Our Heritage 2040 Further Reading

Powering Up for the Future: From Consumption to Optimisation

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Laura Sandys, CEO Challenging Ideas, this week launches the first episode and headline findings of her latest report ReCosting Energy. Published ahead of the imminent Government Energy White Paper, recommendations include changing energy system objectives, which include moving from consumption to optimisation; and getting more from less across five key drivers of cost and value – Carbon, Capital, Capacity, Costs, and most importantly Customers.


The Headlines:

  • Optimisation not Consumption: Calls for new energy system objectives designed around the optimisation of Supply and Demand
  • Carbon Busting: Includes target for electricity supply to be 80% decarbonised by 2030
  • Demand and Supply Equally Treated: Compares the value of generation with demand-side assets and calls for these customer and storage assets to benefit from similar support


Overview of Recommendations: 

Re-Costing Energy

Ahead of the publication of the much-anticipated Energy White Paper, it’s rather apt that the energy sector is at a crossroads. Do we squeeze our new renewables dominated system into the old fossil fuel model or do we overhaul the system and policy that governs it to reflect its very different characteristics?

The current system is a smouldering platform of silos, with commodity prices no longer able to be the proxy for whole system costs.  We are currently unable to effectively integrate and unlock the real value of all the new innovations that are helping to decarbonise our economy – from electric vehicles, to smart electricity tariffs, to long term storage. Their value is cannibalised which is holding back the pace of decarbonisation, wasting money and giving customers a raw deal.

This new report paints a picture of a new system that rewards customers, properly values demand-side measures for the first time, and unlocks the huge investment required to get us to Net Zero. It proposes new metrics and incentives to encourage people to buy electric vehicles, for developers to build inter-seasonal storage, and for everyone to do more with less.”

The Government’s National Infrastructure Strategy published on Wednesday committed to ensuring that “support mechanisms evolve to consider the total system benefits provided by competing generation technologies and flexibility solutions”. The recommendations in ReCosting Energy seek to address this point.

The report aims to deliver a decarbonisation dividend by addressing some of the barriers to speed, deployment, fairness and efficiency.

The outcomes that the report recommends are shaped by Optimising Demand and Optimising Supply – and that these represent the new competitive tension within the market. The journey is incapsulated here.

Laura Sandys

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