The whole energy system is facing radical change – by Philip New

Published: 13 May 2016

One of the greatest achievements of the past century has been the democratisation of comfort and mobility – to the extent that here in the UK we now treat them as something that we enjoy by right, like education and healthcare. Underpinning all this has been cheap, reliable and plentiful energy. Our energy works.

By Phil New

Global warming confronts us with the need to change the sources of energy we use – and how we use them. More recently other trends – the growth of the digital economy, the desire of communities to take more control of their energy, the emergence of local energy generating technologies – have added to the push for change. Managing this without compromising the reliability and affordability that we have come to depend on is a massive challenge, and a massive opportunity.

We have been primarily focussed on how we replace fossil fuels with lower carbon alternatives. This isn’t straightforward; even though wind and solar are becoming much cheaper, they are intermittent (they only work when the wind blows and the sun shines, which isn’t necessarily when it suits us), while big nuclear projects are proving challenging to finance. Replacing natural gas in heating, and oil in transport, adds another layer of complexity – and yet if we are to meet our 2050 carbon targets we will need to do this.

We have traditionally used energy in a fairly segregated fashion – electricity keeps the lights on, gas keeps us warm, oil keeps us moving. Energy would be produced at central points – power stations, refineries, gas terminals – and distributed to consumers. An elegant, vertically integrated array of discrete systems. Market structures, regulations and operational expertise have grown around each of these “vectors”.

We now face the prospect of the “vectors” becoming intertwined and interdependent – as we use electricity for cars, or heat, for example. Further, we can now generate electricity locally – down to an individual rooftop. We can use the surplus heat from a hospital boiler to provide warmth to a neighbourhood. This opens the possibility of local energy networks, and possibly local energy markets, developing – challenging the traditional, centralised, top-down structures that have managed and balanced our energy system in the past.

The whole energy system – the physical, economic and institutional networks that connect the sources and uses of energy – is facing radical change. Change can be difficult, but it also provides great opportunities for new ideas, new ways of working, new technologies, new markets and new skills.

This is the backdrop for the Energy Systems Catapult. Our job is to help make sense of the transformation our energy system faces – building investor confidence, supporting new technologies, enabling new markets, growing new companies, and opening export opportunities, while making sure that we continue to enjoy affordable, reliable, and ever cleaner energy. We will do this by building a picture of the whole system that people, whether policy makers or entrepreneurs, can use to make choices, and by developing the tools that innovators and market makers can use to experiment, test and scale up the new ways of operating that this energy revolution will need.