While the British Energy Security Strategy included ambitious targets, it was missing policy on demand side reduction, support for customers, onshore wind and energy efficiency.
This was the key conclusion of the latest Current± Briefings webinar, which delved into the opportunities and ambition of the strategy.
“Targets may be fantastic, but they do not deliver,” Charles Wood, deputy director of policy for Energy UK, said, although he did welcome some of the targets that had been outlined within the policy document, such as the addition of 10GW to the offshore wind target, taking it to 50W by 2030.
However, he did add that raising the target without adding further detail is contributing to confusion and uncertainty within the market, while existing issues surrounding regulatory barriers need to be dealt with.
For Luke Murphy, IPPR’s associate director for energy, climate, housing and infrastructure, there were three key tests the strategy faced, these being to lower bills for households, bolster UK energy and national security and address climate change.
“Across all three, it falls short,” he said. “Fundamentally, it lacks a strategy. Yes, ambitious targets are welcome but it’s largely silent on how targets will be met.”
One of the key areas all three of the panelists felt was lacking in the strategy was energy efficiency measures, which Alex Done, Modo Energy’s head of research, described as low-hanging fruit.
“We really miss a lot of the short-term aspirations this report was really intended to drill down into,” he said.
Done said the strategy made big bets on long-term plays, when it should have been more measured bets on short-term plays.
When asked why energy efficiency may have been excluded from the strategy, panellists alluded to the changing policy landscape for energy efficiency over the past 10 years or so.
“It’s a consistent policy failure across multiple different governments in terms of consistency and the stop-start approach to funding which has really just battered the supply chain into submission. It’s no longer a confident bet to say ‘let’s invest in energy efficiency and low carbon heat’ because you don’t know how long that funding’s going to go for,” Wood said.
“There’s also that negative connotation with those failed schemes like the Green Homes Grant where the Treasury doesn’t want to touch it, they don’t want to put funding towards it because it fails, and looks bad.”
However, Wood did praise the removal of VAT on energy efficiency measures in the Spring Statement as a welcome announcement from the Treasury.
Other areas not touched upon in the British Energy Security Strategy include battery storage, a technology which is often touted as key to energy security and security of supply as the system decarbonises and more intermittent generation is brought online.
Done said that while the strategy itself doesn’t offer any specific subsidies or detail on how battery storage will fit in to energy security, “the standard economic arguments speak for themselves”.
Indeed, with the raising ambitions of offshore wind targets in the strategy, for example, the level of battery storage therefore needed can also be determined. Done said that with the raising of offshore wind targets to 50GW, scenario analysis suggests the UK will need to reach 16GW of energy storage.
“We don’t really need the words in a government white paper to tell us that storage is going to be very, very vital,” Done said.
However, while Wood agreed that there is a need for energy storage of all kinds to be developed over the next 10 years, he said there is not yet enough movement within the market mechanisms.
He pointed to the follow up paper yet to be published, the Review of Electricity Market Arrangements, looking at the energy markets and whether or not they’re fit for net zero, stating that this needs to progress faster.
He said there’s a need for a holistic look at the balancing markets, the wholesale markets and the Capacity Market to see if they’re fit for purpose and if the quantity of things such as energy storage and demand side response required can be delivered within the existing market framework.
“I think it’s fairly clear that the answer is no,” he said.
The next webinar, Current± Briefings: The emerging inertia market in Britain, will take place at 11am BST, on 27 April 2022. To register for the event, click here.
