The government needs to act now if it is to optimise the benefits of a decentralised power network, says Andrew Robertson
We find ourselves at a crossroads in the 130-year history of the UK electricity system. Having emerged from the 19th century with a chaotic and centralised electrical heritage, followed by an established centralised order for most of the 20th century dominated by fossil fuels, we find ourselves in the midst of another revolution. Or perhaps several evolutions.
The UK will decarbonise its power sector over the coming decades, diversifying reliance on unabated fossil fuels and introducing a far greater proportion of low and lower-carbon generation. This is having two significant implications: first, we are shifting from a centralised system to a substantially mixed centralised/decentralised system; second, we are beginning to introduce smarter grid technologies to manage the system efficiently and effectively.
The issue of distributed generation has been largely neglected. A new and independent report from cross-party think-tank Carbon Connect makes 23 clear and practical recommendations for government, Ofgem, distribution network operators, local authorities and others with the future of distributed generation in their hands.
Foremost among these is a call for the establishment of a clear vision for distributed generation. Distributed generation has been seen as a 'Cinderella issue', and government should now move it to centre-stage alongside other key policy areas such as energy efficiency and smart grids. Promising signs have emerged from the Department of Energy and Climate Change in the last year, such as the formation of a Ministerial Distributed Energy Contact Group (DECG), an informal advisory group looking at distributed energy issues. However, it is now time to establish permanently the policy area at the centre of the department, not on its fringes.
So what are the next steps? The benefits of distributed generation are qualitatively well understood: as well as supporting the deployment of low-carbon technologies and improving system-level energy efficiency, it engages consumers in energy management, avoids or delays the need for costly network upgrades, and provides new capacity in the short term. If we are to see material progress for distributed generation, there must be a better understanding of its many and diverse benefits. This means quantifying its costs and benefits, and that is government's first task.
It is clear that the benefits extend beyond facilitating low-carbon power and make important contributions towards the challenges faced by the UK in its energy 'trilemma' of security, sustainability and affordability.
Laura Sandys MP, who chaired the group responsible for the Carbon Connect report, has commented: "Distributed generation presents the opportunity to quickly deliver much-needed new generating capacity and attract investment in energy infrastructure from new and diverse sources. This is important if the UK is to keep the lights on as supply margin falls from 14 per cent to 4 per cent by 2015/16 and as the UK seeks £110bn of investment in energy infrastructure by 2020."
It is not all about government however. On the 'front line', the current regime is showing signs of stress as distributed generation levels rise with the popularity of renewables. Distribution network operators, responsible for connecting new distributed generation to the grid, are swamped with distributed generation inquiries – some seeing increases of over 400 per cent in recent years. Less than 15 per cent result in successful connections.
Furthermore, new capacity is coming forward piecemeal because of a lack of information on where distributed generation is best sited. There are steps that market regulator Ofgem, distribution network operators and local authorities can take to fine-tune the current regime – reducing the unnecessary burden on distribution network operators and enabling a more intelligent, system-based development of power networks.
Distributed generation will become increasingly important. The questions are: can the current regime adapt and prevent this being a painful adjustment? And will the government make the most of this opportunity and unlock distributed generation's full potential?
Andrew Robertson is manager of independent forum Carbon Connect www.policyconnect.org.uk/cc