Lost your password? Register


Net Zero: The UK’s Next Industrial Revolution

It is now a month since the Government launched its Energy White Paper ‘Powering our Net Zero Future’. And what a month. Apart from the strangest Christmas ever, the news has been dominated by a scramble to the Brexit finish line, extraordinary scenes emerging from the US Presidency transition and of course, the continued devastating effects of the Covid rampage.

So it is only now, when there are glimmers of light and hope, that the scale of the Net Zero challenge comes into focus. When the White Paper talks of transformational scale equivalent to the industrial revolution, it is not exaggerating. To deliver net zero, every aspect of our lives will need to change.

The most significant feature of the transition is the degree to which going forward all the moving parts will need to move in sync. We expect demand for electricity to potentially double, but only if the anticipated growth of transport and alternative heat sources grow as anticipated. We know that buildings both domestic and commercial, need to become significantly more energy efficient, but quite how and who pays are still unanswered questions. We can only forecast today with what we know, and the pace of technological innovation is increasing all the time and changing assumptions as a result. Until the last couple of years, the potential for hydrogen was only really a peripheral subject- now it is seen as key to the transition. What will be the next big idea?

So what comes first? Investment in new generation, the network, heat or hydrogen? The answer is that there is no clear answer, but all will have to develop in parallel to deliver carbon reduction, keep the lights on and make the cost of transition as low as possible.

This parallel development means that going forward there will be significantly more interconnection between power generation, building efficiency, heating and transport. This interconnection can only be effectively and efficiently managed by the availability of reliable and detailed data in relation to all sectors. So, as well as a physical infrastructure transformation, we will also need a digital transformation in order to achieve net zero. Total UK demand and supply ultimately need to be kept in balance, second by second, and there will be many thousands more assets contributing to the system in the future. Understanding what each asset is doing, when and where, as well as how demand is fluctuating across the UK at any time during the day will remain critical, but significantly more difficult. Availability of data and the ability to interrogate it are key enablers to the transformation.

The concept of an efficient market to achieve all of this is essential to underpin affordability. Investors need to have sufficient visibility of returns, the playing field needs to be as level as possible and the cost of transition has to be kept as low as possible to keep the country competitive in a global market. All of this, whilst remaining affordable for consumers too. The current energy market design was for power markets only, it now needs to be adapted for the new world integrating heat, transport, data and energy efficient products and services, which represent the new energy market.

So in this world of complexity and transformation, how does a consumer, whether commercial or domestic, plan for the future?

The key is to think holistically- plans for power supply, heat, transport and buildings need to be considered in the round. Clear priorities need to be defined at a strategic level, whether carbon reduction, comfort or capital availability. Time horizons are likely to need to be extended. One of the greatest challenges in making the decision to invest is the fact that the real returns are likely to come into the future, not necessarily in the 3-5 year windows typically used for financial appraisal. This is true whether for a University campus, manufacturing estate or domestic home. Recognising that all the answers are not known today, building optionality into any solution will enable adaptation to future market conditions, new innovations, products and services or changing economics.

All of this complexity demands a very different mindset. The easiest answer is to do nothing and wait for clearer answers. However, the lack of clear answers and certainty can easily result in paralysis. Whilst achieving net zero by 2050 sounds a long way off and therefore a sensible target, the scale of change required to deliver is huge, made all the harder in a post Covid world. Small steps are needed in all areas which require active engagement. Fundamentally, bravery in decision making will be needed now and going forward. Clearly policy, whether carrot or stick, will help drive action, but ultimately it requires a change to mindsets and beliefs to deliver. Behavioural change is talked about least, but is probably the hardest aspect of it all.


Author: Jo Butlin, Non-Executive Chair, TEC
Categories: All
Skip to toolbar