‘Decarbonisation will be achieved at the edge of the grid’

Hundreds of thousands of jobs could be created – many in poorer areas that need them most – by taking a decentralised approach to energy investment, Stephen Fitzpatrick has told MPs.

Giving evidence to the Commons environment audit committee’s inquiry into the green recovery yesterday (3 December), the Ovo Group chief executive and founder said that prime minister Boris Johnson’s 10 point plan is a “helpful” signal of how seriously the government is taking decarbonisation but offered nothing tangible on investment.

The government has “almost abandoned” its support for residential solar, he said: “Mechanisms like FITs (feed in tariffs) and CfDs (contracts for difference) have been extremely powerful at mobilising financial capital into the zero-carbon sector. Without the right set of regulations, it becomes almost impossible to finance or to commercialise this kind of technology.

“We’ve moved away from mechanisms that encourage private sector capacity into distributed infrastructure in favour of large offshore wind and the worst of all technologies, nuclear. We are saddling UK consumers for decades to come with dramatically over-priced electricity.”

He added: “For a fraction of the money we are spending here, we could be mobilising private capital into energy efficiency and decarbonised distributed infrastructure that can support hundreds of thousands of new jobs especially in regions that suffer extreme rates of fuel poverty and high levels of unemployment.

“We need to change the pre-conceived view that we are going to decarbonise the UK economy from the centre and through large-scale infrastructure investment. It’s going to be done at the edge of the grid, in the regions and at KW scale.”

He also told the committee they must challenge the idea that the net-zero journey can be designed in Whitehall and rolled out from central departments.

“This is going to be done by and large by business, homeowners and citizens finding the right platforms that they can invest their capital in,” he said, adding that the government should be exploring policies that can accelerate investment at this “micro level” scale.

“Most innovation in the next decade will be at the KW scale in people’s homes,” he said, identifying heat and transport as the two key challenges that could be tackled in this way.

Fitzpatrick also warned about the risk of resistance and division in society unless a way can be worked out to ensure that the poor end up paying a disproportionate share of the cost of decarbonisation.

“We will leave a lot of economically challenged citizens behind and they are going to resent the extra cost as a result of green policies, and we will see climate change becoming a very divisive issue.”

As an example of a policy which must change, he pointed to the uneven policy treatment of gas and electricity.

He said customers are paying more than 3.5p/kw hour in their electricity bills on social and environmental levies, which he added is more than the “entire cost” of the equivalent unit of gas.

“We are asking retail investors to invest in ESG backed investment schemes and homeowners to replace fossil fuel-based infrastructure with electricity but we are putting all of the costs onto electricity without putting anything on gas. No amount of financial engineering can make those numbers stack up.”