These days barely a day goes by without energy in the news. Now a hot political topic at a UK level, we have the Government seemingly moving towards removing ‘green levies’ from our bills and the opposition proposing a freeze on energy prices. In my view neither of these offer realistic solutions to the serious situation we find ourselves in on our energy supply, part of which should involve a much, much stronger commitment to community owned generation and supply.
There are a number of very significant challenges:
• Supply of electricity is still operating to the model of centralised large power stations and export across the national transmission and distribution grid networks. This model has achieved a lot – bringing electricity to all across the UK and providing a reliable and secure service. However this means that currently we are locked in to a dependency on large-scale, expensive, centralised power generation. This was not so bad when we could use our indigenous energy reserves (coal, oil, gas), but these are declining such that we are now increasingly dependent on the global market to fill the gap. Global prices are rising and, some say, not secure.
• Renewables penetration is rising. In Germany, where there is a very high level of connected, distributed renewables, there is a downward pressure on wholesale prices – so much so that it threatens the financial viability of the large fossil-fuel power stations and the utility companies that own them. Will this happen here? Well, its sign of the times that the only way the UK Government could get investment into a new nuclear plant at Hinkely point by offering very generous guarantees and market price assurances. If the grid operation is dependent on large stations providing a base-load, who will pay if they are uneconomic? And what happens to the grid supply if there is not enough connected generation because the investment in new plant doesn’t happen?
• On a different track, we’ve just had the biggest ‘wake up’ call from the global scientific community through the recent IPCC report which makes it clear there is a 50:50 chance of a higher global temp rise than the target acceptable level. This must be one of the most peer-reviewed and government- negotiated scientific reports in history and it still comes out with a very clear warning. But we are still sucking in and burning vast quantities of fossil fuels, not just for electricity generation but also for transport, heating and cooking – as if there was no tomorrow.
We’re locked unto an energy supply system which will get more expensive and more uncertain (OFGEM have warned of a ‘generating gap’ and a higher risk of power cuts) whilst continuing our dependency on imported fossil fuels – the price of which will only rise. What’s more, where we are generating power locally and selling it to the grid, we’re selling it cheap (wholsesale) and buying it back at a much higher (retail) price. So – what to do?
The interesting thing is that we now – more or less – have the technology that allows us to generate renewable energy at a smaller, local level and use it to substitute for our fossil-fuel addiction. A key part of this involves the electrification of heating and transport and the direct linkage between local generators and local demand though ‘smart grid’ management. We have the potential to extract ourselves from dependence on increasingly expensive, uncertain, high carbon, centralised energy supplies whilst creating real opportunities for local economic regeneration through energy development. Examples of this in action are appearing e.g. Summerside municipality in Canada , Feldheim in Germany, the Faroe Islands. The technology is there, the commercial models are emerging; the only other ingredients required are leadership commitment and determination to deliver clean green and tangible energy benefits to local consumers.
In some ways there is a parallel with other large industrial sectors such as communications. With the growth of the internet and associated technologies there has been a ‘democratisation’ of information supply that the big news companies have had to adjust to. Will this happen in the energy sector leading to a much greater emphasis of ‘local energy economies’?
Scotland is at an advantage in this rapidly evolving picture because of our outstanding renewable energy resources. Scotland has also led the way in the UK in supporting community energy development. Can Scotland now lead the way in maximising the potential in the local energy economy idea and benefit from all the innovation that goes with it?
The forthcoming referendum provides an opportunity to introduce some of these ideas into the energy debate. Will the National Grid be broken up with independence or will this be another UK institution that we will keep? If we stay in the UK, can we, through greater devolution, reform the currently inflexible incentive and regulatory framework operated by OFGEM? Will it be possible for a new Scottish Government to create a more stable policy, regulatory and incentive system than that created by Westminster, which does not effectively address vital security of supply and de-carbonisation issues?
Currently, many of us feel powerless to influence the development of the energy sector, which is vital to our future security and development. The constitutional debate gives us an opportunity to change this and ensure that whatever happens, we end up with a better system, with more local control, than we have now.