Energy policy in transition: evidence from energy supply and demand in the UK

Whilst much of Europe is turning to supplier obligations in order to compel energy companies to deliver energy efficiency improvements, the UK, after 18 years of using such schemes, will from 2013 have a financing scheme as the central delivery mechanism, relying fully on the market rather than government intervention. The remaining supplier obligation will focus on the areas that financing is not expected to fully support: more expensive insulation and help for those with no access to finance. In addition, the publicly funded fuel poverty policy is to be terminated: for the first time since 1978, there will be no taxpayer funded energy efficiency programme for the most vulnerable. These changes represent the biggest shift in the history of energy efficiency policy in the UK since the first and second oil crisis. Yet, despite appeals from many stakeholders, no period of transition will exist between the end of the current and the start of the new policies. The impact is likely to be stark: the expectation is for a dramatic reduction in the delivery of cost-effective energy efficiency measures leading to a big fall in employment and carbon reduction.Plans for the supply-side are equally profound. In order to create a market with greater capacity and to encourage nuclear investment, the Government has unveiled plans for electricity market reform (EMR). For renewable generators, EMR will mark a change in policy support, from a quantity-based green certificate mechanism (the Renewables Obligation) to a price-based feed-in-tariff approach. In contrast to the approach on the demand-side, Government is allowing a three year transition between these schemes. The paper outlines the reasons for the different approaches to policy continuity across the demand and supply side. It highlights what we see as key considerations for policy makers when planning a transition from a supplier obligation to a finance mechanism. We assess the implications of this shift in terms of carbon reduction effort, the industry and fuel poverty

The governance of retail energy services in the UK: a framework for the future

This Working Paper is the first output of research on retail market governance in the theme on “Decision making”. Retail markets are the main commercial interface for most people with the energy system. Current retail energy market governance in the UK is characterized by a quite complex mix of arrangements that have evolved over time. The scale of governance is increasingly complex, for both technical and political reasons, with a trend towards multi-level governance. The role of EU institutions has increased and this seemed set to continue until the EU Referendum; some energy governance is now devolved (although to different extents in Scotland, Wales and Northern Irelandii); and some local government is beginning to play a more active role. However, the principal level is still the nation state, and that is therefore our predominant focus

Energy saving obligations—cutting the Gordian Knot of leverage?

International audienceBetter leverage of public funding is essential in order to trigger the invest-ment needed for energy efficiency. In times of austerity governments in-creasingly look at policy instruments not funded by public expenditure and Energy Savings Obligations represent one option. Because Energy Savings Obligations are paid for by all energy customers, the degree to which they are able to raise additional private capital for energy efficiency invest-ments is crucial with regard to the financial burden on consumers. In this paper, we systematically assess how successful Energy Savings Obliga-tions were in levering capital from parties other than the obligated entities including private investors and other public bodies. We analyse three countries with substantial experience with Energy Savings Obligations, identify the main design differences and the effect this has on the degree of leverage. We conclude that the design of Energy Savings Obligations largely determines the degree of leverage and that that there appears to be a trade-off between high leverage and additionality

A Smart, Flexible Energy System : The UK Energy Research Centre's (UKERC) Response to the Ofgem / BEIS Call for Evidence

We welcome the attention being paid by Ofgem and BEIS to the need for flexibility in Britain’s electricity system. In our view the main reason to support electricity system flexibility is that it can help minimise the costs of meeting the UK’s statutory climate targets whilst ensuring that system security is not compromised. The electricity system’s ability to adapt to changing demand in timescales of years down to minutes and varying availability of power from different resources will be extremely important to meeting these policy goals. Furthermore, action is needed so that those consumers that are best able to adapt their patterns of use of electricity have sufficient incentives and rewards for doing so. One manifestation of the main goal in accommodating future generation and demand is an objective to maximise the utilisation (across each year of operation) of electricity system assets, i.e. generators, network components and storage facilities. Whilst the title of the call for evidence focuses on ‘a smart, flexible energy system’, most of the raised relate to the electricity system. We have therefore focused most of our responses on electricity rather than the energy system as a whole. Our responses are selective. We have only answered those questions where we can offer relevant evidence, based on our research and expertise

Reaching a 1.5°C target : socio-technical challenges for a rapid transition to low carbon electricity systems

A 1.5°C global average target implies that we should no longer focus on merely incremental emissions reductions from the electricity system, but rather on fundamentally re-envisaging a system that, sooner rather than later, becomes carbon free. Many low-carbon technologies are surpassing mainstream predictions for both uptake and cost reduction. Their deployment is beginning to be disruptive within established systems. ‘Smart technologies’ are being developed to address emerging challenges of system integration, but their rates of future deployment remain uncertain. We argue that transition towards a system that can fully displace carbon generation sources will require expanding the focus of our efforts beyond technical solutions. Recognizing that change has social and technical dimensions, and that these interact strongly, we set out a socio-technical review that covers electricity infrastructure, citizens, business models and governance. It describes some of the socio-technical challenges that need to be addressed for the successful transition of the existing electricity systems. We conclude that a socio-technical understanding of electricity system transitions offers new and better insights into the potential and challenges for rapid decarbonization. This article is part of the theme issue ‘The Paris Agreement: understanding the physical and social challenges for a warming world of 1.5°C above pre-industrial levels'

The diversity of residential electricity demand – a comparative analysis of metered and simulated data

A comparative study between simulated residential electricity demand data and metered data from theUK Household Electricity Survey is presented. For this study, a high-resolution probabilistic model wasused to test whether this increasingly widely used modelling approach provides an adequate represen-tation of the statistical characteristics the most comprehensive dataset of metered electricity demandavailable in the UK. Both the empirical and simulated electricity consumption data have been analysedon an aggregated level, paying special attention to the mean daily load profiles, the distribution of house-holds with respect to the total annual demands, and the distributions of the annual demands of particularappliances. A thorough comparison making use of both qualitative and quantitative methods was madebetween simulated datasets and it’s metered counterparts. Significant discrepancies were found in thedistribution of households with respect to both overall electricity consumption and consumption ofindividual appliances. Parametric estimates of the distributions of metered data were obtained, and theanalytic expressions for both the density function and cumulative distribution are given. These can beincorporated into new and existent modelling frameworks, as well as used as tools for further analysis

Simulating flexibility, variability and decentralisation with an integrated energy system model for Great Britain

Energy system models allow the development and assessment of ambitious transition pathways towards a sustainable energy system. However, current models lack adequate spatial and temporal resolution to capture the implications of a shift to decentralised energy supply and storage across multiple local energy vectors to meet spatially variable energy demand. There is also a lack of representation of interactions with the transport sector as well as national and local energy system operation. Here, we bridge these gaps with a high-resolution system-of-systems modelling framework which is applied to Great Britain to simulate differences between the performance of decarbonised energy systems in 2050 through two distinct strategies, an electric strategy and a multi-vector strategy prioritising a mix of fuels, including hydrogen. Within these strategies, we simulated the impacts of decentralised operation of the energy system given the variability of wind and across flexibility options including demand side management, battery storage and vehicle to grid services. Decentralised operation was shown to improve operational flexibility and maximise utilisation of renewables, whose electricity supplies can be cost-effectively converted to hydrogen or stored in batteries to meet peak electricity demands, therefore reducing carbon-intensive generation and the requirement for investment in expanding the electricity transmission network capacity

Modelling transport energy demand : a socio-technical approach

Peer reviewedPostprin