Sustainable Consumption Institute

Would it be possible for the UK’s electricity system to transition to one where 50% of final demand was met by distributed, low-carbon sources and delivered by communities, cooperatives, local authorities, town and parish councils and social housing providers? And, if it was technologically possible, how might the transition come about? What kinds of policy and institutional support would be necessary, and crucially, would it cost more?

New research [PDF] published today by the EPSRC-funded Realising Transition Pathways (RTP) project argues that such a transition would be technologically feasible by 2050 while also providing reliable, affordable and low-carbon electricity. In addition to assessing technological feasibility of increased distributed generation, the report examines the new types of governance, ownership, and control a distributed future would need, proposing a new institutional architecture designed to support a civil society-led transition.

Less than 2% of UK electricity demand [PDF] is currently met by community- or local authority-owned distributed electricity generation. A systemic transformation to 50% distributed generation would, therefore, be technologically, socially and politically challenging, particularly given the need to provide affordable, low-carbon electricity while maintaining a reliable supply.

In the distributed generation scenario examined, despite widespread electrification of the transport system, electricity demand falls across all sectors from agriculture to industry due to high rates of energy efficiency improvements. In particular, by 2050 households halve their electricity consumption, and would have to be much more flexible, for example, about when they switch on their washing machine; handing control over to ‘demand managers’ trying to balance a hugely complex system. The electricity market would transform from one which includes hundreds of trading companies to one that includes thousands of companies, municipally-owned energy service companies, cooperatives, and individuals. Moving to a distributed system would therefore involve new roles for municipalities, communities, and households within the energy system, as well as new business models at distribution and supply levels.

While Britain’s electricity system first emerged as a distributed electricity system, the Electricity (Supply) Act of 1925 triggered the transition to a centralised electricity system focussed on economies of scale. Now, most electricity is generated in large centralised plant, which is then transported to areas of high demand by the high-voltage transmission network, and then to the consumer via the medium to low voltage local distribution networks.

Distributed generation by contrast connects electricity generation to the local distribution network. In the 50% distributed generation scenario considered, while much of the distributed generation is small-scale such as solar PV and community combined heat and power (CHP) plants, it also includes large-scale onshore wind farms.

Future projections advocated by incumbent players in the market—such as private utility companies and policy makers—focus on technological mixes or cost optimisation. These projections are often based on assumptions that draw on the model of a market-led transition based on centralised generation, and thus the models of governance and the familiar roles that go with it. These assumptions, however, represent just one possible pathway to low-carbon transition. Greatly expanded distributed generation is another technologically feasible pathway.

This distributed pathway is often marginalised in current national planning, which favours ‘least cost’ models— while distributed technologies may present higher capital costs across the system overall, they also offer the opportunity for civil society to capture value from generation, distribution and supply. Furthermore, due to the centralised structure of energy finance, markets and infrastructures, contemporary energy policy has been designed to favour large-scale generation and corporate ownership. This is to the detriment of building strong alternative energy movements.

Despite an unfavourable policy environment, there is growing interest in the potential of capturing value from distributed energy systems from a range of stakeholders: the devolved governments, municipalities, and communities. Motivations are wide ranging, including; local economic development, community cohesion, democratic participation, environmental education, and environmental concerns. Although market penetration remains low, the number of decentralised generation schemes is growing. But activity is neither coherent nor well co-ordinated.

Long-term visions of how the ‘up-scaling’ of community energy into a nationwide transition to a decentralised energy system might be achieved have also been lacking. In particular little attention has been paid to the institutional architecture needed to support and coordinate such a transition. And, significant gaps exist in understanding the feasibility of scaling-up decentralised generation from governance, regulation, policy, and financial perspectives.

‘Distributing Power: A transition to a civic energy future’ [PDF] addresses these gaps, as well as assessing the technological feasibility of the transition. The report draws on empirical research, engagement with a wide range of stakeholders from the energy sector, and from experience in Germany, Denmark and the UK.

Key findings of ‘Distributing Power’ include:

• The report’s low carbon electricity scenario, in which 50% of final demand is met by distributed generation, could deliver a 97% overall reduction in the electricity generation system’s direct greenhouse gas emissions by 2050: from today’s 494g CO₂eq/kWhe to 12g CO₂eq/kWhe.
• National energy planning with regional and local support for a ‘civic energy sector’ would be needed, requiring a much greater role for national and local government.
• Whilst distributed energy systems have often been equated with increased energy independence, high-levels of distributed generation would require an increase in regional, national and international interconnection, such as electricity imports from neighbouring countries.
• The traditional business models of the ‘Big Six’ would be challenged as they lose market share to local generation and supply businesses.
• Much of the economic value from the UK’s energy system that currently leaks out of the economy could be captured at the local level.
• New infrastructure, like smart-grids and emerging technologies such as in-home fuel cells, would be necessary; large-scale expansion would need to occur from 2020 onwards.
• The impact on consumers’ bills would only be marginally more expensive in the medium term to 2030; it would be significantly cheaper in the long-term to 2050, compared to two other scenarios considered.

While ‘Distributing Power’ assesses the impact of one distributed generation future, there are others, which might have a greater role for solar, onshore wind, or other generation mixes. However, the report offers general insights into the barriers and the technological transformation that would be required for a move to a highly distributed energy future.

The report can be downloaded here [PDF].

Dr. Victoria Johnson is co-author of ‘Distributing Power: A transition to a civic energy future’.