The Sustainable Lives of Others

International lessons in decentralising Britain’s energy system

Britain has to cut its carbon emissions in half within the coming decade to meet the IPCC and Paris climate targets. Decentralised energy will be a key to doing so.

Since 2010, financial levers have been skewed in favour of the transnational, the unaccountable and e non-renewable. Smart technologies are already making decentralised energy the key to a clean energy future; opening the door to more integrated answers to air quality, clean transport, energy saving and citizen engagement.

If Labour doesn’t do this, those who have fleeced the past will fleece the future too. It will be the litmus test of any incoming ‘transformative’ Labour government.

Debates about decentralised energy often get no further than ‘electricity’. In reality, it is so much wider, more exciting …and more urgent. Let us be clear about the starting point.

The next Labour government will have to cut UK carbon emissions in half within a decade, in half again within the following one, and in half again during the next. In reality, Britain will need to embrace a whole set of new and innovative technologies if it is to become Net-Zero by 2050. Climate physics dictates the urgency of this, not Labour’s NEC or its manifesto working parties.

This is what Britain has to do to meet its legal obligations under the Climate Change Act, the Paris Agreement and IPCC calculations for avoiding climate chaos.

As the latest IPCC special report on meeting the 1.5C made clear, Governments can still meet the Paris Agreement emissions reduction target but only with “rapid and far-reaching” transitions in the world economy.

This is the ‘carbon law’ set out in the magazine Science^[1]. It explained the ‘global carbon pathways’ that eco-system survival is going to depend on.

In non-scientific terms, what scientists are telling us is that there are no ‘slow track’ options left.

This is the existential challenge magazines such as the New Scientist (and others) have been trying to turn into a route map.^[2]

Britain’s ageing energy system – shackled by outdated Big Energy/corporate interests and obsessed with one-way energy traffic (from power station to plug) – cannot deliver change on such a scale.

Nor can Old Energy thinking take the public with it; at least not in ways that are either socially or politically inclusive. Labour’s task is to map out a radically different approach that does both.

A rapid shift into clean, renewable energy technologies is part of the answer, but not the whole one. This would involve a fundamental rethink of tomorrow’s energy systems and their role within a more circular economy. Decentralisation is a start, but only when tied in to democracy and decarbonisation.

The good news is that others have already done much of the transformational thinking (and doing) that Labour will need to adopt, adapt and extend.

Democracy and security

No one has a perfect model or unblemished record in this pursuit of systems change. There is, though, more than enough good practice to draw on, with Denmark deserving recognition as first movers in this transformation process (even if the trigger was energy security rather than planetary boundaries).

The 1973 oil crisis almost paralysed the Danish economy. Their response was to treat energy as a service, not a market. This was the (cross-party) basis upon which the Danish energy grid was both nationalised and localised.

More profoundly, Denmark opted for an energy system that delivered both heat and power. Their 70 local energy networks (largely owned as co-ops) have to offer integrated energy solutions, building on the localised ownership of both gas and electricity grids.

One critical aspect of this was in the balancing mechanisms, essential to any decentralised energy system. Denmark accepted that linking heat and electricity, in CHP systems, lowers efficiency in the electricity sector (by around 40-45%). On the ‘plus’ side, it raised their ‘whole system’ efficiency/stability by 45-95%. This ability to switch from heat to power became a flexibility that enhanced grid stability.

Denmark’s was a model diametrically opposite to the privatisations foist upon Britain by Margaret Thatcher. Today, Denmark delivers Europe’s highest level of security of supply/grid stability (99.98% in 2016/17) along with stable prices. Some communities have had no increase in heating bills for almost a decade.

It doesn’t stop there. Denmark’s ‘2012 Energy Agreement’ mandated a 30% reduction in industry use of fossil fuels and a rise (to 40%) of renewable energy in final energy consumption. Much of this is being delivered through a change in planning regulations. New building proposals that are reliant on fossil-fuel heating simply cannot get planning permission. Construction has had to look for other solutions.

In a myriad of ways, this approach is being mirrored across Europe and (now) in large parts of the USA. Often, the role of the State has been to provide the regulatory changes (and new fiscal routes) that underpin localised solutions.

And as Germany demonstrated, this combination of clean and decentralised became a key element in job growth and prosperity, rather than an unaffordable burden.

Moreover,

• France now requires all new buildings to have solar or nature roofs, and
• California insists that solar is installed on all new buildings up to 10 stories high.

Genuinely transformational measures are beginning to emerge in ways that see localities driving the change. They are tomorrows decentralised systems, already changing the lives of households across a wide array of communities, towns, cities and villages.

From the grass roots upwards

In Germany, from the playground on the hill overlooking Munich’s Ackermannbogen estate you can see some of the array of solar thermal panels that form the roof-cladding on its 4 blocks of low rise apartments.

The hill is deceptive. Beneath it lies a 6,000 cubic metre storage tank and a small power plant (plus heat pump) that manages the hot water supply for the whole estate.

Solar energy supplies 45% of Ackermannbogen’s heat, cutting energy bills by roughly the same amount. Their solar district-heating system provides hot water all year round and heat in winter for the whole neighbourhood. In summer, it heats water in the storage tank up to 90°C and holds this heat through to the autumn. It continues to provide heat until January when the city’s district heating system takes over.

Munich already hosts one of the largest heating networks in Europe along with a set of really ambitious climate objectives; one being the switch to 100% renewable district heating by 2040. The Ackermannbogen estate forms a key part of this approach to ‘whole city’ thinking.

Norwegians would

The Norwegian city of Drammen uses the local fjord to meet the heating needs of its 65,000 residents and burgeoning business community. Drammen’s novel district heating system involves taking water from the fjord (at 8 degrees C) and using it (under pressure) to heat liquid ammonia.

The rough chemistry involved is this: at 4 times normal atmospheric pressure (4 bar) ammonia will boil and evaporate at 2 degrees C. By increasing the pressure to 50 bar the gas heats up to 120 degrees C. In turn, this heats water in the whole system to 90 degrees C. And once heat has been transferred to the water, the ammonia reverts to a liquid state. At this point whole process can start all over again.

What may sound like smart chemistry is, in reality, smart politics. It is about using today’s technologies in ways that neatly embrace the issues of climate, comfort and cost.

By the beginning of 2011, Drammen’s heat pumps provided 85% of the city’s hot water and heating needs. It more than pays its way, delivering annual cash savings of around €2m a year, along with 1.5m tonnes of carbon savings; the equivalent of taking more than 300,000 cars off the road.

Moreover, by heating water up to 90C (rather than the usual 50C-60C) it meant the system could be used in old as well as new buildings. For the first time, Drammen was able to begin retrofitting homes that had relied on gas-powered boilers to drive their heating systems. For them too, renewably-sourced, hot water and heating became a practical part of decentralised energy thinking.

Community, climate and clean

Back in Germany, and not far from Munich, the village of Wilpoldsried went even further. Over the last 18 years the tiny village (2,600 residents) has installed 5 bio-gas plants, 11 wind turbines, a hydropower system and over 5MW of solar panels. The result is that Wilpoldsried now produces 500% of its own energy needs and sells its surplus into the grid.

Further up the scale, towns like Wolfhagen produce 100% of both the heat and power needs of its 15,000 population. It decided, however, that instead of selling energy into the local grid it was better to own the grid itself. Wolfhagen became one of the 190+ German towns and cities that have taken their grid into local, social ownership; delivering both decentralised generation and decentralised distribution.

Smart technologies make all this possible. Smart grids join them up at anything from a neighbourhood to a regional level. And rapid advances in energy storage allow the variabilities involved in local ‘clean’ generation to be balanced out whilst massively extending the pace of decarbonisation.

It is at this point – where technologies morph into a wider debate about energy ‘systems’ change – that the real excitement begins.

By 2030, 50% of all Denmark’s energy will have to come from renewable sources. By 2050 the country will be a ‘100% low emissions economy’. This commitment to radical decentralisation has taken Denmark into more joined-up conversations about clean transport, clean air, clean electricity, clean heat … and about saving energy in preference to consuming more.

For Britain’s fuel poor, there could not be a more important aspect of the decentralised energy debate than energy saving.

It isn’t just that 40% of UK carbon emissions and energy consumption comes in heating our homes and buildings. The real killer – sometimes literally – is the disproportionate impact this has on the fuel poor.

Figures from the UK Energy Research Council^[3] spell out how the poor pay far more of their incomes on energy costs than anyone else.

If anything, decentralisation and decarbonisation planning must begin with the fuel-poor, not end with them. A key starting point would be a UK right of local supply.^[4] This is where towns and cities, villages and communities come into their own.

By 2025, Copenhagen aims to be the world’s first C-neutral Capital city. To do so, it’s decentralised energy system is mandated to deliver an accelerated exit from fossil fuel consumption, including a shift into clean transport. Already, 85% of its council vehicles are electric vehicles. Extending this across the city will need its own network of charging points and a system of smart storage/sharing.

Targets for reduced energy consumption in Copenhagen’s homes and businesses are being met through integrated energy-efficiency and clean-generation plans. The city already has 50-100 experimental projects under consideration (including free-heat recovered from its sewage system). Any comparison with UK initiatives just looks farcical.

Government forecasts of take up of Britain’s RHI (Renewable Heat Incentive) were wildly optimistic. The projected 513,000 new schemes have now been revised down to 111,000. Government investment has fallen (from £47bn to £23bn) and the RHI’s contribution to heat and emissions reductions has fallen by 65% and 44% respectively.

After the IPCC Report, the Tories ‘Green GB’ launch merely added insult to injury. Pledging support for airport expansions, fracking, a massive new roads programme, whilst cutting local authority programmes to tackle fuel poverty, install renewable energy or shift into clean transport systems does not make Britain a world leader. Real government leadership is mainly found outside the UK.

The dynamism shaping today’s decentralised energy debate can be found most easily in almost any of the 7,100 towns and cities signed up to the 2016 Global Covenant of local Mayors.^[5] For them, the debate has already moved from the ‘should we’ to the ‘how should we’ stage. Their ambition is to make ‘clean and green’ part of society’s DNA.

Paying for the journey

Wherever you look, a key element underpinning the shift into decentralised, renewable energy has been the availability of low cost finance.

Denmark offers low interest, municipal loans (1-2% over 20-30 years) to cover the costs of energy transformation. To pay for it, the Danes apply a universal Carbon Tax. It taxes heat at £7.50/giga-joule, whilst offering renewable energy subsidies of £18/MWh.

Germany used its Development Bank (the KfW) to de-risk more localised investment. The KfW also trains high street banks to deliver fast-track approval of schemes that come within local transformation plans.

Another approach, in the USA, has seen States placing ‘demand reduction’ duties on grid operators, forcing them to become co-financiers of local authority, energy efficiency/housing improvement programmes.

Whatever the approach, this joined-up focus on decentralisation, decarbonisation and democracy has allowed others to avoid the UK experience of seeing much of its green finance ‘captured’ by large, corporate interests.

Breaking from the past

This, perhaps, is the biggest obstacle a Labour Britain would face in the race towards a decarbonised, democratised and decentralised energy future.

Since 2010, all the financial levers have been skewed in favour of the transnational, the unaccountable and the non-renewable. Feed-in-tariffs (FiTs) and the Renewables Obligation (RO) which were available to households, communities and local authorities have been progressively squeezed out. Corporate lobbying has shifted funding programmes towards complex (and often stupid) schemes that only the big guys can access.

Britain’s community energy cooperatives have been steadily de-recognised. At the same time, Mickey Mouse programmes – Contracts for Difference (CfDs), Capacity Payments, auctions and emissions trading schemes – have been used to skew government support in favour of existing corporate, big energy interests. Even Britain’s remaining energy efficiency programme – the energy company obligation (ECO) – is in the hands of companies whose business model rests on selling more consumption. Someone has to be bold enough to transform the lot.

Smart technologies are making decentralised energy the key to a clean energy future. They will open the door to more integrated answers to air quality, clean transport, energy saving and citizen engagement. These are exciting prospects. But as Labour will discover, it isn’t enough to will the ends. You must also will the means.

If Labour doesn’t do this, those who have fleeced Britain’s past will fleece its future too. This will be the litmus test of any incoming ‘transformative’ Labour government.

Alan Simpson

Sustainable Economics Advisor to the Shadow Chancellor

1. Science 355: (1269-1271), 24 March 2017 – The “carbon law” for the 2-degree target, from “A roadmap for rapid decarbonization”, Rockström, Gaffney, Rogelj, Meinshausen, Nakicenovic and Schellnhuber, ↑
2. ‘100% Renewables: how to keep the lights on without blowing the planet’, Peter Fairley, New Scientist, 9th June, 2018. ↑
3. ‘Funding a Low Carbon Energy System: a fairer approach?’, UKERC 2018 policy briefing, http://www.ukerc.ac.uk/asset/0AD68D13%2D5215%2D4EC7%2DB6D5FAE680E90706/ – Professor John Barrett, Dr Anne Owen and Professor Peter Taylor, (University of Leeds) ↑
4. See Transformation Moment, 10:10 publication, June 2017, http://files.1010global.org/documents/Transformation_Moment_Alan_Simpson_Report.pdf ↑
5. Transformation Moment, op cit, p 12 ↑