McKinsey: Power consumption to double by 2050 as COVID-19 helps pull back fossil fuel peak

Image: Getty.

Image: Getty.

Power consumption is set to more than double by 2050 as electrification increases, according to new research from McKinsey.

The consultancy found that the share of electricity in energy consumption will grow to 30% by 2050, up from 19% today. Renewables will be dominating this from 2030, with cost reductions over the next decade resulting in the technology becoming cheaper than existing fossil fuel plants.

This is to trigger a sharp uptake in the installed capacity of solar and onshore and offshore wind, with 5TW of new solar and wind capacity installed by 2035 and over 50% of global power power generation coming from renewables the same year.

The consultancy is also predicting that the aggregate fossil fuel demand peak will be brought forward to 2027 partially as a result of COVID-19’s impact on energy demand.

It found that while global coal demand has already peaked, oil and gas are now not far behind, falling in 2029 and 2037 respectively.

In McKinsey's report The Global Energy Perspective 2021, it discusses how the pandemic has resulted in a significant reduction in energy demand, which it will likely take between one and four years to recover from. Additionally, the company expects that electricity and gas demand will bounce back quicker than demand for oil, and that demand for fossil fuels overall will never return to its pre-pandemic growth curve.

However, McKinsey did state that over the long-term, the impacts of behavioural shifts due to COVID-19 are minor compared to more known long-term shifts such as decreasing car ownership, growing fuel efficiencies and a trend towards electric vehicles, whose impact is estimated to be three-to-nine times higher than the pandemic’s by 2050.

Despite the earlier peak of hydrocarbon demand resulting in a substantial reduction in forecast carbon emissions, the report continues to state that the world remains significantly off of the 1.5ºC pathway.

This is detailed in particular in the Reference Case scenario, one of four modelled by McKinsey, which saw more than half of all global energy demand continuing to be met by fossil fuels by 2050. This scenario is McKinsey’s outlook on the continuation of existing trends, examining its expectations of how current technologies can evolve, and is compared against a 1.5 ºC pathway, a delayed transition where the societal focus is on economic recovery post-COVID-19 and an accelerated transition.

Christer Tryggestad, senior partner at McKinsey, said that there is still “a long way to go” to avert substantial global climate change, with annual emissions needing to be around 50% lower in 2030 and 85% lower by 2050 than current trends predict.

Tryggestad added that many governments need to translate "ambitious targets into specific actions", with the focus of stimulus packages for COVID-19 to "play a key role in shaping energy systems in the decades to com

Has Brexit created higher electricity prices? A look at the impact of decoupling from EUphemia

National Grid ESO has issued two Electricity Margin Notices (EMN) – one for Wednesday evening and one for Friday evening – as the cold weather and lower generation cut into its safety buffer, putting the security of supply at risk.

The tight margins led to dramatic peaks in intraday trading and Balancing Mechanism (BM) prices. Power prices in the N2EX auction hit £1,000.04/MWh for the period 17:00 to 18:00 on Wednesday 6 January, the highest hourly price seen on the auction. During the same period EDF’s CCGT plant West Burton B was called on at £3,000/MWh in the Balancing Mechanism.

Following on from the EMN issued for Friday, West Burton B2 and B3 had offers accepted at £4,000/MWh in the BM, while Uniper’s Connahs Quay 3 CCGT plant was accepted at £2,750/MWh.

An additional factor that drove up the N2EX auction price was the decoupling of the markets as Alastair Martin, founder and chief strategy officer at Flexitricity, explained: “The two main day-ahead auctions (operated by Nordpool and EPEX-Spot) are no longer linked, which means they can clear at different prices. Most of the time, they come out very close to one another, but yesterday the divergence was large. This is probably a market inefficiency, and it remains to be seen how it will be resolved.”

Decoupling and confusion: Leaving EUphemia

While much of the price volatility seen this week was driven by the changing nature of the nation’s electricity, with more intermittent renewables taking over from baseload coal stretching periods of high demand, there is now also the additional impact of Brexit and this decoupling of Great Britain’s auctions from EUphemia (EU + Pan-European Hybrid Electricity Market Integration Algorithm).

“All of the EU’s electricity markets are linked at the day ahead in a big algorithm called Euphemia,” explained EnAppSys’s director Phil Hewitt, describing it as "one of the crown jewels of the internal electricity market".

“At noon Central European Time – so that’s 11am GB, Irish and Portuguese time, and 1pm over in eastern Europe – what happens is that all of the auctions in each country are linked to their neighbours. This results in the automatic flow of power from less expensive regions to more expensive regions. So if, for example, it was tight in GB, then the power would flow across from France, Belgium and the Netherlands automatically. So, now, because we've left the European Union and the transition period has ended, we're no longer in that market arrangement; we have decoupled. Not only that but the two auctions in GB have decoupled from each other, causing more price confusion.”


Now GB has decoupled, it is running two auctions- Nord Pool and EPEX, as well as participating in the European auction. This creates more liquidity, and with it the potential for higher and lower prices.

Whilst leaving EUphemia doesn’t in itself increase energy prices, it does complicate trading which is likely to lead to higher prices for the GB market.

“Before you had a single auction, so if you were an interconnector capacity holder there was little risk to scheduling those flows,” expanded Adam Lewis, partner at market insight company Hartree Solutions. “There was a low risk methodology of optimising those flows to ensure that they flowed in the best way. Whereas now because of Brexit, we've decoupled and the UK has now decided to go on to have two auctions in the morning, which creates more confusion, volatility, uncertainty and risk. We believe the market would benefit from a single coupled UK auction.”

Does Brexit mean we’ll see more price volatility?

It seems likely that there will be more power price volatility going forward, especially if the UK sees continued cold weather as well as low wind generation. This is more a mark of the changing makeup of the nation’s energy mix than the impact of Brexit however, with that more a secondary aspect.

“The current system was designed to create peaky prices, reflective of the stress on the system at the time,” pointed out Martin. “The idea was that electricity suppliers and wind farm operators would put more effort into forecasting, and thermal generators would put more effort into reliability if the consequences of getting it wrong at the wrong moment were more unpleasant.

“Since then, renewable generation has continued to grow, and the electricity system looks quite different. So, we may see a revision to the pricing mechanism at the extremes. Whether that calms down prices, or re-directs the peakiness to different types of event remains to be seen.”

Additionally, it is worth noting that price spikes are not entirely negative as they can help keep power stations that might ordinarily struggle to compete in auctions running and encourage increased expansion.

“The high prices encourage people to enter the market, so they're not necessarily a bad thing,” argued Hewitt. “A power station that’s marginal is going to make reasonable money in periods of high prices, which might mean it will decide to stick around for another year or maybe somebody who’s developing battery projects or developing gas peakers or maybe even CCGTs is going to look at these high prices and say, ‘well, there we go, I can make money in this market'. So they're going to be more encouraged to build."

Balancing Mechanism price jumps to highest level since 2001, hitting £4,000/MWh

Image: Getty.

Image: Getty.

The imbalance price reached a high of £4,000/MWh on Friday evening, capping off a dramatic week in the energy market.

For the price periods 39-40 – between 19:30 and 20:30 on 8 January – the imbalance price soared to a high equivalent to 400p a unit, the like of which hasn’t been seen since 2001.

It followed a dramatic jump during price period 35 as well on Friday, hitting £2,750/MWh. At the time, this was the highest seen for nearly two decades but this was beaten just two and a half hours later.

The first week of 2021 was particularly volatile for the energy markets, as tight margins and low temperatures pushed National Grid ESO, leading it to issue two Electricity Margin Notices (EMN). Both were followed by periods of high prices in the Balancing Mechanism, with prices jumping to £3,000MWh on Wednesday 6 January as EDF’s West Burton B was called on, allowing NGESO to cancel the first EMN.

The second ENM was issued for Friday evening, and although it was subsequently cancelled, it led to EDF’s West Burton B2 and B3 successfully having their bids accepted at £4,000/MWh on Friday.

For the previous high period on Friday, Uniper’s Connahs Quay 3 CCGT plant was accepted at £2,750/MWh.

The last time prices were as high as they have been in Great Britain’s Balancing Mechanism was in 2001, when the New Electricity Trading Arrangements (NETA) were first introduced. The NETA Go-Live on 27 March that year created a new wholesale market, with a number of minor problems with the simplicity of the algorithm used for the Balancing Mechanism leading to two records being set that year that have yet to be broken.

On 5 May 2001, during period 32 the price soared to £4,993.88/MWh, before this record was broken on 19 June 2001 during period 32 with a price of £5,003.33/MWh, according to EnAppSys.

These high prices can be seen as a positive according to Phil Hewitt, director of EnAppSys, as “they encourage the building of new assets and the development of innovations such as demand response that allow the electricity system to decarbonise".

“In the future prices will become more extreme at certain points – either super-high prices like this week or super-low prices when renewables are running at maximum output and this will encourage solutions via the market to smooth generation and demand.”

Price volatility is likely to become increasingly common, as Great Britain relies increasingly on intermittent generation such as offshore wind. Additional factors that have driven high prices so far in 2021 also include the BritNed interconnector with the Netherlands remaining down, as well as the decoupling of the UK’s electricity markets with EUphemia – a consequence of Brexit that has added a level of complexity to energy trading.

As well as driving up prices in the Balancing Mechanism these also led to record N2EX auctions prices last Wednesday, when it hit £1,000.04/MWh for the period 17:00 to 18:00 on 6 January, the highest hourly price seen on the auction.

“Looking at the demand/supply stack for UK power moving forward, we see limited baseload generation coming online so this tightness is likely to be more acute in future years,” expanded VEST Energy’s Aaron Lally.

In order to manage it, more flexible assets such as battery storage will need to be integrated into the mainstream power system, he continued. “The highest prices we have seen in the BM for decades on Friday could have been avoided if GWs of flexible assets were confident that making themselves available in the Balancing Mechanism would have led them being dispatched by the TSO.

“This is really a competition issue; large plants exercising market power because the current market framework does not allow smaller (more dynamic) assets to participate. This needs to change.”

The heat pump rollout could fail due to high electricity costs warns EAC

Daikin's Altherma heat pump. Image: Dailkin.

Daikin's Altherma heat pump. Image: Dailkin.

The cost of electricity could cause the rollout of heat pumps to fail, as the technology must be made affordable for consumers.

With the cost of electricity roughly four times more expensive than gas, due to the government placing the costs of its low carbon policy with customers, adoption of the green heating alternative may struggle, according to a letter to energy minister Kwasi Kwarteng.

Written by the Chairman of the Environmental Audit Committee (EAC), Rt Hon Philip Dunne MP, the letter reflects on the evidence heard by the Committee during its short inquiry on Technological Innovations and Climate Change: Heat pumps.

The Committee was advised that reviewing the policy costs for gas and electricity could significantly improve the customer case for heat pumps, helping to make them cheaper than conventional gas boilers in a domestic setting.

Beyond cost concerns, the Committee heard through written evidence and a one-off evidence session that the supply chain is not currently equipped to installed the numbers of heat pumps required. To make sure the rollout happens, sufficient production and high-quality installations will be key.

While the initial growth of heat pump installers are expected to come from reskilling existing gas and electrical engineers, a concerted attempt to bring new, skilled entrants into the market over time. The government should fund a dedicated training programme, supporting education and training as part of a long-term strategy, suggested the EAC.

The uptake of heat pumps will be supported by the Green Homes Grant initially, but further confidence will need to be provided to industry to allow it to invest in skills and resources given the short window of time the scheme is expected to run for. The government should extend the grant beyond March 2022, making it a multi-year scheme.

Dunne said: “We are in an exciting and innovative time with new technologies coming to market that can make our net zero ambition a reality. But the scale of the challenge is huge, and requires government to set clear direction to instill industry confidence.

“Heat pumps could be transformative in decarbonising heating in our homes, and with homes emitting 20% of the UK’s greenhouse gases, it is a problem we need to meet head-on. Only when the supply chain is equipped to deliver the roll-out of 600,000 heat pumps a year, and costs are brought down for consumers, will we see heat pumps being a staple for many UK homes.”

The letter follows the government’s target of 600,000 heat pump installations a year by 2028, announced as part of the Ten Point Plan in October. The target was particularly welcomed following analysis from the UK Energy Research Centre that suggested it would take the UK 700 years to transition to low-carbon heating.

Charles Wood, Energy UK’s head of new energy services and heat, agreed that the EAC was right to highlight the significant barriers for the nascent heat pump sector, adding that “the low carbon heat market is most in need of clear signals from government in order to justify investment, and the 600,000 installation target is a positive move in that direction".

“Government now needs to follow this broad vision with a strategy for delivery in the 2020s. Bringing down the associated costs for low carbon heat technologies while delivering local growth, for example through developing local supply chains and increasing the number of skilled installers, is critical to giving customers the ability to choose how and when to decarbonise.

"This has to be joined with regulation, taxation and incentives in order to deliver rapid market growth towards net zero."

SSEN calls on customers to ‘signpost’ interest in flexibility services

Image: SSEN.

Image: SSEN.

Scottish and Southern Electricity Networks (SSEN) has called on generators to “signpost” their interest in providing 250MWs of flexibility to the energy system.

This will prequalify customers to participate in alleviating network constraints through formal tenders in the future, with the DNO looking to secure its flexibility options over the next eight years.

Owners of low-carbon technologies, generators and solutions that are capable of absorbing demand are being called on to announce their availability, with SSEN set to take a technology agnostic approach when the procurement process begins next year. Those who win tenders going forwards will be able to earn money, support network security and the transition to net zero.

Stewart Reid, head of future networks, said SSEN was taking a "flexibility first" approach to network infrastructure investment, assessing smart flexibility service markets when new electricity infrastructure is needed.

“By registering their interest generators and owners of low-carbon technologies and solutions will help provide sight of where flexibility exists and support informed decision making that supports a cost-effective transition to a smarter electricity system. This is an exciting opportunity for owners of generation assets to play a proactive role in that journey.”

SSEN pointed to the Climate Change Committee’s recent forecast that electricity demand will potentially treble as the UK transitions to net zero, and the following requirement for a significant increase in electricity infrastructure and investment in the UK’s networks. Using flexibility and smart management can delay or sometimes avoid network reinforcement, easing the process and limiting the cost.

DNOs have repeated broke flexibility tender records throughout 2020, with Electricity North West announcing its largest flexibility tender ever in November, seeking up to 122MW, while Western Power Distribution awarded 222MW of flexibility in its sixth round of procurement in October.

SSEN has taken a number of steps to increase flexibility on its network, including launching its Constraint Management Zone flexibility scheme, which welcomed its first wind generator contract in October. The following month, it awarded Opus One Solutions a contract to develop and deploy solutions to test different flexibility market models.

Customers have until 31 January 2021 to signpost their interest in providing flexibility services to SSEN, and can register here.

Saying goodbye to 2020

from  Veronica Truman Head of Content & Communications at Cornwall Insight

While lockdown may have been the most used word overall in 2020, in the energy sector net zero would certainly give it a run for its money. The raft of policy announcements, particularly in the last few weeks, will lead to a dramatic change in sector especially with moves to decarbonise heat and transport. This has been set amid a backdown of further consolidation in the supply market and escalation of ambition to achieve net zero.

Our popular weekly articles are an opportunity for our experts to discuss topical industry news. Based on the number of downloads, these are the top five most popular 'Chart of the weeks' from 2020.

Five: E.ON UK and npower: When 2 become 1

Recent acquisitions were changing the face of the non-domestic supply market according to our Business Market Share Survey for Q220 (with a reporting date of 30 April 2020). In this 'Chart of the week' we looked at what the market will be like once the E.ON UK and npower merger was complete.

Under the proposals announced in May 2020, E.ON Group would merge npower’s I&C arm, npower Business Solutions, with E.ON UK’s I&C unit. Under the proposal the two portfolios would be integrated by the end of 2021 with the merger leading to significant changes in the rankings for the larger suppliers, most notably in the electricity market.



Four: The pipeline for CfD AR4: Who, where, when?

With the potential reinstatement of ‘Pot 1’ technologies in the next Contracts for Difference (CfD) Allocation Round 4 (AR4) in 2021, this ‘Chart of the week’ took a look at the pipeline of renewables projects most likely to enter the auction.

Drawing upon research in our new service ‘The Renewables Pipeline Tracker’, we showed a heat map of site locations by capacity for potential AR4 bidders.


Three: Energy demand falls amid coronavirus outbreak

In this ‘Chart of the week’, we looked at the timeline of the COVID-19 outbreak and the impact of milestone events on the daily gas and power consumption in the UK.

When the government imposed restrictions on movement in the UK on 24 March, demand for power fell around 11% from March 2019 levels. Comparatively, demand for gas was less affected due to the dominance of the domestic heating market on gas demand.


Two: Cha-Cha Slide: COVID-19 & falling levels of inertia

The level of inertia on the system is a key contributor to electricity system stability. In this ‘Chart of the week’, we took a look at how changes in demand brought about by COVID-19 were impacting this.

Inertia is an attribute of the system related to the energy stored in the rotating motors of synchronous generators (e.g. coal, gas, nuclear). It prevents system frequency from falling too quickly after a frequency disturbance (e.g. a generator trip) as inertia stored in these rotating motors provides resistance to system changes. It is effectively free frequency response the ESO can count on in the case of a sudden fall in frequency and is measured in Gigavolt Ampere Seconds (GVA.s). Typically, levels of inertia on the system will fall as the levels of synchronous generation on the system decline and asynchronous generation (wind, solar and interconnectors) increases.


One: What’s in it for me? Household grid balancing

This ‘Chart of the week’ looked at the potential benefits and flexibility models available to customers. The dearth in energy demand and high renewable generation brought the need for flexible consumption sharply into focus. On the weekend of 22 May, Octopus Energy paid thousands of smart meter customers to use energy. Industry then seriously looked at how households would be supported in their participation in demand side services, traditionally the domain of large commercial customers.


UK’s first Electric Forecourt opens for business

GRIDSERVE celebrates 'major milestone' as UK’s first Electric Forecourt opens for business



The site is the first of over 100 set to be rolled out across the UK over the next five years as part of a £1 billion programme to make electric vehicle (EV) driving ultra-convenient and stress-free, according to the company.

Toddington Harper, founder and CEO of GRIDSERVE, said it represented a “major milestone” for delivering sustainable energy and “moving the needle climate change".

“It’s our collective responsibility to prevent greenhouse gas emissions rising further, and electric vehicles powered by clean energy represent a large part of the solution.

"However, charging has to be simple and free of anxiety, which is why we’ve designed our Electric Forecourts entirely around the needs of drivers, updating the traditional petrol station model for a net-zero carbon world and delivering the confidence people need to make the switch to electric transport today – a full decade ahead of the 2030 ban on petrol and diesel cars.”

The Braintree Electric Forecourt allows 36 EVs to be charged simultaneously, using 350kW chargers. These high powered chargers allow a vehicle to add 200 miles of range in 20 minutes.

Electricity for the site is generated by both the solar canopies above the chargers and a network of hybrid solar farms operated by GRIDSERVE. For example, the site is paired with Clay Hill, the UK’s first subsidy free solar farm, which has a capacity of 10MW.

Additionally, the Electric Forecourt has a 6MWh battery onsite, helping to balance the grid around it and shifting energy to the most profitable periods.

Initially, drivers will be able to pay 24p per kWh of energy, which GRIDSERVE says is the lowest ultra-high power charging rate on the market current. As such, going from 20% to 80% would typically cost under £10 for an average-size EV.

The company has partnered with Hitachi Capital (UK) PLC, Innovate UK and OZEV for the project, with all three parties providing funding.



GRIDSERVE and Hitachi announce EV leasing solution

Together with Hitachi, GRIDSERVE is launching a new EV leasing service to coincide with the opening of the Braintree site. Drivers will be able to charge at Electric Forecourts without additional costs, with net zero carbon energy included in the monthly leasing payments the companies are launching.

This will help bring down the cost of driving electric, and will particularly benefit those who do not have access to off-street parking who will see the expense of charging fall by 40%, according to GRIDSERVE.

Robert Gordon, CEO of Hitachi Capital (UK) PLC, said the partnership was a “total game-changer for electric mobility”.

“Not only are we providing electric vehicles at some of the most competitive rates on the market, but we are at the same time developing a network of rapid, reliable and renewably powered Electric Forecourts that will fast-track the electric vehicle revolution in the UK as we prepare for a zero-carbon future.”

Currently, available EV brands for leasing include Audi, BMW, DS, Mercedes-benz, MG, Mini, Nissan, Renault and Volkswagen. Hitachi and GRIDSERVE plan to offer EVs from all major vehicle manufacturers eventually.



Growing EV charging infrastructure ahead of 2030

The Braintree Electric Forecourt was initially supposed to be opened in the summer, but was delayed due to the COVID-19 pandemic. It includes shops such as WHSmith Travel, Costa Coffee, Boots, Post Office, and Gourmade, as well as a waiting lounge, free superfast WiFi, washrooms, dedicated kid's area and a wellbeing area with exercise bikes that generate electricity.

On the upper floor of the site, there is an onsite showcase for the latest EVs, including multiple digital screens that help people learn about and source EVs.

This is designed to help people make the switch to EVs according to GRIDSERVE, which is becoming increasingly pressing following the government’s recent announcement that it is bring forwards the ban on the sale of new petrol and diesel vehicles to 2030.

James Cleverly, Minister of State, former Conservative Party chairman and MP for Braintree, said: “Our government is committed to increasing the take-up of electric vehicles, to clean our air and enable us to achieve net zero carbon emissions as quickly as possible, which is why we have just brought forward the ban on new petrol or diesel to 2030.

“GRIDSERVE’s Electric Forecourt, close to Braintree, is the most advanced charging facility in the world and is pioneering the world-class infrastructure required to support our policies and drive the confidence we need to make the move to sustainable transport in the UK.”

In order to assess how the government can aid the rollout of EV charging to further facilitate the decarbonisation of the transportation sector, the Competition and Markets Authority launched a study earlier this week to examine the barriers.



UK sets 68% emissions reduction target by 2030 ahead of UN Summit

The Prime Minister has today announced a new ambitious target to reduce the UK’s emissions by at least 68% by 2030, compared to 1990 levels.

Recognising the urgency to go further to tackle climate change, the UK’s new target to reduce greenhouse gas emissions – our Nationally Determined Contribution (NDC) under the Paris Climate Agreement – is among the highest in the world and commits the UK to cutting emissions at the fastest rate of any major economy so far.

Today’s target is the first set by the UK following its departure from the EU, demonstrating the UK’s leadership in tackling climate change. Over the past decade, the UK has cut carbon emissions by more than any similar developed country and was the first major economy to legislate for net zero emissions by 2050.

The announcement comes ahead of the UK co-hosting the Climate Ambition Summit on Saturday 12 December, which will coincide with the fifth anniversary of the historic Paris Agreement. The summit calls on countries around the world to submit ambitious NDCs or other climate plans as we head towards the UN COP26 climate talks, which the UK government is hosting in Glasgow next year.

This new target meets the recommendation of experts at the independent Climate Change Committee who advise the government on emissions targets.

The UK’s path to meeting this target is backed by the Prime Minister’s Ten Point Plan for a green industrial revolution, which will create and support up to 250,000 British jobs by 2030. The plan sets out ambitious policies and investment, with the potential to deliver over £40 billion of private investment by 2030, so that we can develop innovative technologies and make significant strides in cutting emissions across energy, transport and buildings. It also provides a roadmap of further action the UK will be taking to reduce emissions in the coming decades, encouraging similar levels of ambition from businesses, organisations and nations around the world.

Prime Minister Boris Johnson said, “We have proven we can reduce our emissions and create hundreds of thousands of jobs in the process – uniting businesses, academics, NGOs and local communities in a common goal to go further and faster to tackle climate change.

“Today, we are taking the lead with an ambitious new target to reduce our emissions by 2030, faster than any major economy, with our Ten Point Plan helping us on our path to reach it.

“But this is a global effort, which is why the UK is urging world leaders as part of next week’s Climate Ambition Summit to bring forward their own ambitious plans to cut emissions and set net zero targets.”

Each party to the Paris Agreement – including countries and international blocs such as the European Union – determines what domestic action it will take and communicates it in a Nationally Determined Contribution.

NDCs are at the heart of the Paris Agreement goal, set at COP21 in 2015, to hold the global temperature rise to well below 2 degrees and pursue best efforts to limit the increase to 1.5°C.

Together, these plans will determine whether the world will achieve the long-term goals of the Paris Agreement, including global peaking of greenhouse gas emissions as soon as possible.

Many countries have now made net zero commitments and this round of NDCs, which set a 2030 emission reduction target, will need to be consistent with those longer term commitments. The UK’s announcement, which reflects the independent Climate Change Committee’s advice on net zero, does just this.

Today’s announcement comes ahead of the UK co-hosting a virtual Climate Ambition Summit on 12 December, which will coincide with the fifth anniversary of the historic Paris Agreement.

The Climate Ambition Summit provides a platform for leaders who are ready to come forward with announcements of new, more ambitious nationally determined contributions and long-term strategies to net zero, as well as new climate finance pledges and ambitious adaptation plans.

By Tim McManan-Smith  at The Energyst

whatsapp sharing button

BEIS gives businesses extra 12 months to apply for RHI

9 November 2020, source edie newsroom by Sarah George

The UK Government has confirmed that it will extend the Non-Domestic Renewable Heat Incentive (RHI) scheme by 12 months, in light of the impact of Covid-19 on the private sector.

Businesses which apply for the extension will have until March 2022 to finalise their appliacations

Businesses which apply for the extension will have until March 2022 to finalise their appliacations

In a decision paper published late last week, the Department for Business, Energy and Industrial Strategy (BEIS) confirmed that applicants for the Non-Domestic RHI will be eligible for a 12-month extension from March 2021. This will give them until the end of March 2022 to complete their applications.

BEIS first confirmed it was mulling an extension to the RHI in February and, in the months that followed, touted a potential six-month period. Green groups told ministers that a longer period would be preferable, as businesses are having to deal with Brexit preparations as well as Covid-19, and as heat is one of the UK’s biggest hurdles on the road to net-zero.

The Renewable Energy Association’s (REA) head of policy Frank Gordon said the decision on the extension is “welcome” and could support “hundreds of businesses” across the UK.

“We are also pleased to see Government working closely with industry to tweak the design of this extension, responding to feedback on the original proposals, helping to ensure the measures are as successful as possible,” Gordon explained.

“However, it should not be forgotten that this measure only helps projects that are already in the pipeline. There remains a growing renewable heat policy gap, with no firm indication yet on how new industrial or business heat decarbonisation projects are going to be delivered once the RHI is closed for good next year.”

On his latter point, Gordon is referring to the Heat Strategy, which is due for publication this Autumn. Ministers have reportedly paired it with the Buildings Strategy. The framework is expected to confirm the specifics of the RHI’s replacement – the Clean Heat Grant.

This new grant scheme will provide up to £4,000 per applicant. It may also have stricter eligibility criteria and exclude biomass. Organisations including the CCC, REA,  Confederation of British Industries (CBI) and UK Energy Research Centre have all urged those developing the Strategy to make it broader in scope and longer-term than the RHI.

The Domestic RHI had already been extended to 2022. It is not expected to fulfil its purpose of converting 12% of UK homes to renewable heat by the end of 2020 – current trajectories suggest the proportion will stand around 8%.

Cashing in on low-carbon heat

In related news, the Scottish Government has today (9 November) announced a new £4.5m “cashback” incentive schemes for homeowners looking to install energy efficiency measures or renewable energy infrastructure.

Applicants will receive up to 75% cashback towards the cost of a renewable heating system, up to a maximum of £7,500 per home.

For energy efficiency measures like insulation and triple glazing, the proportion stands at 40%, up to a maximum for £6,000 per home.

A separate £4m cashback scheme with similar rules has also been created for SMEs.

“This new scheme is part of our action to reduce emissions from heating our buildings and to support a green economic recovery from COVID-19 and I hope suitably qualified businesses are able to also pick up some valuable local work,” Scottish Energy Minister Paul Wheelhouse said.

This is in addition to the £4 million renewable heat cashback scheme for SMEs which opened for applications last week.

WWF Scotland’s head of policy Fabrice Leveque added: “Transforming the way we heat our homes is a vital component of Scotland’s journey to zero carbon. This funding will help homeowners reduce their energy bills while also cutting damaging emissions.”

Waste not, want not: the future of Energy from Waste

A common complaint of the grumpy middle-aged European academic is the creeping Americanisation of language. An example often cited is ‘garbage’, although the pedants amongst us know that garbage was originally an English word that went to America with the pilgrims on the Mayflower and has only recently come back to its mother country via the medium of television. I was musing on this whilst watching an American program on the Discovery channel about Roman ‘garbage’ dumps and hence the inevitable segue into a blog about rubbish.

As well as the etymology of the word garbage, my other take away from the program is how modern civilization still disposes of its rubbish in much the same way as our Italian forefathers did: we put in big holes in the ground and pretend it never happened.

Imagine 365 Wembley stadiums full of garbage

Let’s start with some startling statistics. Globally we produce about 2 billion tonnes of waste per annum and this is likely to rise to 3.4 billion by 2030. Put that a different way, it’s the equivalent of the interior space of Wembley stadium being filled from the pitch to the roof line with garbage every 17 hours. However, some 2,000 years after the Romans, we still bury about 70% of this in big holes in the ground and these big holes annually produce 1.6 billion tonnes of greenhouse gas (mainly methane and carbon dioxide).

The two alternatives to disposing of this mountain of rubbish are to either recycle it into new materials or to incinerate it to make steam and then electricity via turbines. Although both are preferable to burying, there seems to be a consensus amongst environmentalists that somehow the latter (energy from waste) is almost as bad for the planet as landfill. Now obviously one cannot generalize about every environmentalist and their views but taken in aggregate, the two most commonly articulated objections to EfW plants are that they discourage recycling and they pollute the environment.

Do EfW plants inhibit recycling?

Let’s take the recycling one first. It is argued that the materials that form part of the fuel mix for EfW plants could be recycled, and hence building these plants will take materials out of the recycling chain so that more raw materials are needed. This is true in theory but as is often the case, not true in practice. If everything in the waste stream could be recycled then it would be an unarguable case but that little word “if” is doing a lot of the heavy lifting in that sentence. The reality facing most waste disposal authorities is that a significant proportion of the waste stream is not suitable for recycling but still contains sufficient energy to make it viable as a fuel. For example, contaminated card like pizza boxes has virtually no value for recycling but still has a calorific value of 13.5 joules per kg so can be used as a fuel. It is similar for film plastic and waste wood so these three components of the waste stream (dirty card, film plastic and waste wood) tend not to be recycled and would otherwise end up in landfill producing methane which as we know is a much more potent greenhouse gas than CO2.

Are EfW plants clean?  

The second objection is emissions. There’s no denying that EfW plants produce emissions and that is why they have big chimneys attached. However the contents of these emissions is very strictly regulated and the level of particulates produced by a modern plant is only a fraction of what it was twenty years ago. A recent study by Imperial College concluded that, “Overall particulate (PM10) exposures related to EfW emissions in Great Britain are extremely low especially when compared to annual mean background concentrations.” What the carefully phrased term “background concentration” means in layman’s terms is that other sources of combustion such as domestic wood burning stoves, barbeques and bonfires produce in aggregate far more airborne polluting particles than EfW plants but let’s be frank, go to any beach on a summer evening and you will see there isn't a strong environmental lobby against campfires or portable barbeques.

Why not convert existing coal plants?

So, although there is clearly a need for clean EfW plants in the UK, only one or two at most get built every year and the biggest obstacle to building more is probably planning. Although the average person in the UK throws out about half a tonne of waste per year, most people don’t want a new EfW plant in their neighbourhood and would rather not think about where their half a tonne of waste actually ends up. One potential solution to this is to convert coal-fired power stations to run on waste instead of coal. This would kill two metaphorical birds with one handy stone; provide a solution to the mountains of waste and reduce the amount of coal that is burnt globally.

According to the Global Coal Plant Tracker, there are an estimated 1,767 coal-fired power plants in the world and 196 in construction giving a total of 1,963 plants and an operating capacity of about 2,000 GW of capacity. And as you will recall from school, coal was formed from dead trees and plants that absorbed CO₂ from the atmosphere about 300 million years ago and a tonne of coal is 85% pure carbon. Every time you burn it, you are releasing that ancient carbon back into the atmosphere. One tonne will produce about 2.86 tonnes of CO₂ and the 1,767 existing plants repeat this simple maths everyday producing roughly 15 billion tonnes of CO₂ emissions annually, about 30% of global CO₂ emissions.

The good news is that the number of operational coal plants fell by 29 in 2019, the third year in a row of decline and 75 have shut in the last 3 years. This is creating a pool of derelict power stations which could usefully be converted to EfW plants. The practicality of this is quite straightforward; the building, power island and grid connection can all remain untouched and the majority of the work is converting the fuel handling system and the incinerator to run on Refuse Derived Fuel (RDF), a fuel produced from industrial and commercial waste. Although there is still a planning requirement regarding change of use, this is generally less contentious as the local community have lived with the plant for a long time and it is often a significant local employer.

As well as the technical practicality, the economics of conversion make for compelling reading. A brand new EFW plant will cost between £100m - £500m depending on size whereas a coal-fired plant can be converted for roughly a 1/3 of the equivalent cost. The environmental argument is also persuasive as RDF has a significant biological content of up to 45% (paper, card, food etc.), therefore has more recently captured its carbon molecules from the atmosphere in the original growing process compared to the ancient carbon locked up in coal. Using RDF as a fuel instead of coal can generate net emissions savings of up to 1.5 tonnes of CO₂ per tonne of fuel. Converting coal-fired power station into EfW plants would likely reduce carbon emissions in the power stations converted by over 50%. To use another Americanism, it’s a no-brainer.

In conclusion

As with their attitudes to Christians and lions, it seems pretty obvious to us that we cannot carry on like the Romans when it comes to disposing of rubbish. The amount produced per person continues to rise and the revolution in home deliveries and takeaways during the lockdown has created yet more mountains of packaging and greasy cardboard, most of which is probably being sent to landfill to rot away and produce methane. This situation clearly can’t carry on indefinitely and it is particularly ludicrous that we are burning coal whilst burying RDF. Converting power stations to run on the latter instead of the former seems like an obvious solution and we are pleased to note that other people in the industry seem to share our vision.

Uskmouth power station in South Wales will be converted from coal to RDF in the next couple of years and we expect that many other projects will follow suit. There are a lot of coal-fired power stations dotted around the world and all could be converted in time. We may be losing the cultural war against the invasion of American words, but hopefully a mere 2,000 years after the Romans went home we will finally change the way we deal with waste and turn it into electricity rather than landfill.