Utility Week

Utility Week 20th October 2017

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UTILITY WEEK | 20TH - 26TH OCTOBER 2017 | 11 Policy & Regulation ENERGY EFFICIENCY The Clean Growth Strategy marks a renewed focus on energy efficiency. The strategy extends the Energy Company Obligation, through which energy suppliers support home energy efficiency improvements, from 2022 until 2028. In addition, funding will be maintained at the current level of £3.5 billion a year. The strategy announces the goal that "as many homes as possible" should meet the Energy Performance Certificate (EPC) band C by 2035, albeit with the caveat that doing the work should be "practical, cost- effective and affordable". The government has also said it will consult on how social housing can be upgraded to EPC band C. The strategy says there will also be a consultation next year on raising minimum energy efficiency standards for rented commercial buildings. This will take place once the independ- ent review of building regula- tions and fire safety, prompted by June's Grenfell Tower disas- ter, has been completed in the spring. And in seven particularly energy-intensive industrial sectors, decarbonisation and energy efficiency plans have been published. In addition, the strategy announces a call for evidence on how to encourage people to improve their homes' energy effi- ciency, including exploring ways the government can support "green mortgage" products. Jonathan Marshall, energy analyst at the Energy & Climate Intelligence Unit, welcomes in particular the call for evi- dence on measures to promote energy efficiency. "It will be use- ful if they can work out how to make finance cheaper and more attractive," he says. However, the big gap on energy efficiency is the lack of commitment to restore the zero carbon standard for new homes, which was axed two years ago. KPMG's Virley worries that the government's steps don't go far enough. He says "Fur- ther policy action on heat and energy efficiency will be required beyond the measures announced today." CCS The Clean Growth Strategy marks a volte-face in terms of the government's approach to car- bon capture and storage (CCS). The £1 billion package of support for CCS was one of the big casualties of the govern- ment's post-2015 election bonfire of low carbon subsidies. However, the clean growth strategy puts CCS back on the agenda with the announcement that £100 million has been ear- marked for a technology that many see as the only way of dealing with emissions from big energy-using industries. A fih of the funding will go towards a CCS demonstration project. The sum has been dismissed by Liberal Democrat leader Sir Vince Cable as small beer com- pared with the £1 billion support offered under the coalition gov- ernment in which he served. Luke Warren, chief executive of the Carbon Capture and Stor- age Association, takes a more positive view, while still express- ing concern about the "lack of detail" in the document about how to deliver CCS. Providence Policy manag- ing director Keith McLean says: "The statement on CCS is fairly unambitious but it represents a significant about-turn: it's a step in the right direction." The chief executive of the Energy Technologies Institute, Jonathan Wills, agrees: "It's good that it's back on the table. To drive costs down you need to start building, as we have seen with offshore wind. It's not just about innovation in the laboratory." HEAT The biggest questions begged by the Clean Growth Strategy surround its proposals on how to tackle the decarbonisation of heating, which accounts for a third of total UK carbon emissions. While improved energy efficiency will help, the strategy acknowledges that the total decarbonisation of heating will be required if the government is to meet its statutory target of reducing emissions to 80 per cent of 1990 levels by 2050. However, the strategy contains few concrete meas- ures for tackling the decarbonisation of heat, which the government admits is "our most difficult policy and technology challenge." The document says the installation of high carbon fossil fuel boilers in new homes as well as existing dwellings, which are off the gas grid, will be phased out during the 2020s. This will kick-off with new buildings. It also says the Renewable Heat Incentive scheme will be reformed to encourage a greater uptake of heat pumps and bio-methane. And the strategy proposes building and extend- ing existing heat networks, underpinned with public funding until 2021. However, there are no clear answers in the strategy on the big question, which is how to move heating from its current dependence on gas. Instead, the government says it aims to lay the "ground work" for a decision in the first half of the 2020s on the best options for decarbonising the heat network. The chief options outlined in the document are to electrify domestic heating, thus exploiting low- carbon generation sources. The other is to pump new fuels like bio-methane and hydrogen into the existing gas grid. The problem with the latter option is uncer- tainty over whether the existing infrastructure of pipes and boilers can take these different fuels, while the commonly identified problem with the former is that it would massively increase peak flows on the electricity grid. Jonathan Wills, chief executive of the Energy Technologies Institute, says the strategy is right not to plump for electrification of domestic heating, wel- coming the nod that it gives to the extension of dis- trict heating. "It's not been overly prescriptive about the solu- tion which is crucial with heat," he says. Keith MacLean, managing director of Providence Policy, says that the government's approach makes sense as long as the work is done. Hydrogen may be the great clean energy hope, but he says that it is right not to make a more explicit commitment now. "They are making the right noises about collect- ing the right evidence base: the top priority is to put in place funding for demonstration projects to provide the evidence base for decisions in the next parliament."

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