OPINION The energy transition: disruption or repurposing?

Research by Michael Kattirtzi and Mark Winskel found different views on the UK energy system transition

 

The UK’s energy system is experiencing dramatic technological and institutional change, and there are enormous challenges in reconciling system-wide decarbonisation, energy security and flexibility and affordability for consumers. While substantial progress has been made in some areas, the challenges ahead include decarbonising heating and transport sectors and managing the intermittency of renewable electricity generation. There are emerging opportunities, including from smart infrastructure and distributed generation and storage technologies.

For some UK energy experts and stakeholders, these pressures and drivers imply an urgent need for a fundamental reconfiguration of the UK energy system, while for others the solutions lie in repurposing and adapting existing assets and organisations. These competing ‘transition logics’ – of disruption and repurposing – play out in debates across a wide variety of energy topics, and it can sometimes feel like different experts and stakeholders are talking past each other.

In recognition of this, the UK Energy Research Centre (UKERC), working with ClimateXChange (CXC), Scotland’s centre of expertise on climate change, spent two years analysing how experts and stakeholders assess the likelihood and desirability of disruption and continuity across various aspects of the UK’s energy system transition. We surveyed around 130 UK-based stakeholders, including academic researchers and representatives from government and other public bodies, think tanks, established and emerging businesses and civil society organisations.

 

Governance arrangements

Survey participants were asked to assess the likelihood of three different propositions about UK energy system governance arrangements in 2040:

Proposition 1 There will have been a decisive shift away from centralised control, with greater powers to nations, regions and cities. By 2040, UK energy system governance will reflect regional and local priorities above national strategy and operation

Proposition 2 There will be a greater spread of powers between national and local bodies, with some planning and delivery powers devolved to local and regional authorities, but with national government, regulators and system operators remaining as the main system strategists in 2040

Proposition 3 The distribution of powers between national and local bodies in 2040 will largely resemble those of today, with national strategy and planning remaining dominant

Proposition 2 emerged as the most common expectation among survey respondents. More than three quarters considered this a likely or highly likely outcome. Views were more divided on the other propositions. Just over half considered it unlikely or highly unlikely that powers will be decisively decentralised, and just under half saw it as unlikely or highly unlikely that powers will remain largely unchanged.

Participants’ comments revealed that those who saw proposition 2 as likely or highly likely typically reasoned that this balances between a rise in regional and local bodies taking advantage of distributed technologies and developing their own energy strategies, and the continued national significance of secure and affordable energy supplies. Others argued that more integrated national and Europe-wide control of energy systems is more likely (and preferable) if the challenges of decarbonisation, security and affordability are to be met. Only a minority argued that security and decarbonisation can be better achieved through initiatives led at the local and regional level.

 

Finance and ownership

Participants were asked to assess the likelihood of two different propositions regarding the relative role of private and public finance and ownership in the UK‘s energy system:

Public financing (rather than private) of energy infrastructure and supply assets will be dominant in 2040

Public ownership (rather than private) of energy infrastructure and supply assets will be dominant in 2040

Excluding respondents who were undecided or who felt unable to answer this question, almost three quarters considered it unlikely or highly unlikely that public ownership would dominate, and almost two-thirds considered it unlikely or highly unlikely that public finance would dominate.

Participants’ comments reveal disagreement on whether the current (predominantly private) model of UK energy system ownership and finance has been successful or not. Those who believe that private financing and ownership will prevail argued that public bodies lack funding and organisational capacity, and that private companies have responded well to a political steer to decarbonise, particularly in the electricity sector.

In contrast, those who argued that public ownership and financing is likely to dominate suggested that there are opportunities for public bodies to raise much-needed revenue, or that they are needed to invest in low carbon solutions that private investors may consider too risky or long term, such as carbon capture and storage and local heating networks. Others suggested mixed models of private and public ownership and financing will prevail, perhaps facilitated by digital platforms.

 

Implications

The survey results reveal widespread disagreement among UK energy experts and stakeholders about some key aspects of the UK energy system transition, and on the overall role of disruption and repurposing in system change. While we have focused here on governance, ownership and financing, this pattern is seen across a wide range of other issues, including the future of heat, and the role of consumers and citizens.

In other areas there was much greater agreement, and on the key policy drivers, there was a clear prioritisation of decarbonisation, followed by energy security and flexibility, affordability and industrial strategy. Overall, the findings suggest caution in ‘reading-off’ energy innovation and policy priorities from broad narratives of either disruption or repurposing. It is important that experts, decision-makers and stakeholders engage widely and debate these issues outside of their common circles, to ensure that assumptions are revealed, counterarguments are acknowledged, and policy and strategy decisions are well-evidenced. Failure to do so will reinforce old blind spots – or create new ones.

First published in the May 2019 issue of New Power Report

Read the research in full

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