In the UK, we still have a relatively centralised approach to energy production. What can be done to encourage more localised supplies?
Regulatory reform to allow local generators to supply to local consumers to help improve revenues for decentralised energy. This reform needs to embrace the concepts of energy storage and also a more diversified approach to the system operator role.
At the national level, the most important factor is a consistent policy framework, which encourages and supports appropriate technology-driven decentralisation, in order to give funders and developers sufficient confidence to invest in local energy systems. Delays and sudden changes in financial support mechanisms diminish the impact these policies are intended to create. Also the planning system has an important role to play in supporting local generation and in challenging developers to maximise local, low carbon generation.
And what role can local authorities here in the UK play in securing cleaner energy?
Local authorities can play a key role as scheme promoters, by helping to define opportunities and to secure anchor loads (energy demand) from public sector properties and new development sites passing through the planning system. We are seeing this especially for heat networks and energy from waste plants, but local authorities are also beginning to explore opportunities to develop or support power generation and supply.
Where projects are identified as economically viable, but below the threshold to be commercially attractive to the private sector, local authorities can use their powers to borrow and invest in local infrastructure to secure viable low carbon networks.
Political support can also be crucial and local authorities play an important role in communicating to stakeholders the benefits of distributed energy systems and ensuring that any local impacts are mitigated.
The report highlights the role that mayors have played in Europe. What opportunities do city-regions and devolution deals here in England offer in this regard?
Mayors around the world are finding through networks such as the C40 Climate Leadership Group, the Global Covenant of Mayors and the 100 Resilient Cities programme that knowledge sharing can provide benefits to all cities. The new mayors and newly empowered cities and regions can also benefit from these networks to enhance their understanding and gain the confidence to make radical changes in how their cities create and use energy.
Devolution creates a window of opportunity to make radical change, so cities need to capitalise on the opportunity to have a new conversation with their citizens and to start down a new pathway to local, low carbon, secure energy. They can use the success stories from other cities around the world to support public engagement and enthusiasm.
Could we really see a municipal energy company in every city?
Municipal energy companies can deliver significant local economic and environmental benefits and there is no reason why every city could not have one. These companies could take a variety of forms and be involved in many different aspects of the energy system, including building retrofit, heat networks, low carbon generation and full electricity supplies. However, success in all cases will depend on sustained leadership, political commitment and investment to secure the right knowledge and skills to manage risks and to deliver the potential benefits. In practice, we are likely to see a more patchwork arrangement, with some cities pushing ahead with a variety of business models and others taking no direct part in energy delivery or distribution.
However, we are all consumers and the message of climate change is that every one – including every city – needs to engage with how and where energy is created and used in order to bring about the radical reduction in greenhouse gas emissions, which are needed to avoid global warming well beyond the 2 degree limit agreed at COP21.
How important will it be to integrate energy and transport infrastructure in the future, and what will the benefits of this be?
We should first remember that efficiency is the ‘first fuel’. An efficient transport system is one which uses less energy overall so the first thing cities should do about energy in transport is to maximise walking and cycling, and then public transport. The less energy the transport system uses, the easier it will be to integrate the energy it does use into the wider urban energy system.
However, what is obvious is that an apparently virtuous city transport policy that encourages electric vehicles will not work in practice unless the city has at the same time reviewed the impact on its energy systems. Will it be possible and what will be the thresholds for their electricity network to supply an all-electric vehicle transport policy? So integrated energy planning in conjunction with integrated transport planning is of fundamental importance; though this thinking is often not yet in place for cities. This is the key opportunity for cities to have a ‘voice’ through coordination.
And lastly, how can we in the UK finance these new projects? Should central government, the private sector or local authorities lead it?
Central public-sourced finance or support to finance is often necessary to gain momentum in the initiation phases of significant energy projects. The market on its own, through private investors and developers, is not readily able to take schemes through the uncertainty of planning and regulatory approvals when there is no guarantee of implementation. This needs to be recognised by both central government and cities. But once through the early initiation phases, energy projects are viewed as good long-term assets with clear revenue streams so then become popular investments for the major infrastructure funds and pension funds.
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