Our 12 Days of Christmas series is timed to coincide with issue 600 of Energy Spectrum. It commemorates 12 years of our weekly publication, which first debuted in 2005. It offers perspectives from senior industry figures on the past 12 years and discussion on where the energy market could be heading.
Tim Rotheray became Director of the Association of Decentralised Energy in August 2013. Tim spoke to Cornwall Insight on the value of getting on with things, the challenge of heat and offered an insight into ADE’s recent merger with the Association for the Conservation of Energy.
Where were you and what were you up to in 2005?
I was at Cardiff University and in the first year of my PhD in life sciences. I was looking at carbon and nutrient cycling in woodlands.
In the last 12 years, what trend or development in the energy sector have you found most surprising?
The pace of change in power sector economics has been fascinating to watch. I don’t think that most people were really expecting the cost reductions in wind and solar to have been as dramatic as they were.
There is still additional room for cost reduction. It will continue to happen. What becomes interesting then, is the economics of those plants start to disrupt, or continue to disrupt, the economics of traditional plant. It creates a virtual circle which should drive additional carbon abatement.
What has most pleased you?
The trend towards decentralisation and a greater recognition that the customer has a bigger role to play in the energy system. That’s really starting to come through. Twelve years ago, it wasn’t a discussion. It was always about big generation. Even five years ago, the discussion was “do we have nuclear, wind and CCS?”. Things like demand response, onsite generation and the energy customers’ role in the system was just not there. To see that develop has been really exciting to watch.
What has most disappointed you?
Politics has not consistently pushed in one direction. That absence of a really consistent focus on the science has been disappointing. The ban on onshore wind, the inability of enabling users to participate in the Capacity Market – all of those things on how we can deliver a cost-effective, decarbonised economy has not been an absolutely consistent theme and that’s been disappointing.
The Clean Growth Strategy has actually re-established a political consensus on climate change that hasn’t been there since the Coalition Government, which had a consistent view on decarbonisation and acting on climate change.
What are you currently working on? How could it impact the industry?
One thing which is really fascinating for me is that energy, still in most people’s minds, is electricity – certainly in the industry. People talk about energy and electricity interchangeably, but the Fifth Carbon Budget has really focussed on how we need to look at transport and, in particular, the challenge of heat. One of the things the Clean Growth Strategy picks up on is that whatever we do, the government identifies a potential for 17-24% of heat to come from heat networks. That’s a really interesting change. It’s the next challenge.
We can see really great things happening on power decarbonisation; we can see an encouraging route on a lot of the decarbonisation of transport, but decarbonisation of heat doesn’t have as much progress. The taskforce that we announced last year, and will be reporting on in January, will set out the industry view on what needs to happen to enable government’s ambition on heat networks to be deployed. That’s really exciting and one of the big pieces of work we’re going to be bringing out.
The second thing to flag is that when we announced our merger with ACE in December, that merger reflects what we consider to be a trend as we start to understand energy customers better. Customers aren’t really caught by the silos of energy policy, so they’re not interested in power or heat, demand or supply. They’re interested in powering and heating and mobilising their lives in the most cost-effective way. The work we’re doing together to bring the demand and the supply side at a local level together on heat and on power is really exciting. I think you’ll start to see some work coming out as the organisation moves towards the merger next year.
Why was it the right time for the merger to happen?
Energy efficiency and heat, efficient heat and decarbonisation of heat have been things of varying interest to government over the past few years. The Fifth Carbon Budget creates a focus which has just not been there. We cannot deliver the Fifth Carbon Budget without a greater focus on energy efficiency. We cannot deliver it without a greater focus on the decarbonisation of heat. The two organisations basically represent two sides of the same coin.
The focus on decarbonising heat and enabling customers, from domestic all the way to industrial, to participate in the energy system, the increasing electrification of heat which is part of that, the role of the gas, and the role of the heat networks and the whole role for demand reduction – all of those things are coming together into one area of focus is fascinating.
We are an association that focusses on what the user wants to do. The user wants to have access to all of the technologies and services to solve the problem, so the fact that we’ve got to really focus on decarbonising heat meant this was the right time for this to happen.
What are the key policy challenges going forwards? How do we solve them?
This decentralisation trend that we’re seeing and this opportunity for energy users and energy customers to participate in the system is something that can happen, but it also needs to be facilitated by the appropriate market and regulatory structures. That change is a huge cultural change for Ofgem, for BEIS and for market participants.
This is a world where we used to have active generators and passive customers. We’re moving to much more active, engaged, participative customers. Aiding that change and facilitating it is hugely challenging and it is a part of cost-effective decarbonisation of power. It’s easy to think “well, we’ve got a long way on power, so we can leave that” but I don’t think that’s the case. If we’ve got to deliver the low-carbon power system that we clearly need, there’s more to be done.
The second challenge is really grappling with the heat challenge and understanding heat is hyperlocal. Heat networks or individual homes and offices is a very local system. It engages non-energy experts in many cases. Figuring out the balance between demand reduction, decarbonisation of supply, the right technology in the right area – those are big challenges and will require bold action. We cannot just tweak if we’re going to deliver the ambition that’s required by the Fifth Carbon Budget.
What New Year’s Resolutions would you make, to make the sector a better place to work in and better contribute to policy goals?
When we start a project at the ADE, the question I often ask is what defines success? How do we know what success is? We know what success is at a very strategic level of energy, we know that a low-carbon energy system is successful. However, in the case of a more decentralised system the definition of a success is around how many customers, be it industrial, commercial, public, domestic, are participating in the system, how much they’re participating and how much value they’re providing. So, I think a resolution should be defining what we mean by success for policy making, in terms of enabling a more local and low-carbon system to happen.
Within the Capacity Market, this didn’t happen. We’ve just had 9GW of coal-fired capacity cleared for pre-qualification. If we’re saying that success is no coal on the system by 2025, then we’ve got to make sure those 9GW are gone. If we’ve got to get those 9GW gone, we’ve got to replace that from somewhere. Defining success and defining how we can really engage customers and make sure they get value for what they can do would be one resolution.
If I’m government, I would say by the end of 2018 we will have a plan on how we’re going to decarbonise heat. A real, clear plan. We won’t have all the answers, but there is a risk of what one of our members calls “paralysis by analysis” – you do so much analysis that you get more and more data and you don’t make any decisions.
What’s the best piece of energy advice you’ve ever received?
It relates to that paralysis by analysis question, which is “just do it”. Just get on and do stuff. We can spend lots and lots of time analysing what are the right solutions for a city, or decarbonising household demand or whatever. Just doing some stuff, just taking a punt and just doing things is one of the most useful pieces of advice I’ve seen.
Often, at city scale, I’ve seen local authorities saying well we’ve just started doing something, we thought a retrofit programme on insulation would be a good idea, we thought it’d be a good idea to consider a heat network and got on and did it. It’s only after having done that, the benefits have started to accrue, things they didn’t expect at the time. Whereas others have done endless strategies and future planning and targets and there’s lots of documents gathering dust.
What do you feel the main focus of the 2020 Christmas issue of Energy Spectrum will be?
Whatever answer I give you on this question will be wrong. If one thing is very clear in energy, it’s that we’re rather poor at predicting the future. There are some trends I would expect the activity on decarbonisation of energy, and the pressure to do so, to extend in an exponential way. If you look at the change in discourse on decarbonisation in the last five years, it’s gone from it being something that’s talked about to something that is absolutely central and mainstream to the point where it’s the focus of one of the most popular nature programmes on the BBC.
The pace of change is going to accelerate on decarbonisation and that will catch people by surprise. The focus on costs will still be there. That will remain. I wouldn’t be surprised if we are talking about the move away from carbon intensive forms of heating. I think you’ll find that the heat debate really goes up. I wouldn’t like to say what the main focus will be, it’s a mug’s game. It’s impossible to predict.
How does Energy Spectrum help you in your day-to-day work?
Spectrum is useful in providing that slightly outsider view. It’s a very insightful analysis, helping you to understand some of the key trends and developments. That can be very valuable.