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The hidden billions saved by demand side energy
By The Association for Decentralised Energy director, Dr Tim Rotheray
The way we have developed the UK energy system is based on a centralised view.
Power is generated far from its users. Production is managed up or down to follow changes in demand. The energy user, by and large, is a passive recipient. The producer has no relationship with the user, and the user has little control over their energy.
Energy for heat is also by and large centralised - gas (the major source of heat in the UK) is procured and delivered in GB wide network to broadly passive users.
But the system is changing. In fact, the system has been changing for a long time. The change is driven by users wanting to take greater control of their energy, principally to manage their costs. These local actions – be they investing in decentralised generation, efficiency measures or actively shifting energy demand – are individual decisions, hidden from view.
A new report published by the renamed Association for Decentralised Energy seeks to quantify the cumulative value of all of these discrete, individual actions. The report examines what energy demand would have been if we used as much energy for every pound generated in the economy as we did in 1980.
The results are staggering. The collective impact of all those individual decisions and investments is worth £37bn in avoided business energy costs every single year. Our annual gas imports would have been three times what they are today. That is 771 supertankers of avoided gas imports. The UK would also have needed to build 14 additional large power stations and Our annual CO2 emissions would be higher by nearly half a billion tonnes.
These demand side investments have made the UK leaner, greener and more secure. It is only by seeing the enormous total value that we can fully understand the case for doing more at the local level.
Our energy system struggles to encourage local solutions. Heat networks to capture local waste heat, lifting the vulnerable from fuel poverty. Combined heat and power to make business more competitive and cut the vast amount of energy wasted from our power stations. Businesses’ investment in energy management and demand side services, allowing them to reliably keep our lights on for less cost, and allowing participation in our energy system right across the country.
This is not about pitting one system against another. There are no silver bullets. It is about creating a system that can accommodate and value all options. Centralised and decentralised, supply and demand.
To achieve this end, we require a new way of thinking about the UK energy system. Not thinking of a system which dictates to the user, but thinking of one in which the user and producer are in partnership. By exploring all options equally we can find the best way to meet the UK’s energy needs by managing both production and demand, and crucially, by cutting waste first.
Using Government's own estimates, the Invisible Energy report shows that there are many more 'demand side' opportunities. By 2020, we could cut business energy cost by a further £5bn and save enough power to run the London Underground for 30 years.
We see the role of the newly renamed Association for Decentralised Energy as helping bring together the policies necessary to support that opportunity, and help create a more local, user-led, efficient energy system.
Our focus will remain on shaping policy and regulation to ensure the UK is seizing upon its decentralised generation, demand response and demand reduction opportunities. Currently, demand side policy is fragmented, with little integration to ensure that it works for the user. Our vision is for the energy system to be designed around the user, enabling them to take control. If we are to make the successful transition to a low carbon economy, we must capture the opportunities to make business and industry more efficient and competitive, heat homes and businesses with technologies and infrastructure suited to their location, and ensure our transition to a low carbon economy is done as cost effectively as possible.
A competitive, secure and low carbon energy economy is achievable, but only if we explore the options at all scales to help us get there.