and more cost-reflective electricity supply and demand, according to new analysis from the NIC. These innovations could also save consumers up to £8bn a year by 2030, help the UK meet its 2050 carbon targets, and secure the UK’s energy supply for generations.

The NIC report: Smart power makes practical recommendations to this end – not for new subsidies or substantial public spending – but towards the creation of a level playing field and a better managed network. It proposes that:

• Government should pursue additional interconnectors with other European countries.
• The UK should become a world leader in electricity storage systems – two steps are required: a review of the regulatory and legal status of storage, removing outdated barriers, which should be implemented as soon as possible; and Ofgem should encourage network owners to use storage.
• The UK should make full use of demand flexibility by improving regulation, informing the public of its benefits and piloting business models.

NIC Chairman Lord Adonis said: ‘Our existing power stations are closing down and their replacements will be radically different as we decarbonise supply to reduce emissions. This represents an enormous challenge, but it also leaves the UK uniquely placed to benefit from three exciting innovations set to transform the global electricity market. The UK can lead the world in harnessing these innovations, bringing jobs and investment into the country and cutting bills for consumers.’

Adonis added: ‘If we get this right a smart power revolution could save consumers £8bn a year.' However, positivity around the NIC report was contrasted by a report published the day previously by the Energy and Climate Change Committee, which suggested that confidence levels among potential investors in Britain’s electricity system is falling.

The Committee said that confidence has been dented by a series of sudden policy changes since the election, which may lead to a hiatus in project developments and threaten the UK’s ability to meet its energy security and climate change objectives.

The government has cut support for onshore wind and solar, ended the Green Deal energy efficiency programme and cancelled a long-standing competition to deliver carbon capture and storage, said the Committee whose Chair, Angus MacNeil said: ‘Billions of pounds of investment is needed in order to replace ageing energy infrastructure, maintain secure energy supplies and meet our legally-binding climate change targets. Since coming to office in May, the government has made a number of sudden and unexpected changes to policy. This has spooked investors and left them wondering what will be next?’

So what of the energy industry itself? A couple of weeks earlier the trade association for the UK’s utility sector, Energy UK, signalled its readiness to deliver affordable, reliable and clean energy by embracing a customer-focused approach to Britain’s energy transition. In a February report: Pathways to 2030, Energy UK highlighted how a positive partnership with government will allow the sector to meet the considerable challenges facing the country in balancing costs with affordability while meeting environmental and security goals.

However, the government needs: ‘to adopt a costed, considered and stable end-to-end approach to policy and investment, where the impact of policy decisions were thought through across the electricity, heat and transport sectors,’ said the association.