There’s a Change of Energy in the Air and We’re Well Placed to Take Advantage21 December 2017
Peter Emery, our Board member and CEO of Electricity North West talks about the changing energy landscape and how our area could take advantage, as part of our economic strategy refresh.
The energy landscape in the UK is changing and it’s not showing any signs of slowing down. Whilst it’s not clear what things will look like in 20 years’ time, there’s already some firm indicators of the direction of travel.
The technology for using hydrogen as a large scale fuel source and to power cars is here, de-carbonisation and de-centralisation of energy production is moving forward and new energy storage technologies are advancing.
The question is no longer if change will happen or when, but at what pace? And, how can we be best placed to take advantage?
The signs are quite encouraging. But first let’s look at what’s happening.
Energy generation is shifting
Firstly, there is a change from fossil fuels to low carbon energy generation. Over the last five years we have seen a marked shift towards renewable energy, coinciding with the launch of next generation nuclear power. Investment in new fossil fuelled generation has stopped abruptly, with the exception of small scale diesel generation installed to provide network support.
The infrastructure is changing
In parallel with this, the infrastructure required for power generation and electricity distribution is changing.
Many renewables (particularly solar power), are now connected directly to regional distribution networks in the form of small scale plants or equipment, installed on the end user’s premises. These end users cover the entire range; from industrial and commercial, through to SMEs and domestic home owners.
The old established centralised system – based on large generators, feeding a centrally managed UK wide transmission system – and then on to largely passive regional networks, is being turned on its head.
Energy generation is decentralising
De-centralisation of energy generation is set to continue such that up to 50% of our capacity could be small scale and connected to the regional networks inside 10-15 years.
This de-centralisation is encouraging the growth of small, independent electricity networks in city centres and small communities. For the more ambitious, it’s also providing the opportunity to consider the local integration of both heat and electricity, which increases efficiency by reducing waste. Storing this decentralised energy is key to doing so.
Early stage storage technology is expensive. However, it’s starting to be deployed alongside renewable energy. Early movers are exploring the commercial opportunities to provide network support or enable further intermittent renewable generation.
Distribution network operators are in the process of taking greater operational control of their networks, optimising them and ensuring system stability.
Key to facilitating de-centralised energy generation will be lowering the cost of those wishing to connect to these networks. Building some regulations to help facilitate decentralisation wouldn’t go amiss either.
So what does this all mean for our area?
Here’s some food for thought.
Success in the energy business relies upon seizing every competitive advantage available. These advantages range from natural resources to economies of scale. In a recent Government tender (summer 2017), two offshore wind farms were awarded contracts at prices broadly in parity with the subsidy free traded electricity price. This bodes well for the future of both offshore and onshore wind and Yorkshire is well placed to capitalise on this both locally (wind resources) and across the world (manufacturing economies of scale).
Our rural geography shows potential
The geography of North Yorkshire could provide opportunities for the development of local community projects. There’s no shortage of villages and small towns that could benefit from working together to develop generic models for local renewable energy projects with integrated power and heat networks. Potentially transport for domestic situations too.
Solar power continues to reduce in cost and improve in performance. If this trend continues coupled with similar improvements in storage technology it could be the catalyst for community energy projects both large and small.
We have the infrastructure to help facilitate demand
If the demand for electric vehicles takes off, there will be an urgent need for additional infrastructure and generation capacity. This might stimulate the construction of new large scale gas-fired electricity generation which can be built relatively quickly versus the nuclear alternative.
The region is well placed to capitalise on this using existing transmission grid connections, a legacy of the local coal-fired power stations.
There is a history of change in the energy industry associated with ‘game changing’ events such as new sources of energy, new types of energy demand or large changes in price, both upwards or downwards.
Whilst there are many uncertainties, it’s clear that the de-carbonisation and the de-centralisation of our electricity system is underway and this will provide opportunities for our region. The trick is to be aware of them, respond quickly when the time is right and watch out for game changers.
One such game changer is the emergence of hydrogen as a large scale fuel and to power vehicles. Hydrogen gas could also become a source of renewable energy storage, negating the need for batteries.
Another game changer is whether or not electricity storage or battery technology can progress fast enough to facilitate the needs of the mass production of electric vehicles and domestic energy storage.
We need to make sure that the technology is in place to facilitate de-centralisation, that the barriers of cost are removed and that regulations are in place to help the process where possible. We’ll also need to consider how we can future proof new investment, by looking at long term energy strategies.
Change is happening on the energy landscape, there’s no doubt about that, but how fast will it develop and will we have the tools in place to benefit fully?
Did you find this think piece interesting? We’ve got some questions you might find interesting too.