Lessons from the British Energy Transition
The paper Powering Up Britain outlines the British government’s energy strategy for the coming years. Britain is ahead of most countries in the energy transition, which often look to learn lessons from the UK’s experience. So far, those lessons are decidedly mixed.
Good points include:
- Rapid transition from fossil fuelled to renewable electricity;
- Driving down the cost of offshore wind by sustained strategy and support with well-designed contracts well suited to the technology;
- Showing that the energy transition pairs well with both economic growth and the development of high-quality jobs.
It is troublesome that whole system costs (both operational and network) are much higher than they should be, and rising exponentially, due to unsuitable regulation and contracting, threatening to cost the country trillions more than if they were well suited to the task. Causes for this include:
- Unsuitable regulations and contracts, which are too short-termist and salami-sliced;
- Dealing with different aspects of the energy transition separately (“salami slicing”) when they actually affect each other fundamentally and should be considered together – for example, system operation separated from networks, hydrogen (which is renewably powered) separated from renewable generation and the electricity system;
- Short-termism, in which “strategic” planning is 2030 (7 years) despite the fact that just connecting something new to the grid typically takes 15 years, so 1-2 years should be considered immediate term, 2-15 years short term, 16-30 years medium term and 31+ years long term / strategic.
The Electricity System
Turn-of-century energy systems were underpinned by hydrocarbons, which fuelled power stations, transportation and most other things, whether directly or indirectly. The future energy system will be under-pinned by the electricity system, which will power not only widespread electrification (for example, of heating, transportation and industry) but also the hydrogen economy whether through electrically powered green hydrogen (from electrolysis powered by renewable energy) or providing supplementary energy to create blue hydrogen (from fossil fuels with CCS). Therefore the electricity system must be considered with all the other aspects of the economy, not separately from them. And generation, distribution (networks) and consumption must be considered together.
Such integrated considerations would greatly reduce the costs and other adverse effects of the energy transition.
- Connecting the renewables to the grid will be totally unaffordable, and scar the countryside with unnecessary transmission lines, unless large-scale renewable generation is connected to the grid through suitably-sized LDES (long-duration electricity storage);
- Powering the hydrogen economy would also require a vast electricity grid unless it were taken largely off-grid, again using LDES;
- The objectives of the energy security plan are laudable, but unachievable without regulatory change along the lines of A 21st Century Electricity System, many of whose proposals apply equally to the hydrogen economy and other utilities.
Most forecasters expect that, excluding the hydrogen economy, the energy transition will require grids to be at least 3.5 times their pre-transition sizes. Even excluding the hydrogen and mitigating the reinforcement by using sufficient LDES, grids will have to increase substantially in size; around the world their limited capacity is severely constraining both investment and cost-effective achievement of the energy transition.
The Hydrogen Economy
The hydrogen economy does indeed need developing fast, but the proposed uses of hydrogen are questionable. Domestic, commercial and many industrial uses require low-temperature heating. But such heat uses six times as much energy if powered by hydrogen than by heat pumps – and that is the claim of hydrogen advocates! And transportation cannot be wholly – or even largely – electrified: there aren’t enough raw materials (lithium, cobalt, rare-earth metals) in the earth’s crust, let alone if it’s also to be used for electricity systems, domestic storage, portable devices, lightweight alloys and other uses. Moreover, it’s impractical for a large proportion of vehicle users, who find the current system of quick refuelling in fuel stations very effective: much better for the majority of all vehicles (e.g. two-thirds, accounting for ~90% of energy use) to be hydrogen-powered.
Likewise, the plan to dilute the gas network with increasing amounts of hydrogen is both excessively expensive and counter-productive. It’s excessively expensive as it would require multiple conversion campaigns as the percentage of hydrogen increases. It’s counter-productive because the gas-hydrogen mixture can only be used for low-temperature heating for which it’s very ill-suited and for high-temperature (industrial process) heating; all other uses require 100% pure hydrogen. The reason is because three times the volume of hydrogen is needed for the same calorific value as natural gas, and the flame characteristics differ. This determines a different strategy for converting the gas network for hydrogen.
Such a re-configured hydrogen economy will be vast, even if it doesn’t account for as much energy as the current gas system. But it will be renewably powered, whether for electrolysis or for most other means of producing hydrogen. Likewise the other aspects of the hydrogen economy, such as chemical and fuel synthesis, and industrial uses. To power all this through the grid will require an unaffordable increase in the size and complexity of the grid, scarring the landscape. Better is to build it largely or entirely off the electricity grid, by powering the hydrogen economy with renewables supported by LDES on local power networks, exporting from them only the intermediate and finished products, chemicals etc.
CCS and CCUS
CCS and CCUS are indeed necessary for hard-to-abate industries and for negative emissions using BECCS, but it should not have a significant additional role in power generation, as we’ve written before. And blue hydrogen should only be a stopgap measure towards green hydrogen.
It should always be borne in mind that CCS is both more expensive and less efficient than billed. For example, Canada’s Boundary Dam project shows that the target 90% capture rate delivers an irregular and sharply decreasing 80=>40% capture in practice. CCS also imposes a 30-40% inefficiency on the power station that carries it.
Incentivising the Energy Transition
The proposed increase in funding and incentivisation of private funding for the energy transition is very welcome, but much less effective than if it were paired with an Emissions Added Tax and suitable contracts which would both be cost- and revenue-neutral for the country while promoting green investment, jobs and growth, fitting the economy for the 21st and 22nd centuries.
In summary, the Emissions Added Tax would work like Value Added Tax, charging each business for the emissions they create while avoiding double payment of emissions already paid for by suppliers. Moreover, it enables charging and crediting of the tax at borders, so avoiding any disadvantaging of the economy with respect to other economies. Meanwhile suitable contracts would have the lead times, durations and scope that would properly compensate plants for what they do, and provide the degrees of financial certainty that investors need to invest at low project-finance rates.