With the UK under pressure to plug a looming energy gap and at the same time meet targets for clean renewable energy, power may be shifting to a new generation of consumers
Records are made to be broken – and last year saw the share of UK electricity generation from renewables hit a new high of 19.2 per cent, with wind and solar leading the way.
Despite this the UK is set to miss its target share in the binding European Union goal of sourcing 20 per cent of all energy from renewables by 2020. By 2030, the target climbs to 27 per cent, with an accompanying cut in greenhouse gas emissions, against 1990 levels, also agreed at 40 per cent.
However, not everyone accepts EU renewables targets as the metrics of success. “The issue isn’t missing EU targets,” argues Michael Liebreich, founder of Bloomberg New Energy Finance. “The EU shouldn’t be in the business of setting targets for renewables. The question is whether the UK is on track to decarbonise its economy.”
In terms of the economics of UK decarbonisation, Mr Liebreich expresses frustration at what he sees to be a policy problem largely of our own making. “The UK is among world leaders in the transition to clean energy, but this has essentially been achieved by offering generous subsidies,” he says.
“The fact is the UK is subsidising renewable energy, then promising to subsidise nuclear power even more, and then subsidising fossil-fuelled energy via the capacity market to keep the lights on. Frankly, it’s madness.”
While Westminster might be accused of sending mixed signals on renewables – the latest being an early withdrawal of onshore wind subsidies – the same could not be said of fracking. Vocal and unflagging government support notwithstanding, cheap energy and site protests frustrate progress.
As evidenced by recent support from planners in Lancashire, however, markets should keep the faith, says Chris Faulkner, chief executive of Breitling Energy Corporation. “Fracking is still viable in the UK,” he says. “I am fracking new wells profitably now in Texas at current oil prices. UK energy prices, especially gas, have not fallen as much as US, so shale remains attractive to investors.”
As Mr Faulkner acknowledges, UK development rates are difficult to forecast. “At a guess, I would predict a modest increase over the next five years, but the real growth will happen within ten years, with fracking accounting for some 50 per cent of gas supply and perhaps 10 per cent of oil,” he says.
Fracking is, of course, not the only technology with backing. Wave and tidal power is enjoying a boom period with the £1-billion Lagoon scheme green-lighted for Swansea Bay, plus the barrage on the River Wyre in Lancashire. Meanwhile world-record levels of wood-pellet imports are proving a barometer for biomass and fuel cells are warming to the task.
However, according to Dr Carole Llewellyn, associate professor in applied aquatic bioscience and participant in the EnAlgae research project at Swansea University, the future of energy may actually be greener than we think. “Algae are strong contenders within the mix of fuels of the future,” she says. “Basically, the petroleum we use today originated from algae millions of years ago. Algae have potential as a fuel for all forms of transport, including aviation, and can be farmed on wastewater and waste CO2 emissions.”
Algae commercialisation is still a work in progress, but funded under the INTERREG IVB North West Europe programme, the first legacy of the EnAlgae project is a decision support tool, which provides a virtual lab and algae pilot.
Given this generation game debate, it is easy to assume future energy markets will be all about grids and the technology of tomorrow, rather than communities and the people of today. However, community projects are showing that clean and green energy agendas, and issues of social sustainability, such as affordability and inclusivity, go hand in hand, according to Alex Germanis, interim chief executive of Pure Leapfrog.
“Energy increasingly has a social dimension. The exponential growth of community energy shows how hungry people are to create and own green energy that delivers a social return,” says Mr Germanis.
A business-led charity, Pure Leapfrog is the leading social investment provider within the community energy sector. With the rise of the sharing economy and associated social money-raising mechanisms, such as crowdfunding and peer-to-peer lending, digital technology trends are literally handing power to the people, he argues.
We will increasingly see liberalised markets where the consumer chooses – consumer preferences will be more important than economic rationale
“We are seeing an exciting marriage of decentralised and democratised energy and finance coming together to revolutionise the way we create, own and manage energy,” he says. “This is a growing movement and here to stay.”
People power of a different kind is predicted by Bjørn K. Haugland, executive vice president and chief sustainability officer of Norway’s DNV GL Group. He highlights the rapid increase in deployment of sensors, from ten million in 2007 to 3.5 billion in 2012, with as many as one trillion forecast for 2030 – more than 100 for every person on Earth. In his analysis, one counterintuitive consequence of this technological infiltration of landscapes and lifestyles, driving the internet of things of sensors and connected machines, will actually be the rise of the “prosumer” – the professional consumer.
In a world of storage options and the ubiquitous smartphone, where demand can be seen as the new supply, the focus swings away from generation and centralised distribution, towards an energy cloud, efficiency and behaviours.
“This game-changing transition has already started,” he concludes. “We will increasingly see liberalised markets where the consumer chooses. Apps are likely to impact mass customer demand response. Consumer preferences will be more important than economic rationale.”
In this sensor-rich future scenario, power may rest not with the new generation, but the next generation.