If I asked you to picture the future of the electricity system, what would you see? Rows of solar panels? Offshore wind farms? Both are part of the story, but these are only the most visible indications of a fundamental transformation in how we generate and use electricity. ICT-enabled products and services are changing the way the system works, allowing real-time control of supply and demand, and linking individual devices and households to the grid. This is a gamechanger. Together with better storage, it allows us to smooth over the peaks and troughs of supply and demand, and become more efficient in our use of power.
These innovations are timely, because demand for electricity must increase if we are to meet our climate goals. At the moment, we still burn fossil fuels every day—to run our cars and heat our homes. To switch to electrically powered transport and heating, we need to increase the amount of renewable electricity produced, and we need to get smarter about how we use and store power. We will need to recharge vehicles at times of low demand on the grid; make storage commonplace; make our homes and buildings much more energy efficient; and charge more for electricity used at peak times like winter evenings. The innovations I have described make this both realistic and practical.
Yet there is an obstacle: a set of rules and regulations which were put in place more than 30 years ago, and which govern the way that electricity is bought and sold. These were made for a very different system, where electricity was generated in distant coal-fired power stations, and delivered down wires to passive consumers. Times have changed, but government hasn’t kept pace. For example, electricity supply companies are still incentivised to sell as much power as they can, leaving them with no reason to help customers to use less.
In a white paper published just before Christmas, the government finally admitted that the system is outdated. But putting it right is a tough job, particularly since large energy companies are adept at whispering in ministers’ ears. I would suggest that there are four critical, interlinked steps to take.
First, we need to make sure that the transformation of our electricity system is enabled and properly co-ordinated—a big job. My work with a team of governance experts at Exeter University has convinced me that the best way to achieve this is through establishing a dedicated “Energy Transformation Commission,” working to government targets and policies. The commission would plan, co-ordinate, and make sure that all voices are heard, so that policymaking is not overly influenced by incumbent interests.
Second, control over electricity systems should sit at the local level, where supply, demand and storage can be linked. There should be incentives for local authorities to partner with local energy companies and network managers, to optimise local electricity supply and demand.
Third, we should prioritise efforts to reduce demand for energy, rather than focusing on supply alone. There should be strong incentives for households to invest in energy efficiency measures like insulation and smart thermostats. Poorer households should have measures provided for free.
Finally, we should see this not as a technical challenge, but as a social one. People need to play an active role in the energy system, replacing car use with walking, cycling or e-biking, making sure their homes are as efficient as possible, investing in renewable energy if they can. This won’t happen unless governance is reformed to align incentives and market offers with the changes we need people and businesses to make. One of the best ways to make policy work for people is to involve them in its development, through processes like citizens’ assemblies, as last year’s Climate Assembly UK showed.
A zero carbon, flexible, fair electricity system is there for the taking. With careful co-ordination, targeted incentives and good citizen engagement, we could make it a reality.
This article summarises a longer report, “Getting Energy Governance Right: Lessons from IGov,” published by the University of Exeter.
This article features in Prospect’s new “Green Recovery” report, published in partnership with SNC Lavalin, Atkins, Ricardo and the Aerospace Technology Institute. Read the full report PDF here.