Latest evidence reveals local energy is key to setting a path for homes & businesses to net zero carbon

3rd July 2019

  • Local onsite generation and energy management from thousands of businesses and millions of homes key to a net zero future – customers should be placed at the heart of the way the UK meets its energy needsUltra-low carbon onsite combined heat and power, capturing otherwise wasted heat, could increase to 15 GW, the equivalent of more than 7 large power stations
  • Recycling of waste heat through heat networks will have a key role delivering clean, green cities heating 1.5 million homes by 2030 rising to 5 million by 2050
  • Energy efficiency could cut as much as £400 a year from households’ energy bills and cut £6 billion from business energy bills between now and 2030
  • £800 million of value to homes and businesses through helping to reduce peak power demand; a market that could triple in size to match other leading nations

The Association for Decentralised Energy (ADE) has launched new analysis, setting out the future of the UK’s energy sector. Reviewing the latest evidence, the ADE says, that a zero-carbon energy system can only happen when energy customers and local energy are placed at the heart of the way that the UK meets its energy needs.

The ADE’s analysis and vision responds to the Government’s recently adopted legally binding  Net Zero target, and the Committee on Climate Change’s Net Zero report, published in May.

The energy revolution will see the UK moving away from the traditional silos of gas and electricity and into an integrated system where power, heat and transport systems work together, designed around the user’s needs. It is a revolution where the customer uses but also generates, stores and even shifts the timing for the energy they need.

According to the ADE, the future smart, user-led system will replace the traditional purely centralised approach and enable users to participate in and benefit from the energy system.  The ADE sets out the case for an energy system with energy users are at is heart:

 

  • On-site flexibility and energy storage enables energy customers to support the grid. The market for flexibility services from homes and businesses is set to grow; The value for reducing peak demand by 5% alone is estimated to be worth at least £800 m if unlocked for consumers.  Flexibility helps us to keep the lights on with a reduced need for investment in generation and wires: if we achieve comparable levels of flexibility to other leading countries, peak power demand could be reduced by up to 15% by energy users. Over half of domestic, a third of commercial and almost a quarter of industrial energy demands can be flexible (6). Using this flexibility to help manage the power system drives down cost and provide new revenues to energy users.
  • Widespread efficiency measures deal with the UK’s leaky housing stock, slashing household energy bills by up to £400 a year, about a third off their current annual energy bills.
  • Driving business competitiveness through investment in cost-effective energy efficiency technologies and industrial processes could cut £6 billion from energy bills between now and 2030.
  • By 2030, up to 1.5 million homes could be heated by heat networks, and by 2050 this number could be more than doubled meeting almost a fifth of total heat needs and 5 million homes.  Heat networks deliver cost effective, low carbon heat, in the form of hot water, from the point of generation (usually an energy centre) to the end user through a network of insulated pipes. These networks will unlock a range of low or zero carbon heat sources, including waste heat that we currently have no use for.
  • Flexible combined heat and power (CHP) located  onsite at businesses and using the heat that is normally lost could triple from over 5 GW today to over 15 GW by 2050, the equivalent of 7 large power stations. All this CHP would use low carbon fuels in line with the Net Zero goal.

 

Dr Tim Rotheray, Director of the ADE said: “Whether through onsite generation, storage, energy efficiency, capturing waste heat or smart vehicle charging, the next stage of the energy revolution centres on the energy user.  From homes to industrial sites, we need to help energy users drive a dramatic change in our energy system. Those same users will benefit from lower bills, cleaner air and even a rebate on their power bill for helping the system. Facing the climate emergency is a challenge for everyone. Our analysis shows it can be an opportunity for everyone too.”

 

Lord Deben, Chair of the Committee on Climate Change (CCC): “Local onsite generation and energy management will play a central role in delivering the UK’s net zero carbon future.  Giving customers the power to help drive the UK’s low carbon transition is vital and we need credible UK policies, across government, that inspire a strong response from business, industry and society as a whole.”

 

The transition from the UK’s decades-old, inefficient and purely, centralised system is already happening at a pace:

Local energy systems:

o   We already have 500,000 homes connected to heat networks, saving connected households an average of £100 per year compared with using a gas boiler.

o   There are 5.8 GWe of highly efficient combined heat and power (CHP) systems across 2,000 sites in the UK.  These CHP plants provide 6.4 % of all the UK’s electricity generated and 42 TWh of heat – around 7% of total UK heat demand and saved 10 million tonnes of CO2 in 2018.

Customer owned energy generation and energy efficiency:

o   Solar power can be installed on homes and businesses meeting their needs and nearby communities. Between 2013 to 2017 solar has grown by 330% from 499 to 2.1GW compared to centralised generation which has fallen by 8% over the same period. There are around 1 million solar PV installations with a capacity of less than 4kWe – the sort of size you see on the roofs of homes across the country. That is the equivalent of two large power stations.

o   UK energy use decreased by 10% between 2000 and 2014.  Without energy efficiency improvements, economic growth over the period would have resulted in energy use increasing by 6%.

 

And the UK can go further through better use of smart technologies:

  • Smart and flexible energy systems, using the ability of customers to respond to peak grid energy demands by either reducing their energy usage or selling back their energy, will be vital in this new energy system.  Onsite smart energy, using technologies such as smart meters has the potential to grow and help reduce GB peak power demand by up to 15% (16) . Energy users managing their energy to reduce UK peak power demand by 5% would reduce the power system cost by £200m a year and give £790m a year in of consumer benefits.

 

Businesses are already making this happen across the UK, through: thousands of district heat systems; onsite combined heat and power generation plant at over 2,000 sites; improving the energy performance of millions of homes and business premises; and working with customers to offer flexibility services to the system.

 

However, for the UK to achieve net zero, the ADE, is calling on the Government and the regulator, OFGEM to allow energy customers to fully realise the benefits from this energy revolution through:

○     Opening up access to  markets to ensure all homes and businesses can be paid, just like power stations, for helping to keep the lights on and the grid stable though onsite generation and energy management. This may be through moving their energy use to different times of the day, permanently reducing demand through efficiency, or providing very short term power system stability through onsite batteries or demand flexibility.

○    Unlocking infrastructure investment in heat networks to recycle wasted heat in Britain’s towns and cities. This has already been done in other energy networks and needs to be extended to heat through a similar regulated investment framework. One that gives heat energy customers clear rights and protections and drives down the cost of heat.

○    Efficiency requirements for new power stations to ensure they capture wasted heat for industry, businesses and heat networks.

○    A clear road map to deliver the Clean Growth Strategy promises of EPC C for all homes and a 20% improvement in business energy efficiency, including robust, enforced minimum efficiency standards, fiscal incentives and public sector action that sets a clear example for others to follow

 

Dr Tim Rotheray, Director of the ADE said: “Local energy is growing at pace, and has the capacity to expand rapidly.  If Government puts customer led energy at the heart of its policy making and works alongside business we can put power back into the hands of customers and meet our net zero in a fair way.  Saving customers money, and delivering radically cutting CO2 emissions. Now is the time to focus on the role of local energy as key alongside other energy solutions, safeguarding the UK’s energy future.”

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