Reducing Costs & Carbon

The Covid-19 crisis has been a strange and difficult time for many, and our electricity system is no exception.

However, out of such difficult and extraordinary times, the actions we take now – and in the next few months – could propel us more quickly to the smart system we need for Net Zero.

Most welcome during this period has been the record-setting run of zero domestic coal generation at more than two months; by far, the longest period since the start of the Industrial Revolution.

There have also been more subtle changes. We have seen the Electricity System Operator introducing new approaches to ensure a flexible, operable system, and the government responding urgently to add greater flexibility into the Capacity Market and Contracts for Difference during this period.

Reason to be hopeful

As thoughts turn to the new normal and the recovery, there remain lots of questions about the lasting legacy of the past few months. However, I think there is much reason to be hopeful.

Firstly, the importance of energy efficiency in so many studies and reports on the recovery has been extremely heartening.

Over the last few years, energy efficiency in the UK has been the muesli of UK energy policy – we know it’s good for us, we should buy it – but still, it’s quite dry. No longer.

Energy efficiency essential

Organisations across the board – from WWF, Greenpeace, the Green Finance Institute, Aldersgate Group and McKinsey – are calling for efficiency to be part of the recovery to deliver jobs and growth, particularly outside the South East.

Muesli no more, energy efficiency is now well and truly part of the avocado on toast zeitgeist.

That’s good news for climate change, for our ability to live in healthy comfortable homes and also for progress towards a smart electricity system.

The UK’s homes leak heat at a greater rate than almost all of Europe. That means their heating is less flexible because we can’t retain warmth as easily.

Yet the walls that we live in have the potential to be an enormous, nationwide store of energy in a system that is going to need lots of it – we should use the recovery to better exploit them.

Enhancing flexibility

Secondly, the exceptionally low demand that we have seen during lockdown has prompted interesting questions about how we operate such a system and what flexibility we need going forward.

Over the last few months, the Electricity System Operator has introduced a new service especially for distribution-connected, smaller assets to provide flexibility and help manage the operability of our national system. (For more on this, see this recent blog.)

At the same time, they have had to negotiate a one-off contract to reduce generation from the Sizewell B nuclear plant, in parallel with National Grid’s existing mechanisms for ramping generation up and down to balance the system.

Government and National Grid have understood for some time that greater use of flexibility at distribution will be crucial in a Net Zero energy system and have been preparing for it. The last few months have accelerated that work.

Flexible strategy to be revised

The government will revise its strategy for a smart, flexible electricity system this year.

It is crucial that this supports such faster progress, as well as seizing the opportunities that significant investment in building renovations holds – anything that goes into improving our buildings as part of the recovery needs to be smart.

Finally, and far more uncertain, is how this crisis could change the balance of power across Whitehall and between central and local action. And what impact that could have on our ability to reach a smart, Net Zero system.

Local focus needed

Decarbonising the heating in our buildings and the steam for our industry needs an even greater sense of local place than decarbonising our power. We need to understand local conditions, the energy resources we have to work with locally and what the best path is to create local, flexible Net Zero systems.

Even before the crisis, this was a big ask of local authorities and others who have not traditionally been very interventionist in local energy, certainly compared to some other European countries, and who have had to manage an extremely challenging financial climate since the financial crisis.

Will the need to respond to the lasting impacts of Covid-19 in the care sector and other areas mean that this is now even further out of their reach – or will the recovery mark the start of stronger, resurgent local governance?

A new vision to come?

Similarly, the Industrial Strategy is now three years’ old and decidedly that of a former administration.

Will the government retreat from big ideas as it battles a recession, or will it use the recovery to launch its own vision for the UK’s future, a vision that could end up asking radical questions about the balance of central versus local power and the responsibility for Net Zero across government departments?

All we can say for sure is that progress towards Net Zero cannot wait and we will need to find our way towards a flexible, efficient decarbonised energy system whatever the lasting economic and social impact of Covid-19 turns out to be.

Let’s hope that by COP26 in November, we will be together again toasting success.


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