Why does the 5th fuel, energy efficiency, remain underappreciated in the UK?
By Kevin Cox, Managing Director, Energys Group
For as long as I can remember I, and therefore Energys Group, have pushed the message that energy efficiency and demand reduction are cheaper than building more capacity to generate electricity.
You may imagine then I was pleased to see that The Climate Group has started calling efficiency the 5th fuel. This is a sensible approach; wherever we can coin useful phrases to push the positive story efficiency has to tell, the better.
We badly need messages like this, because today we face an unfortunate reality. In another recent article, The Economist noted that often energy efficiency is also known as the ‘invisible’ fuel.
Invisibility is just not good enough; the vast benefits of efficiency need to be high on central policy lists, well known by businesses, accepted as key to our future. After years of lobbying, it seems to me that energy efficiency still faces unnecessary challenges with regard to take up and deployment.
This is a tragedy; energy efficiency is too often overlooked compared to generating more, yet we know it is the fifth fuel source and we know it needs to be prioritised.
In case you are after some proof, The International Energy Agency (IEA) estimates that since the 1970s, energy efficiency improvements in 11 countries saved the equivalent of 1,337 million tons of oil in 2011, worth US$743 billion.
This figure is larger than the combined total energy consumption in the European Union or Asia (excluding China) for the same year.
We must build energy efficiency in the UK, today
Fortunately, we have good news. Energys has been working with the government’s Electricity Demand Reduction (EDR) pilot, discovering how businesses that deliver lasting electricity savings at peak times could in future compete for funding with generation.
The enormous potential this approach has to do good is astounding. The concept affects relatively simple work too; projects that could win cash include improving motor or pump systems, installing energy efficient retrofit technologies such as LED lighting or making any other simple improvements to a building and its electrical equipment.
At Energys, we are delivering the lion’s share of the reductions for the 2016/2018 EDR programme. So far, that’s a total of 9,297kW out of the 23,307kW which the complete Phase II pilot is delivering.
Of course, we are very, very proud to be part of this early adoption drive, leading the way on UK energy efficiency.
But we are also aware of the pressing urgency to raise energy efficiency’s profile, and to banish efficiency’s unfair reputation as an ‘invisible’ fuel to history.
The deeper story to EDR and UK energy usage and resilience
Comparing energy efficiency’s story, there are some interesting numbers I would like to share.
Every kW of demand reduction in the EDR scheme, a key part of future UK energy plans, costs DECC £203.
Conversely, the cost of a kW of additional capacity using solar is around £1000. Solar contributes almost nothing to solving our peak capacity problem, as maximum demand occurs on winter evenings when the sun is set. Irrespective of how much solar capacity we bring on line, unless it is married to some form of storage solution, we still need sufficient generating capacity from other sources to meet our peak demand. I am not anti-renewables (far from it) but they are definitely not the solution to our capacity issues.
Wind generation is similarly expensive. Like solar, it too can only play a small role in capacity planning, as the high pressure weather systems that bring cold, dry, frosty winter days, also bring only light winds. The reality is that maximum energy demand often coincides with low wind.
Thus, from a demand planning point of view, we have to have sufficient capacity without taking renewables into account.
So, what about the generating methods where the amount of electricity we produce is in our control? Let’s consider Hinkley Point C. Even if the project is completed on budget (which is unlikely!), it will cost a whopping £5,625 per kW to build, and that is with no allowance for any future decommissioning costs. This makes it around 28 times as expensive as reducing demand.
There is a huge amount of angst at the moment as the UK faces several winters where peak demand is forecast to be at, or over, our capacity. The most cost effective way of solving this problem is to reduce demand rather than increase supply (and in any case increases in supply are often many years away).
Energy efficiency rules the roost
So, my call is this; get energy efficiency in there fast, into buildings we already have: Make businesses more profitable and their employees more productive, with better lighting and bespoke controls for lights or heat.
A beneficial ‘side effect’ of this approach is that we significantly reduce our carbon footprint – so carbon reduction becomes an automatic by-product of policy.
So, with new government programmes, let’s roll out more cash support to get this happening.
We have to get to work on really delivering energy efficiency today. We love the government’s EDR pilot. But we say; ‘there is so much more we can do’.
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