In the UK, energy policy space the gap between mega top down design and micro bottom up initiatives – particularly the space covered by municipal authorities – has become more evident.  This has highlighted the omission of the impact of non-incremental and social equity issues in UK energy policy design.  There has also been a substantial increase in the business models and actors who have until only recently played a passive or marginal role in energy system change.  The implementation of an increasingly broad suite of low carbon policy and energy systems research has also allowed a better idea to be developed as to the implications of attempting to transform the UK energy system in such a tight timescale in a liberalised and regulated energy market.

Many of the present suite of policies and research are, however, based on a set of mega trends and uncertainties established in scenarios developed some time ago.  There is a need to integrate the most recent developments into the work of ERP, those of the members and the broader energy space.

The project aim is to: identify what the main uncertainties that will impact international and UK energy sector development which might need to be considered over a number of timeframes.

Project Outputs

The project will deliver the following:

• A living document will be developed on an ongoing basis on a shared site as the project develops;
• Changes Slide Decks and Summary paper for assessments undertaken of different sectors of the energy system;
• Scenarios from key issues picked up in the horizon scanning component of the project will be produced;
• Energy, Policy and Financial Modelling based on one of the scenarios will potentially be produced by The Grantham Institute, UKERC and the Carbon Tracker Initiative, respectively; and
• Overarching Final Report in the format of the ERP Energy Innovation Milestones Report with accompanying slide deck targeted at policy makers and industry.The ERP Energy Innovation Milestones work might be turned into a Grantham Briefing Note to appeal to a broader policy audience.

Conclusions & Recommendations

TBA

Follow-up activities & Impact

The work is to be synchronised with the Committee on Climate Change’s 5th Carbon Budget (2028 – 2032) recommendation for December 2015 and the Carbon Plan that will be developed in government to meet the carbon budget in Q1 and 2 in 2016.

Steering Group

Project Chair: Professor Jim Watson – Research Director UKERC

Steering Group:

• Dr Jeff Hardy – Ofgem
• Dr Geoff Darch – Atkins
• Jim Maltby – DSTL
• Alyssa Gilbert – Grantham Institute

Steering Group Advisor:

• Dr Wendy Schultz – Infinite Futures

Further information

Please contact ERP.

The project undertook some modelling and analysis of the GB electricity system in the light of the carbon targets set by the Committee on Climate Change. Firstly a brief examination was made of the German and Irish markets with the hope of learning from their advanced penetration of variable renewables. Secondly a new model, BERIC, was written to simultaneously balance the need for energy, reserve, inertia and firm capacity on the system and its findings compared with simpler stacking against the load duration curve. The intention was to assess the need for flexibility on the system but some broader conclusions also emerged:

Conclusions

A system with weather dependent renewables needs companion low carbon technologies to provide firm capacity. This firm capacity could be supplied by a number of technologies such as nuclear, biomass or fossil CCS.

Policy makers and system operators need to value services that ensure grid stability so new providers feel a market pull. Currently some necessary services are provided free or as a mandatory service. However traditional providers (fossil plant) are disappearing at the same time that demand is growing. New providers can’t develop in the absence of a market signal.

A holistic approach to system cost would better recognise the importance of firm low carbon technologies and the cost of balancing the system. The value to the system of a technology is dependent on the existing generation mix and the services which that technology can provide. This means that a technology cannot be characterised by a single number such as levelised cost of energy.

Recommendations

A much deeper examination of the issues raised here is needed but must employ a whole systems approach.

New zero carbon firm capacity is essential to decarbonisation but leading technologies such as nuclear and CCS require long lead times so meeting 2030 targets requires action today.

DECC and National Grid should consider how new providers of ancillary services can be given the financial comfort needed to underpin their development and deployment before traditional providers disappear.

This work supports some key recommendations from the European Commission’s Smart Grid Task Force, in particular:

• Equal access to electricity markets for all providers
• Contractual simplicity and transparency
• Standardised measurement of flexibility
• Incentives to grid operators to enable flexibility for meeting 2030 targets rather than focussing on short-term optimisation
• Improved price signals for providers of flexibility

Follow-up activities

A workshop was held in November to test these initial conclusions. Further work and modifications to the modelling will take place in response to that. Talks have also been given to the 14th Annual APGTF Workshop, the Gas to Power UK Forum 2014 and the IChemE workshop at the Grantham Institute for Climate Change.

Working Group

Project Chair:

Peter Emery – Drax

Steering Group:

• Phil Lawton – National Grid
• Nick Bevan – DECC
• Nick Eraut – ETI
• Ed Sherman – BIS
• Alexandra Malone – SSE

Steering group advisor

• Dame Sue Ion – RAEng

Further Information

Please contact  ERP .

Conclusions & Recommendations

• There are examples from around the UK and from other countries in which community energy has delivered benefits in the energy sector (public acceptance of change, and engagement with energy), as well as wider social benefits for communities.

• There is a need for improved assessment of projects in the UK, and improved understanding of community energy’s role in the UK in order to determine whether its costs and benefits (and their distribution) justify addressing the challenges that it faces. We recommend:
  • improving assessment of projects, and providing guidance for decision makers;
  • facilitating studies by providers of technology and services; and
  • conducting studies to review existing projects, monitor new projects, and trial alternative arrangements for local energy.

• There are opportunities in the short-term to increase the uptake of projects (including for conducting studies) and to improve the delivery of expected benefits. We recommend:
  • provision of tailored advice to project groups; and
  • provision of opportunities to delegate administrative tasks.

Follow-up activities

We will work in autumn 2015 with community energy support groups, policy makers and research funders to progress our recommendations, focusing on the proposed research.

Steering Group

Steering Group chair:

• Naomi Luhde-Thompson, Friends of the Earth

Steering Group:

• Anna Wieckowska, Hitachi
• Laura Morris, ETI
• Christian Inglis, Innovate UK
• Chris Noyce, ESRC
• Fiona Booth, DECC
• Ron Loveland, Welsh Government