November 2016    
Building flexibility to cut bills 

Dear reader,

There is a disconnect in energy policy. The Government has committed to creating a smart power system that enables the UK to deliver what are now statutory decarbonisation targets out to 2030 at least cost to consumers. However, apart from announcing auctions to procure a modest amount of new offshore wind capacity and putting huge effort into pushing through a decision to proceed with Hinkley Point nuclear power station, there has been no shift in what is effectively a moratorium on investment in onshore wind and solar PV. Despite the increasing body of evidence that the direct costs of these technologies are reducing rapidly and are cheap compared with alternatives, there remains a fear that significant ‘hidden’ costs exist due to the intermittent nature of the electricity produced. Industry stakeholders are crying out for policy coherence and this, in turn, demands strong evidence that these hidden system integration costs will not lead to escalating energy prices. This is the question that is being tackled by the E3G report based on leading edge system modelling undertaken at Imperial College.

The conclusions of the analysis are clear. Virtually any progress on improving the ‘smartness’ or ‘flexibility’ of the power system will ensure that the integration costs of intermittent renewables will remain low, <£10/MWh,  even with a high share of around 50% of electricity produced. Moreover, if the Government achieves the smart power system to which it aspires, then the UK creates the option to deploy even higher volumes of renewables and take advantage of the low prices and reduced carbon emissions that will result. However, the virtuous and self-reinforcing action of renewables and flexibility will not happen without policy action. The report sets out what is needed to ensure consumers are able to reap the benefits of a flexible low carbon power system based around the deployment of large volumes of renewable capacity.

Thanks for reading,

Simon Skillings, Senior Associate

Imperial figure 11 Report — 15 November 2016
Plugging the Energy Gap
by Simon Skillings, Tom Lafford
A new E3G report based on analysis from Imperial College London shows that the UK urgently needs to develop a flexible power system. The report lays to rest the argument of a preventative ‘hidden’ cost of renewable power.

Bill cost Blog — 22 November 2016
Smart Power: Putting bills payers before politics
by Tom Lafford
The advantages of a flexible energy system are increasingly clear and well evidenced. Now is the time for government to take a firm grip of the policy changes, market mechanisms and regulatory regimes needed to deliver a decarbonised energy system at least cost to bills payers.

Imperial figure 5 15 November 2016
Plugging the Energy Gap - Infographics
by Simon Skillings, Tom Lafford, Bryn Kewley, Lisa Fischer
A fully downloadable set of infographics

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