Shrinking window to meet climate targets brings new energy trilemma

The rapidly shrinking window to meet the UK’s climate targets means the energy industry faces a new trilemma as it comes under pressure to deliver infrastructure on time.

Eric Brown, executive advisor at Energy Systems Catapult, said achieving these targets will require the industry to balance issues of uncertainty, urgency and legitimacy.

Speaking at Utility Week’s Future Networks conference this week, Brown said the already well-known trilemma of “sustainability, affordability and security of service… tells us something about why we’re going to do things and what we need to do.”

But he said the industry now needs to “think much more about delivery, building stuff, and that gets to the question of ‘how’”.

“When we think about the acceleration of infrastructure, we’re going to be forced to make some really quite tough decisions and tough trade-offs. We’re going to be confronted with high levels of complexity,” he warned

Brown said this situation brings a new trilemma of uncertainty, urgency and legitimacy. The industry faces “a very high degree of uncertainty” as it awaits key government decisions but also an “acute sense of urgency” in the form of three key milestones: the 2030 generation goals, the 2035 net zero power target and UK’s overall commitment to reach net zero by 2050.

“And then legitimacy is also key here,” he added. “We need to understand how we are going to bring people with us as we make this transition.”

When asked during a subsequent panel session how the regulator intends to deal with uncertainty, particularly over the future of heat, Rebecca Barnet director of networks at Ofgem, said: “One of the things that we really want to make sure our regulation can do is be agile.

“There are key decisions that will not happen this year, they might not even happen next year, so I think one of the things that will be key is having those re-openers, having that flexibility in the regulation, to accommodate that.”

Martin Cook, chief commercial officer at National Gas Transmission, highlighted the balance between central planning and consumer choice, “which is a really important conversation we need to have if you think about Eric’s trilemma and you’re looking at legitimacy”.

“Legitimacy can be pulled. It can be pushed. It doesn’t have to be all pull and often when you do something with urgency you use push to create that behaviour change that you need at pace.”

Cook expressed hope that the new National Energy System Operator (NESO) will help to clear up some of the uncertainty hanging over the industry. He said if the NESO is going to fulfil its role effectively, “it’s going to have to make some decisions that not everybody in this room is going to enjoy”.

But he said the government and Ofgem will also need to take some tough decisions, noting that “consensus is the enemy of pace”.

Cook also called for more anticipatory investment where an ultimate need has been established: “We might get the timing wrong but given where we’re going, we are going to need to build a lot of assets.” He said consumers should of course be protected from “undue costs” but there are economies of scale to be realised by taking forwards projects as a portfolio rather than “bit-by-bit, step-by-step”.

Sara Habib, head of future price controls at National Grid Electricity Transmission, said it is certainly better to be early than to be late: “When we can establish a need, we can then focus on pace and allow the regulatory framework to deliver that”. She said creating more certainty would “give confidence to the supply chain that that work is there”.

Andrew Wainwright, whole systems manager at SSEN Distribution, said: “There is a lot of work we need to do as an industry to achieve net zero, and that goes all the way through the supply chain… There are efficiencies in getting things done once, getting things done right, being able to facilitate what the network’s going to need in areas so that we can do the work once rather than multiple times.

“If you boil that down, you don’t have to big up the road multiple times… There is local community interest in doing this the right way.”