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Meet climate change commitments, for less
A recent speech by former Environment Secretary Owen Paterson followed by an article from Telegraph columnist Christopher Booker, urged an increased role for demand management and combined heat and power to more cost-effectively deliver a low-carbon, secure energy system, while lower business energy costs.
CHP's value arises from it capturing and using heat that is otherwise wasted in cooling towers and demand response by moving demand away from times of high demand (and higher pollution) to times of lower demand.
What was curious was that the support for these technologies was linked with scrapping the Climate Change Act. But it is not the Climate Change Act that prevents us using more cost effective emissions reductions tools like CHP and demand response. It is the way we make energy policy.
In fact, the Climate Change Act should drive uptake of efficiency measures and more cost-effective carbon abatement. But instead, time and time again, the most cost-effective options for more secure, lower carbon energy are missed in favour of old, simple approaches: More centralised plant, more generation. In fact, a DECC research paper this year found a number of ways that the most cost-effective demand-side options are often missed in policy making.
And this waste of money continues to occur. Despite DECC’s analysis showing that supporting CHP would reduce consumer and taxpayer costs by millions of pounds, there is a very real risk they will not support the policy, despite a commitment to do so in the 2013 Heat Strategy.
And despite demand side response providing the most cost-effective way to provide the flexible capacity the grid needs, DECC’s designed their Capacity Market scheme around building new, expensive power plants.
Consumers are looking to Government to ensure we are achieving our goals in the most cost-effective way. We need to decarbonise and, if we are to retain the support of voters, we must do so at lowest cost.
In order to change this broken record and a long history of doing things more expensively than we need to, a new Government should rebuild taxpayer and consumer trust by committing to meet our energy policy aims for a secure, decarbonised system at best value. At the CHPA, we call this commitment a ‘Consumer Value Guarantee’.
Under the Consumer Value Guarantee, Ministers would be required to test all energy policies, as part of their Impact Assessments, against alternative demand side options. If a proposal is to build more of a particular generation technology, Ministers would have to compare the cost and benefits of doing something different, such as investing in better building efficiency, and force ministers to ask “Is this the most cost-effective way for us to meet our commitments?”
By taking a new approach, opportunities like demand response, demand reduction, heat networks, waste heat recovery and yes, CHP, will be able to compete on their respective merits and against the only metric which should matter: How we meet our commitments in the Climate Change Act for least cost.