UKERC Blog: The times they are a-changing

16 Jun 2016

Energy systems only change slowly. They consist of large, long-lived infrastructures; they are dominated by conservative companies; and therefore exhibit what innovation theorists call “lock-in”. Well, that’s the conventional wisdom.

But conventional wisdom can be wrong. In the 1980s, telecoms analysts took much the same view. Early mobile phone technologies looked as ridiculous then as 1980s hairstyles do now. (Younger readers can check both using Google!). But, as we all now know, it was the ever cheaper, mass-produced technologies that changed communications markets for ever, undermining the economics of the fixed-line infrastructure and transforming user behaviour.

Now energy systems show some signs of going the same way. Midnight on 10 May marked the first time for well-over a century in which coal-fired power stations did not contribute to electricity generation in Great Britain. We’ve known for some time this moment was coming, but it happened years earlier than projected by National Grid. And despite their best attempts, the Government has so far largely failed to incentivise new combined cycle gas-fired capacity through the capacity auction.

Part of the reason is that energy demand has fallen substantially since 2004, in defiance of official projections. Initially the main effect was on gas demand, but in recent years peak electricity demand has also fallen, with lighting efficiency a major contributor as the shift to LEDs gathers pace. Renewable generation has risen to 25% of annual demand, with summer day grid operation now significantly affected by the deployment of 10 GW of solar PV. Most of this has been achieved in less time than it’s taken just to discuss whether to build Hinkley Point C.

Solar costs continue to tumble with reports of costs as low as $30/MWh in Dubai, which would imply about £50/MWh under UK conditions. And now battery costs and market penetration seem set to go the same way. This combination of demand side investment, mass deployment of low-cost renewables and storage might just turn an electricity transition into a revolution. It means there is a serious prospect of future electricity systems containing nothing that would be recognisable as a power station to earlier generations of engineers.

None of this is guaranteed. The forces opposing such a change are strong. The investment required in new technologies is very large. New market actors have insufficient resources to deliver that investment. Operating such a different system is already raising some major challenges. And some of our energy uses – like aviation, shipping, industrial processes and heating existing buildings – still look very challenging to change radically.

The 1964 Bob Dylan quote above shows that singing about change (at least in American politics) is not always sufficient. But the possibility of transformational change in the energy system is bigger than ever before in our lifetimes.