renewable electricity

‘Fundamental’ changes needed to lower UK electricity carbon footprint, think-tank says

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Fundamental changes to the ways in which consumers use energy need to be encouraged in order to cut greenhouse gas emissions from the electricity grid, experts have said.

The study from Tony Blair’s think-tank Institute for Global Change anticipates a “hugely expanded” role for the electricity sector in the coming years as it becomes the energy source for much of our transport and heating – replacing fossil fuels such as diesel and natural gas.

However, the current electricity market is “not well placed to deliver these changes”, the study says, as it has been designed around fossil-fuel technologies. Current attempts to integrate new technologies involve “shoehorning” them into a market that is not designed for them.

The report - Powering Ahead: The Need to Reform UK Energy Markets, authored by industry experts Tim Lord and Phil McNally - recommends more incentives for consumers to invest in decarbonisation or alter their energy usage patterns to fit the demand flexibility that future electricity grids will rely upon.

“With more than 20 suppliers going bust in recent months, profound problems [have been exposed in the] design and regulation in the retail market,” the report states.

“In both the generation and retail markets, the response has been an ever-expanding role for government and a shrinking role for the market in making decisions, leading to accelerated decarbonisation but also centralisation, distortions and inefficiencies.”

The report recommends a shift towards a system that relies less on centralised planning from central government and a move towards a fundamental reorienting of the electricity market based around incentivising consumers to adopt a low-carbon approach to energy usage.

This could involve cheaper tariffs for off-peak times or encouraging consumers to charge their electric vehicles overnight and then feed unneeded power back into the grid from their cars during the day.

Other recommendations include changes to the consumer price cap to allow companies more flexibility to invest in new business models such as “energy as a service”, where energy providers offer a wider range of services rather than just trying to compete on price.

These could include management of energy use, such as when to charge your electric vehicle, the installation of energy assets such as insulation, and general advice on how to reduce your costs.

“The UK energy system is at a crossroads. While we have cut emissions rapidly in the last decade, we are on a path to a system which is over-centralised and inefficient,” Lord said.

“It is possible to deliver a flexible carbon-neutral system that encourages innovation and strikes the right balance between government intervention and liberalised markets to keep the lights on and costs down, but only if we act now to fundamentally reform our energy markets.”

In October, the National Grid warned that although will be enough electricity to meet the UK’s peak demand this winter, supplies will be tight.

This is largely due to historic rises in wholesale gas prices and a fire at a French interconnector that sent the cost of electricity soaring.

Yesterday, Ofgem announced it was levying a £158m fine against National Grid and Scottish Power Transmission due to delays to a major power cable linking Scotland’s energy networks with the rest of Great Britain.

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