10 Energy Things I Like and Don’t Like – 30th November 2023

The opinions presented here are my own and do not reflect the views of Energy Systems Catapult or of any organisation that works with the Catapult.

Welcome to another attempt to recap (somewhat humorously) some of what has been happening in the UK energy sector over the past month – as always the format of this post owes a debt to the American sportswriter Zach Lowe. Let’s get into it.

1. Speeding up infrastructure delivery

Flying somewhat under the radar as part of the deluge of documents that were published alongside the Autumn Budget, was the government’s plan to speed up infrastructure delivery through planning and related reforms. All of the attention in the energy sector has been on the Transmission Acceleration Action Plan and the Connections Action Plan – both of which are important and very welcome. But this cross-industry plan arguably has the potential to be even more impactful.

There’s a lot in the document, covering both short-term actions and long-term ambitions. Sam Dumitriu from Britain Remade did a much better job of summarising it all in a thread on Twitter/X than I ever could. By no means is this a panacea for the UK’s struggles to build infrastructure quickly and efficiently – the really tricky questions, such as judicial review of planning decisions are left to the “we’ll look at it in the future” bucket of actions – but it’s a welcome acknowledgement from government that something must be done, and a step in the right direction. ??

2. Suppliers lack curiosity about their customers

Caroline Flint, in her role as Chair of the Committee on Fuel Poverty has chastised some energy retailers for a lack of “corporate leadership, responsibility and curiosity for what happens at the interface with customers, supplier or contractor”. Flint’s comments were made in the context of the scandal of forced installation of prepayment meters. But the general thrust of her message can easily be said to hold more widely – witness the number of suppliers who continue to miss their smart meter rollout targets and the increasing calls from suppliers to make smart meter installations mandatory.

This is a completely predictable outcome from an approach to smart meter rollout that has prioritised the technology over the consumer outcomes. As we run out of ‘early adopter’ / ‘early majority’ customers who would willingly accept a smart meter out of curiosity or an ability to engage with differentiated offerings, we are left with a large group of customers who mistrust the industry, and see little value in a device that comes with few personalised offerings – kind of like selling you an iPhone that can’t access the internet.

So much is hope is now placed on Market Wide Half-Hourly Settlement (when it finally arrives) to create the conditions for more targeted retail offerings. But without the culture shift to go with it, expectations are best left modest.

3. Isle of Wight digital twin

Under the Energy System National Digital Twin Programme, the Isle of Wight is progressing with developing a digital twin “demonstrator” project. The digital twin is expected to comprehensively map the island’s electricity system, with a particular ambition to inform learnings about the potential role of load control in delivering flexibility to the system.

Details are still being worked out – as is often the case with projects that are at the cutting edge. But islanded systems such at the Isle of Wight’s (pun very much intended) offer a test-bed for working these things out, with the hope that it would not only help manage a decarbonised local electricity system, but also that it would help firm up the case for rolling out digital twin technologies across the rest of the UK’s electricity system.

4. Ofgem sets eyes on a Future Regulation Sandbox

Ofgem has launched a call for input on its ambitions to expand its Innovation Link and ‘regulatory sandbox’ service. The sandbox has to date been focused on enabling innovators to test their products / business models while being temporarily exempt from rules that are blocking those innovations. Ofgem is now looking to use the sandbox to test regulations themselves – i.e. the sandbox will now be directly linked to questions about how the rules and regulations need to evolve to enable the energy transition.

The key shift Ofgem is signalling here is that it would be proactively driving the topics / insights that would be explored through sandbox trials, whereas historically Ofgem has been reacting to innovators’ interests. This echoes some of the sandboxes / regulatory experiments that are used elsewhere:

• in France, Commission de Régulation de l’Energie invites bids to run innovation trials on specific themes that it is particularly interested in learning more about (e.g. to explore the potential of synthetic methane in the gas system); and
• in Italy, the Autorità di Regolazione per Energia Reti e Ambiente permits time-limited exemptions from certain rules so that it can learn how regulations should adapt (e.g. the minimum size of a unit that’s allowed to participate in the balancing market).
• 5. An alliance for carbon accounting takes form

The Carbon Accounting Alliance was formally launched earlier this month, and very quickly grew in membership by about 300%. A diverse collection of organisations of different sizes, skills and focus areas, it will seek to raise the profile of carbon accounting, particularly with government. Whether an organisation whose members have such wide-ranging interests would be effective at making the case for more standardisation is still to be seen. As we at the Catapult have written about extensively, the current carbon accounting landscape is messy and confusing, and acts as a potential barrier to growth and to truly understanding how we’re progressing on the road to net zero. Consolidation would be welcome.

6. MCS Foundation, highlighting the gap in green skills

Research commissioned by the MCS Foundation found a general lack of awareness amongst younger people of the opportunities for clean energy jobs. The report highlighted the lack of information to school leavers, and a general underplaying of apprenticeships by careers advisers. The MCS of course has some skin in this game, but the findings of its research are nonetheless important.

Also essential is the need to bring in a diverse workforce into green jobs – which fundamentally involve a more varied set of skills (e.g. artificial intelligence and modelling to understand heat loss from a building). For households to have confidence in making major investment decisions and transforming their homes, they need advisors who are (i) experts and (ii) who are able to build trust.

7. NatWest launches a home energy hub

Speaking of trusted advice, NatWest has launched an online portal aimed at helping people navigate home retrofit decisions. House purchase (but also re-mortgaging) is seen as a critical point at which homeowners are more likely to make the transition towards a lower emissions home – be it through energy efficiency improvements, installation of low carbon heating, or both.

The service is inherently generic – it cannot match the personalisation offered by home retrofit assessments – and reliant on Energy Performance Certificates, despite their many known flaws. But it is another positive step, chipping away at the “wicked problem” of home decarbonisation.

8. OK Computer

The Department for Energy Security and Net Zero awarded ￡65 million to five projects in the latest round of its Green Heat Network Fund. Largest amongst the grants, and possibly the most interesting of the five projects, will be a new heat network serving a major new mixed use development in west London. The heat network, which is being developed by the Old Oak Park Royal Development Corporation, has the unique selling point of aiming to use waste heat from local data centres. Particularly in city centres, where residential and commercial facilities tend to be close to each other, such ingenuity is essential.

9. The UK and Germany sign an energy partnership agreement

Building on a recent partnership agreement that focused on hydrogen, the UK and German governments have signed a wide-reaching agreement that could pave the way toward multi-purpose interconnector projects in the North Sea (i.e. interconnectors that also connect to offshore generation sources).

This type of cooperation with Europe’s largest economy and one of the world leaders in the energy transition (Energiewende), is an important step towards addressing the global elements of the climate crisis. It would be fantastic if there was a way to have all European countries sign on to similar agreements. Perhaps a “union” of European Member States…

10. Ireland to trial renewable hubs

The Irish energy regulator, the Commission for Regulation of Utilities (CRU), has authorised pilots of renewables hubs that are intended to alleviate issues with connecting to the distribution grid. Selection of suitable sites would be made by ESB Networks, the distribution system operator, and could include community energy schemes. The CRU has also authorised a different cost recovery methodology for the pilots, with the projects in question only liable for the shared assets of the advanced network build (on a per-MVA basis), while all other network costs would be socialised through the standard distribution network charges. This approach has some similarities to the ‘renewable energy zones’ that are being developed in Australia.

Like most developed countries that are undergoing the transition towards a renewables-heavy electricity system, Ireland has had issues with managing the grid connection queue. For a decade now, the CRU has tried different schemes, incentives and investment allowances to address the problem at both the distribution and transmission levels. But there are two reasons this latest move is particularly encouraging: first, the hubs provide a clear signal for investment ahead of need, which can be tricky to undertake under Ireland’s regulatory model; and second, by deliberately carrying out a regulatory experiment, both the CRU and ESB Networks are showing a willingness to learn rapidly and to adapt.