Utility Week

UTILITY WEEK | JANUARY 2023 | 19 Energy Staying optimistic through the transition While 2022 has brought little cheer, utilities must continue to instil optimism into the energy transition. Comment Tom Lowe T he summer of 2022 brought home to many the accelerating risk of climate change. In my home of West Yorkshire, we saw temperatures of 40C for the first time. Native plants wilted. Even relatively modern buildings struggled to stay cool because of their limited energy efficiency. Railways ran slow because the rails were built for cooler temperatures. At the same time, the UK faced the worst drought since 1976. And, when the rains eventually came, the baked ground could not absorb the water, leading to flash floods. As Gaia Vince says in her new book Nomad Century, climate is everything. Beyond the short-term disruption, many people will remember summer of 2022 for the overnight discomfort where the thermostat didn't fall below 20C. The unnerv- ing sense of stifling stillness on those extremely hot mornings. The silence as the insects and birds conserved their energy. The case for combating climate change is increas- ingly visceral. Progress during 2022 Despite that far from cheery opening, reinventing the energy sector and tackling climate change requires relentless optimism. Climate adaptation must make people's lives better. That's the only way to get millions of people to make small and large decisions about their homes and habits. 2022 showed rays of optimism shin- ing through. Governments across Europe have sought to accelerate the transition to domestic green energy sources to get off Russian gas and oil. In the UK, the government's ambi- tion on offshore wind has increased to 50GW by 2030. The economics (and tax regime) of solar panels are now irresistible to businesses and those fortunate households with savings. Delivering security of supply increasingly delivers on net zero and enhances affordability. We have seen system design progress. In January 2022, I wrote in Utility Week that "people will start to get paid for when they use electricity. If they can adjust when they charge their car or heat their home, their energy will cost them less". Thanks to extensive work by National Grid ESO and others that reality started in November 2022. The Demand Flexibility Service is still in its infancy but household demand – rather than coal or gas back-up generation – is now being paid to balance the grid. This is only the start. National Grid ESO will work in 2023 to better understand how people are benefiting from the service. The real magic occurs when people agree to automated changes to their heating or electric vehicle charging schedules. A£er a few false dawns, the government has got the memo on electrifying heat and reducing gas demand and doubling down on energy efficiency. The launch of the Energy Efficiency Taskforce shows that our buildings are a significant infrastructure problem to tackle. And that serious money is required. That requires more than the down payment of £6 billion for 2025-28. And more than extending the Energy Company Obligation (ECO) or introducing ECO+ in April 2023. As well as reducing heat loss from homes, we need low-carbon heating sources. So it's good that decar- bonisation of heat has stepped up. The Boiler Upgrade Scheme launched in May 2022, providing grants to cover the higher cost and the government has helped to finance the installation of 1,000s of heat pumps. Innovation in smart electric heating continues at pace, supported by governments. British companies such as Tepeo are partnering with Ovo and UK Power Networks to trial their smart thermal storage, while Sunamp was awarded £9.25 million to develop and deliver its smart thermal store to 100 homes. Heat pumps continue to evolve. Ultimately, while government can set the vision and provide the guardrails, it is companies that will develop and deliver the products that people want. Challenges for 2023 There is a sense that deep change to utilities regulation is coming. The regulatory settlement of the 1990s looks increasingly outdated. The problems and available solu- tions of 2023 are very different to those of 1997. So£ware and hardware has evolved. Innovation has driven price reductions in technology. And there is so much more data available to people, companies and regulators. One of the most formidable challenges ahead for utilities is coordinating change. During the 2020s, that coordination might mean joining up electricity network investment with the installation of electric heating technologies or electric vehicle adoption. It might mean working with local councils. It might involve decommis- sioning parts of the gas grid. With increasingly decen- tralised technologies such as solar and low-carbon heat, it is unclear whether the future entirely lies in central- ised decision-making in the southeast of England. Tom Lowe is an energy consultant working on energy retail and heat decarbonisation. He is also the founding director of Thermal Storage UK, a trade association promoting smart thermal stores. This is an edited version of a comment piece by Tom Lowe that can be found at: https://utilityweek.co.uk/ article-type/opinion/

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