A NEGAWATT MARKET FOR SUSTAINING ENERGY

SERVICES SECURITY IN THE UK

6th International Scientific Conference on Energy and Climate Change Athens, Greece - October 10, 2013

Reem Yusuf and Yael Parag

Socio-Technical approach for the Security of Energy Services (STESS) ProjectFunded by the EU FP7 Framework

Environmental Change Institute (ECI), University of OxfordInterdisciplinary Center (IDC) Herzliya

ENERGY SERVICES SECURITY VS ENERGY SECURITY

Supply

Energy Services Security (ESS): “the extent to which the population in a defined area (country or region) can have access to affordably and competitively priced, environmentally-acceptable energy services of adequate quality” (Jansen, 2009:7).

The security of energy services presents a more appropriate term than energy security, as the ultimate energy policy goal – and challenge - is providing consumers with adequate and reliable energy services.

Socio-Techno-Economic Vs Techno-Economic

STE can help overcome possible barriers to energy conservation, energy efficiency , and carbon emission reduction mechanisms;

MLP allows for a comprehensive analysis through applying a systemic approach taking into account energy providers, consumers and their intermediaries;

The two approaches tackle the financial and technological barriers that are challenging but they also manage the complexities of consumption behavior;

Here, we focus our attention on the role of energy consumers, those within the residential and commercial sectors as perceived by the UK government through its most recent energy and climate change policies.

We then analyze consumers’ interlocking and potentially transformative roles by way of their potential involvement in new energy markets and initiatives

SOCIO-TECHNO-ECONOMIC APPROACH (STE) + MULTI-LEVEL-PERSPECTIVE (MLP) ENERGY SERVICES SECURITY

(ESS)

AN INTEGRATED DEMAND-SIDE APPROACH FOR NEGAWATT MARKETS

Economically incentivizing energy users to change their consumption behavior is a way for facilitating the Integrated Demand-side system (above) and the notion of sufficiency.

This can be achieved at least-cost through creating an energy savings market or the so-called Negawatt market.

WHAT IS A NEGAWATT MARKET?

A NEGAWATT MARKET… A WIN-WIN SOLUTION

treats a unit of saved energy as a commodity with a discounted price tradable between consumers, utilities, and generators;

enables creating new incentives for reducing demand for electricity;

allows for further flexibility in generating off-grid energy and off-grid energy services which grant households more freedom to pick and choose which energy service to save and when to do so;

acts as an enabling mechanism for creating new markets and niches needed to prevent further technological lock-ins and opportunities particularly necessary during the current economic downturn.

ADVANTAGES OF A NEGAWATT MARKET

involves the entire supply chain plus consumers from all sectors including households;

transforms energy users from being merely passive consumers to active participants;

provides incentive for continuous reduction in energy consumption rather than incentives for technology adoption;

helps promote off grid and decentralized energy generation;

fosters public engagement in electricity generation and in the sector as a whole

WHY A NEGAWATT MARKET FOR THE UK? Projected electricity demand increase, due to electrification of transport and heating; Decline in capacity: Fifth of existing power plants (coal, oil, nuclear) are to cease operation by 2020

(total capacity loss of 19.1 GW) as they are either reaching the end of their lifecycle or because they do not comply with environmental regulations set by the Industrial Emissions Directive. Further closures are expected by 2023;

UK’s Continental Shelf reserves depleting leading to further reliance on import;

the need for large investments in low carbon generation to reduce carbon emissions;

reduce at least 34% of GHG emissions below its 1999 baseline by 2020 and 80% by 2050 with the power sector to be largely decarbonized by 2030;

Under UK’s Renewables Roadmap, 15% of total energy consumed is expected to be generated from renewable sources by 2020

Electricity prices are projected to rise based on some global natural gas price increase scenarios, high costs of Carbon Capture and Storage, cost of renewable energy

Approximately GBP 110 billion of investment is needed in the electricity sector alone by 2020

UK ELECTRICITY MARKET REFORM, 2011

Energy Supply Security

Carbon Emission Reduction

ASSOCIATED CHALLENGES

UK’s total generation capacity is 90.2 GW out of which 20% is of a capacity margin. With an estimated energy deficit of approximately 19.1 GW (around 1/5 of the total installed capacity) due to power plant closure, the country’s de-rated capacity margin will drop to less than 5% by 2020

While the introduced set of mechanisms can assist in overcoming some energy supply challenges, it disregards energy demand reduction as a way of achieving the government’s targets at least-cost and in the short-term.

There is no transparent market in savings, although it is believed that there have been bilateral trades between suppliers, as well as sales of insulation measures to suppliers from the managing agent for Government funded programs” (Eyre et al, 2009:435). The policy mechanism is designed to influence investment in energy efficiency technology, rather than the effective use of that technology once installed.

SOLUTION: COMBINED DEMAND-SIDE & SUPPLY SIDE FOR ENERGY SERVICES

SECURITY

The security of energy services requires integrating both supply-side as well as demand-side approaches that when combined allow for greater involvement by engaging intermediary actors capable of supplying energy services.

While a Negawatt market can significantly reduce CO2 emissions and reduce electricity costs, it can also open opportunities for greater energy services security, reduce needed investment in infrastructure and power stations, which can all assist the UK in meeting its carbon emissions reduction and energy security targets in the short term and in a cost-effective way

PROPOSED ELECTRICITY MARKET FOR THE UK

Thank you