Recent government announcements are set to have significant impact on the energy industry and the operational landscape for utilities companies. Chris Evans looks at what the future has in store.
We’re set for a New Year of uncertainty, not resolution, when it comes to the UK’s energy landscape following three major announcements by the government as 2017 drew to a close. October’s Clean Growth Strategy was heralded as paving the way for low carbon opportunities; but it was followed by the Budget and the Industrial Strategy, both of which seemed to undermine the initial promise for sustainable energy projects.
The Clean Growth Strategy explained how the country can benefit from low carbon opportunities – making buildings more energy efficient, shifting to low carbon heat sources, increasing use of electric vehicles (EVs) and transitioning industry to clean fuels.
However, the November Budget failed to detail the way government intends to meet these commitments. The Chancellor confirmed there would be no fresh funds for new renewable energy projects levied through electricity bills until 2025, and little detail was offered on taxing carbon dioxide emissions from the power sector. Moreover, in December, fears the government seemed reluctant to put its money where its mouth is became reality. Although the Industrial Strategy highlighted the potential for Britain to pursue green energy projects, ministers got cold feet when it came to investing in a large tidal power scheme planned for Swansea.
This ‘blowing hot and cold’ leaves us in a position of uncertainty over the future of the country’s energy infrastructure in 2018 and the disconnect between proposal and policy has left many questioning the UK’s low carbon future.
Driving towards an energy dilemma
One area where the government’s commitment is clear is to EV technologies, with £400m investment in the charging infrastructure in the November Budget. However, the rollout of EV charging points across the UK will bring to a head a fundamental challenge in terms of availability of power. The National Grid has warned that EV owners may have to choose between boiling a kettle or charging their car. As demand for power grows, we’re increasing the pressure on our already overloaded National Grid. Whilst theoretically, capacity to provide additional power can be facilitated in the short term, over the long term this poses more of a challenge.
Higher EV uptake in certain areas combined with lack of infrastructure investment has the potential to create imminent and significant local challenges, including a greater likelihood of brownouts. It’s all too easy to overload the grid, as was shown recently when electric heaters given out during a gas outage caused the local transformer to blow. This fragility in supply is bad news for businesses who require greater energy security to meet the UK’s bold economic growth plans.
It is disappointing that government did not give further clarity in the November Budget on how it plans to progress new renewable energy projects. By announcing no new support for projects post-2020 and a freeze on carbon taxes, government seems to be turning its back on the renewables proposals it outlined just the month before. This lack of commitment could see a hiatus in much-needed infrastructure development, which could derail the whole plan before it even gets off the ground.
One solution could be a growth of decentralised, clean energy generation, creating less reliance on the grid. Installing power supply solutions – such as waste to energy plants, PV or wind turbines – would secure future energy supply, go towards meeting environmental targets, minimise landfill and maximise the potential of low carbon technologies.
For this to work effectively, however, priority must also be given to strengthening our energy infrastructure, which is struggling to adjust to the integration of renewable generation schemes. This is increasing the cost of low carbon generation and preventing otherwise viable low carbon schemes from being developed. Distribution Network Operators (DNO) are heavily legislated, partly through EU rules, and are severely restricted in their ability to invest in the network. Brexit presents an opportunity for these restrictions to be relaxed, allowing the flexibility in investment the grid so desperately needs.
The UK also has an opportunity to reduce heat related carbon emissions with District Heating Networks, particularly those that could utilise wasted heat from industrial processes and power stations. The Heat Networks Delivery Unit (HNDU) estimates that 43% of UK heat demand could be met by district heating networks by 2050. Given the energy intensity required to generate heat, decarbonising and utilising wasted heat has substantial potential to reduce UK emissions as part of a national Clean Growth Strategy.
Outlook for 2018
One of the key intentions of The Clean Growth Strategy is to escalate our economic growth whilst also ensuring the UK continues to lead in the sustainable energy arena. Developing a comprehensive set of policies to accelerate the pace of ‘clean growth’ is admirable but was quite rightly labelled as “ambitious”.
If we are to achieve the government’s aim, we cannot ignore the infrastructure improvements required to cater for the paradigm shift in the UK’s energy landscape going forwards. We must take urgently needed steps to create a more robust infrastructure to serve the UK’s business interests well into the future.
Our transport, energy and communications networks are becoming increasingly and inextricably linked with developments in the built environment, and a cohesive UK-wide strategy is vital. Cross-sector collaboration between government, the utilities sector and wider industry is essential to ensure the UK continues to grow and flourish in the emerging brave new sustainable world.
Recent government announcements are set to have significant impact on the energy industry and the operational landscape for utilities companies. Chris Evans looks at what the future has in store. We’re set for a New Year of uncertainty, not resolution, when it comes to the UK’s energy landscape following three major announcements by the government as 2017 drew to a close. October’s Clean Growth Strategy was heralded as paving the way for low carbon opportunities; but it was followed by the Budget and the Industrial Strategy, both of which seemed to undermine the initial promise for sustainable energy projects.