From an article that first appeared in the Evening Standard here.
One year on, there are two big things Bristol’s Owen Square Community Centre has got out of its local geothermal project. The project, a half-hour or so from the proposed Hinkley Point nuclear reactor in Somerset, has made enough savings on the centre’s energy bills to fix up the gents’ toilet — a total makeover, it’s really a palace now. It has also redone the entrance, taking out the bullet-proof Perspex that shielded the receptionist from any visitors. “You can’t believe the difference,” Damon, the site manager, told me. “It makes people feel as though they’re welcome here.”
No big cash has been made out of this project, run by Good Energy, just some shaved energy bills from the boreholes the size of a dinner plate dug into the ground — but could it give a glimpse into Britain’s energy future?
For the past century there has been one dominant energy model, the centralised production and distribution of fossil fuel-based power through the grid. Then in the Sixties we had the dream of abundant nuclear power, centrally delivered and “too cheap to meter”. That dream of energy abundance may look far off but how does local distributed energy stack up as an option? Can it provide the scale to form a credible part of an energy strategy? Here are three emerging reasons why it looks, against the odds, like it could move from niche to mainstream.
On the technological side, without a high-octane regulatory support package, decentralised energy is already happening. Not with big budgets, necessarily, not with mega-glamour, but with a series of small-scale projects tailored to what’s there. In Newham, for example, the Combined Heat and intelligent Power plant (CHiP) aims to harness the energy from “fatbergs”, the bus-size balls of grease which cost Thames Water an estimated £1 million a month to remove, using teams of trained “flushers” decked out with protective white suits and shovels who descend into London’s Victorian sewer system to hack up the fat. CHiP plans to use the fat instead to power 40,000 homes.
In Brixton, the energy group Repowering is installing solar panels on the rooftops of housing association buildings to lower fuel bills, and is teaming up with Transport for London to introduce “energy gardens” across 50 London Overground sites.
At the Bunhill Energy Centre project in Islington, whose second phase was opened by Mayor Sadiq Khan last month, they’re using heat from the Northern line tube to power a thousand homes. The engineers Buro Happold have estimated that there is enough heat wasted in London alone to power 70 per cent of the city’s energy needs. What’s the potential for growth? Copenhagen provides 98 per cent of its space and water heating through district heating, at 45 per cent of the cost of normal oil heating bills. London’s uptake, better than the one to two per cent national average, is currently just five per cent.
The second reason is the economics ahead. When Henry Ford was using mass production to harness the power of fossil fuels, you virtually just had to stick your finger in the ground and the oil came out. The energy return on energy invested (or EROEI, the net energy, in other words, that you got back after all the drilling) was an estimated 1,900 to one. A century later, as we turn to oils that are tougher to extract — tar sands, shale gas, sub-salt oils, for example — the EROEI has dwindled to around 15 to one. Break even is around 12.
As the long-term energy returns for fossil fuels go down, the returns on renewables, driven by lower costs of solar panels and improved battery performance, continue to go up. According to one estimate, by 2020 80 per cent of the world’s population will be living in places where renewables are below cost-parity with fossil fuels. Why does this cost-parity matter? Because that’s when it becomes politically possible to start reducing some of the global subsidies that fossil fuels receive, estimated by the IMF to be an annual US $5.3 trillion, accelerating the cost advantage for renewables.
The third reason is about behaviour. Even if the technology works, even if it theoretically saves money, people have still got to switch to use it. One wild card, potentially more disruptive for the energy markets than any volatility in the oil price, could be the electric vehicle. With 23 per cent EV growth year-on-year, Nissan estimates that electric charging points could outnumber traditional petrol stations in the UK within four years.
The Tesla Powerwall could potentially be the game-changer. Under Tesla co-founder Elon Musk’s Master Plan, homes will become “micro-grids”. Homes capture solar energy during the day, storing it in their cars to get free travel, free electricity and back-up power to deal with intermittency. The electric vehicle, in other words, could be the plug-and-play piece of technology that drives mainstream adoption.
What is the timeline on any of this? Hard to say, and hype is abundant, but Tesla’s $4 billion investment in its Gigafactory in the Nevada desert aims to drive the cost of its battery pack down by more than 30 per cent by 2017.
What does this mean for the UK energy landscape? There is no silver bullet, no one killer app. There will be critical transitional roles for base load, for interconnection with lower-cost European providers, potentially for small-scale nuclear in the form of small modular reactors estimated to be a market worth up to $400 billion.
One contour is emerging. A century-old model, the energy equivalent of the telephone land line, may get joined and in some areas displaced by an ecosystem of distributed power innovations that is closer to mobile telephony. It’s a shift from a model that is centralised, top down and one way, to one distributed, locally driven and interactive, with communities not just as consumers of power but as co-producers.
Leo Johnson is the co-presenter of the Radio 4 series FutureProofing