Earlier this year Energy UK – the trade association for the UK energy industry representing over 80 suppliers and generators of electricity and gas for domestic and business consumers – stated that they will campaign for low carbon alternatives for the first time, marking a massive change in a group that has been viewed as a big defender of consumption of fossil fuels.
Chief Executive of Energy UK Lawrence Slade, who took the reins of the association just last year believes that the shift in thinking is vital in order to not be left behind in a world calling for more renewable low carbon energy sources.
In a piece published by the Guardian earlier this year, Slade was quoted saying that a shift towards something resembling Germany’s Energiewende would be the „sensible” path for UK to follow, however stressing that such a change should be of UK’s own instead of a direct imitation of the German implementation.
Germany’s transition to a low carbon, environmentally sound, reliable, and affordable energy supply Energiewende relies heavily on energy sources such as wind, photovoltaics, and biomass. It also relied heavily on energy efficiency, and energy demand management for its success. Germany aims to retire coal fired generation and gradually phase out nuclear reactors in the country by 2022 under with Energiewende.
This program is not without its downsides as critics point out that electricity prices have risen, and the profitability of Germany’s largest power companies have declined. A scathing Forbes column on the subject highlights some of the biggest criticisms the German low carbon transition faces.
However Energy UK while taking a positive stance on building a low carbon economy wants more long-term thinking and financing and is calling for details on the levy control framework of subsidy levels to be published so that investors have a clear picture up to 2025.
Energy UK has produced a report titled „Pathways for the GB Electricity Sector to 2030” with the help of accounting firm KPMG, which was hailed as a significant step for emphasising on the need to help renewables, reduce energy demand and move away fast from some fossil fuels towards a low carbon future.
Chief Executive of Energy UK, Lawrence Slade’s foreword in the report Pathways for the GB Electricity Sector 2030 has been reproduced below.
Here in the UK, we rely on electricity to flow at the flick of a switch. So, it’s easy to overlook and underestimate the complexity of the market that allows it to happen. In order for the electricity sector to operate smoothly and effectively, it is important that industry and government work together putting in place long-term policy that meets the needs of today and supports the innovation needed to deliver the electricity for tomorrow.
Now, and in the future, the energy sector needs to be in sync with all its customers: domestic; industrial; and commercial. Nothing stays the same and, as needs and attitudes to energy change, so will demand. And, as electricity generation and supply needs long-term investment, it is vital the industry knows as much as it can about how great the demand will be in the future. It is essential the industry gets a clear signal of the focus, direction and speed of travel to 2030 and beyond.
However, this spans more than the power sector alone. We need to take associated sectors – such as heat and transport – into account too. We cannot continue to look at these industries in isolation: a whole systems approach is needed.
In order to meet binding decarbonisation targets, it is essential government gives industry the necessary policy to achieve these targets. The power industry understands it will bear the bulk of the heavy-lifting. But, as energy, transport and heat become much more intertwined, each will have its own impact on the power sector and the level of investment – and timeframe over which it is needed.
As our future energy choices change, the country must consider – with every decision we take – how we maintain the delicate balance between security of supply, affordability and decarbonisation.
The energy system is moving to a more decentralised model – with strong roles for wind, solar and storage. This means an important role for policy to continue supporting these technologies until they can stand alone without subsidy. In the next few years the solar panels on our homes are expected to be able to compete with traditional sources of electricity. We are seeing falling costs for electricity storage. It has the potential to revolutionise the way customers take control of their energy use but it will also play a vital role in balancing the system and creating greater flexibility in supply. But again the policy and regulatory framework must be in place to unshackle this technology.
The country’s energy mix is changing as the government looks to remove all coal from the system by 2025. The absence of coal generation – in the past, a mainstay of British energy – will leave room for lower-carbon fuels, like new gas, biomass and wind, to play a greater role in a flexible energy system. We have the opportunity to see advancing technologies take up more of the mix – including storage, solar, wind and tidal.
There is an urgency for investment as the economics of traditional large-scale generation makes way for a newer model, which will see these plants complemented by decentralised technologies. The message is clear: companies are ready to invest – but they need government to put the right framework in place. Since Energy UK started work on this report in summer 2015 almost 8.5 GW of traditional capacity has closed or will soon be closing, which demonstrate the urgent need to get investment flowing.
As the UK decarbonises the electricity system, there will be costs and challenges along the way. So the industry must take its customers with it. The goal is just too important to be missed.
The cheapest electricity will always be what we don’t use. Energy efficiency remains the most cost-effective way to help cut energy bills and carbon emissions. And much more can still be done. Government needs to put policies in place that: encourage improvement; help people struggling with their bills; and kick-start – by a combination of fiscal and regulatory measures – the-able-to-pay market.
There will be renewed focus on customer engagement; on delivering services that meet individual needs. By 2020 every home will have a smart meter allowing us all to take control of the energy we use in ways not previously possible.
The energy world is changing to meet the needs of our busy lives. And, while the future is an unknown land, one thing is certain – Britain’s energy sector is ready to take up the challenge and to work both with customers and other sectors. The members of Energy UK believe together we can tackle the challenges of global warming while delivering, year on year, affordable and reliable energy at the touch of a button. However, no sector can do it alone or without the right support from government. This report sets out a vision and a pathway but Britain needs the policies in place to take it from the page to the practical future we all want.
Lawrence Slade – Chief Executive / Energy UK – is a speaker at the 5th Annual Renewable Energy Finance in Practice Forum.