How can utilities accelerate the UK’s journey to net zero?

Last year the UK government laid out its 10-point green plan to help drive down carbon emissions and begin the country’s evolution towards net zero by 2050. While this plan covers multiple industries, the energy and utilities sector is uniquely placed to have a huge influence and is in need of further acceleration in order for the UK to hit its green targets.

As the foundation for the UK’s green energy initiative, there are a few challenges that both the sector and the government must overcome in order to set the nation on the right track towards decarbonisation.

Below I will outline the top challenges facing the industry and how both sides could navigate these murky waters.

Invest in battery technology

It’s a fact that there is an inadequate level of energy storage in the UK. The distribution grid is unable to store the surplus energy being created by traditional and renewable energy providers, causing much of the energy to be wasted. On a very windy and sunny day, the UK is actually turning wind turbines out of the wind as there is no way to use that surplus energy up. In order to ensure we can capture all the energy we can generate, we must invest in battery technology.

Battery storage has come on at pace in recent years, particularly through greater R&D in electric vehicles (EVs), and now is the time for the UK to get in on the second generation of batteries at a grid level. With the UK government’s commitment to stop the sale of fuel vehicles by 2030, the future for automotive being electric is clear and further investment in battery technology is a given.

A joined-up approach is needed and utilities must take the opportunity now to commit to greater levels of R&D to ensure their customer batteries are optimised for the distribution grid itself, as well as in individual homes.

However, to truly reap the benefits of battery technology and green energy there must be a joined-up policy at a government level allowing the nation to utilise home batteries and EVs as storage devices. The amount of EVs on the road is only increasing but the country is not currently exploiting their potential as storage devices while plugged into people’s homes each night. An individual can currently have a local agreement with an energy retailer allowing them to store energy and sell it back to them, but the government needs to agree a policy that scales this idea at a national level.

Now is the opportunity to start co-ordinating a programme of activity to prevent this green energy being unused. Additionally, there needs to be a review as to whether grid-scale batteries have a business case now, looking at examples such as Australia.

Cutting through the red tape

The utility sector and its intersection with transport, housing etc. is saddled with the most regulation due to it being involved at both a local and national government level. With current regulations, there is simply no way that the industry will reach net zero by 2100, let alone 2050.

We are currently at an inflection point – EVs rolling out at scale, smart meters being installed in the majority of homes and renewable energy becoming more affordable. However, there is currently no alignment between industries. We are still building new homes with gas boilers, very little insulation and no charging points.

The government messaging around net zero is strong and ambitious but all momentum will be lost if we don’t find ways to act now and cut through the delays in consultation periods and industry reform so that new designs and technologies can be trialled.

The good news is that this isn’t an unheard of notion. The UK has proven it is capable of being agile and can streamline previously difficult programmes when vital through the Covid vaccination effort. By leveraging this approach, the government and utility companies can cut through the red tape quickly to align the different sectors around green policies. This would then enable companies to start investing now in the technologies and research required to hit the green targets.

Companies need to be able to trial pilot programmes immediately in small areas without having to prove its validity through lengthy consultations and theoretical studies so that it can be rolled out at scale for the entire country quickly.

From our recent discussions with utility organisations, most agree the dialogue they are having with the government is moving in the right direction and both sides agree that speed is imperative. But in order to maintain momentum, the government needs to issue policies that remove the bureaucratical hurdles currently in place or face the inevitability that change won’t happen quickly enough to reach our carbon deadline. We need to replicate the urgency we had when combatting Covid-19 when combatting climate change.

Incentivisation is the key

One of the most immediate hurdles the UK needs to overcome to reach net zero is to move away from gas central heating. Currently there is not enough incentivisation for gas installers or customers to turn away from this cheaper form of heating and move to electric. Industry needs to work with the government to make electric heating financially viable for the average consumer. But there must be an incentivisation for the utility companies in the first instance to gain traction.

Going back to EVs as an example, the government provided initial investment and subsidies to consumers in order to get buy in and drive momentum. They made it clear that EVs were the future and supported manufacturers in their transition. This has resulted in the growth of EVs on the road and consumer demand has increased as the business case is clear and simple – the long-term costs of these vehicles are lower than petrol vehicles. Combine this with the dis-incentive of the decreasing attractiveness of fuel vehicles and it is clear how the market will continue to move.

If the government can incentivise utility and construction companies to invest in greener technology when building homes by offering subsidies on corporation tax for example, it will accelerate their journey to net zero.

Combining that with clear government deadlines as to when all new homes must be built with green technology would give these companies all the incentive, they need to make the switch within the timeframe necessary to make a difference. This will in-turn provide more financial benefits to consumers as the volume of electric heating or other green alternatives will go up and therefore decrease the price, making it a better value proposition than what we currently have.

Conclusion

We have all the ingredients within this country to succeed in hitting our net zero target. We have the correct expertise within each sector and the governmental backing to make these wholesale changes to our infrastructure, but we net to get the recipe right in order to hit these aggressive deadlines.

The Covid-19 crisis showed that we can adapt and evolve quickly in the face of a pandemic. We have a competitive advantage over other countries in that we are able to work fast and efficiently in an emergency. But if urgent change doesn’t happen now in our race to net zero, we face a losing battle against climate change.