The boom in wind and solar power means 240 generating stations feed into the grid
After 15 years at National Grid, including nearly 10 as chief executive, I am stepping down next month from a job I have loved and that has given me an opportunity to play a part in the huge changes in the UK energy sector.
When I joined, 80pc of UK electricity was supplied by fossil fuels and just 3pc came from renewables. Fewer than 50 power plants were pretty much all that Britain needed to allow National Grid to run a reliable electricity system.
Today, that could not be more different. Last year, those same fossil fuels supplied just 55pc of our electricity, while renewables have surged to 24pc. Thanks to the boom in wind, solar and, to a lesser degree, biomass we now have more than 240 individual generating stations feeding into our transmission grid, and thousands more businesses and households generating power into their local networks.
We are in the midst of nothing less than a revolution in the provision of our energy.
There are huge and exciting opportunities ahead but I am concerned that their impact has become muddled by misunderstanding. Phrases like “smart”, “off-grid” and “demand side response” mean different things to different people and are at times negatively portrayed. We need to separate fact from fiction.
Let’s start with the concept of “smart”. This catch-all term is popping up everywhere and energy is no exception. We have smart grids, smart meters, smart appliances, smart homes, smart anything really.
I am a big believer that the power of communication technology will transform the way we deliver and use energy. British Gas, for example, is pushing hard into thermostats that can be controlled from a smartphone. One new supplier, Tempus Energy, is trialling technology to take remote control of customers’ appliances to help manage periods of high demand.
These developments are very positive for customers. But we need to ensure that we don’t unnecessarily limit the possibilities. For example, the Government has mandated that smart meters must be installed in every home by 2020, but progress has been slower than hoped for and there is confusion over exactly what the meters should deliver.
To be transformative, smart meters need to empower consumers to gain greater control of their energy and the price they pay for it. Although the plans cover households, it is businesses where estimates indicate that four-fifths of the potential energy savings from smart control technology can be found.
For me, the true test of smart meters is to emulate the success of the smartphone where it is not the hardware that matters but the quality of the apps that can be delivered over the platform.
Imagine an app store for your energy meter with hundreds of products created by entrepreneurial start-ups, all designed to help you lower your energy bill. I think that’s a fascinating concept for the future.
Next up is the phrase “off-grid”. For many this will conjure up an image of the past. Maybe a cottage in the Outer Hebrides, too expensive to connect to the national energy network.
But interestingly the phrase has recently resurfaced as a description of our energy future. Today 700,000 households already have some sort of energy-generating capacity on site and, with greater efficiency in the way buildings use and store energy, it is increasingly possible for consumers to power themselves.
That is a really encouraging development. In the last few years, rooftop solar has nearly trebled to 4.8GW, out of a total solar capacity of 9.5GW, helping Britain meet its energy needs with clean, renewable power.
But it’s also unhelpful to think of houses and businesses one day going “off-grid”. The rise of micro-generators – the “big 60,000 rather than the Big Six”, as former energy minister Lord Barker once put it – makes the energy system more complex, not less. In this world, we will need our energy networks more than ever to take excess energy when self-generating consumers don’t need it and to deliver a reliable and economic energy supply when the sun isn’t shining. That is why National Grid has earmarked up to £20bn for investment through to 2021 to ensure our energy system is fit and flexible for a low-carbon future.
The final phrase that I think has become misunderstood is “demand response”. Again, history is not our friend here. For those of a certain age, the lowering of energy demand to match energy supply invokes the energy crises of the early 1970s and the three-day week.
But the reality today is completely different. Companies have large power loads – air conditioning and refrigeration, for example – that can easily be powered down for short periods without any impact on their business.
At National Grid, we have recently begun developing a market that allows companies to voluntarily offer a temporary reduction in the load of these large power consumption sources in order to help us balance the system at times of high stress. We deploy this very rarely but it is very much a part of the modern system and, frankly, it is good for the companies involved as they receive payments for supporting the energy balance.
But to read some reports in the press you would think that factories are having to shut down all over again and Britain is on the cusp of another economic meltdown. That sentiment is absolute nonsense and something that we need to rid ourselves of in order to enthuse businesses about the opportunity.
Ultimately the future energy system will be much more flexible than today’s. It doesn’t make sense to keep building an ever larger system just to meet the rare peaks of energy demand. We need flexible networks and the ability to flex unnecessary demand. This will allow a cleaner future that can be cheaper and more efficient. To bring us back to where we started, that is a “smart” future for us all.
Steve Holliday is chief executive of the National Grid
This article was written by Steve Holliday from The Daily Telegraph and was legally licensed through the NewsCred publisher network.