27 July 2017
On Monday Greg Clark gave the transition to clean energy a long-overdue shot in the arm. Alongside trumpeting a substantial £250million investment in battery technology - a key component of a highly renewable energy system - he announced the intention to press ahead with changes to the way our electricity system is run. They're designed to hasten a 'smart' future - combining batteries, electric vehicles and appliances that manage their own use - to increase the amount of renewable energy we can use. Unlike yesterday's damp squib announcement on air pollution the Government's plans on clean energy have the potential to be genuinely radical.
Woven into these technological shifts now underway are the building blocks of not just a cleaner, but a more local, more democratic energy system. But they won't assemble themselves. We need to do that.
Fading are the days in which a cohort of towering power stations ran the game (and captured all the profits). Coming into focus is a new picture: one in which householders, communities, local authorities, schools and hospitals can own the means of energy production alongside private companies. The enabler is the precipitous cheapening of wind and solar power over the last decade to levels basically no-one predicted. The future of energy is arriving - we just don't know exactly what it will look like yet.
What does the public want? It wants a vested interest in its own energy provision - driving more efficient behaviour. It wants greater choice and responsibility at a local level. And it wants increased use of renewables to protect the environment. Don't ask me, ask Ofgem. The energy regulator's research found a strong public preference for an energy system of 'renewable communities' over the corporate, centralised, 'big power' model we're used to. That's revolutionary - and inspiring. Countries like Denmark and Germany show us it is possible.
Batteries, and smart grids, can be a big part of this - reducing our reliance on traditional 'thermal generation' (burning fossil fuels) for back-up capacity. But Monday's triumph is in conflict with a decision that preceded it by just a few weeks that never hit the front pages. A decision that shows it's far from game over.
A year or so ago, Government discovered that dirty diesel engines were winning public tenders to provide back-up electricity capacity. Not a good look these days. Diesel engines are connected to local networks (unlike big gas, coal and nuclear plants), so the Government took aim at rewards to local generators to make diesels less competitive. Ofgem announced recently they would be cut by up to 93%.
Problem is, those rewards are key to the emerging business models of battery (and other energy storage) projects - as well as providing benefits to local renewables such as wind power. Taking aim at local energy as a whole throws the baby out with the bathwater, undermining the public's long-term vision. In doing so, it confusingly works against the ambitious agenda that Greg Clark just unveiled.
We need to block dirty diesels getting public money - no question there. But there are other ways to do it, like putting a cap on how polluting generators receiving subsidy can be. So, what's going on?
Officially, Ofgem is unable to propose rule changes (despite being the regulator). A system of semi-self regulation leaves that to the sector - i.e., those being regulated. In a time of necessary, rapid change this throws up conflicts of interest.
Like this one.
Less money for local energy suits those who like the energy system just how it is. That's most of the big utilities (often referred to as the Big Six) and companies you didn't even know existed that have monopolies on the physical wires that move electricity around. Here's the catch: only they have the resources to show up to develop and vote on rule changes. Smaller players just can't get a look in.
The proposals to cut local energy rewards were raised by incumbent corporates. The panel that voted on them had a majority of members with big stakes in the status quo. There is fight in the old system yet.
Am I accusing the industry of a stitch up - or Ofgem of being hopelessly captured? No, that's too simplistic. This is also a story Government working against itself as the tensions of transition play out. But Ofgem's decision-making process can resemble a closed shop, dominated by powerful old-school players. We shouldn't be surprised when it resists reflecting the public's preference for a future (clean) energy system rooted in communities.
The opportunity local, smart and clean energy heralds to democratise our energy system and distribute its profits and benefits fairly needs us to be realised. We can start here: first, by urging Ofgem to rethink its decision on local energy. Second, by demanding reform to ensure it's not just big vested interests at the rule-making table. Third, by requiring Ofgem to drive towards our long term emissions targets.
It's time we changed who makes the rules. It must be the public and the climate front and centre, because the public and the climate demand it.