Digitilisation of the UK energy system

Climate Scepticism

BY MARK HODGSON

I have written here before about seminars run by Westminster Energy Environment & Transport Forum (WEET). Sometimes I find them a useful way to alert me to developments of which I would otherwise be unaware. On other occasions, I simply despair at the amount of time and energy (and money) being spent on pursuing a fantasy. The conference that has just come to my attention probably covers both of those: “Next steps for digitilisation of the UK energy system”, to be held on 26^th February 2024.

Energy Digitilisation Taskforce

First of all the conference details alert me to the fact that we in the UK have an Energy Digitilisation Taskforce. The level of expenditure and civil service/QUANGO effort with regard to all things net zero-related is so immense that it is almost impossible to keep up with it all. For instance, I completely missed the Energy Digitilisation Taskforce’s report from January 2022. At “just” 35 pages long, it’s a short document compared to many reports that I have had the misfortune to plough through on behalf of Cliscep readers. Yet despite its (relative) brevity, it reveals shocking complexity and immense costs being necessitated by imposing net zero on the UK’s energy system. The foreword’s opening paragraph lays this out quite clearly:

Our success in achieving net zero will require harnessing energy from low-carbon sources to power our homes, businesses, and vehicles. To achieve this, millions of installations — including solar panels, battery storage, heat pumps and electric vehicles — will need to be seamlessly integrated onto our electricity networks. This move to a more decentralised energy system will create more complex energy flows, which will rely on the digitalised exchange of data to be managed effectively in, real-time. This digitalised data exchange facilitates an energy system which can accelerate, automate, plan, and anticipate processes far better than at present.

Of course, Ed Miliband would have us believe that a Labour government can achieve this by 2030 (even Sunak and his Tories seem to think it could be a reality by 2035). I wonder if any of them have read even as far as the Report’s Introduction?

The future energy system will be profoundly different to the one that exists today; it will have to manage hundreds of millions of actions and assets every year, each interacting, engaging, and delivering value to customers and the stakeholders.

Customers will have the opportunity to access more complex, blended products through digital platforms and services, with algorithms and smart technology managing energy needs on their behalf.

Generators and storage vectors of all sizes will need to respond to demand profiles, optimising their assets in a more dynamic manner to unlock value in their respective business models. Stability will need to be managed throughout the system at all levels, with varied and multiple roles interacting with new actors and actions.

This is a significantly more complex operational environment and will require a different approach to the design, management, and governance of the system. Furthermore, these outcomes will need to be flexible enough to adapt to changes in the system as the energy transition evolves.

The Energy Digitalisation Taskforce aims to empower consumers and drive decarbonisation by outlining the digital journey that must be undertaken. Importantly, these benefits must be realised without compromising the high standards of system stability, security, and resilience.

Tucked away in page 11 of the Report is this gem:

Customers are starting to deploy a range of energy assets that will reduce demand for fossil fuels but will also drive-up electricity demand significantly such as Heat pumps and EVs. This sharp increase in demand could create a need for substantial network upgrades, however many experts believe that flexibility can help to make the best use of available capacity and reduce infrastructure costs. However, many of these energy assets lack basic smart functionality ‘out of the box’. This means the energy system has little visibility of their presence and actions but also means they cannot be flexible energy assets. This creates a huge risk for the future, removing a potentially valuable tool for Net Zero, and possibly creating the need for costly digital retrofit or premature replacement programmes.

Time and space do not permit a detailed examination of the proposals contained in the Report. I would urge readers to take a look for themselves, in order to appreciate the enormity and complexity of what is coming down the line. However, Recommendation 5 (“carbon monitoring & accounting”) is worth a quick look, in order to appreciate the extent of the hubris and delusional self-congratulatory thinking embedded in our net zero-obsessed establishment. This is what “they” believe:

Carbon data will provide government, companies, and consumers with the information that is needed to understand the potential impact of their carbon footprint and develop wider economic carbon policies. This could have global impacts with other governments and countries being able to follow the UK’s lead toward a Net Zero future…

…Carbon reduction is a global mission; the UK has already shown leadership by being the first major economy to set a legally binding Net Zero target. We now have an opportunity to become a world leader in carbon monitoring, data capture, and accounting. Accurate carbon metrics are key to supporting carbon innovators to deliver Net Zero and provide a solid foundation for future carbon policy.

Forget everything else. It’s all about those pesky emissions:

To improve the granularity and timeliness of carbon emissions data, Government should mandate that carbon data that is collected today should be reported at a more granular level, ideally aligned with settlement periods. In some cases, this may be commercially sensitive so it may be appropriate for an independent third party, such as the Future System Operator, to collect and aggregate data prior to publishing. In addition, the Regulator should consider requiring hardware-based emissions monitoring for all carbon emitting energy generation. There are a multitude of sensors available from low-cost environmental IR sensors to industrial grade specific emissions spectrometry. These should be deployed with the specific intention of measurement above the granularity of the current grid balancing settlement period, i.e., half hourly under current market design. As broad a spectrum of greenhouse gases should be monitored as appropriate, dependant on their source. This includes, but is not limited to, carbon dioxide, carbon monoxide, methane, nitrous oxide, HFCs, PFCs, nitrogen fluorides and sulphur fluorides. This breadth of data collection is a fundamental requirement to establish a more accurate carbon emission estimate for the energy sector…

Of course, China, India, Russia, Indonesia et al will be rushing to follow our “example”…..

Bottom line:

It is agreed that digitalisation of the energy system is not just a ‘nice to have’ but a core requirement in ensuring that we can accelerate the journey to Net Zero…

(Apparently the customer goes on a journey too). Anyway, thirty-five depressing and worrying pages of management-speak. One thing seemed to be missing from my quick look – any mention of the cost.

National Grid ESO Digitilisation Strategy and Action Plan

This was issued in June 2023, and runs to just 16 pages, including covers, contents page, foreword etc. You have to give it to the National Grid when it comes to optimism. See page 5, for example:

We will keep the lights on and get energy to people when they need it, maintaining today’s reliability levels in a rapidly decarbonising and decentralising world. We will ensure our control centres are resilient, flexible, and agile, with the ability to keep pace with the changing energy landscape. We will confidently and regularly operate periods of zero carbon electricity with high levels of renewable output and dynamic demand. The number of market participants will have increased significantly, as a result of growth in distributed energy resources, electric vehicles, and energy storage.

We will have invested and adapted ahead of need, to continue to operate securely and reliably through extensive automation, greater use of artificial intelligence and enhanced training and simulation, to deal with the vast amount of data needed to run the electricity system. There will be alignment with distribution system operation (DSO) to enable seamless planning and operational coordination to realise the benefits for consumers of a decarbonised energy system.

Page 11:

We will continue to drive delivery of efficient outcomes for consumers and remain conscious that everything we do has an impact on consumer energy bills. A key focus will be enabling whole system flexibility through the markets we operate. Our balancing markets will be decarbonised and distributed, to help achieve the UK’s commitment to net zero emissions. We will maximise consumer benefit by facilitating competitive markets and managing system costs, attracting high volumes of flexible energy, such as demand-side response and storage.

The optimism is most reassuring. Yet, by page 13, it all sounds just a little flat, even if the management-speak does its best:

We will seek the best whole electricity system solutions, working collaboratively with Transmission Owners (TOs) and Distribution Network Operators (DNOs) across transmission and distribution to deliver electricity to Great Britain’s homes and businesses as efficiently as possible. We will use our unique position in the industry to help Great Britain meet net zero through driving debate and collaborative action across the energy sector. This means stepping up and playing a crucial part in the transition to net zero – using our insights to identify and accelerate no regrets strategies that deliver consumer value over the long term. By taking a whole energy system view we will facilitate the transition to clean heat by helping prepare the energy networks and optimising between them. In doing so, we can drive the transition to a low-carbon energy system in a way that maximises benefits to consumers.

Take a look at the Plan to see for yourself the significant number of activities that are being undertaken to try to facilitate the madness while keeping the lights on. Given that the operators of our electricity grid are at the sharp end, I do wonder whether they believe this stuff, or whether they just feel that they have no choice but to go along with it. The optimism and positivity is great. I wonder how the reality will turn out?

Arup – Pathways to a digitilised energy system by 2035

Arup, it seems, were appointed in March 2023 by DESNZ to carry out a six-month feasibility study in partnership with the Energy Systems Catapult and University of Bath with a view to researching energy system ‘digital spine’ feasibility. In August 2023 they produced a report, which can be downloaded here. Arguably, the task handed to them represents something of a poisoned chalice, given this (page 7):

The UK government has set out ambitious plans to create a net zero power system by 2035, subject to security of supply. This involves a rapid acceleration in the deployment of wind and solar capacity, storage capabilities, nuclear power, heat pumps and electrolyser capacity to produce hydrogen. Whilst there is uncertainty regarding how the electricity system will decarbonise, the pathways presented within this paper focus on governance and could enable any energy mix that emerges.

It feels a bit like it’s all on a wing and a prayer (and that’s assuming decarbonising electricity production by 2035 – Labour’s 2030 target seems like pie in the sky). Also on page 7:

To achieve the UK’s net zero goals, our future energy system will need to be comprised of a series of new technologies. Integrating these will require massive structural changes to the ways in which we produce, distribute, and consume electricity.

Given that Arup knows about such things, paragraphs such as this are more than a little worrying:

The system is moving away from centralised sources supporting a large base load, such as energy generated in thermal power stations, towards smaller and distributed generation. A more decentralised model will provide greater flexibility to balance load demands resulting from more variable and distributed energy resources connecting to the grid. We will require specific localised understanding in energy production alongside more dynamic modelling of the energy system. These changes mean all stakeholders will need to fundamentally adapt their roles and responsibilities in the energy market.

The “more decentralised model” is awash with practical and logistical problems, yet Arup claims (politically expedient to do so, I wonder?) that more variable and distributed energy resources connecting to the grid (= problems, I should have thought) “will provide greater flexibility”. The rest of the wording in the paragraph does look like euphemistic language recognising the massive scale of the challenge, while seeking to present it rather as an opportunity (as politicians seem to believe, or at least hope).

I wonder what they got paid? The rather short conclusion looks like a determined attempt to dodge a bullet (or, to mix my metaphor, to avoid drinking from the poisoned chalice) and (to mix the metaphor still further), to thrown the ball back into the Government’s court:

Whilst good progress has been made in digitalising the energy system since the Energy Data Taskforce in 2019, our current pathway and the rate of change is not enough to achieve decarbonisation commitments. New thinking is required, considering alternative pathways to realise a digitalised energy system by 2035.

Within this paper, we have identified a range of pathways available to achieving a digitalised energy system, each with their benefits and challenges. We conclude that the preferable pathway is built around sustained coordinated collaboration between the regulator, government, and industry.

In exploring these different pathways, we intend not to recommend detailed actions but instead to initiate meaningful debate within the sector about the crucial roles that all stakeholders may play. This is to provide greater certainty and clarity so that next steps can be taken.

Back to the conference agenda, and I can see no real reference to costs (they are the elephant in the room, that really must be obvious as a huge issue, yet nobody wants to talk about them). Indeed, the whole thrust of the conference is around the eagerly anticipated consumer benefits to be achieved by net zero and digitilisation. It has sections talking about “increasing consumer participation and autonomy”; “opportunities for customers to engage directly with the energy system”; “managing energy use through smart technologies, tariffs and services in order to reduce [sic] bills”; “frameworks for supporting a competitive market for energy smart appliances, encouraging affordability, and removing demand-side barriers to smart technologies”; “considering how additional capacity from these smart appliances can be utilised”; “what will be required to meet smart meter rollout targets, looking at incentives and next steps for enabling smart households to benefit [sic] from a digital energy system”; and “building and maintaining consumer trust to work towards the wholesale adoption of data-led solutions”.

Incredible though it may seem, they actually seem to believe this stuff.

Post-COP28: carry on regardless

Shortly after I received the email alerting me to the WEET digitilisation conference, I received another one, about yet another such conference, headed “Priorities for UK climate policy following COP28”. This one is to be held on 31^st January 2024. Unlike the digitilisation conference, where many of the speakers were yet to be identified, this one’s speaker roles are filled, and we find the usual suspects present there in large numbers, with representatives of (inter alia) the Climate Change Committee; the Parliamentary Labour Party (in the form of the Shadow Minister for Climate Change); DESNZ (x 2); Glasgow City Council; Prospect (trade union); National Open College Network; Arup; Zero Hour; WWF; Durham University; Octopus Energy Generation; Heathrow Airport; Globalfields; and the Chartered Institute of Building. Joint Chairs are members of the House of Lords.

Areas for discussion might have been taken from my last jokey article, An A-Z of Climate Alarmism. As for COP28 “key outcomes and takeaways”, there is absolutely no reference at all to the determination of most of the developing world to slow down the phasing out of fossil fuels. Instead, there will be a discussion regarding “policy implications and legal commitments for the UK – next steps for delivering a green economy and for net zero targets”.

The next session will talk about “progress”: “assessing the UK’s position in relation to short and long-term climate goals – viability of current climate strategies to meet Paris Agreement ambitions – decarbonising key industries in the UK”.

A session dealing with international co-operation (with whom? India? China?) will discuss “aligning timeframes with globally agreed standards – standardising reporting and trading of carbon – opportunities for global cooperation”. They’re always opportunities, aren’t they? There’s never a down-side.

The next session is on finance and investment (remember, it’s always an investment, and the word “cost” must never be used). Here the talk will be about “next steps for funding infrastructure projects – assessing sustainable finance initiatives and strategies to promote green activity – improving public-private partnerships”.

A section on monitoring will discuss “plans for delivering better assessments of climate impact at global, national, sectoral and company-wide levels – promoting transparency and accountability – the role of ESG reporting”.

Finally, the magic (but so far as I can see, meaningless) phrase – the just transition. The conference concludes with a discussion regarding “strategic priorities for a people-centred and inclusive approach – opportunities for job creation and reskilling in phased-out industries – minimising negative externalities of green transition”. I suppose I should be grateful that there is some recognition that “the project” will result in “phased-out industries” and that it involves “negative externalities”. The insouciance with which these unpleasant aspects are approached, however, gives me no comfort at all.

Lest there be any doubt, whatever mutterings there may be from the Great Unwashed, it’s clear that the Establishment fully intends to carry on regardless. If you think that’s an exaggeration, then just look at the list of “key policy officials who are due to attend”. They will be there from the following:

APHA; Cabinet Office; CCC; CCS; DAERA, NI; DBT; Defra; Department for Communities, NI; Department for Infrastructure, NI; Department for the Economy, NI; Department of Finance, NI; DESNZ; DfE; DfT; DLUHC; DSIT; EA; FCDO; FSA; GLD; HMRC; HM Treasury; Home Office; Homes England; HSE; Isle of Man Government; MCA; MOD; NAO; NIAO; NIC; OBR; Ofwat; OGP; ONS; ORR; OZEV; UKEF; UKIB; the Scottish Government; and the Welsh Government – as well as parliamentary pass-holders from both Houses of Parliament.

Other than business people hoping for a slice of the very substantial pie, I wonder if anyone other than that lot bothers to attend these things?