The value of improved energy efficiency in decarbonising the power sector

Andrew Warren, chairman of the British Energy Efficiency Federation, writes in the March issue of Energy in Buildings & Industry that the power sector has been decarbonising rapidly this century. But this is due more to energy efficiency than a switch to alternative supply sources


It may be under-valued but efficiency provides a win-win

Breathless headlines greeted the welcome news that, since 2010, the UK has been decarbonising emissions from the power sector at a faster rate than anywhere else in the world. The rejoicing was prompted by a new survey “Electric Insights” issued by Imperial College London.

Cue the inevitable pictures of windmills and biomass power stations. Cue intense concentration by commentators about how the country’s generators have led the transition away from coal and gas to renewable sources.

Sadly, nobody chose to illustrate the story with pictures of LED lighting, or of super-efficient electrolysis components.

Which is very misleading. Because statistically, the biggest decarbonising driver of the lot has not been to do with switching supply sources. It has happened entirely as a result of investments in more energy-efficient technology.

As the Imperial College report concludes: “It should be of little surprise that carbon pricing, coal and wind were big drivers (of change). However, these were all dwarfed by reductions in demand – reinforcing the often-overlooked mantra that efficiency is the first fuel that should be considered.

“But, whereas carbon prices and coal retirements pushed up wholesale power prices, efficiency improvements reduced them. Demand reductions genuinely pushed down both prices and environmental impact. This is a rare win win.”

Throughout this century primary energy consumption in the UK has been falling. And falling. And falling. It is now over 20 per cent lower than it was in 2000. In the case of the main heating fuel, natural gas, the impact has been even more pronounced. Sales have dropped by approaching one-third. Largely due to better insulation and more efficient boilers and heating systems.

Yet there has long been an underlying assumption that the trend towards decarbonising the economy means that electricity will become responsible for a larger percentage of the fuel mix. That is undeniably occurring. This presumption has led to tax breaks galore offered up to suppliers – contracts for difference, depletion allowances, carbon floor prices, and capacity market auctions. No equivalents exist for the demand side investments.

But the critical question is surely: what is the total size of the overall energy market likely to be?

Attempts to peer into a crystal ball half a century ahead are always fraught. As recently as 2010, the incoming Conservative led government was officially planning on the basis of a possible “doubling, even tripling” of electricity consumption by 2050. Even then, in practice electricity generation was already falling year on year.

Forecasting exaggeration of over 30 per cent

The 2005 Energy White Paper had reckoned that by 2020 electricity consumption would already have increased by 15 per cent. In reality, it has decreased by 16 per cent. That is a forecasting exaggeration of over 30 per cent.

Given that between them the two serious new nuclear power station complexes – Hinkley Point C and Sizewell C – were both planned in that 2005 White Paper to deal quite specifically with this anticipated 15 per cent demand increase, it is little wonder that their interminable construction delays have not led to any capacity worries whatsoever.

Today’s official forecasters in the Business Department are now working from a far lower initial consumption baseline. Past experience has made the gung-ho a little more chastened. Currently primary energy demand is officially forecast to keep falling, by a further 11 per cent to 2025.

But after that, apparently we shall revert to the bad old ways. The Government forecasters reckon that we shall return to the world as they used to know it. The decline in consumption will suddenly cease, and within ten years it will be back not just to today’s levels, but to a whole 2 per cent more.

Interestingly, the Imperial College analysts are far more equivocal about likely electricity consumption trends. On the one hand, they state that: “Electricity demand may bottom out, and then begin growing towards the end of the 2020s. But on the other hand, they reckon “it may continue its gradual decline.”

Proponents of big new electric power sources eagerly point to road transport sector growth. But National Grid keeps saying the power system can cope with an overnight boom in electric vehicles (EVS), and that the extra generation capacity required to handle millions of vehicles is no big deal.

Nine million electric vehicles on UK roads might require 8GW of extra power generation capacity if people charge them up when they like. But smart charging could cut that to well below 4GW, according to National Grid’s EV lead, Graeme Cooper.

The firm’s modelling concludes that “not a tremendous amount of new generation is needed”, so long as energy companies “marry up the challenge of the generation and the wires to get the generation in the right place.”

So, even if increases in electric vehicles meet the most aggressive scenarios, National Grid’s modelling suggests the transmission system will not require a “wholesale upgrade”.

Given how critical the demand side of the energy equation is proving to be, it remains puzzling just how little political attention is being given to how and where these crucial savings are occurring-and then to realising the many unfulfilled potentials.

As the Imperial College researchers phrase it, the “first fuel” offers genuinely rare win-win opportunities.

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